By: Staff Writer
September 04, Colombo (LNW): Sri Lanka’s centuries-old gemstone industry, once a source of national pride, is facing a severe credibility crisis. Corruption, financial mismanagement, and rising smuggling networks often aided by foreign buyers—are undermining both state revenue and the livelihoods of thousands engaged in mining and trading.
Official figures highlight the widening gap between promise and performance. In August 2023, the then-Chairman and CEO of the National Gem and Jewellery Authority (NGJA) projected Sri Lanka’s gem exports would soar to US $2 billion annually by 2025.
That optimism was drawn from US $312 million in exports recorded during the first seven months of 2023. But less than two years later, the government now speaks cautiously of merely reaching US $1 billion, underscoring how corruption and malpractice have drained the sector.
The Committee on Public Enterprises (COPE) has spotlighted the NGJA’s questionable financial decisions. Instead of renovating its headquarters for Rs. 21 million, the Authority chose to rent another building at an eye-watering Rs. 2 billion a figure 95 times higher than necessary. Lawmakers allege the deal reeks of waste and possible kickbacks.
COPE also uncovered a case where a gem parcel valued at Rs. 250 million seized by court order in September 2024 for undervaluation was released back to the same company without proper approvals. The NGJA imposed only a token fine of Rs. 10,000, ignoring the legal maximum of Rs. 333,000 and disregarding court rulings. Lawmakers blasted the move as a blatant betrayal of public trust and state revenue.
Serious lapses extend beyond financial misconduct. COPE noted the NGJA operates without a dedicated imports division, despite being responsible for gem imports. Between 2022 and 2024, 46,815.94 kilograms of gems were imported legally, yet only 1,664.06 kilograms were re-exported, raising red flags about large-scale smuggling.
The committee has urged the case be referred to the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) while calling for urgent internal inquiries.
Adding to the crisis are allegations of foreign interference. Industry insiders say Chinese buyers are increasingly involved in secret purchases of rough sapphires and other gems, some smuggled abroad through unofficial consignments or even diplomatic mail. These networks bypass local auctions, weaken domestic traders, and tarnish Sri Lanka’s image in international markets.
The fallout is deeply human. Nearly 600,000 Sri Lankans rely on the sector from mining in Elahera and Ratnapura to polishing and trading. Many miners complain that gems they extract vanish into black channels, leaving them without fair returns.
Despite glittering showcases like the “Gem City Ratnapura 2025” exhibition, the industry’s future hangs in the balance. Unless swift reforms curb corruption and strengthen oversight, Sri Lanka’s proud gem legacy risks losing its sparkle forever.
