At a recent working session with the Central Policy and Strategy Committee on gold market management, General Secretary To Lam requested to eliminate the monopoly on gold bars in the principle that the state still manages but can grant licenses to many qualified enterprises to participate in production.
The market continues to be vibrant
Following the General Secretary's directive, on May 29, many gold shops in Hanoi reported that the number of customers coming to buy was still very large.
For example, Bao Tin Minh Chau stores recorded 70% of customers buying but only 30% selling. A representative of a gold shop on Tran Nhan Tong Street, Hai Ba Trung District also said that there were many customers coming to buy, and the shop did not limit the number of sales. Many gold shops do not sell gold bars but do trade plain round gold rings to serve customers in need.
In Ho Chi Minh City, the headquarters of Saigon Jewelry Company (SJC) also attracted a large number of people lining up to buy SJC gold bars when the price dropped to its lowest level in the past 5 weeks. SJC employees announced that each customer could buy a maximum of 1 tael of gold bar per transaction; if they wanted to buy more, they would have to queue again from the beginning.
People are trading quite actively in the context of domestic gold prices falling in line with the world gold price decline. Photo: HOANG TRIEU
At the end of May 29, gold bars were listed by businesses at VND115.5 million/tael for purchase and VND118 million/tael for sale - down VND700,000/tael from the previous day. Also down about VND600,000/tael from the previous day, gold rings and 99.99 gold jewelry were traded around VND110.3 million/tael for purchase and VND113.4 million/tael for sale.
Domestic gold prices fell in line with the world gold price decline. In the international market, gold prices "broke" the 3,300 USD/ounce mark, falling sharply to 3,280 USD/ounce - losing about 25 USD/ounce compared to the previous session.
Many people expect that after the General Secretary's direction, domestic gold prices will continue to decrease and narrow the gap with world prices, instead of the current difference of 10-15 million VND/tael.
Support more businesses to enter the market
Speaking to a reporter from Nguoi Lao Dong Newspaper, Mr. Nguyen Trung Anh, Deputy Director of Ancarat Vietnam Joint Stock Company, acknowledged that the General Secretary’s directive is very important for the gold market. From there, it is possible to create a competitive, fair, and transparent business environment; eliminate the monopoly on gold bar production; and reduce the gap between domestic and international gold prices.
"For the jewelry industry, the supply of raw materials has been very scarce for a long time due to the strong fluctuations in gold prices while people limit the sale of gold to the market. It is very difficult for businesses to buy raw materials for production," Mr. Trung Anh stated the reality.
According to the Deputy Director of Ancarat Vietnam Joint Stock Company, allowing many qualified enterprises to participate in the production of gold bars and import of raw gold under state management will help the budget collect more taxes from import-export activities, especially when many enterprises with the capacity to produce gold jewelry can boost the export of products to the world.
"We also want to access bank capital to have resources to increase production scale and innovate technology," Mr. Trung Anh suggested.
Mr. Dinh Ngoc Dung, General Director of Bao Tin Manh Hai Gold and Gemstone Joint Stock Company (abbreviated as Bao Tin Manh Hai), said that removing the monopoly will help many businesses feel secure in investing and producing, thereby the market will have many reputable brands, supplementing the gold supply. At that time, people will have less speculative mentality, and there will be no more queues to buy gold bars.
"A more balanced supply and demand will be a very important factor in narrowing the price of gold bars and the price of gold jewelry, contributing to reducing the difference between domestic and international gold prices and fundamentally stabilizing the gold market," Mr. Dung analyzed.
According to Bao Tin Manh Hai, gold bars are a commodity that affects the macro economy and inflation, so eliminating the monopoly needs to go hand in hand with strengthening state management and control. This company recommends implementing two principles for the gold market, especially the jewelry and fine art gold segment, to develop strongly.
Firstly, clearly define the import of raw gold to produce jewelry and fine art products with high processing, manufacturing and technology content to serve the purpose of decoration, beauty and the needs of tourists; aiming for export, bringing Vietnamese cultural identity and values to the world. Secondly, there needs to be mechanisms, policies and management tools to ensure the transparency of the entire process - from importing input materials to production, manufacturing and output of finished products.
