Proposal to allow 3 businesses to import 1.5 tons of gold/year

Speaking to the press recently, Mr. Huynh Trung Khanh, Vice President of the Vietnam Gold Business Association, said that in order to stabilize the price as well as the gold market, this unit has sent proposals and recommendations to the management agency about allowing three enterprises, PNJ, SJC, DOJI, to import 1.5 tons of gold/year, equivalent to each enterprise importing 500 kg of gold per year.

Mr. Khanh stated that the Association proposed to import raw gold for businesses to make gold jewelry. The three proposed units are all the largest gold trading enterprises in the industry. He hopes that the management agency will pilot the program with these units first, not mass-produce it.

Accordingly, businesses will not import a total of 1.5 tons of gold at once, but will divide it into several imports, depending on the decision of the State Bank. According to this person, the number of 1.5 tons is actually not large, because the domestic demand for gold jewelry is up to 20 tons.

“Converted into money, it is about more than 30 million USD/500 kg. The total value of 1.5 tons of gold, including import fees and taxes, is about 100 million USD,” he said. According to Mr. Khanh, compared to importing other goods, this number is not too high.

Vietnam Gold Business Association proposes to allow 3 businesses to import 1.5 tons of gold/year

The Vice President of the Vietnam Gold Business Association said that gold imports will help diversify the market. At that time, domestic gold prices will certainly decrease and help narrow the gap between international and domestic prices. Accordingly, people will benefit and the gold market will also stabilize.

“With such control, issues regarding exchange rates and foreign exchange will not be affected because the import figure of 100 million USD is not too large,” Mr. Khanh said. At the same time, he said that if the state monopoly on SJC gold bars and the State Bank’s monopoly on gold imports are not removed, there will be no more effective solution.

“If supply is not increased, there is no way to reduce the price difference. This is a supply-demand issue, monopoly causes supply bottlenecks, if not resolved, the difference will increase more and more. The market over the past 10 years has proven this, no administrative measure can narrow the gold price difference,” said Mr. Khanh.

Many mixed opinions

Also believing that gold import is the fastest way to stabilize the market and limit the current painful gold smuggling situation, as well as making the "black market" exchange rate in the past always "hot" and higher than the exchange rate in the bank, however, Associate Professor Dr. Nguyen Huu Huan, University of Economics Ho Chi Minh City emphasized that gold import needs to be imported according to quota, meaning the State Bank will balance based on the surplus of the balance of payments, annual foreign exchange reserves to grant an appropriate gold import limit, avoiding the use of too much foreign currency resources for gold import which can affect the balance of payments as well as the exchange rate of Vietnam.

Associate Professor, Dr. Nguyen Huu Huan raised the question: If people buy gold as much as they earn, where will the capital come from to reinvest in production and business?

Besides, it is necessary to conserve the current foreign exchange reserves to prioritize more important matters than stabilizing the price of gold, a non-essential product that does not support much in promoting economic growth, if not to say it is a barrier in mobilizing resources in the economy for growth.

“If people buy gold as much as they earn, where will the capital come from to reinvest in production and business? At that time, we will have to face the problem of trade deficit and exchange rate pressure when most of the foreign currency is used to import gold,” Associate Professor Dr. Nguyen Huu Huan raised the issue.

Meanwhile, Associate Professor Dr. Ngo Tri Long, an economic expert, expressed his opinion that to stabilize domestic gold prices, eliminating the monopoly is only one factor. “There are opinions that we must increase gold imports or entrust some import units... that is dangerous. Because if we continue like that, it will create conditions for the supply of physical gold, while the world trend is not only physical gold but also gold accounts. If we import gold, the State must spend foreign currency; the more physical gold supply increases, the more “goldenization” there will be. Therefore, we must synchronize solutions at the same time. When amending the decree, we cannot change more than 20%, so Decree 24 must be replaced,” Mr. Long suggested.

From another perspective, an expert believes that the amendment to Decree 24 on gold market management should aim to serve the overall economy. In theory, any solution that increases supply and reduces demand will achieve the goal of narrowing the gap between domestic and international gold prices. However, according to this expert, if the amendment to Decree 24 only sets the policy goal of "narrowing the gap between domestic and international gold prices", will it ensure the safe and healthy development of the gold market as required by the Prime Minister? Therefore, the expert believes that policy design can only be successful when it aims to serve the overall economy.

Whether or not to continue the monopoly of SJC gold bars? or which businesses will be allowed to import gold? will continue to be considered and reviewed by the management agency. However, according to the message raised by Deputy Governor of the State Bank Dao Minh Tu at the beginning of the year, whether to maintain the monopoly of SJC or to allow many other gold bar brands, the goal is still to ensure that this market does not affect the macro environment, ensuring the rights of more than 100 million people.