The Export Development Board (EDB) Advisory Committee on Gems, Diamonds and the Jewellery sector discussed the importance of making Sri Lankan Gem and Jewellery traders more competitive and simplifying policy measures during the seventh Advisory Committee Meeting recently.
The Advisory Committee Members pointed out that currently, the presence and influence of illegal foreign traders and buyers at the China Fort Gem Market and Ratnapura have become a major challenge to local gem traders. While these markets have brought new opportunities to the industry, it has also presented specific challenges that need careful navigation.
Members emphasised that the primary challenge faced by the Beruwala and Ratnapura gem markets is the intensified competition from illegal foreign traders. These people arrive in Sri Lanka using a visit visa and engage in the gem business. Also, they don’t have any licence from the National Gem and Jewellery Authority which is a mandatory to engage in the gem trade. This unlicensed gem trading could seriously damage Sri Lanka’s reputation as it can lead to lot of malpractices. Members emphasised that these foreign traders have a wider range of buyer and seller access via online platform. As foreign traders and buyers become more active in the Beruwala gem market and Ratnapura, it puts more pressure on local traders and facilitates the smuggling business.
The money for gem purchases is being brought without following any government rules and regulations and the purchased stones are also taken out unofficially without being regulated while the traditional Sri Lankan dealers are subjected to taxes and regulations. The miners, dealers and brokers sell stones to these foreigners for cash without any documentation.
This has badly affected exporters who use the official channels to obtain merchandise for export. This also reduces Government tax revenue and employment opportunities.
The Members emphasised that the Government should give priority on making local traders more competitive to survive in this trade. The Advisory Committee Members stated that Government support is not forthcoming and some of the policy measures discourage the local traders and make them less competitive. The committee identified the Gem and Jewellery sector as a unique export sector among other export sectors as 99% of the value addition is locally produced while most of the others need foreign components.
The oversight supervision and the industry regulations must be revisited by the National Gem and Jewellery Authority to reduce these illegal businesses carried out by foreign traders.