The government is committed to moving ahead with plans to make Thailand the world's trading and manufacturing hub for gems and jewellery by 2013, and will extend loans to operators over the next two weeks to improve their liquidity.

"Thailand is in fact ready to become the world's trading and manufacturing hub for gems and jewellery, as the government has already tackled its main obstacles, particularly through the elimination of the 7% value-added tax on coloured stones," said Commerce Minister Porntiva Nakasai at the 44th Bangkok Gems and Jewellery Fair yesterday.

The five-day fair, which runs until Saturday at Impact Arena, Muang Thong Thani, is expected to generate orders worth at least 20 billion baht.

To improve the liquidity of small and medium-sized gems and jewellery exporters, the ministry recently agreed to team up with the Export and Import Bank of Thailand to extend loans totalling 3-5 billion baht.

The agreement also allows exporters to place their raw gems as collateral for loans, which would help them produce more to meet increased purchase orders anticipated for the fourth quarter.

According to Deputy Commerce Minister Alongkorn Ponlaboot, the government is also committed to working with the private sector to explore for raw materials from new markets such as Kenya, and build partnerships for raw materials from Madagascar. The ministry and business leaders plan roadshows to promote Thai gem and jewellery products in Kenya and Mozambique by the end of this month.

According to Commerce Ministry statistics, Thailand exported gems and jewellery worth US$8.27 billion or about 274 billion baht last year, a rise of 53.7% from the year before. The sector was the country's third biggest export earner, behind computers and automobiles.

Mrs Porntiva said the government had set a target to increase the export value of gems and jewellery this year to 300 billion baht.

In the first seven months of this year, gems and jewellery exports earned $5.68 billion or 197 billion baht, up 25.4% from the same period last year, overtaking automobiles to reach the No. 2 spot.

However, once unwrought gold, which accounts for 62% of shipments, is excluded, exports fell across almost all segments. Diamond shipments, for instance, dropped 34.5% during the seven months, with gems falling 37.8%, pearls down 30.1%, gold jewellery down 26.9% and silver jewellery down 5%.

Thailand is the world's largest coloured stone processor, raising about 30 billion baht a year from shipments.