SMUGGLERS sneak it across borders by air, land and sea and commonly hide it in their anus or strapped to their bodies. Whatever the means, the supply Thailand’s billion-dollar jewelry export industry with gold — precious metal manufacturers say they can’t get enough of because of tough import restrictions.

          Thailand last year exported 23.62 billion baht (945 million U.S. dollars) worth of loose gemstones and gem-set jewelry, yet only 7,400 kilograms of gold were legally available through Thailand’s official gold importer Mocatta & Goldsmid Co. of London.

          Jewelry exporters estimate that roughly one fourth of last year’s exports required pure gold for ornamentation although some 80 percent went out as 14 karat gold. They would not say the actual amount of gold required in that single year although the figure is believed to be nearer 10,000 kilograms, the volume also quoted by the Finance Ministry which regulates gold import.

          A senior Customs Department official, speaking on condition of anonymity, said in an interview that less than 10 percent of gold that is believed smuggled into the country is confiscated. While seizures along the Thai-Malaysian border and Bangkok’s Don Muang International Airport have multiplied, a number of smugglers trying new channels continue to elude detection, he said.

          “We are covering broad areas with limited personnel,” the official said, adding his department had nabbed 122.46 kilograms of gold worth 65.44 million baht (2.62 million U.S. dollars) the first four months this year.

          From October 1987 to December 1988, a total of 270.35 kilograms worth 127.1 million baht (5.08 million U.S. dollars) were seized, Customs Department figures showed.

          Actual successive arrests in a single day involving a group of five East Indians and seven Nepalese who together stashed gold bars weighing 17.099 kilograms in their anus;

          Disembarking at Bangkok Airport from four separate fights from Hong Kong and Singapore, the men cart their baggage trolleys through a customs area designated for passengers with nothing to declare. Within six hours they are discovered, facing fines and prison sentence ranging from one to 10 years, said the official. The haul, worth 7 million baht (280,000 U.S. dollars), was to be sold entirely in Thailand, the couriers told authorities.     In a similar incident, customs officials arrested three Singaporeans for attempting to smuggle 66 small gold bars in their shoe soles and their anus. The value was put at 3.2 million baht (128,000 U.S. Dollars), according to customs figures.

          In both cases, arrests were attributed to prior knowledge of smuggling activities thanks to improved law enforcement cooperation among nations, said the senior customs official.

          Most of the smuggling originates from Singapore and Hong Kong in large consignments and is done by air through Don Muang because gold prices fluctuate daily, making land and sea routes unattractive to couriers and financiers, said the official.

          “With gold trading prices varying, it makes better sense to do business by air because other options take longer and could cost operators dearly,” he said.

          The financiers, he described, are “normal businessmen taking chances who sometimes enlist the help of airline staff but otherwise not organized criminals pushing syndicates.”

          The official said he believed smuggling could lessen as the Thai government moves to ease restrictions on gold imports.

          In March, the Finance Ministry approved two additional gold importers, breaking a year-old monopoly held by Mocatta & Goldsmid, the world’s largest precious metal merchant for over 300 years.

          The previous year the ministry awarded Mocatta & Goldsmid sole concession to import 7,400 kilograms of gold for Thailand’s jewelry exports. It was hoped the arrangement would help curb smuggling and lift standards for jewelry exports which ranks as the nation’s number two export earner.

          The decision last March raises the volume of imported gold to 16,600 kilograms per year with Gold Traders Association and Authorized Gold Dealer Co. importing 6,000 and 3,200 kilograms respectively. The Finance Ministry has estimated that up to 12,000 kilograms of gold a year would be sufficient.

          “People hate formality, particularly bureaucracy, and will avoid it but as the government gives licenses to more gold importers, jewelers will want to buy from legal sources because this will lower their risks,” the customs official said.

          Thai officials and jewelry exporters have warned that fees charged by Mocatta & Goldsmid should be competitive since smuggling was unchecked. The market practice is $1.5 - $2 U.S. dollars per troy ounce.

Exporters buying gold from Mocatta & Goldsmid are required to register with the Revenue Department and report to the Fiscal Policy Office the volume needed every six months. While gold used in exports are exempt from a 3.3 percent business tax, manufacturers must place a guarantee letter with the Revenue Department worth five percent of the amount of gold required. They additionally must use all the gold purchased from Mocatta & Goldsmid within three months and are forbidden to resell the gold without prior official approval.

          Deputy Finance Minister Suchon Champoonut has said his ministry would revise gold trading taxes and regulations to fight smuggling. “We are trying to solve the smuggling problem by bringing local gold price down to the levels quoted in Singapore and Hong Kong,” Suchon was quoted as saying. Gold prices in Singapore and the British colony are just slightly lower than in Thailand.

          For years, demand for and dependence on smuggled gold grew strong yet domestic and foreign interests in gold mining concessions in Thailand were not forthcoming.

          Though the Department of Mineral Resources renewed bids for gold ore prospecting and mining rights, a number of factors continued to delay mine development. They include tough regulations requiring operators to sell gold ore to the government, land ownership problems, high ore royalties and double taxation.

          A foreign investor, commenting on availability and choice of local and imported gold, said: “There’s gold every-where in this world if you dig deep enough. The question is the investment may be too heavy from what will come from the ground… so people buy quality gold when they need it from people who already have it, sometimes from smugglers…”

          Customs officials say smuggling costs the government lost revenue while jewelry exporters resent having to pay more for smuggled gold and in turn accepting smaller profit margins. “That’s basically not good gold policy.” One exporter said.