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Lt Gen Hassan Azhar Hayat

The author has a vast experience of serving in erstwhile FATA during the War on Terror. He commanded a Brigade in South Waziristan, a Division in North Waziristan and is Commanding Peshawar Corps at the moment.

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Hilal English

Peshawar’s Namak Mandi: A Gemstone Heaven

March 2024

The global gemstone market in 2023 is valued at USD 32.38 billion and is expected to reach USD 56 billion by 2033, with a compound annual growth rate of 5.6 percent. Pakistan possesses the world's fifth-largest high-quality gemstone reservoirs, particularly in KP (Khyber Pakhtunkhwa) and GB (Gilgit-Baltistan). A little focus and patronization of the gemstone business have the potential to generate millions of dollars in foreign exchange.



Descending into Peshawar’s Namak Mandi, a tourist might be surprised to learn that amid the sprawling meat and tikka shops, within the dark and narrow alleys, lies a globally recognized gemstone market. Similar to global forex trading, gem trading starts around the afternoon and continues until late evening, with a host of local and foreign buyers bargaining with local stone dealers to secure the best deals. Namak Mandi's gemstone trade mostly involves undocumented sales and exports amounting to tens of millions of dollars, providing job opportunities to thousands of traders. A favorable regulatory regime and patronage have the potential to exponentially enhance the export potential of the Namak Mandi gemstone market and generate millions of dollars in foreign exchange.
Economic Potential of Gemstones 
According to the Trade Development Authority of Pakistan (TDAP), the potential of the gemstone industry in Pakistan is enormous when it comes to contributing to the national economy. The country has the potential to export 800,000 carats of Ruby, 87,000 carats of Emerald, and 5 million carats of Peridot per year.



Pakistan possesses the world's fifth-largest high-quality gemstone reservoirs. Swat’s Emerald, Mardan’s Topaz, Mohmand’s Nephrite, Kohistani Peridotite, and Azad Jammu and Kashmir’s (AJK’s) Ruby are recognized as the world's best gemstones due to their brilliant clarity, durability, and glittering design. Pakistan's export potential in the latent gemstone industry is estimated to be around USD 32 billion. Many countries, including China, Afghanistan, the USA, Belgium, the UK, and India, import raw gemstones from Pakistan and export value gem products and jewelry worldwide.
Within the global gemstone supply chain, the Namak Mandi market stands out as a prominent gemstone trading hub. Raw gemstones from Pakistan and Afghanistan are sold through Namak Mandi to markets and traders in China, Thailand, and Dubai, where value-added gemstone jewelry/products are sold and exported at exorbitant costs worldwide. Although Namak Mandi's gem trading hub is pivotal in the global gemstone business, formal exports of gems and jewelry from Pakistan are not commensurate with the potential. Before looking at impediments and the way forward, it is paramount to study the evolution of Peshawar’s Namak Mandi into a global gemstone trading hub.


According to the Trade Development Authority of Pakistan (TDAP), the potential of the gemstone industry in Pakistan is enormous when it comes to contributing to the national economy. The country has the potential to export 800,000 carats of Ruby, 87,000 carats of Emerald, and 5 million carats of Peridot per year.


Evolution of Namak Mandi into a Gemstone Trading Hub
Nestled within the vibrant streets of Peshawar lies a gemstone lover’s paradise: Namak Mandi; a bustling marketplace renowned for its centuries old tradition of lapidary work and melting pot of cultural exchange for various regions.



Namak Mandi, meaning “salt market” in Urdu, was originally established decades ago as a trading center and storage facility for salt. According to anecdotal evidence, Namak Mandi’s gemstone market began in the 1970s. With the Soviet invasion of Afghanistan, local Afghan gemstone dealers began to migrate with their stones and established themselves in Peshawar. Traders from Kunar Province of Afghanistan exported tourmaline to Namak Mandi, along with spodumene from Nuristan and emerald from the Panjshir region.



