brand logo

Policy restrictions takes shine off gem & jewelry

07 Feb 2019

Sri Lanka now, Ratna Dweepa then, has a fascinating geological history, one that is the reason why this island nation is blessed with treasures of gems hidden deep in high-grade metamorphic deposits of the Highland Complex. She had once been a part of Pangaea, then part of the Indian plate, and remained on it after Madagascar was left behind. There are still a lot of similarities between the rocks of Africa, India, Madagascar, and Sri Lanka, particularly regarding the building up of mountains about 550 million years ago. In terms of plate tectonics and geology, Sri Lanka, however, remains a part of the Indian plate even today, even though she is an island on her own. This uniqueness defines the richness of her geological makeup and explains why Sri Lanka has long been the treasure box sought out by explorers, conquerors, and in the modern day, lovers of gems and jewellery. Sri Lanka’s gems are otherworldly, and this reputation for the finest quality gems has propagated a true mine-to-market industry, both domestically and for export. Sri Lanka is home to 70 of the world's 200 varieties of coloured stones, including its best-known export, the Ceylon sapphire. Estimates suggest that 80-90% of the country's rock formations could hold gem deposits. The industry is revered by international buyers because of the melding of tradition craftsmanship in gem mining coupled with technological modernisation in lapidary and stone-setting workmanship. Under the close supervision of the National Gem and Jewellery Authority (NGJA), which is the regulatory body responsible for the issuance of mining licenses, gem mining is carried out largely on a small scale, with mining operations looking to minimise the impact on the environment. The NGJA discourages mechanised mining. It is estimated that the industry provides employment to 60,000 to 70,000 gem miners. In totality, it is estimated that approximately 600,000 engage in the industry generating $ 200 million in export revenue annually, well below the true commercial potential of the industry. Opportunities for the industry are broad, especially in view of the recovery of the global luxury markets in 2018. However, the industry continues to lag due in large to non-conducive domestic policy and industry policing issues. Sri Lanka's gem industry also faces considerable domestic challenges, which include a smuggling problem, staff shortages and exploration constraints. Additionally, in 2018, changes in taxation policy further exacerbated the industry challenges, further slowing down the industry. Later in the year, with the intervention of President Maithripala Sirisena, the policy changes were reverted, at the request of the gem and jewellery industry stakeholders. As with most other industries, the lack of consistency and pursuance of a long-term vision has impeded the industry. Despite Sri Lanka having a long history with the gem and jewellery industry, it has fallen well behind regional players. According to the Sri Lanka Gem and Jewellery Authority (SLGJA), the exports of gem and jewellery from Hong Kong have reached $ 27 billion per annum and Thailand’s gem and jewellery exports amounts to $ 13 billion per annum, while the Sri Lankan export earnings lag well below $ 300 million due to policy issues. Additionally, industry players estimate that the figure could be significantly higher, but is impeded by unofficial business, smuggling, and undervaluing. One key impediment is the tax on gem exports. Industry stakeholders note that the tax on exports has created a scenario of undervaluing of goods. On the other hand, importation of rough gems is also restricted – possibly to protect the Ceylon Gems brand – but this is seen as a protectionist strategy that does not elevate the potential of Sri Lanka to become a trading hub. In the past, much of Sri Lanka's stonecutting and polishing operations have lost business to regional competitors. Sri Lanka has fought hard to re-establish its gem manufacturing industry; yet operational challenges remain, led at the forefront by a shortage of qualified workers. For Sri Lanka to become a gem and jewellery-trading hub and achieve higher export targets through value-added products, the lapidary industry and jewellery craftsmen need an infusion of state of the art, modern crafting techniques, and know-how. With many retailers today still importing designs, the industry has plenty of potential to add further value through up scaling design skills, thereby opening opportunities to easily double export volumes. Mining and exploration also presents challenges for the industry, especially as the industry is limited to small-scale mining efforts. In order to increase the productivity of pit mining, stakeholders have been lobbying for the ability to utilise geological information mapping for exploration purposes. However, this has been back peddled largely due to the lack of authority of the Geological Survey and Mines Bureau to go beyond the exploration of minerals. The Sri Lanka Gem and Jewellery Association has more recently proposed a regulatory framework to enhance the accountability for freer importation of gold bullion at zero duty for direct and indirect jewellery exports. The SLGJA is proposing to the Government to allow direct and indirect jewellery exporters to import gold at zero duty according to the invoices filed by them on foreign currency accumulation from gem and jewellery exports. This, they believe, will eliminate the current grey market imports of gold, and the subsequent loss of revenue to the industry. Whilst the potential is high, and the legacy of the industry is undisputed, it remains clear that Sri Lanka’s gem and jewellery industry is far from crowning the global industry.

Kapruka

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!


More News..