Unearthing gold bargains in two small Malaysian towns

KUALA PILAH/PORT DICKSON – When I was preparing to travel to Negeri Sembilan for the recent state election, I expected stories about politics, campaigns and candidates.

I did not expect to come home wondering why some of Malaysia’s cheaper places to buy gold jewellery had been hiding in plain sight.

It began with a casual tip from a friend who used to live in Negeri Sembilan: that Kuala Pilah was known for selling gold jewellery at prices lower than those in Kuala Lumpur.

That piqued my curiosity.

There is no single secret behind the town’s reputation. Instead, it appears to come down to the economics of running a jewellery business in a smaller town: lower operating costs, simpler designs and keen competition for a limited pool of customers.

There is, however, one misconception worth clearing up.

Some Kuala Pilah jewellers say that not being members of the industry’s association gives them greater freedom to set their prices.

But Ng Yih Pyng, adviser to the Federation of Goldsmiths and Jewellers Association of Malaysia and group managing director of listed jewellery group Tomei Consolidated, said the association does not set retail prices.

“It is a free market. The association doesn’t set the price,” he told The Straits Times.

Prices can vary between jewellers for a range of reasons, he said, including product mix, operating costs, workmanship, design and the level of competition in a particular market. In smaller towns, jewellers may offer simpler designs and lower-cost packaging, while some shops may price more competitively to attract and retain customers, he added.

One Kuala Pilah jeweller said the shop operates on slim margins and relies on volume.

“Our profit margin is thin but we make up for it through volume,” said one staff member, who declined to be named because she is not authorised to speak to the media.

That explanation made sense. Then I discovered that Kuala Pilah might not have been quite so cheap after all.

Port Dickson surprise

While reporting in the seaside town of Port Dickson, I drove past a jewellery shop with an electronic signboard displaying the day’s gold price. To my surprise, it was lower than the prices I had seen in Kuala Pilah.

A comparison of prices on Aug 14 showed that 916 gold was selling for as low as RM520 (S$163) to RM525 per gram in Port Dickson, compared with RM534 to RM553 in Kuala Pilah.

The 916, or 22-karat gold, contains 91.6 per cent pure gold, with the remainder made up of other metals. It is a common standard for jewellery in Malaysia and Singapore.

In Kuala Lumpur, 916 gold was selling for about RM630 per gram at three major jewellery chains, although one Masjid India jeweller was offering it at RM544.

These figures are only a snapshot: Gold prices fluctuate, and retailers can change their advertised rates.

The quoted rates were before workmanship charges, which vary according to the store and the complexity of the design.

In other words, a lower gold rate does not necessarily mean a cheaper piece of jewellery.

Buyers should compare the final price, including workmanship, and check the purity and weight, whether stones are included in the quoted weight, and the shop’s buy-back terms.

The authorities also conduct spot checks at some of these shops.

In March, the Negeri Sembilan branch of the Ministry of Domestic Trade and Cost of Living inspected gold shops in Port Dickson to ensure that the purity of the gold and the accuracy of weighing equipment complied with regulations.

A reputation that travels

Still, for shoppers buying several pieces, the potential savings can add up.

The shopkeepers I spoke to in both towns said their lower prices have helped build business over the years, largely through reputation and word of mouth.

These days, word of mouth travels much farther with social media.

“People travel from Johor and Kuala Lumpur to shop here, particularly during Hari Raya. This town is known for its lower prices,” said 20-year-old Haniff Rizwan, a staff member at jewellery store Emas Anuar in Kuala Pilah.

A 56-year-old masseuse living in Kuala Lumpur, who wanted to be known only as Kak Long, has been travelling to Kuala Pilah to shop for gold jewellery over the past few years.

She said she preferred shopping there because she trusted the shop and felt its prices were fair.

Shopping malls in Kuala Lumpur were more expensive, she said. “It’s a big difference,” she added.

Kuala Pilah’s gold shops draw shoppers from beyond the district, including customers travelling from Kuala Lumpur for better prices.

ST PHOTO: HAZLIN HASSAN

The same reputation for competitive prices and value is drawing customers to Port Dickson.

A staff member at a jeweller that has operated there for more than 50 years said being in a smaller market helped keep prices low.

“We have to take care of our customers,” said Michelle, who declined to give her full name.

In the end, the bargain appears to have less to do with a special source of cheaper gold jewellery than with the old-fashioned economics of a small-town business: lower overheads, leaner margins, simpler offerings and customers who know where to find the best deals.

Jeslyn Lim, 24, who helps her parents at their jewellery store, said their customers come from Penang, Kuala Lumpur, Johor and Singapore, as well as the United Kingdom and Australia.

Some are regulars, while others come on recommendations from friends or online.

“They come to Port Dickson especially to buy gold,” she told ST.

Jeslyn Lim at her parents’ jewellery shop in Port Dickson, Negeri Sembilan.

ST PHOTO: HAZLIN HASSAN

I was stunned.

I had made countless trips to Port Dickson over the years, yet not once had I heard anyone mention that the sleepy beach town might also be a bargain hunter’s destination for gold jewellery.

It turns out Port Dickson has another attraction other than its beaches.

And unlike a beach holiday, this one might leave you with something that doesn’t wash away with the tide.