I thought I’d write this as a PSA mini-article that could help all of you better understand how the gem trade operates in Sri Lanka.
Heads up – it’s a very long post, but it’s meant to share objective information, describe some common trade practices and empower you all to make informed decisions.
Facts are facts, and understanding them serves honest buyers and honest sellers and prevents misinterpretation, manipulation or misunderstanding. The gem trade is famously opaque worldwide, but often it's for no real reason beside a simple lack of communication.
Sri Lanka, gem trade centers
1) Sri Lankan gemstones are mined almost entirely in the Sabaragamuwa province. The rough & faceted buying and selling centers include Ratnapura, Nivithigala, Pelmadulla, Balangoda, Kalawana and various other places. There’s almost not a village in the entire province without gems being mined and sold.
2) The main gem trade center in the Western province is the commercial capital, Colombo, while Beruwala in the same province serves as port of entry for African gems from Tanzania, Madagascar, Congo, Ethiopia etc.
3) The Southern province – the town of Galle, for the most part – also imports gems from Africa for the most part and has a relatively developed cutting industry, and towns like Gintota, Deniyaya and similar also operate gem markets.
Shipping in Sri Lanka
Shipping of gems is entirely mandated by the government and, uh, idiosyncratic to say the least. Both import and export come with strict controls and loads of paperwork.
The allowed methods of export are: air mail, EMS, FedEx, Brinks and Malca Amit. Availability and ETA can vary by country of destination, and also depends on both local and global changes in logistics and shipping which have become quite frequent due to Covid.
The legally exported parcels will always look the same: a metal box with brown paper, red wax & twine, stamped by the National Gem and Jewellery Authority and customs. The exporter has no say in how that packaging is made – they can package the interior of the parcel only.
Any other method of shipping is illegal and apart from putting the seller at risk, also puts your return options at risk as well since the seller cannot legally re-import gems they supposedly didn’t export to begin with. So no postal envelopes, no DHL/UPS packages, etc.
Export of rough and/or crystals is and always has been prohibited entirely. This also applies to pre-formed stones. Very few exceptions are granted on a case-by-case basis - like for example if a rough piece is imported for heating and then sent back, or if it relates to an institution (GIA taking samples, for example).
Shipping can take multiple weeks, especially through air mail and EMS. FedEx is very fast, but it costs a lot because it’s a private franchise with their own (rather predatory) pricing that’s higher for gems than for other articles.
Every exporter will have a shipping agent: someone who acts as a liaison between the government (customs, the NGJA) and shipping agencies, and the exporter. This is the person who works with FedEx, post, Malca, customs etc. on the exporter’s behalf, but the exporter may also work with the couriers directly – so long as they go through legal channels (i.e. the NGJA).
Refunds in Sri Lanka
In doing face to face business, refunds are locally unheard of except in cases where there are treatment discrepancies (you buy unheated, lab says heated).
Most sellers will state that they do refunds internationally but whether they do or not can vary: some state it hoping it doesn’t happen, some state it and then contest your reasons for doing so, some state it simply because they don't know they may not be able to do it, and some will state it and honor it. It's up to the seller.
The first complication in refunding is the strict forex controls currently in place (as of the time of writing, August 2021). As explained in another thread, Sri Lanka has a ballooning foreign debt problem and they’ve recently started servicing it through restrictive controls on the private sector.
It’s a new development, and it’s entirely likely that this situation will improve and get back to normal as foreign reserves start getting built back up when the country reopens.
The solution: usually it’d be a wire transfer, but at the moment the solutions are remittance through PayPal/WU/another payment service, foreign bank account, or a trade partner/finance partner/company or individual abroad.
This needs to be stated here because you need to know in advance what to ask for and how to approach your deals. Ask the seller how you will get refunded if needed, specifically, and ask them to clearly specify how long it’ll take. If you can’t get crystal clear answers to those questions or the answer is “the stone sold”, read between the lines.
Gem business models in Sri Lanka (and elsewhere)
The second potential complication relates to the business model itself: I’m sure many of you will have noticed that there are literally thousands of accounts on social media selling tens of millions of dollars worth of gems just in Sri Lanka itself.
