By Lee Hyo-sik
Staff Reporter
The government plans to establish an exchange for gold as early as next year to make gold transactions more transparent and discourage the smuggling of the precious metal.
According to the Ministry of Finance and Economy, the government will set up an exchange, an organization to manage and supervise gold distribution, next year to stem any illegal transactions and distribution of gold.
It will expand the exchange into a comprehensive commodity exchange, like New York Mercantile Exchange (NYMEX), to deal with not only gold, but diamond, crude oil and other commodities as well.
The exchange will operate separately from the Korea Exchange (KRX) on which stocks, bonds and derivatives are traded, the ministry said.
Finance and Economy Minister Kwon O-kyu said the government will eventually develop the gold distribution management body into one of the internationally competitive and advanced commodity exchanges such as the NYMEX and London Mercantile Exchange (LME).
At an initial stage, the government plans to exempt gold bars traded in the exchange from excise taxes to help stimulate trading, while reducing income taxes for gold traders.
In a move to stop gold smuggling and encourage good transactions through a normal market process, it will also scrap a 3 percent tariff on imported gold in 2008.
``The exchange will likely deal with primarily spot trading of gold at first but will later include a broader range of items, such as diamond, copper and crude oil. We also plan to allow the commodity futures transactions,'' a ministry official said.
Also, the ministry said it will consider abolishing excise taxes levied on precious metals and jewelry items from 2009 through the revision of the relevant tax laws next year.
The government is contemplating providing tax breaks and low interest loans for raw material purchases to the local precious metal processing industry to help strengthen its competitiveness.