Sri Lanka world’s Sapphire Capital

Ajith PERERA - Acting Deputy Director General, National Gem and Jewellery Authority

Sri Lanka has been celebrated for its gems almost since the dawn of history. It is an accepted fact that Sri Lanka is one of the largest sources of some of the finest gemstones in the world. There are a number of priceless treasures on permanent display in world famous museums, whose origins are traceable to Sri Lanka.

NGJA

The National Gem and Jewellery Authority (NGJA) was established by Parliamentary Act No. 50 of 1993, to develop, regulate and promote the gem and jewellery industry in Sri Lanka. The ‘NGJA’ replaced the State Gem Corporation (S.G.C) established in 1971, which focused mostly on the Gem industry in Sri Lanka, and engaged in purchasing, processing and marketing gems through its network of well appointed sales outlets. S.G.C. was involved in training, research and development and jewellery manufacturing as well.

The present day ‘NGJA’ is mandated to develop, regulate and promote the industry in the capacity of a facilitator.

Keeping in line with the Government’s development strategy, which emphasizes on development of industries, employment generation and encouraging value addition; gem and jewellery industry has been identified as one of the thrust areas of export development. The ‘NGJA’ is mandated by the Government of Sri Lanka to spearhead and play a leadership role facilitating the industry on a focused path while upholding the best interest of all the Stakeholders.

The thirty year long war against terrorism was a factor which slowed down the country’s economic progress and impeded its efforts to harness Sri Lanka’s natural advantages and the creative energies of her people to accelerate development in the economic and social sectors.

The industry

The Government of Sri Lanka being aware of the huge challenges facing the gem and jewellery industry, through successive budget proposals introduced far reaching measures intended for the expansion and growth of the industry. The National Gem and Jewellery Authority in turn, took the initiative by sponsoring capacity-building programs, assisting exporters to find new markets, facilitating loan schemes aimed at providing financial assistance to the SMEs in the sector, encouraging jewellery exporters to use modern designs, advanced technology in production, cutting costs by more automation and encouraged jewellery exporters to move away from mass marketing and focus more attention on craving market niches overseas.

With a view to promote Sri Lankan gems and jewellery globally; ‘NGJA’ organized “Sri Lanka Pavilions” at leading trade fairs and exhibitions held in Japan, U.S.A., Hong Kong, Thailand, Malaysia, Singapore, China and India. Despite the setbacks during the past 30 years gem, diamond and jewellery exports recorded an overall growth of 14 percent in 2008 earning a revenue of USD 531.1 million; in comparison with the corresponding figure of USD 466.4 million in 2007. This was the highest export revenue recorded in the history of ‘NGJA’. Due to the global economic downturn which had an adverse impact on our exports; a 26 percent negative variance was recorded in 2009 with a corresponding export value of USD 392.4 mn. The global economic slowdown and shrinking consumption took its toll on the Gem and Jewellery industry in Sri Lanka. In the prevalent soft marketing climate, where even affluent buyers and consumers tightened their belts; under the pressure of high and fluctuating gold prices, the focus was on products with lower gold content. Similarly Sri Lanka focused more attention to innovative designs offering top value for money. The onset of recession in the U.S.A. the world’s biggest gem and jewellery market - whose ramifications are of international nature prompted us to look actively at other markets such as China, Russia, Brazil, India, South Korea, Turkey and The Middle East.

The ‘NGJA’ believed; it was not the time to give up. Rather it was the time to shape up, to remain lean and fit and to continue investing in market research and product, skills and knowledge development.

The ‘NGJA’ initiated series of development plans to help Sri Lankan manufacturers and dealers to venture in to the Chinese market by providing necessary advise and guidance to dealers and manufacturers in all aspects of marketing in China.

According to the results of a survey conducted by Jewellery News Asia (January 2010) In China 41 percent of urban households and 59 percent of rural households plan to increase their spending in the year 2010.

