The Sri Lankan Gem & Jewellery Industry – A Bright Future
By Ajith Perera – F.G.A
Actg. Director General, National Gem & Jewelry Authority – Sri Lanka
From time immemorial, Sri Lanka has had a sparkling reputation for highly treasured gems. Sri Lanka’s mineral rich soils have been yielding more than 70 varieties and sub varieties of gemstones out of the 200 varieties known to Gemologists. The gem industry in Sri Lanka is of great antiquity. Legend says that King Solomon in Biblical times wooed the Queen of Sheba with precious stones from Sri Lanka. Many years later, Prince Charles mesmerized Lady Diana with an engagement ring set with a priceless Blue Sapphire from Sri Lanka. That very ring has symbolized the engagement of Prince William and Kate Middleton; who entered holy matrimony on 29th of April, focusing world attention on Blue Sapphires from Sri Lanka.
Let us take a close look at the Sri Lankan Gem and Jewelry industry which has been identified by the Government as one of the thrust areas of export development. The Government has provided pro active policy environment and enabling facilities to assist the development initiative of the gem and jewelry industry.
The victory over terrorism has opened new vistas for expansion and development for the industry. The global economic meltdown which hit us in the last quarter of 2008, and continued in to the 2nd quarter of 2009, was a major challenge. Our traditional markets of U.S.A, Europe and Japan were the most affected. We rose to this challenge by focusing strongly on new emerging markets such as China, Russia & India, which boasted economies with highest development.
Accordingly to Mr.Wilson Yuen, President of International Colored Gemstone Association. China’s middleclass will grow to 350 million by the year 2030 that is more than the current population of the U.S.A. China’s expanding economy, rising standard of living and vast foreign investments are likely to create a huge new business opportunity for the Sri Lankan gem & jewelry industry. Having realized this great opportunity, the National Gem and Jewelry Authority (N.G.J.A) has taken the initiative under the guidance of Hon. Anura Priyadarshana Yapa, Minister of Environment to organize “Sri Lankan Pavilions” at major international Gem and Jewelry Trade Fairs & Exhibitions in China; encouraging Sri Lankan Exporters to participate and showcase their products. The ‘NGJA’ with the able assistance of the Sri Lankan Embassy in Beijing and Consulate in Shanghai have been putting a lot of effort in to opening the gates to the vast Chinese market to Sri Lankan members of the trade, highlighting the green and ethical mining methods practiced in Sri Lanka.
Similarly India, which recorded an export revenue of USD 28 Billion in the 2009/2010 fiscal year from Gems, Diamonds & Jewelry has been our 5th gem, export destination in value terms in 2010. India which exported gems to the tune of USD 1.44 Billion is yet to identify Sri Lanka as their leading sourcing country. India also enjoys an export revenue of USD 8.84 Billion from Jewelry while offering unlimited opportunities to our jewelry manufacturing exporters.
It is evident that the Global Gem and Jewelry industry is witnessing the interplay of various factors that could change its structure in multiple ways. Such factors include, among others, a shift in global economic dynamics, increasing role of regulation, technological advances, increasing consumer sophistication and activism, emerging of alternate retail channels such as internet & television, increasing emphasis on transparency, professional work practices and corporate governance. It is believed that progressive players in the industry could play a role in shaping the future by predicting some of these trends and preparing themselves for changes that are likely to happen. As the famous saying goes “It is far better to foresee even without certainty, than not to foresee at all”.
The price of gold has been volatile from day to day. On 19th of July 2011 it touched the record figure of USD 1607/00 per troy ounce. Twelve years ago in 1999, it was a mere USD 255.00; per Troy Ounce. Analysts have predicted gold prices to reach the historic peak of USD 1700.00 per troy ounce by 2015. Several factors such as global fears of rising inflation, volatile situation in the Middle East & North African Countries, a surge in investment demand, state of U.S. finances & weakening of the US dollar, European debt and increased demand from China & India have contributed to this price escalation. The impact of the high gold prices is visible in the local market. Customers are in a dilemma and currently stay away from fresh orders. Both consumers and wholesalers appear to be waiting on the sidelines for more sizeable dips to provide more attractive buying opportunities.
The decision of the government to remove NBT on the import of gold brought in some measure of relief for the domestic & export jewelry industry. Increase in gold prices has forced many jewelers to make light weight jewelry, which has become a latest trend among consumers. Similarly a thriving market has emerged for Palladium, Silver and Steel jewelry with modern designs.
Our jewelry collections are luxurious and unique but also accessible, and we believe these will make us stand out in the global jewelry market. We used to have only one campaign which was anchored on Sri Lanka’s gem industry. Our country however has so much more to offer to the world. The music, dance & poetry that are in our hearts are evident in the unique pieces that our jewelers create. More importantly, the depth and breadth of our product offerings are truly amazing from one of a kind pieces to fashionable but price friendly pieces. Our jewelry has global appeal, and that is one of our strengths.
Jewelry takes on an even greater meaning, because we attach an emotional value to it. Jewelry is a celebration of beauty, but more importantly it is a celebration of life.
Sri Lanka’s solution to stay competitive in the global market has been to upgrade its production processes, through improved technology, particular focus has also been placed on the development of the new design skills and on increasing marketing efforts to establish Sri Lankan Brand names in the world market. Going one step further the ‘NGJA’ intends to establish a Central Design Centre which could obtain up to date designs and pass them to the manufacturers and traders.
The Sri Lankan gem and jewelry industry has seen a significant success so far and has developed considerable capabilities in the past few decades. However it has not yet outlined for itself a clear growth and transformation agenda, to ensure sustainable, long term value creation. The industry is now at a stage where it needs to evaluate the impact of some of the changes mentioned above and also strategies on the future direction of growth for all parts of the industry value chain; based on the salient factors of supply development, demand development and capacity building.
“Tomorrow belongs to the people who prepare for it today”
21st July 2011