More than 90% of Pakistan gold trade informal: CCP report

The Competition Commission of Pakistan (CCP) has released its first-ever Competition Assessment Study of the country’s gold market, offering an evidence-based examination of the sector’s structure, regulatory gaps and long-standing competition challenges.

The study, prepared by CCP’s newly established Center of Excellence in Competition Law (CECL), maps a market dominated by informality, opaque pricing mechanisms and fragmented oversight.

CCP has recommended the establishment of a Pakistan Gold and Gemstone Authority to formalize and regulate the sector.

Highly informal, poorly regulated market

According to the report, Pakistan consumes between 60 and 90 tonnes of gold annually, driven largely by cultural and social demand.

More than 90% of gold trading occurs through informal channels, where transactions are mostly cash-based and trader groups exert significant influence over pricing and supply.

Pakistan relies almost entirely on imported gold, with $17 million worth of gold imported in FY 2023-24, the report states.

CCP notes that the absence of a regulated price-setting mechanism leaves markets dependent on rates issued daily by city-based jewelers’ associations, further entrenching opacity.

Reko Diq seen as a game changer

The report highlights the transformative potential of the Reko Diq copper-gold project, which is expected to produce an estimated $74 billion worth of gold and copper over its 37-year life cycle.

CCP says Reko Diq has the capacity to reshape domestic supply chains, making regulatory modernization urgent ahead of its commercial rollout.

Regulatory gaps and tax barriers

CCP identifies overlapping and inconsistent regulations issued by the Ministry of Commerce, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Pakistan Gems and Jewelry Development Company (PGJDC) and the Trade Development Authority of Pakistan (TDAP). These fragmented mandates create enforcement gaps and policy contradictions.

A complex tax regime and unclear procedures encourage smuggling and under-invoicing, the report says.

Meanwhile, Pakistan has negligible gold refining capacity, and insufficient hallmarking facilities contribute to adulteration and fraud, undermining consumer protection.

The absence of reliable data on gold imports, sales and purity prevents evidence-based policymaking.

CCP’s reform proposals

To address these issues, CCP has put forward a set of structural reforms, including:

• Creation of the Pakistan Gold & Gemstone Authority, a unified regulator responsible for licensing, imports, and compliance with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations
• Mandatory assaying and hallmarking nationwide to ensure purity standards, strengthen consumer protection and improve export competitiveness
• Digital transformation of the gold value chain through blockchain-based traceability linked to FBR’s Track & Trace system
• Establishment of a Gold Banking System, modeled on Türkiye’s framework, to channel household gold into the formal economy
• Strengthened data governance, including centralized reporting, market documentation and scientific price-monitoring mechanisms

CCP emphasizes that modernizing the gold sector is crucial as Pakistan prepares for the commercial launch of Reko Diq.Documenting the gold market, the Commission says, will increase transparency, reduce smuggling and informal trading, improve consumer protection and enhance the sector’s contribution to the national economy.