Focus on effective management
Ms. Vu Thi Dao, Institute of Economics and Finance under the Academy of Finance, pointed out 3 benefits if the monopoly on gold bar production is eliminated, including: ensuring the operation of the market's self-regulating mechanism, opening up opportunities for connection between the domestic and international gold markets, and minimizing the risk of gold smuggling.
According to Ms. Dao, when the only national gold brand is no longer maintained, the State Bank of Vietnam (SBV) needs to shift its focus to controlling the quality of gold. Regulations on standards - such as gold content, weight, and inspection procedures - need to be supplemented to grant business rights to qualified establishments. Thereby, ensuring the market's ability to self-regulate, no longer depending on the SBV's decisions with delays in the process that can distort the market.
Some experts commented that the General Secretary’s direction on the gold market opens up many expectations to remove the remaining bottlenecks and existing problems, including bringing the gold price to a reasonable, competitive level and preventing smuggling. However, to have clear movements, there needs to be specific solutions related to the mechanism of granting gold import quotas, criteria for determining which enterprises are allowed to import...
According to Mr. Nguyen The Hung, Vice President of the Vietnam Gold Business Association, to effectively manage the gold market, mechanisms and policies need to be close to reality, ensuring benefits for the people. Currently, the domestic gold price is tens of millions of VND per tael higher than the world price, causing disadvantages for buyers.
"Decree 24/2012 allowing the State Bank to monopolize gold import and export, produce SJC gold bars and manage the gold market is unreasonable because the State Bank does not have a business function," Mr. Hung acknowledged.
Regarding specific solutions, Mr. Nguyen The Hung proposed that the State Bank of Vietnam issue a controlled gold import limit for each enterprise; allow the market to have many gold bar brands; clearly stipulate the ratio of imported gold used to produce gold bars and jewelry. In addition, it is possible to abolish the regulation on granting gold bar trading licenses, allowing people to sell gold at any store nationwide to quickly meet market demand, avoiding the shortage of gold bars as in the past.
"Vietnam spends 8-10 billion USD/year to import cars, phones, and computers, but almost does not recover foreign currency. Meanwhile, according to the World Gold Council and the Customs Department, we import 40-50 tons of gold/year, equivalent to 5 billion USD at current prices. When the market is favorable, businesses can export gold to balance foreign currency, reducing pressure on the exchange rate" - Mr. Hung compared.
No longer "one man in the market"
Speaking to the press on the sidelines of the National Assembly on May 29, delegate Trinh Xuan An (Dong Nai delegation) assessed the General Secretary's direction on gold market management based on a solid practical and legal basis. Emphasizing that gold is not only related to the financial and monetary market but also a social issue, an indicator of the health of the economy, this delegate noted: "Gold should not become a tool for hoarding, underground transactions or money laundering."
Delegate Tran Anh Tuan (HCM City delegation) commented that the current control of all activities of production, distribution, consumption and import of gold bars is not in line with market principles. This makes it difficult to narrow the gap in gold prices between the domestic and international markets, and at the same time creates conditions for gold smuggling. Mr. Tuan proposed expanding opportunities for qualified enterprises to participate in gold production under state control, while applying technology in management to ensure transparency and efficiency.
From the perspective of an economic expert, Professor Dr. Hoang Van Cuong (National Assembly delegate from Hanoi) pointed out that the economy is no longer at risk of "goldenization", so there is no need to monopolize the business and import and export of gold bars. The monopoly leads to SJC brand gold being priced several million VND/tael higher than other brands. "When the monopoly is broken, there will be price competition, Vietnam's gold market will no longer be "one market, one price" - delegate Hoang Van Cuong emphasized.
M.Chien - V.Duan
Source: https://nld.com.vn/mo-duong-cho-thi-truong-vang-canh-tranh-196250529222505325.htm
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