Within Pakistan, merchants from Swat Valley (KP) traded emeralds, while those from the GB region brought aquamarine and pink topaz from Katlang, Mardan. Currently, this market serves a wide range of buyers and sellers from Afghanistan, Uzbekistan, Tajikistan, and Iran who deal with locally mined gemstones from AJK, GB, and parts of KP in Pakistan. More recently, traders from Balochistan Province have also entered the market, introducing stones such as Faden quartz, quartz, and brookite. 



The world's most brightly colored green nephrite is mined from the Mohmand District in KP. Nephrite mined from Hamid Khan and Siraj Khan mines traded in Namak Mandi is considered of the best quality due to its hardness and bright colors. It is mostly exported to China in raw form for value addition and export. Namak Mandi has evolved into a fusion point/melting pot for cultures and traditions of different regions brought along by gemstone traders around the world.


Nestled within the vibrant streets of Peshawar lies a gemstone lover’s paradise: Namak Mandi; a bustling marketplace renowned for its centuries old tradition of lapidary work and melting pot of cultural exchange for various regions.


Transition of Gemstone Market to E-Commerce
Social media networks have become the most important channels/platforms in trading gemstones. Digital marketing provides incredible opportunities for young traders in the gem market to reach out to thousands of customers locally as well as worldwide.
E-commerce trading on social media has transformed the gem/jewelry business. With the onset of social media and the online trading revolution, the Namak Mandi gem market has increasingly evolved itself into an online gemstone buying and selling hub. Gemstone traders showcase their products on social media and e-commerce platforms, and young entrepreneurs make USD 1500 to 2000 on a monthly basis by merely becoming a go-between/middleman between international buyers and local sellers. The e-commerce business of gemstones has many women entrepreneurs working from home as well. The downside of the evolution is that there is no legal framework for extracting, processing, and trading gemstones. Transactions between the seller at Namak Mandi and the international buyer at Thailand, Dubai, and the USA occur either through the PayPal account of a third person sitting outside Pakistan or illegal means of hawala/ hundi, depriving the national economy of millions of dollars.
Impediments
Even though Pakistan has rich mineral and gem deposits, it rarely figures internationally when discussing the gem trade. Use of primitive methods and archaic tools during mining, outdated lapidary tech, lack of skill development, and modern branding/marketing are major hurdles.
Governmental Patronage. Transformation of Namak Mandi into a gem trading hub comes sans government support. The sector has not been given the formal status of an industry. This deprives the sector of much-needed government patronage. 
Obsolete Equipment/Techniques. Crude techniques of mining, transportation, cutting/polishing/faceting affect the quantity and quality of gemstones. It is estimated that 75 percent of waste occurs due to obsolete mining and cutting techniques.
Lack of Skills Development Training. At present, three different institutes, Gem and Gemology Center of Excellence in UET (University of Engineering and Technology) Peshawar, Gem and Jewelry Training Center under TEVTA (Technical Education and Vocational Training Authority), and Gem and Gemology Institute of Pakistan, provide skills development training in gemstone identification and lapidary skills. These institutes lack the requisite capacity and patronage in terms of trained teachers and modern equipment. 



Absence of Gemstone Certification Laboratory. Certifications provide consumers with assurance and approval of their purchases. Due to technological advancements, it becomes increasingly important for gem buyers and merchants to distinguish artificial gems from natural ones to avoid fraud and loss. This information is significant since it influences the asset's financial value, as well as its durability and attractiveness. Online gemstone trading heavily relies on certification to verify the gem authenticity before making any bid. Currently, neither an internationally recognized nor affiliated gem laboratory is established in Pakistan. This results in the valuation of gems, thus decreasing the financial volumes of gem exports. 
Nonavailability of an E-commerce Platform. Due to the absence of credible e-commerce platforms like PayPal in Pakistan, gemstone sellers use third-party accounts operated from abroad for sales. Transactions from international gemstone buyers occur through third-party PayPal accounts, and money often reaches traders in Pakistan through illegal channels.
Infrastructure Deficit. Lack of compatible infrastructure, absence of parking facility, and shabby streets of Namak Mandi gem market invariably are incompatible with the value of the business. Moreover, due to inherent concerns of safety/security, exhibitions and meetings of foreign buyers with sellers mostly take place in Islamabad. 



