Việt Nam is set to undergo a significant transformation in its gold trading policies, with expectations of regulatory amendments being completed by June. The move is aimed at addressing longstanding challenges in the domestic gold market, particularly the imbalance between supply and demand.
The government’s reform plan centers on amending Decree 24/2012/NĐ-CP, which has restricted the importation of gold for over a decade. The new regulations, as ordered by the Prime Minister, could open the door for businesses to legally import gold, potentially alleviating supply shortages that have plagued the market for years.
Current State of Gold Trading: A Monopoly System
Under the existing framework set by Decree 24, the State Bank of Việt Nam (SBV) has exclusive authority over the production of gold bars and the importation of raw gold. This regulation has effectively frozen gold imports since 2012, forcing gold businesses to source raw materials from unregulated and often illegal markets, exposing them to considerable legal and financial risks.
Đinh Nho Bảng, the Chair of the Việt Nam Gold Trading Association, has long advocated for the legal importation of gold to ensure a stable and reliable source of raw materials. He expressed hope that the revision of Decree 24 would finally bring this change into effect, emphasizing that modern technology now allows for effective tracking and control of imported gold, including its usage, consumption, and inventory.
Impact of the Current System on the Gold Market
Việt Nam’s gold market has struggled with persistent shortages, contributing to significant price disparities between domestic and international gold prices. The price gap has at times reached as high as VNĐ20 million per tael, driving speculation, smuggling, and price manipulation. Economic experts agree that the reliance on unregulated supply sources has resulted in a volatile market, making it increasingly difficult for authorities to manage effectively.
Lê Xuân Nghĩa, an economic expert, pointed out that the lack of a legal and stable supply chain has undermined the stability of the market, contributing to the volatility observed over recent years.
Experts Agree: Controlled Gold Imports Are Essential for Market Stability
There is widespread consensus among experts that allowing controlled gold imports would be key to stabilizing the market and reducing the price volatility that has harmed both businesses and consumers. While gold is a sensitive commodity tied to foreign reserves, experts argue that qualified businesses should be allowed to participate in gold imports under the oversight of the SBV.
Nguyễn Trí Hiếu, another economic expert, suggested that the SBV should transition from being a direct market participant to a more passive role as a regulator. Under this model, import and production rights would be granted to reputable businesses that meet specific eligibility criteria, with the SBV managing imports through a transparent quota system based on actual market demand.
This shift, experts say, would help to significantly reduce smuggling, curb the outflow of foreign currency, and restore investor confidence in the gold market. Over time, gold could return to its traditional role as a stable store of value, rather than a speculative asset.
Long-Term Benefits: Economic Stability and Growth
Nguyễn Quang Huy, the head of the Finance-Banking Faculty at Nguyễn Trãi University, believes that a healthier gold market will ultimately encourage people to move away from hoarding gold and instead invest in more productive assets such as stocks, real estate, or retirement funds. This could lead to a more diversified and stable economy, benefiting the nation in the long run.
Risks and the Need for a Comprehensive Framework
While the relaxation of gold import restrictions is seen as a vital step in stabilizing the market, experts stress that the reform must be part of a broader regulatory framework. This framework should include anti-money laundering compliance, tax transparency, proper invoicing, and routine inspections to prevent gold from being used for illicit activities.
There are concerns that an influx of gold imports could potentially trigger a surge in demand, which could, in turn, lead to price instability. However, experts believe that clear rules—such as requiring personal identification for transactions and ensuring proper documentation—will prevent this and reduce the risk of gold being used for speculative or illegal purposes.
The Path Forward: Transparency and Regulation
Hoàng Văn Cường, another economic expert, explained that much of the recent instability in the gold market has stemmed from the SBV’s monopoly on gold imports. This monopoly has driven much of the market into unofficial channels, leading to speculation, profiteering, and smuggling. If gold imports are allowed, these problems could be largely resolved, he said, adding that a regulated and taxed import system would help improve market transparency, curb manipulation, and even increase government revenue.
Moreover, the shift in policy could also allow gold businesses to pivot towards gold jewelry production and exports. This could turn gold from a net drain on foreign reserves into a potential source of foreign currency, contributing to economic growth.
Lê Xuân Nghĩa remarked that importing $3-4 billion worth of gold annually would not be alarming, especially when compared to the country’s $8 billion annual import bill for luxury goods such as wine and cigars. The new policy, he believes, could open up a range of opportunities for businesses and the Vietnamese economy as a whole.
Conclusion
Việt Nam is on the cusp of a major regulatory shift that could have profound implications for its gold market. The expected amendments to Decree 24 could bring much-needed stability, transparency, and legal clarity to the sector, offering a much more sustainable path forward. However, as with any significant change, it is crucial that the reform be implemented within a comprehensive framework to ensure it does not inadvertently open the door to new challenges or risks.
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