Turkey is one of the world’s top gold and jewellery exporters, sending manufactured pieces and fine precious metals and stones to many regional countries as well as further afield. The country imports a great deal of these valuable commodities and products, while its domestic market is a robust one – for both the buying and selling of gold, diamonds and jewellery. There is a large and developed domestic production industry for jewellery, with a growing international reputation. Legislative moves taken in 2014 could also see the industry expand further, with the 20% special consumption tax (SCT) on polished diamond imports abolished in 2014, further liberalising an already liberalised sector. In the meantime, gold and jewellery continue to be in great demand as stores of value in uncertain times and as items of high artistic and decorative quality.

Surging Exports

According to figures from the Jewellery Exporters Association (JTR), in 2012, Turkey exported 100,852.36 kg of gold jewellery – a figure which includes both plain gold and diamond pieces. This was worth some $1.66bn. For 2013, the numbers rose to 108,480.66 kg and $2.01bn – the value jumping further than the quantity due to fluctuations in international prices. According to the JRT, jewellery exports recorded substantial growth in 2014 too, rising to around $4.5bn. The latest available data shows that in terms of silver jewellery, the totals for 2012 were 113,430.2 kg, worth $108.3m, and for 2013, 120,401.8 kg and $108.4m – illustrating weak silver prices during the year. Jewellery composed of both gold and diamonds worth $44.8m was exported in 2012, with this rising to $54.68m in 2013. Silver and diamond jewellery showed even more spectacular gains, with the value of these pieces exported rising from $820,970 to $2.25m. Pearls and pearl jewellery are another market segment in Turkey, with these seeing exports of $2.13m in 2012 rise to $2.35m in 2013. The top five destinations for these exports have remained roughly the same for the last few years: the UAE is usually number one, followed by Iraq, then Russia, Germany and the US. Iraq is largely northern Iraq, as Erbil has established itself as the centre for gold and jewellery trading throughout the rest of the country.

The Arab market is a key one for Turkey, with demand for precious metals, stones and jewellery as a store of value high there, while cultural values, such as requirements for gold as a wedding gift, also boost demand.

Shifting Sands

Turkey’s modern jewellery business took off following the liberalisation of the gold trade in the 1980s. Restrictions on the import and export of gold were gradually lifted, and by the 1990s, the trade was established enough to set up the Istanbul Gold Exchange in 1995. Production techniques improved, along with designs, which often achieved a fine, east-west synthesis. From 2004 onwards, however, when global gold prices began to march upwards, demand started shifting towards diamonds. This shift is the main reason organisations such as the JTI pushed the government for new legislation. Unlike gold, or finished diamond products, imports of pure diamonds used to be subject to the SCT of 20%. In addition to the removal of the SCT for polished diamond imports, the 18% value-added tax for diamond trading for members of the Borsa Istanbul was lifted in 2014, enabling registered diamond transactions. On October 1, 2014, Borsa Istanbul began diamond trading in an effort to capture a share of the $10bn market that is currently dominated by Israel, Belgium and Dubai.

Meanwhile, Istanbul Diamond Exchange, which has already been officially registered and has 200 members, has yet to start trading. Insiders suggest that with the 20% SCT now abolished, the exchange is expected be a great success, with many traders from Tel Aviv to Mumbai waiting to come in. In March 2015 it was reported that Turkish and Israeli industry leaders are working together to open the exchange, with the plan including a 150,000-sq-metre diamond compound in Istanbul. At the same time, sector stakeholders are making efforts to widen registration of traders and businesses, further regularising the growing sector.