Sri Lanka modifies gem business strategy
Sri Lanka has modified its gem business strategy by encouraging value added (cut and polished) gem exports of private entities and simplifying gem import and export procedures to regain its position as major global power in coloured gemstone trades.
Moving away from a protectionist stance on gem exports which has fuelled smuggling, the National Gem and Jewellery Authority (NGJA) will be allowing local gem firms to acquire foreign technology and add value for rough gem stones for exports, Chairman and Chief Executive Officer of the Authority Asanka Sanjeewa Welgedera told the Business Times.
A streamlined export process would also attract foreign buyers to the country, he said adding that the policy of prohibiting industrial-scale mining or foreign participation in the trade has not been changed.
The authority will conduct gem auctions thrice a year commencing from next year, he disclosed pointing out that no foreign firm will be allowed to conduct gem auctions in the island.
However a Singapore based auction has announced that it will include sales of unpolished Sri Lankan origin sapphires for the first time in early 2017.
While the industry had an export target of US$1 billion for 2016, diamonds, gems and jewellery export values is expected to be slightly up to $417 million by end this year. The revenue shortfall is owing to gem smuggling and under invoicing by some of the traders.
In previous years revenue was at $558.90 million in 2012, $437.50 in 2013, $381 million in 2014 and $331.7 in 2015.
New consumer markets such as China have re-invigorated gem trading in Sri Lanka, while fueling the need for Sri Lankan dealers’ expertise and experience to satisfy the demands of Chinese manufacturing and domestic consumption.
With the recovery in the Japanese economy from recession, market demand for Sri Lanka gemstones will increase many-fold in Japan while the demand from the US is also increasing at present, several gem traders said.
Positive trends in Sri Lanka’s gem trade has prompted Ratnapura Lanka Gemstones Pvt Ltd (RLGPL), a subsidiary of Gemfields plc, a world leading supplier of responsibly sourced coloured gemstones to selected several gem firms, to establish an organised supply chain in the local market.
Following a call for the Expression of Interest in July this year, the company has shortlisted preferred suppliers from licensed mining companies and registered gem dealers in Sri Lanka of which the final few were selected for the initial phase.
Selection was based on responsible sourcing credentials and in accordance with Gemfields’ global sourcing policy, a company official said.
Amongst the companies selected as preferred bidders are Ashkar Gems, Weslow Gems and Diamonds, Mushan Gems and Lapidary, SGH Gems and Ceylon Facets.
Gemfields will extend assistance to the Sri Lankan gemstone industry through its technical capabilities, proprietary grading systems and marketing methodologies, Mohan Natarajan, Head of Business Development at Gemfields, told the Business Times.
Through working with these preferred partners, Gemfields would help grow the sector and contribute to national economic development through the payment of rightful royalties, taxes and forex, he added.
Ian Harebottle, CEO Gemfields commented; “Sri Lanka is already world-renowned for the quality of its gemstones and we are confident that our proven expertise will augment the established market there, benefitting the local mining community and the Sri Lankan gemstone industry as a whole.”
Director of Weslow Gems and Diamonds, Gamini Wettasinghe from Balangoda, a veteran with 30 years of trading experience, says that local traders will get a better price for their stones. He noted that at present the industry is dominated and enjoyed by a limited few and can be unfair to small scale, innocent workers.
Establishment of this supply chain will help to improve the foreign exchange of the country and will help to prevent poverty among the smaller players who are engaged in this industry, he added.
Back in September 2014, Gemfields entered into a joint venture with East West Gem Investment Ltd in Sri Lanka.
Through the agreement, the two companies also established a gemstone trading company called Ratnapura Lanka Gemstones, which is focused on sourcing rough sapphires from various sources in the local market.
While over 70 varieties of gems are produced in Sri Lanka, over 80 per cent of its export earnings come from the corundum species of gems such as the ruby and the sapphire.
And in fact over 60 per cent of export earnings are from the blue sapphire only while 10 per cent comes from cat’s eyes.