Thursday Nov 14, 2024
Thursday Nov 14, 2024
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By Charumini de Silva
The Government is facilitating the import of gold for “genuine” export-oriented jewellery manufacturers whilst continuing with the licencing scheme for others, it has been revealed.
The support is for those registered under the TIEP scheme of Sri Lanka Customs and Board of Investment (BOI) and for those who have non-foreign currency (NFC) exchange. This is aimed at legitimising jewellery manufacturers.
According to the NFC exchange, the buyers transfer gold for the manufacturers and the finished products are then re-exported.
Last month, the Cabinet of Ministers decided to bring the import of gold under the import licence scheme. The industry was however irked by the move and called on the Government to introduce a mechanism to allow gold imports for export-oriented businesses.
The concerns of exporters regarding the licence scheme were looked at immediately, however, the Government is yet to provide a solution for the local jewellery manufacturers.
“We submitted a proposal to the Finance Ministry for observation last week to resolve the issue with gold imports for local manufacturers,” State Ministry of the Gem and Jewellery Related Industries Secretary S.M. Piyatissa told the Daily FT.
He said that, based on the proposal submitted, the Finance Ministry would come to an ultimate resolution after consulting both Sri Lanka Customs and the Department of Imports and Export Control in the near future.
Piyatissa said the licensing move would help to reform gold imports in the country, while facilitating those who “genuinely” undertake exports.
High gold imports had been a concern for successive Governments, resulting in the imposition of a 15% import tax since 2018. It was also highlighted that around 50% of the local gold demand was sourced through old, refined jewellery obtained from auctions conducted by pawn brokers.
Given industry concerns, Piyatissa added that there could be possible amendments introduced to the Act to streamline the process.
During the first meeting with the new Finance Minister Basil Rajapaksa, the Minister directed officials to identify genuine exporters and allow them to import without hindrance.
According to Central Bank data, gold imports peaked in 2017 to $ 650 million and dipped to $ 439 million in 2018, but a 15% import tax and other factors led to a decline of gold imports in 2019 to $ 2.6 million – it recovered to $ 8.7 million in 2020 following Government relief.
In September last year, President Gotabaya Rajapaksa called for the removal of the 14% income tax on gem and jewellery sales. A loan scheme of Rs. 1 million at a 4% interest rate for jewellery manufacturers and traditional goldsmiths was also introduced as an additional measure to boost the industry.
As per provisional data, gem, diamond and jewellery exports in the first seven months of 2021 amounted to $ 183 million as against a very low $ 90 million in 2020. The total exports in 2020 amounted to $ 211 million, down 9% from 2019. In 2019, the first seven months exports amounted to $ 175.6 million.
