COLOMBO (Dow Jones)–Sri Lanka expects gem and jewelry exports to climb 9.5% to $373.3 million this year helped by an expansion into new markets, said the chairman of the National Gem & Jewelry Authority.
And to build on the momentum, the authority is planning an Internet platform for exporters by next year. It has also started offering training programs at discounted rates to help jewelry designers and manufacturers improve their skills and the quality of output.
"We have been posting satisfactory export growth and the outlook is good. We expect revenue to climb further by between 18%-20% in 2007," Hasitha Tillekeratne told Dow Jones Newswires in an interview.
The gem and jewelry sector currently accounts for around 5% of the country’s total exports.
The authority expects this figure to climb to around 6%-7% in 2007.
Last year, exports grew 1% to around $341.1 million.
In the first nine months of this year, exports rose nearly 20% on year to around $270 million, helped by a promotional campaign launched in many countries.
The last quarter of the year is a traditionally slow period for gem and jewelry exports.
Tillekeratne said the higher revenue this year is due to "demand for finished products from new markets following a series of recent international exhibitions."
New buyers added to Sri Lanka’s portfolio this year include Malaysia, Russia, Austria, and China.
Sri Lanka is famous for its blue sapphires, star sapphires, star rubies, cat’s eyes, rubies, alexandrites, topaz, amethysts, tourmalines and garnets. Blue sapphire is the country’s most popular gemstone.
Sri Lanka’s biggest gem and jewelry market is the U.S., which buys around 40% of the island’s total output, followed by Europe, Thailand, and Hong Kong. Its main competitors include Madagascar, Italy, and France.
Although the industry’s exports have been growing since 2000, the sector still accounts for less than 1% of gross domestic product.
Tillekeratne said the industry plans to focus on expanding the value-added and finished jewelry market due to the potential for revenue growth.
He said Sri Lankan manufacturers now lack the facilities and expertise to compete with other countries in the gem-studded jewelry business.
"This is an area we are looking to develop because there is a big demand for these products and potential revenue growth. We are starting with upgrading the skills of manufacturers," said Tillekeratne.
The Internet trading facility will enable foreign buyers to place orders with Sri Lankan exporters with a government guarantee, he said.
The authority also plans to expedite the setting up of a Gem Trading Bank next year at an initial cost of LKR500 million. The bank will specialize in extending loans to industry players using precious stones and metal as collateral.
"We already have parliamentary approval for this project and we are looking to include it in our 2007 corporate plan," said Tillekeratne.
Meanwhile, the industry is lobbying for some favorable measures in the 2007 budget proposals to be unveiled next month.
Tillekeratne said key recommendations include a reduction in the Value Added Tax to 5% from 20% currently for locally manufactured jewelry and the exemption of a 2.5% levy on gem imports.
Sri Lanka imports various stones and diamonds, usually in rough form, for re-export after value addition like cutting, polishing and heat treatment.
The authority is also spearheading a project launched this year to revive mining operations in Sri Lanka which have been on a declining trend since 1997.
Industry players have estimated that around 90% of primary gem deposits on the island remain untapped due to a lack of technical expertise.
Tillekeratne said: "We have identified 19 new locations suitable for mining and are working with experts" to determine the cost and new methods to explore and extract precious stones. -Financial Times
