The Hon. Sunil Handunnetti - Minister of Industry and Entrepreneurship Development

¶ 01 Mr. Presiding Member, thank you for this opportunity.

¶ 02 Today we are discussing the Second Report of the Sectoral Oversight Committee on Public Enterprises. I thank the Hon. Chair and all Members for presenting a specific report on a particular institution, namely the National Gem and Jewellery Authority (NGJA) under Committee Publication No. 212, together with the Special Audit Report on advances for the importation of 15,000 dairy cows under Phase III.

¶ 03 Before details, I must address a political thread: for days, some Members, including from the Opposition, have used this report as a backdrop to run a political narrative about forming control in local authorities—accusing us of “unclean alliances.” Yet when it comes to COPE/oversight findings on Rajapaksa-era corruption—like the Wellard deal—those who once shouted are now silent. I chaired COPE when we examined the Wellard transaction; we found the single procurement process had been distorted causing losses of millions of dollars. Those who once demanded the Rajapaksas be nailed to the cross now say nothing—because they have cut deals in local bodies. The Opposition that pledged to fight Rajapaksa corruption now cannot speak of it.

¶ 04 Turning to the subject matter: our Ministry has submitted clarifications and an up‑to‑date progress note as of 19.06.2025 in response to the Committee’s NGJA report. I table these documents and request that they be included in the Hansard.

¶ 05 Key findings: - Between 2022–2024, Sri Lanka imported 46,815.94 kg of rough gemstones at a cost of Rs. 2,091 million; total with taxes Rs. 22,523 million. Yet only 1,664 kg (3.55%) were value‑added (cut and polished) and re‑exported through the Authority. Where did the rest go? Gems are not consumed; they should be re‑exported to earn revenue. - The Committee notes that for roughly 45,000 kg of imported gems, the Authority lacks precise data.

¶ 06 Why? Because these gems are not entering lawful accounting channels; they move via “undial” (hawala) and under‑the‑counter transactions, often stored privately—including as a money‑laundering instrument. The result: precious foreign exchange goes out to Madagascar, Kenya, etc., but export revenue does not come back through national accounts.

¶ 07 Our apparel sector earns USD 5 billion annually; gems yield only about USD 388 million in exports. This sector has been informal and captured by illicit networks, with inadequate regulation and intervention. Illegal mines and licenses were aided by political power. This must be investigated. The current report is thin on naming those who abused licensing; future forensic audits should identify who turned a legitimate industry into contraband.

¶ 08 Immediate steps we are taking: - Unifying institutions: NGJA, the Gem & Jewellery Research and Training Institute, and the Geological Survey and Mines Bureau should be brought into a single Mineral Bureau under a committee chaired by the Prime Minister, to establish a coherent national policy for mineral resources, including a clear definition and framework for “value addition.” - Technology for transparency: Under Prof. Rohan Fernando’s leadership, we have developed an app enabling traders or individuals to input gem characteristics (weight, carat, etc.) to estimate value. Our testing shows near 100% alignment with manual assessments. This scientific tool will help expose under‑invoicing and illicit trade. - Tourism linkage and VAT refunds: From 1 July, VAT refund kiosks at the airport will be operational for tourists purchasing gems/jewellery—supporting formal trade and sector growth. - Incentives for formalization: In consultation with Inland Revenue and the Ministry of Finance, we propose differential duties/taxes to encourage re‑export of value‑added gems and to choke illicit channels, while granting lawful operators better facilitation. - Expanding beyond Ratnapura: Significant deposits exist in estates, LRC lands, Nuwara Eliya, Kandy, Welimada, Alahera, Okkampitiya, Polonnaruwa, and the South (including Galle). We will develop the industry with environmental safeguards and better facilitation in these areas. - Capacity constraints: Enforcement is severely understaffed—only 19 officers to oversee 7,840 mines and about 8,000 dealer licenses. Nationwide, we have 198 enforcement officers. We are working with the Management Services Department to approve more cadre. NGJA is self‑financing and contributes to the Treasury; with adequate staffing and technology, we can elevate gems into a top export industry.

¶ 09 Targets: - Raise gem and jewellery exports from USD 388 million to USD 1 billion by year‑end. - Open a 24/7 Gem Exhibition Centre at Port City to promote continuous trade.

¶ 10 All this must be underpinned by the rule of law to dismantle the smuggling and political patronage networks that bankrupted the country. I also support the Justice Minister’s proposal: attach legal officers—AG’s Department and other relevant observers—to COPE/oversight so observations can convert swiftly into prosecutable action.

¶ 11 Thank you.