INTERVIEW GIVEN BY CHAIRMAN NATIONAL GEM AND JEWELRY AUTHORITY,SRI LANKA TO THE UNIVERSAL NEWS IN SEPTEMBER, 2011

Universal News (UN): General, thank you very much for your time, it is a great pleasure and great privilege for us to be here today. There is a clear visionfor the future of the country in the Mahinda Chintanaya. His Excellency the President has outlined the framework in the development framework which goes back to the year 2005 to 2015 and the main key points of this developmentframework are to increase the GDP growth to over 8% and raise per capita income to reach $4000. We like to ask you then, is the

Mahinda Chintana attainable for the country and what would you foresee as the main challenges?

GENERAL ROHAN DE S. DALAWATTE (GRD): Mahinda Chintana has positioned our sector to become one of the top foreign exchange earners. As of today, we are getting about half a billion now from gems but H.E. wants us to take it up to $1 billion a year by 2016. That is our main goal. Our intention is also to make Sri Lanka an icon for Sapphires for which we have started a branding process.

UN: Now, we know, the key element also in this programme is economic empowerment of the people, so how is this economic empowerment of the Sri Lankan social classes promoting the stability in a post conflict scenario?

GRD: This industry employs quite a large number of people from the initial stage of the mining process, to selling it and to finally cutting and polishing it. There are many people involved in this industry; from the simple miner, to the richer lot who actually make the jewellery, sometimes jewellery, sometimes sell it in the form of gems and sell it to the world and some of the very big and valuable gems in most of the museums in the world are come from Sri Lanka. I think at a rough estimate it is about i million, nearly 1 million people are in employment.

UN: So this is a sector and industry that creates wealth of the processes from the moment that it is taken from the ground until it is sold, it is helping to create employment and it creates valuefrom the mine to the market.

GRD: Exactly.

UN: The Gem and Jewellery Industry is one of the leading industries in Sri Lanka and has been identified as one with the potential to playa key role in the country’s development. The Gem and Jewellery Authority is in charge of implementing strategies for the development of the industry. So again, in order with the Mahinda Chintana, what steps are being taken by the Authority to strengthen the livelihoods of the Jewellery Industries?

GRD: According to the Mahinda Chintana, our development programmes and strategies are based on a three pronged strategy: supply development, demand development and capacity building.

In the supply development sector, we want to un-earth as much rough gem material as possible for total value addition. At the same time, we want to liberalise the input policies and attract the rough material ITomother nations to Sri Lanka for value addition. We have Jewellery, Precision Gem Cutting and also we do re-exports.

The second factor is Demand Development. In this regard, we have targeted some international key Gem and Jewellery events in the world. We are organizing Sri Lanka Pavilions at these fairs in order to showcase our products to the entire world. At the moment we are organizing Sri Lanka Pavilions at six major events. This year we are very much focussed on the Chinese market as well as the Indian market, since they are quite close to us. These countries represent booming economies. Therefore, as you can see, we have identified these two key sectors and we are focusing all our promotional efforts towards these markets. Furthermore, for the first time in ourhistory, we are making our debut in the Turkish market which represents a thriving jewellery industry. In addition to this, we had plans for venturing into the Russian market but they are not as open as we would like and the procedures are not very customer friendly. So we see Turkey as an entrance gateway to the Russian market. In this sense, we are organizing the Sri Lankan Pavilion in the Turkish Gem and Jewellery Show to be held in October and we want to entice the Russian buyers in the Turkish Show.

UN: You mention also the facility that you have at the World Trade Centre. We know that the Sri Lanka Gem and Jewellery Exchange is also placed there and this is a concept that was sponsored by the Authority and its main goal is to regulate industry related commercial activity, so we like to ask you how successful has this institution been in modernizing the trading activities?

GRD: This bodywas established20 years ago (it celebratesits 20thanniversarythis year) and the idea was to bring about all the leading key stake holders in one place and to combine their services under one roof. In this sense, it has been very successful in bringing 35 leading Gem and Jewellery Companies with a Gem Testing and Certification Laboratory of the Gem Authority as well as a Liaison Office. Actually, when a foreigner comes they are able to obtain whatever they want from these shops. It has created a very healthy and competitive environment. Their merchandise is tested ‘Free of Charge’ at our State Laboratory so they are assured of their “Value For Money”. That is the idea and the right way to go. You told us about the measures your authorities are implementing,

tourists have a 1 billion dollar target by the year 2015. Year 2016.

2016

UN: The diamond re-export sector recorded 13. 7% growth earnings Rs 22.8 bnfrom Rs

20.1 bn as at last July. What is the Authority’s strategy to increase value-addition in order to compete in the international markets?

