National Economic Council to take up gem and jewellery industry issues next week

By Nishel Fernando 

The National Economic Council (NEC) chaired by President Maithripala Sirisena is expected to take up the issues faced by the country’s gem and jewellery industry on May 15, which will include the recently imposed 15 percent import duty on gold, a senior government official told Mirror Business.

Industry stakeholders say despite the US $ 1 billion potential, the diamond, gem and jewellery exports were hovering around US $ 300-400 million range during the last few years, failing to record any significant growth. 

They charged that the State-run National Gem and Jewellery Authority (NGJA) and the government policies have adversely affected gem and jewellery exports. They said despite collecting a 0.5 percent levy from gem exports, NGJA has not carried any promotional activities.

They also said gem and jewellery exports are expected to take hit from the recently imposed 15 percent import duty on gold, which is likely to adversely affect approximately US $100 million worth annual gold and jewellery sales to tourists and over Rs.2 billion re-exports of jewelleries. 

The industry has called on the government to set-up a quota system for the importation of gold for exports and sale to tourists, in order minimize the impact.
The exporters also stressed that the removal of the income tax exemption through the new Inland Revenue Act (IRA) is also hurting the industry. 
The NEC meeting is expected to discuss a wide range of issues faced by the industry from mining to export promotions. 

The President, Prime Minister, Chairman of Export Development Board (EDB), officials from NGJA and Geological Survey and Mines Bureau, exporters, miners and other industry stakeholders are expected to attend the meeting. 

The President recently removed the Chairman and Director General of NGJA, following complaints from industry stakeholders.

Analysts point out that Sri Lankan gem and jewellery exports have become less competitive in the international markets in recent years with leading market players such as Hong Kong and Thailand taking the lead, having liberalised policies to encourage exports of value-added gems and jewellery. EDB export figures based on Customs data showed that the gem exports during the first quarter of this year have declined 5.08 percent year-on-year to US $41.14 million.