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by INDUNIL THENUWARA

Feasibility studies on the proposed Gem and Jewellery City are now at the final stage. The final project plan is being prepared and will be presented to the trading community shortly, Chairman National Gem and Jewellery Authority (NGJA) Prof. P.G.R. Dharmaratne said.

The project was proposed during the previous regime as a one stop shop for the gem and jewellery industry. "We have the NGJA, the Gem and Jewellery Exchange in Colombo and the proposed gemmology laboratory. Bringing all these as well as trading booths and related sectors such as Customs, exchange control, travel agents, gem and jewellery showrooms and maybe even a museum together was the idea behind this proposal. Most other countries have such facilities," he told the Sunday Observer.

A land close to the Colombo Oberoi has been identified as a possible location. The task of conducting the feasibility study was handed over to Citi National Bank and now it is almost complete after several modifications.

"For instance, the initial idea was to set up a 24-floor complex comprising apartments as well which was found to be financially infeasible. Many apartment complexes are found in Colombo in any case. Now the project looks feasible," he said.

If the plan is approved, setting up a company to operate the complex will be the next issue. A private company will be established to run the operations with government participation. The next step would be finding finances. The project is expected to cost around Rs. 1000 million although the initial estimate was Rs. 2000 million. The government is looking at banks, foreign sources and the participants for funds. Construction will have to get under way within six months if the project is approved.

The gemmology lab was mooted by the PA regime as a separate project. This project was earlier estimated to cost Rs. 200 million for land, buildings and equipment. "Now we have decided that we can even rent the land and building without having our own so the estimated cost could be reduced to Rs. 100 million. We are looking at the trade and Treasury to fund this. We have been working on this project for almost three years now. Due to the change of government and the NGJA going through four ministries, the procedure was delayed," Prof. Dharmaratne said.

A gemmology lab has been identified as a necessity for Sri Lanka to provide certifications of origin of stones for foreign buyers who increasingly demand such documents.

"For instance, geudas which are not worth much become rather expensive sapphires when heat-treated. Stones may be natural treated or natural untreated. Although buyers prefer untreated stones, it may be difficult to distinguish between them without proper equipment. There could be a 25 - 30 per cent price difference between them.

"Although such a lab is a major requirement, no one has ventured into the sector as it calls for vast finances. At present individuals send their gems to other countries for certification, mainly Thailand. This is a time-consuming procedure. If we have our own lab, we can provide these certificates ourselves and cater to other neighbouring countries as well. Not even India has a recognised lab in the region," he said.

Prof. Dharmaratne also said that they are trying to encourage the industry to do heat treatment in the island, thereby stopping the export of stones in rough form. "We cannot force the industry to stop exports. But if facilities for heat treatment are provided here, it could create more employment opportunities, we can double or triple the foreign exchange earned by selling value added stones and also set up more gem cutting and jewellery making factories. No one would export rough stones if heat treatment facilities were available here," he said.

"We should try to attract buyers back to Sri Lanka. Financing has been a major problem for the industry, intensified by the fact that banks do not lend to them. Banks are now looking at the sector. A proposal has been made to give loans to the industry, keeping the gems as collateral."

The United States is the largest buyer of Sri Lankan gems, accounting for 30 per cent of our exports, followed by Japan and Hong Kong with 15 per cent each and Thailand with 10 per cent. "Thailand has been importing our rough geuda and selling them after heat treatment at higher prices for about 20 years. They have captured this market," the Chairman said.

Although the industry had expected a drop in exports with the situation in the US, its main buyer, this had not happened. "Several local companies took part in the Tucson fair in the US, the largest gem and jewellery fair in the world, held in February. They had reported a 40 per cent increase in business secured at this event, compared to last year," he said.

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