This isn’t because there are that many companies working internationally in the country: it’s simply because the vast majority of these accounts are individuals selling gems that don’t belong to them. The same stones are being offered twice, thrice, ten times.
The gem markets in Sri Lanka are live day markets: stones exchange hands daily with hundreds of gem dealers in the same spot. So what you’re in essence seeing in many of these cases is simply photos or videos of a stone that someone showed them, which they then show to you hoping you’ll buy it, and then the same stone goes back to the owner and gets shown again to different people. In some cases, it can even be stones that a broker has never seen in real life – they’re merely posting videos as a marketing tool, or sending other gem dealers videos of potential buys.
Not to mince words: this is basically “fake it til you make it”.
In practice, speaking from personal experience, this sometimes results in comical situations where as a dealer you can see one of your own stones that you’ve owned from rough onwards posted by someone else and then when asking them about it get a response saying “sorry, sold”. Or in other cases, you'll find out how much a broker added on top of your actual price.
But the interesting thing is that as an end-buyer, this may or may not actually be bad for you. On the plus side, you get to see many stones that you otherwise wouldn’t have seen – you’re more likely to come across a particular stone the more people post it, and people will post gems pretty indiscriminately if they don't need to buy them to get a chance to sell them. The prices are likely to be lower for these stones, because in these cases the seller takes almost no risk and makes absolutely no investment in these gems – they simply pay for it on your behalf, send it to you and pocket the difference.
The downside is that things can get complicated if there’s a problem requiring you to return the stone. Depending on the seller, they will either honor it by refunding you and keeping the stone for themselves or they might start creating problems and even questioning your reasons for returning it.
Again, this isn’t unique to Sri Lanka either: many social media accounts from Thailand, India and Pakistan are doing exactly the same thing, as are some Western ones. Often seen on FB groups and similar places.
Sellers should be forthright with whether or not they own a stone and how that impacts you if things go south, but since in most cases you won't be told this openly, understand the following:
You, as the buyer, have absolutely every right to hold gem sellers to the same standards you’d hold Apple or Amazon to. Gem trade isn’t a kindergarten – in b2b dealings for example, there is absolutely no room for excuses or errors and this is completely accepted both locally and internationally. Normal business rules apply that would apply anywhere else, so no reason not to apply them to b2c (although it's admittedly more complicated).
So know your risks and rewards, do your due diligence and act according to your own best judgement.
Import and returns
Sri Lanka’s rules on import are very much the opposite of export rules: they’re about as simple and hassle-free as they could be. The seller pays a handling/clearance fee to the NGJA and their agent, and that’s about it; no customs, duties or taxes. It requires paperwork, but it’s doable.
You’re allowed to import any quantity of gems into the country, and will pay a relatively small fee if it’s a return coming back by post or through a courier. It’s even simpler if you bring them in personally (“hand carried”) – for in-person import, you can import even kilos by just paying a flat fee of $200.
That’s more or less all that comes to mind.
Hope this helps some of you, and if you have questions, ask! The more this forum knows and understands collectively, the simpler absolutely everything will be for everyone involved in the future. The reality in the end is that the gem trade is big enough for everyone, and all buyers and sellers have their place under the sun. There's a stone for everyone out there, and there's also a buyer for every stone. The point of this post, as of this forum itself, is to bridge gaps and share information because in the end everyone is better off for it.
Heads up – it’s a very long post, but it’s meant to share objective information, describe some common trade practices and empower you all to make informed decisions.
Facts are facts, and understanding them serves honest buyers and honest sellers and prevents misinterpretation, manipulation or misunderstanding. The gem trade is famously opaque worldwide, but often it's for no real reason beside a simple lack of communication.
Sri Lanka, gem trade centers
1) Sri Lankan gemstones are mined almost entirely in the Sabaragamuwa province. The rough & faceted buying and selling centers include Ratnapura, Nivithigala, Pelmadulla, Balangoda, Kalawana and various other places. There’s almost not a village in the entire province without gems being mined and sold.
