Budget proposal for gem industry relief hailed

COMMENDATION: On behalf of our members in all sectors in the gem and jewellery industry in all parts of the country, we commend the proposal for the reformulation of the taxation strategy relating to the gem and jewellery industry in the budget proposals for 2007 says President of the Association of Gem and Jewellery industry.

The Ports and Airport Levy which was introduced sometime back on the importation of gems and gold was a big impediment to the legitimate importers .We made several representations to the authorities on this matter.

We note with concern and appreciation the government's commitment to recognise the importance of the gem and jewellery sector in the context of generating high value addition, employment, foreign exchange earning and government revenue as spelled out in the budget speech.

The proposal will certainly contribute in a big way towards these objectives and will bring Sri Lanka to an even playing field with some of the international competitors.

It is acknowledged that Sri Lanka needs free importation of rough gem stones and other raw material mainly gold to develop the industry.

PAL while in force caused lot of problems to the importers of rough gem stones from other countries such as Madagascar where many Sri Lankans have established good business relations.

Gold is a commodity with a fixed international market price and imposition of taxes on gold imports created an imbalance in the raw material prices which the manufacturers were unable to cope with.

Diamond imported for further processing( value addition ) comprised of very high import values and the payment of a PAL at the time of import caused a great hardship even temporarily until refund due to the high values.

VAT on the jewellery manufactured was seen as a negative factor in the context of certain aggressive markets such as China and India our industry had to compete with.

The proposal to remove the PAL and reduce the VAT , therefore will have a chaptalizing effect on the growth of income from these areas.

The imposition of the CESS on imported jewellery too is a very wise and timely decision that will help to boost the local industry.

The strategy to support the technology development in the jewellery manufacturing sector is a long felt need and the government has to carefully monitor the associated steps in order to derive the full benefits.

The gem and jewellery industry views the positive attitude displayed towards it and will derive the benefits while contributing to the national income.