Syria Today | Losing its Shine

Losing its Shine

By Waseem Abdo
Photo Carole al-Farah

Just a few years ago goldsmith Eias Masharkeh would regularly record daily sales of SYP 150,000 (USD 3,250) in his shop in Souk Hamidiye. “I would sell up to two kilos of gold jewellery every day,” he said. “Those were the good days.”

Today, a good day is when sales reach SYP 25,000 (USD 551). The drastic fall in business has forced Masharkeh to let seven of his 12 staff members go over the past few months. Now he is considering abandoning his business altogether.

“The enormous rise in global gold prices has led to a crisis in the Syrian gold market,” Masharkeh said. “People are selling their gold jewellery, but almost no one is buying. Our only customers are those who are buying gold jewellery for weddings and even they are not buying as much as in the past.”

Early last month the price of gold hit an all-time high of SYP 55,249 (USD 1,218.30) per ounce. While the price has eased slightly since then, settling around SYP 49,885 (USD 1,100) at the time of publication, analysts are predicting it will continue to set new price records throughout 2010 and may go as high as SYP 90,700 (USD 2,000) per ounce. Indeed, gold prices have doubled since early 2007, surging on the back of a weak US dollar, high commodity prices and global financial turmoil.

The price rise has taken a heavy toll on the local jewellery industry. Figures from the Syrian Goldsmiths’ Association show that the Syrian gold market shrunk by 70 to 90 percent between May and September 2009, compared to the same period a year earlier. The number of workshops in the sector has also fallen steadily, from 600 at the end of 2000 to just 200 today.

Heavy regulation

In addition, local goldsmiths complain heavy government regulations are hampering their ability to do business. The Syrian government bans the export of gold in order to protect the country’s gold reserves, a ruling which severely affects local goldsmiths and their business. At the same time, the import of manufactured gold products such as jewellery or ornaments has also been forbidden since early 2009. Gold products and other gold objects cannot be brought into the country, unless they are for personal use and weigh less than 0.5kg.

“The ban on the import of manufactured gold products is designed to protect the local gold industry and the goldsmiths working in it,” Walid Issa, coordinator of the Syrian Cabinet’s State Economic Committee, said.

George Sarji, head of the Syrian Goldsmiths’ Association, has a quite different view. He believes that allowing the import of gold jewellery would, on the contrary, benefit the Syrian gold industry as it would allow local goldsmiths to get new inspiration and diversify their designs.

In September 2008, the Syrian government amended the existing law to allow local goldsmiths to sell their products at international jewellery fairs. The decision was received with enthusiasm by local goldsmiths who saw it as a major development and a step towards allowing the export of manufactured gold products.

“We thought the government had finally started addressing our problems,” Sarji said. “But the decision is still just a piece of paper and has not been implemented.”

A number of goldsmiths Syria Today spoke to claim the drop in demand has led to an increase in gold smuggling to Lebanon. At the beginning of November, they say, a record volume of gold was smuggled from Syria to Lebanon on a daily basis, although the trend eased off towards the end of the year.

Skills draining away

A law issued in May 2000 allowed Syrian gold manufacturers to export their products under the condition they import the same weight in raw gold within a specific period of time.

Recent instructions from the Syrian Customs Department have, however, increased the tariff imposed on such operations and restricted the period of time required to import. It has made it almost impossible to profit from the business. “Before the new instructions we sold our skills, not our gold, and that was fine with us,” Sarji said. “Now, even this has become almost impossible.”

According to Sarji, up to 80 percent of Syria’s most skilled goldsmiths have left the country in search of better chances abroad. “We are losing the best hands to regional gold manufacturers.”

However, Issa said the current situation is temporary. “The government is currently looking at ways of supporting the gold industry,” he said. “We are seriously considering the association’s demands and trying to meet them in a way that is satisfactory to them and that would at the same time safeguard the national economy.”

Issa explained that the issues surrounding Syria’s gold industry have not yet been resolved because the memorandum which the association submitted to the State Economic Committee in June 2007 still needs to be reviewed before a final decision can be taken.

“According to the laws effective in Syria, the gold industry is related to a number of governmental bodies including the ministries of finance, economy and industry, as well as the Central Bank of Syria,” Issa said.

“The government is willing to further organise the sector, but this will happen only when all the relevant bodies have reviewed the matter, taking into consideration the interests of the national economy and the goldsmiths.”

Unsurprisingly, many goldsmiths feel the government is taking far too long to resolve the issue. “By the time the government finds a viable way of supporting the industry, there may not even be any goldsmiths left in the country to reap the benefits,” Masharkeh said.

Looking to the Gulf

Amid all this gloom, some goldsmiths remain optimistic. Mazen Ahmed, who has a gold shop in Damascus’s Yarmouk suburb, believes that the superior quality of Syrian-made gold jewellery remains unparalleled and that it continues to have a region-wide appeal.

“Our problem lies, in part, in the downturn of the Gulf state economies,” he said. “Once they recover, I think demand will rise again.

We mainly rely on expats and customers from the Arab Gulf states, where the hike in gold prices hardly affects purchasing power and where the traditions at weddings mean there will always be a high demand for gold jewellery.”

How long it will take foreign economies to recover from the crisis remains uncertain though. “The solution must come from within,” Sarji said. “The government should not be afraid of liberalising the country’s gold industry – if it is serious about liberalising the country’s economy that is.”