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Vietnam to stabilise gold prices
Publication Date : 05-03-2013
Vietnam Prime Minister Nguyen Tan Dung yesterday officially allowed the State Bank of Vietnam to trade gold bars in efforts to stabilise the local gold market and to stock gold bullion for the State foreign exchange reserve.
Government Decision 16/2013/QD-TTg, signed yesterday, states that the central bank governor will be in charge of deciding when it is necessary to intervene in the local gold market.
SBV Deputy Governor Le Minh Hung said interventions were intended to fight goldisation and protect gold owners and consumers.
Hung was speaking during an online interview held by news website VnExpress yesterday to answer questions from the public. He said it was the proper step to narrowing the domestic and global market price gap. It would help ensure the stable market in the long run.
He made it clear that any intervention by the SBV would not be for profit.
The deputy governor said the SBV would narrow the gap by putting forward measures in line with the resolution made by the National Assembly and government.
Given the current legal framework on gold trading, the State Bank strongly believed that it would succeed in stabilising the domestic gold market.
As the Decree 24/2012/ND-CP on gold trading management was not yet effective, Hung said, gold traders had already spent a large volume of currency to illegally import gold – negatively impacting the domestic gold market.
The decree sets up a government monopoly on bullion production and the import and export of raw materials for gold bar production.
Over the years, the central bank has conducted many synchronous measures to adjust the domestic gold market, such as establishing a gold bullion buying network and allowing commercial banks to temporarily import and re-export gold bars or import gold bars to cast a national gold brand.
The SBV spent a long time collecting suggestions before choosing SJC (Saigon Jewellery Company) as the country’s national brand. SJC- a wholly-State run company - had a 95 per cent share of the local market before the SBV asked the Government to issue Decree 24.
Le Hung Dung, chairman of SJC, said the new policies from the government had resulted in significant losses for his company.
Previously, gold bar production brought SJC 80 per cent of its revenue. However, after Decree 24 was released, both revenue and profits fell by 20 per cent.
After the central bank decided SJC was not allowed to wholly produce and distribute, the SJC gold bullion were now controlled by the central bank and SJC gold trading was similar to the trading conducted by other companies.