EDB emphasizes dangers of illegal foreign buyers entering local gem trade

The Export Development Board (EDB) Advisory Committee on Gems, Diamonds & Jewellery sector has emphasized the importance of making Sri Lanka Gem & Jewellery traders more competitive and simplifying policy measures during the 7th Advisory Committee Meeting held recently.

The renowned China Fort Gem Market in Beruwala and Ratnapura are considered as bustling marketplaces for the gem trade in Sri Lanka. They attract over 500 merchants from various parts of the world from the Middle East, China, and Europe. These markets are highly active with millions of dollars worth of gems being traded every day.

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 require careful navigation.

Members emphasized that the primary challenge faced by the Beruwala Gem Market and Ratnapura is the intensified competition from illegal foreign traders.

“These foreign people arrive in Sri Lanka using a visit visa and engage in gem business. Also, they don’t occupy any license from the National Gem & Jewellery Authority which is mandatory to engage in gem trade. This unlicensed gem trading could seriously damage Sri Lanka’s reputation as it can lead to a lot of malpractices,” advisory committee members said.

The members further emphasized that these foreign traders have a wider range of buyer and seller access via online platforms as they do more with online channels. As foreign traders and buyers become more active in the Beruwala Gem Market and Ratnapura, it puts more pressure on the local traders and facilitates smuggled businesses.

The money brought in for the gem purchases is being brought without following any government rules and regulations and the purchased stones are also taken out unofficially without being regulated whilst the traditional Sri Lankan dealers are subjected to all taxes and regulations.

As a result, the miners, dealers and brokers tend to sell stones to these foreigners for cash without any documentation. This has badly affected the exporters who are using the official channels to obtain merchandise for exports. Also this will reduce the Government tax revenue and employment opportunities. Therefore, the members emphasized that the Sri Lanka Government should give focus on making local traders more competitive to survive in this trade.

Additionally, the committee stated that the gem trading hub is Thailand and all the European and American buyers who were patronizing the Sri Lankan market have now been attracted by the Thailand market.

“At a period where we are losing our trade, it is really unfortunate to see that the Government is imposing many regulations which made the local traders even less competitive. Therefore, the Sri Lankan gem and jewellery traders are in jeopardy.”

Members stated that the Government support is not forthcoming and some of the policy measures discourage the local traders and make them less competitive. The committee identified the gems & 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 involve more with foreign components.