Jewelry traders shine amid financial crisis

Jewelry traders shine amid financial crisis

JAKARTA (JP): The monetary crisis caused by the fluctuating
rupiah has brought nothing but disaster to people running
property, automotive or electronic businesses.

But it has been a blessing in disguise for the few who do
business in secondhand jewelry, especially diamonds and gold, as
many people have been forced to sell their possessions to --
among other things -- make up for financial setbacks during the
current economic turmoil.

Eye-catching advertisements in many newspapers and magazines
are just one indication of how their businesses are shining amid
the country's floundering business climate.

While many businesspeople are gradually moving out of malls
and introducing cost-saving methods, buyers of secondhand jewelry
have booked into hotel suites or have rented space in busy
shopping malls.

For many of them, the status of the goods, which could be
verified from certificates or bills, is not a priority.

Most of them set their buying and selling prices much higher
than goldsmiths, who are finding it difficult to breathe due to
the presence of their new competitors.

Speaking to The Jakarta Post yesterday, secondhand jewelers --
most of whom set up business only recently -- said the business
had been very lucrative these days mainly because of the
substantial drop in the value of the rupiah.

Therefore, most of them pray for the rupiah to continue
weakening so they can reap more profit.

"It will be profitable only if the dollar keeps its position
above the rupiah, which makes everything here, including
diamonds, very cheap in the eyes of foreigners," said a man who
jointly runs a business with foreign parties at his watch shop in
the popular Blok M shopping area in South Jakarta.

Last month, for example, his shop had total transactions of Rp
3.5 billion per week, he said.

Riots

The trader, who asked for anonymity, said he started the
business, which he advertises in many newspapers, after the mid-
May riots when more people started selling their possessions in
their quest for cash.

He said he decided to get involved in the business in a bid to
make up for the dramatic drop in his watch shop's revenue.

"The business was actually initiated by foreign diamond
scouts, who pay for diamonds or jewelry in U.S. dollars and who
then sell the diamonds at markets overseas," he said.

According to him, he runs the business in cooperation with
partners from the United States, Singapore and Malaysia.

People make deals directly with experts from the foreign
companies at his shop, he said.

"We get a commission of at least 2.5 percent of the total
transaction," he claimed.

Sellers visiting his shop are mostly affluent gem collectors,
who apparently need cash to keep their businesses alive.

"There was a tycoon here who sold one diamond for Rp 300
million," he said.

Nowadays, one diamond carat is valued at between US$1,000 and
$1,500.

According to many traders, most people who sell diamonds are
from areas such as Semarang, Pontianak, Bandung and Ambon, while
those offering gold are from Jakarta.

A Fung, not his real name, who operates from an office in
Mangga Besar, West Jakarta, said his company collected gold
jewelry and sold it to a local gold-scouting agency.

He said his office was paid a commission of between Rp 1,000
and Rp 1,500 per gram of gold regardless of whether or not the
items had certificates.

A gram of 24 karat gold is currently valued at about Rp
110,000, while 22 karat is valued at about Rp 85,000 per gram.
Before the crisis hit the country in July, gold was traded at Rp
25,000 and Rp 23,000 per gram respectively.

"Our customers are definitely people whose lives were
shattered by the crisis and they have to sell their belongings to
survive," A Fung said.

Most of the collected jewelry is cleaned and, in the case of
gold, melted down by the gold scouts before being sold to
overseas markets, he said.

He refused to explain how the gold was shipped and sold to
foreign markets.

"The foreign buyers can come here to pick up the gold or they
have local scouts deliver the stuff at a particular destination
in the country. I heard they have special 'access' which enables
them to pass the legal procedures but I can't describe it for
you," he said.

Another trader in Pademangan, North Jakarta, decided to get
into the gold collecting business with some friends after her two
goldsmith shops in Bekasi were looted by mobs during the May
riots.

"I have to do it to survive. I have to restart the business
from square one again," she said. (cst)