There are many reasons why Antwerp is on a down slope in the diamond industry. The first reason, is that you must pay 33.33% entry tax on the value of the diamond parcel you are bringing in from outside the European Community, regardless of the fact that you already paid for KPC’s in the Country of origin, so if you purchased rough diamonds in Angola for example, who has a 31% KPC tax rate, and want to import your rough diamonds to Antwerp, you will pay a double tax equating to over 64% of the rough stones’ value.
This will turn out to be the number one reason why Antwerp will ultimately be over run by cities like Dubai, where you have no double taxation, but at the end of the day, the responsibility for the upcoming slide of Antwerp will fall on the Belgian Government for these poor strategic decisions.
Another large nail in the coffin came this week, with the National Bank of Fujairah, owned in parts by the governments of Fujairah and Dubai, two of the seven sheikhdoms in the U.A.E., whom entered the diamond financing market in Antwerp roughly six months ago in order to capitalize on the shift in trade, targeting loans between $5 million and $50 million. The Bank will stop its operations in Antwerp and will focus on the Dubai market, which serves India as its principal client.
Diamond buyers will face a lack of financing after Antwerp Diamond Bank, the lender serving the industry for about 80 years, winds up its operations, removing close to $1.5 billion in funding to the industry. ABN Amro Bank NV and Standard Chartered Plc also curbed funding to the industry in Antwerp.