THE gold and jewellery industry in Penang was established almost 200 years ago by guilds founded by the Chinese, the Indians and the Indian Muslims.

The state does not have any gold deposits of its own, however. Few states do. Most of the gold comes from the Penjom Mine in Pahang and other small-scale gold mines in Pahang, Kelantan, Terengganu and Perak. Perak, which used to be the major producer of tin ore, claims to be the second most important producer of gold in the country.

Although Malaysia has gold mines, it is a net importer of the metal. Its production of gold increased from 3,352 kg in 1998 to 4,221 kg in 2004 but fell back to 2,794 kg in 2009.

Between 1998 and 2004, the compound annual growth rate of gold imports was 15.3%. However, imports have dropped significantly from 2004 to 2009. Although imports fell in terms of weight, imports of gold and other precious and semi-precious materials increased in Ringgit terms, i.e. from RM467.1mil in 2005 to RM1.2bil in 2009.

Gold exports rose significantly from 6,287 kg in 1998 to 86,021 kg in 2003, and then dropped gradually to only 10,804 kg in 2009.

Jewellery exports comprise items made of gold, silver and platinum, which make up 80% of the total, while other articles of precious metals and imitation jewellery make up about 18%.

The biggest export markets for Malaysia from 2007–2009 were the United Arab Emirates (64%) followed by Singapore (17%) and Thailand (five per cent). However, in the first two months of 2010, a new market emerged, namely Japan, which received 10% of Malaysia’s gold & jewellery exports 

for that period.

Presently, as much as 85% of Malaysian gold and jewellery exports comes from Penang.

Most Muslim jewellers operate in the Jalan Masjid Kapitan Keling area while Indian jewellers are mostly found in Little India, with a few in Seberang Perai. Members of other associations mainly comprise ethnic Chinese operating around Campbell Street and the Komtar area, as well as in Seberang Perai.

A 2005 survey indicates that 96% of the companies are small and medium enterprises (SMEs). These are mainly involved in retail, manufacturing, import & export and/or wholesale. The large majority of them are in retail.

The gold and jewellery industry is one of the few industries that have survived without reliance on government support. However, of late, industry players have been finding it difficult to remain vibrant.

Gold prices have been increasing at a compound annual growth rate of 17% since 2001. This means that the effective value of the capital involved has shrunk. With shrinking capital, the size of businesses also diminishes. 

The shortage stems from the following conditions:

• The industry is failing to attract and retain workers; and 
• There is a lack of interest among employers to train workers for fear that they will move to other companies.

In 2008, the Penang Skills Development Centre (PSDC) established a gold & jewellery design programme that was endorsed by the Federation of Gold & Jewellery Association of Malaysia. PSDC invested RM45,000 on a JewelCAD programme software and managed to train 100 students 

at Level One of the programme. Alas, when Level Two of the programme was offered, the take-up rate was so low that PSDC found it unfeasible to continue.

Most small-sized gold and jewellery busi-nesses are family-owned. Sadly, there is waning interest among the younger generation.

Declining sales Several reasons are given by jewellers for their declining sales, including: 

Many small companies cannot afford security guards or private security transport services. Many engage individuals instead to transport their products, or they simply transport their goods themselves. The present lack of flight services between Penang and East Coast towns has also prompted jewellers to travel by road, which exposes them to greater risks.

There is a need to recognise that the industry constitutes an art culture that has been passed down from one generation to another.

It must also be understood that Penang is the biggest exporter of gold and jewellery in Malaysia and Malaysia as a whole has fared quite well in the international markets.

Promotion of gold and jewellery 

Gold and jewellery can be promoted in various ways:

The state government or the municipal councils can assist by upgrading the existing infrastructure, such as providing adequate parking facilities, upgrading roads and beautifying locations where gold and jewellery businesses operate.

Once the Goods & Services Tax and the compulsory hallmarking of precious metals and jewellery proposed by the federal government are implemented, things will get even tougher for the industry.

The gold and jewellery industry is an export-earner for Penang and concerted efforts are needed to enhance the vibrancy of the industry. It has been a neglected gem for too long and Penang must realise that it is in the state’s interests to keep it alive.

  

** Republished with permission. This article first appeared in the October 2010 issue of the Penang Economic Monthly. Anna Ong is senior manager with investPenang, in charge of corporate & knowledge management; events & communication; and Penang Cybercity & shared services & outsourcing.

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