SBV holds the only official supply of gold bars
According to the summary report of the State Bank of Vietnam (SBV) on the implementation of Decree No. 24 of the Government on the management of gold trading activities, recently, there has been a phenomenon of some enterprises and credit institutions (CIs) taking advantage of the gold trading function to conduct illegal business, legalize smuggled gold/gold thieves, evade taxes, and spread false information that affects people's psychology about gold and foreign currency prices to speculate and profit.
The State Bank of Vietnam believes that the monopoly on gold bar production, export and import of raw materials to produce gold bars has revealed some limitations.
Specifically, continuing to depend on SJC Company, while technology and equipment are outdated, makes it difficult for the State Bank to proactively supply SJC gold bars in case intervention with large volumes is needed.
With the exclusive role of SJC in producing gold bars, the State Bank holds the only official supply of gold bars. Therefore, when the market lacks supply, this agency needs to intervene and stabilize the market by using foreign currency from the Exchange Rate Stabilization Fund and Gold Market Management to import gold, process it into gold bars and sell it on the market.
Meanwhile, the gold bar distribution system is currently basically controlled by the private sector.
The market has gold jewelry products (99.99% content) that are used for investment and accumulation similar to gold bars. Among them, there are products such as Au Vang Phuc Long, Kim Giap... of DOJI company that have prices equal to SJC gold bars and can be converted to SJC gold bars.
Through inspection and examination, the State Bank of Vietnam discovered many cases of purchasing raw gold of unknown origin to produce high-content gold jewelry products (99.99%) used as investment gold, with properties similar to gold bars, and prices equivalent to gold bars. This phenomenon occurred in the context of continuous increase in world gold prices, the difference between SJC gold bar prices and world gold prices at a high level.
The reason, according to the State Bank, is that the world gold price has continuously fluctuated in an upward direction while other investment channels have become less attractive, which has increased speculation and gold hoarding by people and businesses.
Notably, gold is not on the list of price-stabilized goods, while foreign currency should be prioritized for more necessary purposes. This leads to the fact that from 2014 to 2023, the State Bank will not supply additional gold bars to the market.
The state monopolizes the production of gold bars and uses the SJC brand only, creating a preference for holding SJC gold bars. As a result, every time the gold price fluctuates, the scarcity of SJC gold makes the market fluctuate more strongly.
In addition, some regulations in Decree 24 are no longer suitable for current practice. Regulations on State management of gold trading activities are still inconsistent.
Buying gold bars can also be considered a form of investment, however, individual gold bar trading activities are not taxed. There is no distinction between the tax applied to gold bars and gold jewelry. This makes it difficult to achieve the goal of combating "goldenization" in the economy.
Remove exclusivity, license by quota
To overcome the shortcomings, the State Bank proposed to amend Decree 24 in the direction of: eliminating the State monopoly mechanism on production, import and export of raw gold for gold bar production.
Instead, the regulation stipulates that gold bar production is a conditional business activity and must be licensed by the State Bank. Switching from a monopoly mechanism for gold bar production to a mechanism for licensing gold bar production activities.
According to the new proposal, credit institutions and enterprises with sufficient financial capacity and full compliance with legal regulations will be licensed to produce gold bars. The management agency will switch to a mechanism of granting annual limits and granting licenses for each import and export of gold bars and raw gold.
At the same time, the State Bank proposed to abolish the function of "organizing the import and export of raw gold to produce gold bars" of this agency, in order to completely eliminate the state monopoly mechanism in exporting raw gold.
When selling raw gold purchased from credit institutions, gold jewelry manufacturing enterprises must issue electronic invoices, fully store and connect data with management agencies.
Credit institutions and gold bar manufacturing enterprises must ensure transparency in the origin of imported gold, develop and report to the State Bank on internal procedures and take full responsibility before the law for the quality of imported gold bars and raw gold.
Source: https://vietnamnet.vn/ngan-hang-nha-nuoc-10-nam-lien-khong-cung-vang-mieng-ra-thi-truong-2411273.html
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