RI diamond potential yet to be tapped

By Rita A. Widiadana

JAKARTA (JP): Say the word diamond and dazzling images of shimmering, glamorous gems will come to mind.

Diamonds have been symbols of beauty, power and privilege since the precious gem was discovered thousands of years ago. For centuries, kings, queens, maharajahs, shahs and sultans put their lives and empires at stake to possess the biggest and the best diamonds.

In addition to its beauty, the diamond was believed to possess healing powers. Ancient people owned diamonds for luck and security reasons. Diamonds were said to cure insanity and impotence while protecting against the effect of various dangerous plagues and poisons.

Diamonds were recognized in Indonesia as early as the 14th and 15th centuries. Diamonds and other gemstones were found in royal jewelry, household appliances and traditional weapons such as kris and spears.

Indonesia has diamond deposits in small-scale mines in Martapura, South Kalimantan. But compared to other Asian countries such as Japan, South Korea, Hong Kong and Taiwan, diamond production and trade in Indonesia are still insignificant. Japan, which has no diamond tradition, has bought US$2.1 billion worth of diamonds annually since l990.

According to Anthony Oppenheimer, president and executive director of the Central Selling Organization, which controls international diamond markets and supplies, it will take a long time for Indonesia to build a major diamond industry.

Indonesia has abundant mining resources such as gold, tin, oil and coal. But, the country's diamond deposits are still very small compared to other diamond producing countries such as South Africa, Zaire, Botswana, Australia and India, Oppenheimer said during his initial visit to Indonesia early this month.

"Diamond exploration and processing require high investment. Indonesia's gold exploration projects have drawn a lot of attention from a number of potential investors but the country's diamond is still out of their consideration," said Oppenheimer, who is also a director of De Beers Consolidated Diamonds, the world's largest diamond mining company.

However, Oppenheimer believes that Indonesia has prospects in the diamond trade, particularly in the retail and jewelry business.

After visiting a number of jewelry shops in Jakarta's downtown area, Oppenheimer said he was impressed by the development of the jewelry business in the city. "It is not yet a major market but in the next few decades, I assume that Indonesia, along with China, will become an important market in Asia."

Johnny Salmon, chairman of the Indonesian Goldsmiths and Jewelers Association, shared Oppenheimer's opinion, saying that the jewelry business in Indonesia is still in its infancy stage.

"Indonesia is now entering a transitional period from production to marketing era. We are still working hard to push the local jewelry business before joining a competitive world market," Salmon added.

He admitted that it was very difficult to determine the precise figure of diamond jewelry sales in Indonesia, compared to gold jewelry consumption, which reached 119 tons a year. Indonesia's jewelry exports amounted to $300 million last year.

Salmon said the local jewelry business is closely linked to the country's economic progress. As buying power gets stronger, people will think less about basic needs such as food and housing, and start buying secondary items such as luxury cars, clothing and jewelry.

Oppenheimer also agreed that the growth of the jewelry business in many Asian countries, including South Korea, Taiwan, India, Hong Kong, Thailand and Indonesia, is in line with the countries' economic progress.

In East Asia, except for Taiwan, retail sales grew very fast with South Korea leading the market. Southeast Asia was responsible most for the diamond market growth in the 1980s and l990s.

"The growth of the retail business is in line with the increasing demand of high-quality and fashionable diamond jewelry," he said.

People buy gold jewelry for fashion and investment, but they buy diamonds because they are attracted to the beauty of the stones, he said.

He said diamonds sold here are mostly in the form of jewelry. The gems come from local diamond mines in Martapura, South Kalimantan, and are imported from various countries.

Indonesian people, he said, have a tradition of possessing diamonds and other gemstones as family treasures. The jewelry is often passed from one to the other. Indonesian noble families, for example, owned priceless diamond jewelry collections. Common people also possessed lower quality diamonds.

"Many of the old collections belonging to these families were redesigned and sold at the local market," he said.

Nanny Budiman, head of De Beers's Diamond Information Center (DIC) in Jakarta, said that in the past, people bought diamonds through vendors. "These vendors determined the price and quality as well as designs of diamond jewelry. Buyers did not have any choice but to accept almost all offered items," she explained.

Since a few years ago, the DIC has been launching intensive campaigns to inform both sellers and buyers on the quality of diamonds. These activities have been part of De Beers's international campaign programs.

Every year, De Beers spends about $200 million in promotional and social campaigns worldwide. About 19 percent of the amount is spent in Asia.

"Indonesian consumers should be well-informed so that they have a strong bargaining position when buying diamonds because they are precious stones," said Nanny.