GRD: Sri Lanka is considered as the top country in producing exquisite cuts. Sri Lanka is the only country that produces tapered baguette of diamonds. Indeed, baguettes are produced by other countries and other cutting centres, but not the ‘Tapered Baguette’.

We are also catering to the Watch Industry by cutting Sapphires as small as 0.3 mm in diameter, which are supplied to leading design houses such as Rolex, Cartier, Mont Blanc, Bulgari, etc. This is in fashion now, so there is a very good demand for these precision cut gem stones in which Sri Lanka is the Number 1. .

GRD: And you have also said that it was time for local and foreign investors to involve

themselves actively in gem trading. What are Sri Lanka’s competitive advantages in the sector?

GRD: Sri Lanka is situated in a strategic location. That is why since ancient times, people came to this land for gems, elephant tusks and spices. They came here because we are on that route from East to West. So we must make full use of this advantage and that is what we are trying to do. Furthermore, we want to expand the Gem Exchange to places like Kandy, Galle and others.

Also, a big concern that we have is to keep our industry as eco-friendly as possible, and in this sense, we have developed our techniques to make the industry a sustainable one. We have a strong focus on sustainability. We have created a special way of extraction, which is done with water pumps. But there is also a mechanised way of doing it, but then the damage to the environment is more, so stopped because we want to maintain the sustainability of the industry. This is not something new; it has been coming dwon from ages. The value of our environment is deeply embedded in our religion and culture. All you have to do is to take a look at the country to see how green it is.

We firmly believe that the resources given by the nature should not be misused. You must take what is necessary and leave the balance for the generations to come. In that sense, we are not selfish. We prefer to take a bit at a time, proceed in a sustainable manner and without ruining the environment. What is happening in the world today, is because we have misused our resources. So Nature is reacting. In Sri Lanka we are very particular about the environment and we try to carry our activities in a sustainable manner.

Just so you get an idea, nine tenths of Sri Lanka soil contains gems. Only the northern area part contains limestone and no gems. So the balance of nine tenths of Sri Lanka is potentially gem bearing. You also have to consider that the geological era is more than 800 million years old. So there is a speciality in these gems. So we should not be in a

hurry to go into mechanized mining which would finish it off in by two years and ruin the entire environment.

To make sure that things are done properly, we have a special environmental division within the Authority. This unit is headed by a Mining Engineer a Geologist and an Environmental Officer. Actually, they are ensuring that all the license holders adhere to all the stipulated conditions with regard to the mining. They have jurisdiction all over the

island. They can go into any mine to inspect whether they are adhering to the established conditions.

In addition to this, I want to highlight the Government’s business ftiendly policies. The sector has been completely liberalised. Our investment model facilitates and allows foreign investors to carry out their projects in a very short span oftime.

The other thing people should know about Sri Lanka is that we ensure women empowerment and we do not use child labour. This is something of which we are extremely proud.

UN: Exhibitions are a good way to create international markets for local industrialists andfor branding a product and a country. In this sense, the Authority is actively participating in some of the most renowned fairs in the world: you were present at the Shanghai Gem andJewellery Show held in China in June 20011; it will have pavilion at the Istanbul JewelleryShow in October. You are targeting Rusia, China and India, and also Hong Kong, Thailand, Singapore and Malaysia. What positive results did the fairs bring and what are yourexpectations for the Turkey event?

GRD: If you look at our exports, you can see that already we have had a good jump compared to last year. As at end July 2011, we have seen a 17% increase. That is a good indication that we are on the correct path. But we are not satisfied and we aim to improve and achieve the target given to us ahead of time. Hopefully we should be able to do that.

Nonetheless, there are there are constraints. For example, the auctioning of the land must be done without it affecting the people of the country. It is a policy matter, it is about the ownership of the land.

UN You have recently expressed your confidence that the Authority will increase its income from $500 million to $1000 million in the near future. This will require an aggressive marketing campaign given the fact that you are entering new markets such as India, Chinaand Turkey. How are you communicating to investors abroad and how are you marketing the industry?

GRD: Basically, by taking part in these exhibitions. This is one of the most important ways of expressing and showing the value of our gems to the world, which in our opinion, are the best in the world. Our aim is to make Sri Lanka the centre of exports for Europe and become a hub for coloured stones. As of today, our nation is the only supplier for the entire global market for Sapphires. We want to go to the mass market and we want that when people think of Blue Sapphires, they think of Sri Lanka.

UN: As a key institution in the country’s economy, the NGJA will participate in the Sri Lanka Expo 2012. The aim of the Expo is to promote Sri Lanka’s trade, investment andtourism, positioning it as a lucrative business investment and tourism destination in

Asia. In what ways can an institution like the NGJA contribute to re-brand and position

Sri Lanka in the international arena?