2) The main gem trade center in the Western province is the commercial capital, Colombo, while Beruwala in the same province serves as port of entry for African gems from Tanzania, Madagascar, Congo, Ethiopia etc.
3) The Southern province – the town of Galle, for the most part – also imports gems from Africa for the most part and has a relatively developed cutting industry, and towns like Gintota, Deniyaya and similar also operate gem markets.
Shipping in Sri Lanka
Shipping of gems is entirely mandated by the government and, uh, idiosyncratic to say the least. Both import and export come with strict controls and loads of paperwork.
The allowed methods of export are: air mail, EMS, FedEx, Brinks and Malca Amit. Availability and ETA can vary by country of destination, and also depends on both local and global changes in logistics and shipping which have become quite frequent due to Covid.
The legally exported parcels will always look the same: a metal box with brown paper, red wax & twine, stamped by the National Gem and Jewellery Authority and customs. The exporter has no say in how that packaging is made – they can package the interior of the parcel only.
Any other method of shipping is illegal and apart from putting the seller at risk, also puts your return options at risk as well since the seller cannot legally re-import gems they supposedly didn’t export to begin with. So no postal envelopes, no DHL/UPS packages, etc.
Export of rough and/or crystals is and always has been prohibited entirely. This also applies to pre-formed stones. Very few exceptions are granted on a case-by-case basis - like for example if a rough piece is imported for heating and then sent back, or if it relates to an institution (GIA taking samples, for example).
Shipping can take multiple weeks, especially through air mail and EMS. FedEx is very fast, but it costs a lot because it’s a private franchise with their own (rather predatory) pricing that’s higher for gems than for other articles.
Every exporter will have a shipping agent: someone who acts as a liaison between the government (customs, the NGJA) and shipping agencies, and the exporter. This is the person who works with FedEx, post, Malca, customs etc. on the exporter’s behalf, but the exporter may also work with the couriers directly – so long as they go through legal channels (i.e. the NGJA).
Refunds in Sri Lanka
In doing face to face business, refunds are locally unheard of except in cases where there are treatment discrepancies (you buy unheated, lab says heated).
Most sellers will state that they do refunds internationally but whether they do or not can vary: some state it hoping it doesn’t happen, some state it and then contest your reasons for doing so, some state it simply because they don't know they may not be able to do it, and some will state it and honor it. It's up to the seller.
The first complication in refunding is the strict forex controls currently in place (as of the time of writing, August 2021). As explained in another thread, Sri Lanka has a ballooning foreign debt problem and they’ve recently started servicing it through restrictive controls on the private sector.
It’s a new development, and it’s entirely likely that this situation will improve and get back to normal as foreign reserves start getting built back up when the country reopens.
The solution: usually it’d be a wire transfer, but at the moment the solutions are remittance through PayPal/WU/another payment service, foreign bank account, or a trade partner/finance partner/company or individual abroad.
This needs to be stated here because you need to know in advance what to ask for and how to approach your deals. Ask the seller how you will get refunded if needed, specifically, and ask them to clearly specify how long it’ll take. If you can’t get crystal clear answers to those questions or the answer is “the stone sold”, read between the lines.
Gem business models in Sri Lanka (and elsewhere)
The second potential complication relates to the business model itself: I’m sure many of you will have noticed that there are literally thousands of accounts on social media selling tens of millions of dollars worth of gems just in Sri Lanka itself.
This isn’t because there are that many companies working internationally in the country: it’s simply because the vast majority of these accounts are individuals selling gems that don’t belong to them. The same stones are being offered twice, thrice, ten times.
The gem markets in Sri Lanka are live day markets: stones exchange hands daily with hundreds of gem dealers in the same spot. So what you’re in essence seeing in many of these cases is simply photos or videos of a stone that someone showed them, which they then show to you hoping you’ll buy it, and then the same stone goes back to the owner and gets shown again to different people. In some cases, it can even be stones that a broker has never seen in real life – they’re merely posting videos as a marketing tool, or sending other gem dealers videos of potential buys.
Not to mince words: this is basically “fake it til you make it”.
