By Chanaka Ellawala
Chairman – Sri Lanka Gem & Jewellery Association
In 2007 the government put in to place a progressive policy and regulatory framework to develop the industry and thereby creating the necessary platform for rapid growth . Several strategies need to be implemented to launch the industry from this platform on to a path of rapid growth.
It is the goal of the industry and the expectation of the government to accelerate export growth to achieve 3 main objectives, which are to achieve an annual growth rate of over 20% over the next several years, to surpass annual export revenue of US$1Billion by 2010 while increasing the share of value added exports, particularly jewellery exports.
During the 5 year period from 2002 to 2006 the industry registered an average annual growth rate of 13% and assuming that rate is maintained the industry is forecasted to reach US$1 Billion in 2013.
The Sri Lanka Gem and Jewellery Association has identified several strategies to increase the growth of gem exports from 14% to 45% and jewellery exports from 23% to 40% while maintaining the growth of diamond exports at the current rate of 12%.
Increasing the supply of gemstones, building manufacturing capacity in lapidary and jewellery manufacture and implementing a concrete marketing effort are the main strategic directions that are required to achieve the target . It is also imperative that the issues of financing and human resource development are addressed substantially to meet the state objectives .
Supply Development Strategy
The aim of the supply side strategy is to increase the supply of gemstone raw materials available to the industry which would lead to an increase in the volume of goods exported.
Increasing the supply from domestic sources can be achieved by increasing the availability of state and plantation land for gemming, providing tax exemptions for gemming, carrying out a national gem deposit survey to identify new gem deposits and increase mining productivity through technological development.
The supply of imported raw materials could be increased by facilitating the free flow of imported raw materials by eliminating exchange control , import control and customs regulations at entry points , granting indirect exported status to gemstone importers, establishing a special purpose vehicle [SPV/ Consortium] with a revolving credit facility to finance the import of raw materials and negotiating bi-lateral gem trade agreements with other source countries.
Building Strategy for Manufacturing Capacity
Increasing the industry capability for value addition to local gemstone raw materials is an important objective in the development of exports.
The manufacturing capacity building strategy aims to rapidly increase the capacity for cutting and polishing of gemstones and expanding jewellery manufacturing by the existing factories and by establishing new factories.
This could be achieved by redressing the financial constraints faced by investors in the industry, designating contract cutting, (re-export) as an export activity , increasing the supply of skilled personnel through delivery of high quality training , assisting local machinery manufacturers to improve their products and expand their capacity.
The capacity building strategy could target investment from three investor groups namely, foreign investors from Europe (foreign direct investment) , existing domestic manufacturers (expansion) and gem exporters (forward integration)
Market Development Strategies
The demand side strategy is aimed at expanding the market for gems and jewellery from Sri Lanka and increasing the value (per carat price) of Sri Lanka gems in international markets.
Branding Strategy
Increasing the demand for and value of gems from Sri Lanka could be achieved by registering a geographical indication for Ceylon sapphire and rolling out a branding program to position Ceylon sapphire as a premium product and establishing an internationally accredited Laboratory to issue reports and certificates on gems to build buyer and consumer confidence.
Repositioning Strategy
The repositioning strategy aims to build the image and awareness in selected markets, of Sri Lanka as a major jewellery production center.
By organizing attractive national pavilions at major trade fairs in target markets and launching an international media campaign targeting both the trade and consumers in selected markets . Sri Lanka can be repositioned as a jewellery manufacturing hub.
Marketing and Promotion Strategy
To support the specific strategies aimed at accelerating export growth , it is also essential to undertake a focused approach to marketing and promotion of gems and jewellery from Sri Lanka , not only to grow sales in existing markets such as USA , Germany, UK, Japan, but to augment these with sales from new markets such as India, Russia and China.
Establishing the proposed Gem and Jewellery Trade Promotion Council , a public private partnership that will unify the industries marketing and promotion activities by carrying out these activities in a planned , organized and coordinated manner will maximize the impact of limited resource .
Developing FACETS SRI LANKA rapidly into a major international event is also important.
Financing
Substantial investment in fixed and working capital is required to achieve the forecasted growth . The lack of access to debit finance via the financial sector coupled with high rates of interest is a major constraint. Access to competitive financing can be facilitated by providing collateral support for fixed and working capital loans by establishing a credit guarantee fund, mitigate the financing cost by introducing an interest rebate scheme and by permitting banks to grant precious metal loans (e.g. Gold Loans).
Human Resource Development
The shortage of skilled cutters and craftsmen is a major constraint that impedes the development of the industry . Around 1000 persons will have to be trained per annum in gem cutting, jewellery making and gemmology to meet the increased demand for trained/skilled personnel. Establishing an accredited school of excellence , offering a scholarship scheme for students who enroll in training programs and carrier prospects awareness programs are some of the actions that are required.
Rapid implementation of these proposed strategies to increase the global competitiveness of the industry could accelerate the current growth of 13% to 22% , which would lead to reaching $ 1 Billion by 2010.
News in Brief
The National Gem and Jewellery Authority “NGJA” participated at the “Sri Lanka National Treasurer Exhibition ” organized by M/s Ryokusei Japan Company in Shizuka , Japan with the collaboration of Sri Lanka Embassy in Japan, from 21st to 23rd March 2008. The main objective of this event is to promote fine quality gems of Sri Lankan origin in Japan. The 393-carat Star of Lanka” and the 105-carat Cats eye “Ray of Treasurer” were displayed at the exhibition .The exhibition drew large crowds and the image of Sri Lanka as a leading producer of fine quality gems was further enhanced.
The Kimberly Process Workshop
The representatives from the NGJA attended the Kimberly process workshop held in March 2008
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