Reformation of the gold sector in the Turkish economy

[摘要] The gold sector in Turkey, where there is no mine gold production, is based only on goldprocessing and jewellery manufacture, driven by a strong domestic demand for goldproducts. In the Turkish economy which was State-driven since the establishment of theTurkish Republic in 1923, the gold sector had been ignored and driven underground as aresult of strict regulations. Despite operating through illegal channels, the sector hadalready accumulated a considerable amount of technical and financial capacity when thepolicymakers realised the potential of the sector in 1983, and started the liberalisationmovements. The liberalisation process produced positive results such as eliminating goldsmuggling and legalising the gold imports which had increased to 163 tonnes in 1993. Italso demonstrated the potential of the sector and revealed the need for further reformationand development in the market structures. However, the mere legalisation of the sectorwas not enough and the Government had to approve and include the implementation of aGold Sector Reform Plan in its protocol in 1993. The model included the initiating anddeveloping the major components of an efficiently operating gold sector, which are goldmining, a gold exchange, gold refinery, gold based financial instruments, the jewellerymanufacturing industry and the promotion of the propensity to save in gold.The Istanbul Gold Exchange (JGE) was given the highest priority in the implementationprocess because it would necessarily pave the way for Turkish investors to adapt to'paper' gold instruments, Success in the operation of the IGE and the introduction of goldbacked financial instruments would accelerate preparations to implement the remainingcomponents of the envisaged reform process,In order to integrate with the international gold market, it was necessary for gold tradedon the JGE to meet the international quality standards in terms of purity and quality. Poorquality standards were caused by the existence of a number of small unregulated refiningoperations. The solution to the problem, and also the challenge, lay in the establishmentof a refinery with the capacity to, produce semi-final gold products, and also in therefining of scrap gold.Even after the liberalisation process, the Turkish jewellery manufacturing industry stillfaces various financial and location problems, and is still constrained by the tax system aswell as constraints relating to taxation and unfair competition within the EuropeanCustoms Union. These problems are being addressed within the context of the gold sectorreform model in order to maximise the potential of this sector.Essentially, Turkey is not a gold producing country, and its gold sector sources most of itsraw material from outside the country. Increased exploration activity has, however,identified some reserves which are due to come into production. If environmentalconstraints are overcome and these mines do in fact come into production, they will pavethe way for the development of a Turkish gold mining industry.The World Gold Council (WGC), through its branch in Istanbul, made significantcontributions to the process of liberalisation of the Turkish market, the compilation theGold Sector Reform Plan, and the implementation of its various components. The WGCalso assisted the government by providing consultancy services such as the expertise lentin the establishment of the Istanbul Gold Exchange.This study records the various stages and components of the liberalisation andreformation process in the Turkish gold sector. The purpose is to evaluate the successesachieved and the failures faced in order to extract certain lessons which can be utilised bypclicymakers who are in a position to develop a non-existing or illegal sector.

[发布机构] University of the Witwatersrand