In practice, speaking from personal experience, this sometimes results in comical situations where as a dealer you can see one of your own stones that you’ve owned from rough onwards posted by someone else and then when asking them about it get a response saying “sorry, sold”. Or in other cases, you'll find out how much a broker added on top of your actual price.
But the interesting thing is that as an end-buyer, this may or may not actually be bad for you. On the plus side, you get to see many stones that you otherwise wouldn’t have seen – you’re more likely to come across a particular stone the more people post it, and people will post gems pretty indiscriminately if they don't need to buy them to get a chance to sell them. The prices are likely to be lower for these stones, because in these cases the seller takes almost no risk and makes absolutely no investment in these gems – they simply pay for it on your behalf, send it to you and pocket the difference.
The downside is that things can get complicated if there’s a problem requiring you to return the stone. Depending on the seller, they will either honor it by refunding you and keeping the stone for themselves or they might start creating problems and even questioning your reasons for returning it.
Again, this isn’t unique to Sri Lanka either: many social media accounts from Thailand, India and Pakistan are doing exactly the same thing, as are some Western ones. Often seen on FB groups and similar places.
Sellers should be forthright with whether or not they own a stone and how that impacts you if things go south, but since in most cases you won't be told this openly, understand the following:
- How to judge gem quality. This literally cannot be emphasized enough – ask here on PS, there are plenty of knowledgeable people who will help you. Understand how gemstones behave in photos and videos depending on the devices they were taken with, and understand how lighting conditions impact different colors. Understand how to spot cutting and clarity problems which are easy to hide. DYOR is crucial.
- How to spot a brokered stone. If you ask for additional information and either get ghosted or get told to wait for a few days because “the stone is in the lab” or “it’s with my brother”, what's most likely happening is that the broker is trying to get the stone to hand from the real owner so they can fulfill your request. If you can’t get a clear price or a clear answer on any other aspect of the stone, it’s the same story. No one who owns gems will ever tell you that they can’t access them – it’s a matter of opening a box. No, whatever you may get told, that 5 carat padparadscha and 3 carat alex aren’t sitting in a bank vault. And likewise no, no one sells multiple 5 carat sapphires daily. They’d be having coffee with Harry Winston and Tiffany execs instead of peddling to you online if they were. This is also the reason why so many gem trade accounts are private – it ensures you can’t get called out for posting someone else’s stones (or conversely, ensures others can’t post yours).
- Make your decisions accordingly: understand and weigh the risk-reward and decide on what’s acceptable to you personally. Everything has its pluses and minuses - but the more information you possess and the less you have to rely on anyone's goodwill, the clearer your decisions can be.
You, as the buyer, have absolutely every right to hold gem sellers to the same standards you’d hold Apple or Amazon to. Gem trade isn’t a kindergarten – in b2b dealings for example, there is absolutely no room for excuses or errors and this is completely accepted both locally and internationally. Normal business rules apply that would apply anywhere else, so no reason not to apply them to b2c (although it's admittedly more complicated).
So know your risks and rewards, do your due diligence and act according to your own best judgement.
Import and returns
Sri Lanka’s rules on import are very much the opposite of export rules: they’re about as simple and hassle-free as they could be. The seller pays a handling/clearance fee to the NGJA and their agent, and that’s about it; no customs, duties or taxes. It requires paperwork, but it’s doable.
You’re allowed to import any quantity of gems into the country, and will pay a relatively small fee if it’s a return coming back by post or through a courier. It’s even simpler if you bring them in personally (“hand carried”) – for in-person import, you can import even kilos by just paying a flat fee of $200.
That’s more or less all that comes to mind.
Hope this helps some of you, and if you have questions, ask! The more this forum knows and understands collectively, the simpler absolutely everything will be for everyone involved in the future. The reality in the end is that the gem trade is big enough for everyone, and all buyers and sellers have their place under the sun. There's a stone for everyone out there, and there's also a buyer for every stone. The point of this post, as of this forum itself, is to bridge gaps and share information because in the end everyone is better off for it.
Your input is very much appreciated.
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