Should more businesses be allowed to import gold?

Recently, the State Bank of Vietnam has issued numerous directives to stabilize the gold market. These efforts have yielded many positive results, most notably the fact that the price of SJC gold is approaching the world gold price. However, the scarcity is becoming increasingly severe, thus requiring a comprehensive solution. According to experts, one of these measures is to allow more businesses to import gold.

The State Bank of Vietnam's efforts to stabilize the gold market have been effective.

On November 11th, the Governor of the State Bank of Vietnam, Nguyen Thi Hong, answered questions before the National Assembly . The issue of state management of the gold market was of particular interest to many delegates.

Representative Luu Van Duc, from the National Assembly delegation of Dak Lak province, requested the Governor to explain how the State Bank of Vietnam has implemented Notice No. 160 regarding the conclusions of the Prime Minister at the meeting discussing solutions for managing the gold market.

Responding to Representative Luu Van Duc, Governor of the State Bank Nguyen Thi Hong stated that from 2014 to 2019, the Vietnamese gold market was relatively stable and the demand for gold among the population decreased. However, since 2021, world gold prices have risen sharply, and consequently, domestic gold prices have also increased.

However, from 2021 to June 2024, the State Bank of Vietnam did not intervene in the market. From June 2024 onwards, world gold prices reached a peak, and the difference between world and domestic gold prices increased significantly, prompting the Government and the State Bank of Vietnam to issue decisive directives.

The proposed measure was to hold a bidding process with nine sessions conducted. Subsequently, the State Bank of Vietnam switched to selling SJC gold directly through four state-owned commercial banks.

" Therefore, the price difference between domestic and international gold has narrowed from approximately 15-18 million VND/ounce to only about 3-4 million VND/ounce ," Governor Nguyen Thi Hong stated.

Should more businesses be allowed to import gold?

The gold market remains scarce.

Thus, it can be seen that one of the biggest instabilities in the market has been resolved. However, Dr. Nguyen Tri Hieu – a banking and finance expert – commented: "This achievement is only 50%, the other 50% is not achieved because there is no supply."

Mr. Hieu explained that previously, the difference between domestic and international gold prices sometimes exceeded 20 million VND/ounce. Currently, this difference is only 3-4 million VND/ounce. However, the problem lies in the fact that those who want to buy cannot buy or can only buy in small, limited quantities. The demand from the people is very high, but the market cannot meet it, so this is only a 50% achievement.

In October, many people reported that it was almost impossible to buy gold bars from banks and Saigon Jewelry Company Limited (SJC). At some other locations, customers were only allowed to buy in limited quantities. To be able to trade, people had to turn to the "black market," which carries many risks.

Mr. Lam Tu (Hanoi) said that more than two months ago, he bought 10 taels of gold. After that, buying and selling became very difficult, so he followed the advice of friends and joined groups dedicated to gold trading.

According to Mr. Tú, the group he's in is very active, with quite a large number of buy and sell orders, mostly sell orders. However, despite being a member of the group for quite some time, he still hasn't dared to buy because he's worried about "violating the rules" and the quality of the goods.

“ I feel completely secure buying gold from large stores. But buying online, how can I know it’s real gold? What if fraudsters take advantage of the scarcity to sell counterfeit goods? ” Mr. Tú worried.

Importing gold to increase supply.

To address the gold shortage in the market, Dr. Nguyen Tri Hieu suggests finding ways to increase supply.

Mr. Hieu supports the view that businesses should be allowed to import gold when it benefits consumers and stabilizes the market, but it must also be based on scientific grounds to avoid affecting exchange rates and foreign exchange. When supply is abundant, customers are the biggest beneficiaries because the supply is sufficient to meet demand, so they don't have to trade on the "black market," which carries many risks such as low-quality goods.

To import gold, Dr. Hieu suggested that the State Bank of Vietnam should calculate the amount of foreign exchange. Based on that, the State Bank would allocate quotas to gold traders, allowing them to import according to the quotas set by the State Bank. This has been done in the past.

Also at the questioning session on November 11th, highlighting the continued complex and unpredictable developments in the gold market, Governor Nguyen Thi Hong stated that Vietnam does not produce gold, so intervention depends entirely on international gold imports. Therefore, the State Bank of Vietnam will closely monitor market developments to formulate appropriate policies to stabilize the gold market.

Source: https://congthuong.vn/co-nen-cho-phep-nhieu-doanh-nghiep-nhap-khau-vang-358272.html