Vietnam central bank set to end Gold import monopoly

The Vietnamese gold market is about to undergo significant reforms that could boost competition, lower prices, and increase supply.

A government decree will open the door for eligible banks and enterprises to import gold into the country and produce bullion. Currently, the Saigon Jewelry Company Limited (SJC) enjoys a monopoly on the importation of gold and the production of gold bars. 

The State Bank of Vietnam (SBV) granted the gold monopoly to SJC under Decree 24/2012/ND-CP, issued in 2012. SBV director Đào Xuân Tuấn recently announced that the central bank is in the process of amending the decree to end the monopoly. 

“The SBV will issue licenses to the credit institutions and enterprises meeting requirements to import raw gold to produce bullion, or use the imported material to produce jewelry.” 

According to Vietnam News, the goal is to dismantle the monopoly while maintaining the state's regulatory and supervisory role. 

According to Tuấn, the State Bank of Vietnam will grant import quotas based on "macroeconomic conditions, monetary policy, and market fluctuations." However, the move should expand choices for consumers, and it could increase the supply of gold flowing into the country. The Vietnam News reported, "Allowing multiple bullion brands is expected to create a more competitive marketplace, narrow price differentials between brands and ultimately benefit consumers."

Officials also say the move should increase the availability of raw gold in the country.

Licensed bullion producers will be required to publicly declare quality standards and maintain detailed transaction records.

The new rules will increase reporting requirements, mandating that all gold sales be made through a bank account and accompanied by electronic invoices. Transactions of VNĐ20 million or more will be required to be made through a customer's payment account and the payment account of the gold trading enterprise opened at a commercial bank or a foreign bank branch.

A large percentage of Vietnam's population owns gold to preserve wealth and hedge against inflation. It is also culturally important, playing a role in weddings and festivals. While the government tightly controls the gold market, there is a significant underground gold economy to meet demand.

Last year, Vietnam Gold Traders Association vice-chairman Huynh Trung Khanh said gold bars have become the “major channel of investment in Vietnam.” 

Currency depreciation is a significant problem in the Southeast Asian country. The dong lost about 10 percent of its value compared to the dollar since the tail-end of the pandemic. 

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