Absence of International Mailing Office.  In an era of rapid technological advancements, postal services remain a vital communication element that links people and businesses and contributes to their economic development worldwide. Due to the absence of the International Mailing Office (IMO) status of the General Post Office (GPO) Peshawar, online exporters face difficulty in mailing international consignments and, at times, face double taxation. 
Way Forward 
Regulatory Measures. The gemstone sector needs to be granted the status of an industry. Namak Mandi Gem Hub may be declared a Special Economic Zone (SEZ). Incentives, in the form of tax exemption for the import of new lapidary technology, may further facilitate traders. Export documentation can be simplified by introducing a one-window operation for export management around Namak Mandi.



Lapidary Skills Development. Due to a lack of modern lapidary machinery and equipment, Namak Mandi has been unable to produce value-added quality gems for exports. Low-duty import of machinery/equipment for gem mining, cutting, and polishing should be considered. Moreover, capacity building of lapidary training centers in line with the latest trends needs to be undertaken.
Establishment of Gemological Institute of America (GIA) Certified Gems Laboratory.  There is a dire need for a certified gemstone lab facility in Peshawar, preferably within the premises of Namak Mandi. A gemstone duly certified by an internationally accredited lab will render authenticity and enhance the value of the gem exports.



Encouraging Gem and Food Tourism. Despite the cramped approach, traffic congestion, and an unfriendly business environment, Namak Mandi is world-famous for the gem business, attracting unexpected foreign visitors due to its relevance in the global gemstone trade. Moreover, the special blend of taste and recipes of traditional Tikka Karahi at Namak Mandi adds to its tourism potential. With the famous Peshawar Museum, Masjid Mohabat Khan, Gor Khatri, and Wazir Bagh located within a kilometer radius of Namak Mandi, the place is ideally suited to be developed into a gem and food street.
As an immediate measure, there is a need to provide a tourist- and business-friendly environment in and around Namak Mandi. Improving road infrastructure, facilitating tourists with local and tourism police, establishing a central gem trading and facilitation center under one roof with international standard gem certification, online marketing, sales/display, packaging, and mailing facilities would greatly enhance both the tourism and economic potential of the gem business.
Gemstone City–A Need for the Future
Considering the export potential of the gemstone business in Peshawar, in the long term, establishing a Gem City with all allied facilities, including boarding and lodging for local and foreign traders, is worth pondering. An initial outline concept is enumerated in Figure 1.



Gem City would significantly enhance the Ease of Doing Business by consolidating the complete sales/value chain of gems within single premises.
Over the last 50 years, Namak Mandi has evolved from a salt storage and trading market into a thriving gemstone business hub. Unfortunately, this transformation came without government support and patronage. The lack of value addition hinders Namak Mandi’s traders from firmly establishing a niche or competing with regional gemstone centers in Thailand, China, India, or Sri Lanka. Due focus and patronage will help realize this sector's true potential, enabling Pakistan to claim its rightful share out of the anticipated global gems exports of USD 56 billion by 2033.


The author has a vast experience of serving in erstwhile FATA during the War on Terror. He commanded a Brigade in South Waziristan, a Division in North Waziristan and is Commanding Peshawar Corps at the moment. He has also been Pakistan’s Defence Attaché to China.
              

Lt Gen Hassan Azhar Hayat

The author has a vast experience of serving in erstwhile FATA during the War on Terror. He commanded a Brigade in South Waziristan, a Division in North Waziristan and is Commanding Peshawar Corps at the moment.

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