Turning point for Vietnam's gold market: end of state monopoly in sight!

Turning point for Vietnam's gold market: end of state monopoly in sight!

Vietnam's gold market is at a turning point as the government seeks changes after more than a decade of monopoly policies in bullion production. Secretary-General To Lam has called for the end of the state's monopoly on gold bullion brands, with the aim of enabling more transparent and competitive development of the gold market, reports vietnam.vn. The state will continue to control production, but will not act in a monopolistic manner, meaning that qualified companies will receive licenses to produce gold bars.

Inadequate supply has led to a significant price gap between the domestic and global markets in Vietnam. The price of SJC gold bars has historically been VND15 million to VND18 million per tael higher than the international price. Dr. Le Xuan Nghia even described the gold market as “abnormal,” with high demand that could not be met. Experts emphasize that market deregulation is necessary to bridge the gap between prices, which can currently reach up to VND 20 million per tael, as vietnamnet.vn reported.

Proposals for reform and the need for competition

The most commonly cited reform proposals include allowing companies to import and export gold. Licensing raw gold imports could thus promote sustainable supply expansion while preventing the market from continuing to suffer from supply shortages, a situation that has existed since 2014. Experts suggest that the price difference could be reduced to VND1 to 2 million per tael if the monopoly is broken.

Nguyen Tri Hieu, a financial expert, criticized the State Bank of Vietnam (SBV)'s slow response to the price differences, pointing out that monopolies create advantages for their owners. During a press briefing, SBV Vice Governor Dao Minh Tu acknowledged the unacceptable price difference of up to VND20 million per tael and described measures to combat this issue as urgent.

The role of the state bank and the impact on the market

The State Bank currently has the exclusive right to import gold and has so far shown itself unwilling to give up this power. Critics argue that maintaining the monopoly serves to avoid 'goldization', whereby citizens hoard gold and base valuations on gold or US dollars. Instead, the central bank should encourage competition between different gold products.

Another concern of experts and representatives of the Vietnamese gold industry is the establishment of a national gold exchange to improve access to information and promote gold investments. A controlled import strategy already prepared by the Vietnam Gold Business Association could serve as a solution to address the existing imbalance in the market if the SBV continues to block gold imports for businesses.

In summary, developments in the gold market depend crucially on the government's willingness to introduce necessary reforms. The early entry into force of the changes to Decree 24 and the opening of the market to qualified companies could help revitalize the gold market in Vietnam and reduce the price gap.