THE BIRTHPLACE OF GEMSTONES
Ahsan Refai examines the strengths and struggles of Sri Lanka’s gem trade
Q: How would you describe the prevailing state of the gem sector in Sri Lanka?
A: Since its pre-colonial era, Sri Lanka has made a lasting impression on the global gem sector with royalty in several countries adorning their crowns, necklaces and rings with Ceylon stones. Today, this legacy has created a huge demand and premium price tag for Sri Lankan gems.
In addition, following the COVID-19 pandemic, the demand for Sri Lankan gemstones has risen with sapphires in particular seeing tremendous growth in recent years. Unfortunately, Sri Lanka is not able to fully meet this demand.
One reason is the lack of mining land. Rich gem deposits on plantation company estates as well as other lands are inaccessible due to environmental constraints. Red tape in obtaining permits to excavate is also a major stumbling block.
As a result, local dealers travel to countries such as Tanzania, Madagascar, Kenya, Malawi, Mozambique and Nigeria to buy rough gemstones, bring them to Sri Lanka, add value and reexport them at a premium.
However, the recent introduction of VAT on rough gem imports has slowed this process. Dealers are now visiting Thailand, Hong Kong and Dubai for rough gemstones instead with value addition taking place in these countries, depriving Sri Lanka of much needed foreign exchange.
Q: What makes Sri Lanka stand out as a source of gemstones?
A: Sri Lankan gemstones are renowned for their supreme lustre, which is unmatched by competitors. The clarity of local gems also attracts high end buyers.
More importantly, brand names such as Ceylon Sapphire makes Sri Lanka stand out as a globally recognised birthplace of gemstones.
In contrast, many international buyers note that Australian and Thai sapphires tend to be lower in quality, and do not sparkle with the same reputed lustre.
Q: How has the sector evolved in recent years especially in terms of global demand?
A: Sri Lanka holds a third of the coloured gemstone market. However, due to several local challenges, the country is currently unable to meet consumer demand.
Countries such as Thailand are capitalising on this gap by importing rough gemstones from the African continent, adding value and re-exporting them – and thereby capturing a substantial market share from Sri Lanka.
Q: And how important is craftsmanship in Sri Lanka’s gem sector?
A: In addition to the exceptional lustre and clarity of Sri Lankan coloured gemstones, another striking feature driving strong demand and creating a niche market is the unmatched craftsmanship passed down through generations. Even young gem cutters possess skills that are world-class.
Local gem cutters are highly skilled in transforming rough stones into fine quality gems. Their expertise plays a crucial role in enhancing the colour, lustre and shape of a gemstone. A gem cutter can either diminish the value of a rough stone or turn it into a million dollar piece.
Q: What distinguishes Sri Lankan gem cutters and craftsmen in the international market?
A: Due to the high price of natural diamonds, lab grown diamonds have gained popularity worldwide. However, superior cuts by Sri Lankan craftsmen ensure that original diamonds continue to enjoy a niche in the global market.
This craftsmanship is a key factor that sets Sri Lankan cutters and craftsmen apart on the international stage.
Q: In your view, how can local jewellery design and branding enhance the presence of Sri Lankan gems across the world?
A: Ceylon Sapphires are renowned as being among the best in the world. For over half a century, the Sri Lankan blue sapphire has been ranked as the top coloured gemstone in the world market.
This reputation has helped Sri Lankan merchandise maintain its strong brand presence. To build on this, the local gem sector should market the Sri Lankan blue sapphire more aggressively at world gem exhibitions and other promotional events.
Additionally, marketing Sri Lankan gems to tourists should be more organised.
Q: Are there any recent innovations in technology that have changed the gem sector?
A: Thenew generation of Sri Lankan gemstone dealers and cutters have embraced modern technology, leading to fresh and uncommon designs.
They have shifted away from taking orders manually and embraced novel communication methods such as video calling to accept new orders, and mobile and internet based payment methods.
Emerging trends are closely followed to create new products while mobile tracking of merchandise via the internet enhances security.
Q: And finally, what challenges does the sector face – both locally and globally?
A: Due to numerous local challenges, leading exporters have opened offices in Thailand and Dubai, resulting in a 25 percent loss of export revenue and curtailment of gem cutting jobs here at home.
Comparatively, Thailand’s exports increased by 25 percent to reach US$ 18 billion while Hong Kong’s gem and jewellery exports exceed 26 billion dollars. Meanwhile, Sri Lanka’s export revenue has yet to cross the US$ 1 billion mark.
If the government and private sector collaborate to market the Ceylon Sapphire, and related taxes are removed, the country could generate much needed foreign exchange through the gem sector.