The Thai Gem and Jewellery Traders Association will present he three-pronged proposal to Commerce Minister Mingkwan Sangsuwan at a meeting today.

Vichai Assarasakorn, the association's president, said members were especially interested in a plan to make Thailand a tax-free port for the gem and jewellery trade. They hope that Mr Mingkwan, as a marketer himself, would understand and support the idea.

He said a zero-rate VAT would draw more raw material suppliers to Thailand, improve the competitive edge of Thai producers and provide greater access to raw materials. Thailand has more than 10,000 gem and jewellery businesses but 90% of them are small and medium-sized enterprises. The country does not have its own raw materials, making it reliant solely on imports.

''Dubai is a great success story,'' said Mr Vichai. ''Because of its tax waivers as a key driver, Dubai is currently a global gold trading centre handling trade worth of over US$15 billion. It is also becoming the hub of the world's diamond trade.''

Dubai's jewellery industry is now the third biggest contributor to the United Arab Emirates' economy after real estate and oil and gas, at 10% of non-oil GDP.

According to Mr Vichai, apart from the VAT waiver proposal, the industry wants the government to establish Gem Bank to provide financial support to small producers who could use assets, especially gold, as loan collateral.

He said the government would also be urged to open up the export market ''more aggressively'', not only to sell products, but also through partnerships, joint ventures and closer co-operation with local operators in each destination.

Gems and jewellery are among Thailand's key exports, with 32.4% growth last year to 185.1 billion baht. The rise was attributed mainly to the sharp increase in gold prices.

''Gold is basically an investment to hedge against inflation and the gold price itself normally moves in the opposite direction to the US dollar,'' said mr Vichai. ''We project that gold prices are likely to stay strong this year given the US dollar and economic prospects.''

In line with rising gold prices, the growth outlook for exports remained good this year, with revenue expected to reach 200-210 billion baht, he said.