Diamond industries in Indonesia, Belgium to improve ties

Diamond industries in Indonesia, Belgium to improve ties

By Rita A. Widiadana

JAKARTA (JP): Indonesia has long been recognized for its potential as a diamond producing country, yet it seems unable to keep up with the growth in global trade.

Indonesia's diamond and jewelry trade has much potential for growth. The abundant resources in the diamond mines of Kalimantan and Indonesian craftsmanship support this fact.

Indonesia is lagging behind neighboring countries such as Thailand in the diamond trade. Trade Minister Tunky Ariwibowo stated that Indonesia may be able to surpass Thailand as a jewelry producer and exporter in Asia because Indonesia has abundant materials, a large workforce, craftsmanship and technology.

The Central Bureau of Statistics revealed that export revenues from the jewelry industry rose sharply from US$241.73 million in l992 to $317.14 million in l993. Last year it is estimated that the jewelry industry contributed $900 million, putting it at eighth in the country's non-oil export revenues.

However, Indonesia's jewelry exports make up only 0.1 percent of the global exports in the industry, and the diamond industry contributed very little in revenue.

Abdurachman Salim, chairman of the Indonesia Diamond Institute, said that Indonesia's diamond industry is still at a very basic stage.

"Most local diamantaries work traditionally. Indonesia's diamond industry is not yet competitive because of a lack of expertise, technology as well as a marketing system," he asserted.

Compared to the gold industry which is now enjoying various incentives from the government, including the exemption of value added tax for gold bar import, the diamond industry has not enjoyed such regulatory framework.

The government, Salim added, has not yet supported the country's diamond industry effectively. There is, for example, no precise data on the number of diamonds entering the local market or exported to other countries.

"We know nothing about the local diamond industry," he confirmed.

Salim also maintained that Indonesia still has no accreditation agency which is authorized to state the quality of diamond products.

"People still have mixed perceptions about the quality and the originality of diamonds. There should be a certification process that states the real quality of any diamond sold in the country," Salim said.

The absence of such an agency has placed local consumers in a very weak position as they have no idea about the quality of diamonds they buy. This has discouraged local people from buying diamonds, which affects the local diamond industry badly.

Salim went on to say that Indonesia should learn more about the complicated marketing and distribution system for diamonds.

In the past, the diamond trade was very simple. Now, however, it involves various international agencies. Unfortunately, only a few local diamond manufacturers are familiar with the rules.

History

The diamond trade has been active since the 4th century B.C. India was the major producer until the 18th century. Until the middle ages, the Persian and the Arabs had the monopoly on diamond shipping and very few stones reached Europe. In the 13th Century, Venice became the largest Western commercial power and also the center of the diamond trade. Through the city of the Dodges, many diamonds came to Brudges in Belgium, which became a famous cutting center. The diamond industry later moved to Antwerp.

But, Antwerp faced a tough challenge from Amsterdam and London, other prominent international diamond centers.

Between the 18th and 19th century, the industry reached its peak with the discovery of diamonds in Brazil, Australia and South Africa. Since then the global trade of diamonds has become very complicated. It involves various agencies, including the Central Selling Organization which is owned by De Beers and controls the market and supply of rough diamonds worldwide. Diamond bourses, dealers and financial and accreditation institutions actively taking part in the international diamond trade.

Growing

Budi Cahyadi, vice chairman of the Indonesian Goldsmiths and Jewelers Association, maintained that the local diamond and jeweler industry should tie itself closely to its counterparts overseas if they want to grow.

"We have to enter the international market as soon as possible. We need to understand the mechanisms of diamond and jewelry manufacturing and trade, how to distribute the jewelry and the latest diamond know-how," Cahyadi said.

In order to encourage the local diamond and jewelry industry, Indonesia will cooperate with the Belgian diamond industry.

Last Tuesday, an Antwerp Diamond Conference was organized jointly by the Belgian Diamond High Council, the Embassy of Belgium, the Indonesian Diamond Institute and the Indonesian Goldsmiths and Jewelers Association at the Jakarta Hilton International hotel.

The meeting, which was opened by Minister of Women's Roles Mien Sugandhi, was attended by hundreds of local and foreign diamond and jewelry manufacturers and designers.

M. Van Den Abeelen of the Belgian Diamond High Council pointed out that the conference was an important milestone for both Indonesia and Belgium to improve their relations in the diamond industry.

"We have no intention of disturbing the local diamond industry. Instead, we really want to support Indonesia in enhancing its industry," he assured.

The Diamond High Council, he said, is able to share its expertise and provide the necessary training for local diamond manufacturers. The Council will continually promote Indonesian diamonds in the international forum, Van Den Abeelen added.

During the meeting, the Council also provided information on the latest trend on diamond trade and processing technology, including the harmonization of diamond grading standards and diamond cutting and shaping with lasers.

Van Den Abeelen revealed that with the support of its government, Belgian diamond exports generated US$18 billion in revenue in l994 or 7 percent of total exports. There are currently 1,500 diamond manufacturers and several diamond bourses in Antwerp.

"It may be high time for the Indonesian government to fully back up its diamond industry if it wants to go global," he concluded.