It is observed that a new generation of trendy consumers have evolved who pay special attention to a trendy and personalized mode of consumption. The internet is becoming the daily communication platform on which they rely. Many present day consumers in China will check information on designs suppliers and brands of products on the internet for careful analysis before they purchase.

As one of the fastest growing segments in the Indian economy, India’s gem and jewellery sector has grown in recent years. India’s role as a major consumer and manufacturer of jewellery and a pearl, diamond and gemstone processing centre has helped propel India into becoming one of the biggest players in the global jewellery industry.

The economic conditions in the U.S could continue to impact consumer sales of gems, diamonds and jewellery. Nevertheless strong demand from China, India, Russia and the Middle East is expected to continue, which would sustain pricing for larger and better quality stones.

At the key industry events held in the second half of 2009, it was evident that sapphires and Rubies of exceptional quality in large sizes moved well. The Watch industry has observed an upward trend favouring the use of coloured gemstones whether precious or semi precious.

Export market

Sri Lankan Gems and Jewellery are exported to more than 60 countries. Thailand, U.S.A, Switzerland, Hong Kong, Malaysia, France, Japan, Germany, Singapore, India and are in the forefront among importers of Sri Lankan gems. All export parcels are channelled through the ‘NGJA’ where they are tested for genuineness and conformity of other invoice particulars, by a panel consisting of gemmologists of ‘NGJA’ and Sri Lanka Customs.

‘Sri Lanka’ intends to register a geographical indication for ‘Ceylon Sapphire’ as successfully practised for ‘Ceylon Tea’ and ‘Ceylon Cinnamon’, followed by a branding programme to position Ceylon Sapphire as a premium product. In its endeavours to promote the industry, the ‘NGJA’ has finalized all arrangements with “Sri Lanka Gem and Jewellery Association” (SLGJA) to establish a state of the art Gem Testing Laboratory which will be geared to issue internationally accepted testing reports.

The ‘NGJA’ has paved way to promote Sri Lankan gems and jewellery in world class trade fairs and exhibitions held in many countries such as U.S.A., Japan, Hong Kong, Thailand, Singapore, Malaysia China and India. In the year 2010 new markets such as Russia and Turkey would be added to this list.

Sri Lanka is beginning a new and exciting period in its history. The ingredients sought by the investors are present in full measure in Sri Lanka today. Now is the time for local and foreign investors to get engaged in projects.

With the improvement of the security situation in the country, tourism is getting a big boost, with a resultant increased business opportunities for wide spread Gem and jewellery trading establishments in Sri Lanka.

As the investors are provided with preferential tax rates, constitutional guarantees on investment agreements, exemptions from Exchange Control and 100 percent repatriation of profits; Sri Lanka will be a paradise for investors in the gem and jewellery sector.

The ‘NGJA’ expects to get the assistance of the Sri Lanka missions overseas, The Board of Investment, the Ceylon Chamber of Commerce, International Chamber of Commerce (Sri Lanka) to promote investment opportunities in gem, diamond and jewellery sector. Further, Sri Lanka being a signatory to Indo-Sri Lanka and Indo-Pakistan Free Trade Agreements would be an ideal launching pad for any country who is aiming to penetrate the lucrative Indian market, and the Pakistan market.

The ‘NGJA’ has been the principal sponsor of “Facets - Sri Lanka” the Sri Lanka, international gem and jewellery show, since its inception nineteen years ago. “Facets - Sri Lanka” has now earned international recognition as the “Showcase” event of Sri Lanka’s gem and jewellery industry. The twentieth Facets Sri Lanka is scheduled to be held from September 2 to 5 at the Sirimavo Bandaranaike Memorial Exhibition Centre (SBMEC). Sri Lanka’s participation at upcoming events such as Jewellery Shanghai, Singapore International Jewellery Show, China International Gold Jewellery and Gem Fair - Shanghai, Gem and Jewellery Fair in Beijing, would undoubtedly consolidate the Sri Lanka’s reputation as the “Sapphire Capital of the World”.