GRD: This is going to be an ideal platform for us. Now, our product is being promoted all over the world but through Expo 2012, we will be able re-position it. We want people to understand how keen we are about producingjewellery using expertise, rather than just exporting gems. We want to add more value to our products and that is why we are incorporating the skills of foreign experts and designers, so that they impart their knowledge in our design.

UN: How important will FACETS be in branding “made in Sri Lanka gems andjewells”?

GRD: FACETS has been an exclusive show for the past 20 years. We are the main sponsors and we have coined the phrase “Come September Come Facets”. This is a show that is in the international almanac of exhibitions. But now we want to upgrade the standardof Facets.

After this one, we have the Bangkok Show, and after that the Hong Kong show. So this is the first series of shows. This is the ideal time when international buyers make their procumbent to

replenish their stocks, so Facets is the ideal opportunity for them to come to the original sourcing country.

Facets is the apex of all these events.

UN: Y 00 also work directly with private exporters?

GRD: Yeah, definitely, we are not involved in trading but we are the facilitators and the promoters. We regulate with licences and we have a State laboratory which has been functioning for the past 39 years. In addition to this, the NGJA has a set of internationally qualified Gemmologists who provide certification for gems at a very nominal fee; a unique service is provided to foreigners completely ‘Free of Charge’, just to ensure that they buy the correct thing. Furthermore, we hallmarking facilities under our supervision and we provide precious metal testing and hallmarking. We are also a member of the Kimberly Process Certification Scheme. We have placed under one roof all the facilities needed for export activities. It is unique set up, nowhere else in Sri Lanka you will find all facilities needed for exports under one roof. Sri Lanka Customs, Sri Lanka Gem and Jewellery Authority Valuation Division, Insurance Companies, International Freight Forwarders, local Freight Forwarders, plus the Postal Department, all are housed under one roof.

As you can imagine, this is very convenient for people who come from outside. It is a one stop shop.

UN: You mention in general, thal now it is a perfect moment to showcase Sri Lanka, Sri

Lanka Stones, Sri Lanka Gems. Sri Lanka’s gems have found their way to many a court since time immemorial King Solomon, bought gems from Sri Lanka for Queen Sheba, 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. This last one has focused world attention on

Blue Sapphires from Sri Lanka. How are you trying to capitalize on that international exposure in order to sustain the trend?

GRD: People like you with initiatives like yours, can contribute in a big way, At the moment there is a promotion going on; it is the brainchild of the Sri Lanka Gem and Jewellery Association in collaboration with the Export Development Board and Gem and

Jewellery Authority, We have actually initiated a promotion – ‘Ceylon Sapphire Promotion’.

Just like the Sri Lanka Tea Board is doing a big promotion branding Tea as Ceylon Tea, we want to do the same thing, so that people start associating Sri Lanka not only to Ceylon Tea and Ayurveda Products, but also with Ceylon Blue Sappahires.

UN: Sir, we know that you have a long record of service to your country. You have been

Chief of Staff of the Sri Lanka Army and Overall Operations Commander (OOC) of security forces. And you were appointed First Ambassador to Brasil from 2004-2005.

Why do you believe that you were chosen to be the first representative of Sri Lanka in the entire South American continent?

GRD: This was a great honour for me because creating something new is always very satisfying; and especially in a country like Brazil, where the people were so friendly and warm hearted. In a sense, I was able to introduce Sri Lanka to Brazil. And since it was during my stay there that we had the Tsunami, when I appealed to the Government and the people for help, they willingly contributed in our recovery.

UN: General, again keeping in line with your long record of service to your country, we know that this is a key sector in the nation’s economy and this is a key institution in the nation. After your services and duties to your country, how would like to be remembered as a Sri Lankan and what would you like your legacy to be here at the NGJA?

GRD: To achieve whatever the Mahinda Chintanaya has mandated us. That is my main motivation and that is what I am striving to achieve. I think that the President is doing a magnificent job for his country and I am very proud to take part in his vision for this country. He has brought peace and now he is developing the nation.

UN: One last question, for both of you, with this report you are reaching over two and a half million readers throughout the world, United States, Europe and the entire world, what would be your final message about the Gems Authority and why people should come and invest in this industry?

GRD: Sri Lanka act ally has been famous for Gems throughout ancient history. Farkor ages we have had a sparkling reputation and Sri Lanka has been known for world famous gems, which are actually held in famous museums all over the world. From Logan Blue Sapphire to Rossar Reeves Star Ruby and we have two beauties in our possession: the 393 carat Star Sapphire “the Star of Lanka”, a 105 carat Cats Eye “Ray of Treasure”.

This is an age old traditional legacy that we want to maintain. Our is to establish our position as the key producer of Blue Sapphires to the entire world and Blue Sapphire mounted jewellery to the region.

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