Proposed end to gold market monopoly to pave way for new players

Proposed end to gold market monopoly to pave way for new players

The State Bank of Vietnam (SBV) has finalised a draft amendment to Decree No. 24/2012/ND-CP, proposing the removal of the state monopoly on gold bar production and imports of gold.

The new mechanism would authorise qualified banks and businesses to import gold bars, a move expected to positively impact the domestic gold market and narrow the price gap of SJC-branded gold bars.

According to Dao Xuan Tuan, director general of the SBV’s Foreign Exchange Management Department, the draft was completed promptly following government instruction.

Removing the monopoly on gold production would help stabilise the bullion market

Regarding the management of the bullion market, the amended decree includes provisions to abolish the state’s exclusive control over gold bar production, as well as the export and import of raw gold for gold bar manufacturing.

The new regulations propose that the SBV would issue licences to selected banks and enterprises that meet eligibility criteria, allowing them to produce gold bars and import raw gold either for gold bar production or for use in jewellery and fine arts manufacturing.

Based on macroeconomic and gold market developments, the SBV would allocate import quotas to licensed banks and businesses.

This approach aims to end the state monopoly while maintaining tight control over the production and importation of raw gold for gold bars.

If the amended decree is passed, it will pave the way for new gold brands coming onto the market, produced by licensed banks and businesses.

This would enhance consumer choice, foster market competition, and reduce large price discrepancies between different gold brands.

The draft decree also proposes updates to payment regulations, requiring gold transactions to be processed via bank accounts and with electronic invoicing. These changes aim to improve transparency in gold bar transactions.

Additionally, the draft stipulates that authorised enterprises and credit institutions must develop internal policies for the import and sale of raw gold, ensuring transparency and accountability.

These entities must also develop robust information systems to accurately store transaction data and facilitate information sharing with relevant authorities, as mandated by law.

According to economist Le Xuan Nghia, while Vietnam imports only $3-4 billion worth of gold annually, concerns about foreign currency outflows often arise.

Imports of luxury goods like foreign liquor, cigars, and tobacco total up to $8 billion per year, and attract far less scrutiny. “This is irrational,” he noted.

According to Nghia, the most effective solution to current gold market issues is to liberalise imports under SBV regulations, allowing a select group of businesses to participate.

In its feedback on the draft amendment, the Vietnam Gold Trading Association (VGTA) strongly supported removing the state monopoly on gold bar production and authorising capable enterprises and banks to produce gold bars.

However, the VGTA opposed allowing commercial banks to engage in gold bar production and trading.

The association argued that under the Law on Credit Institutions 2024, the core function of commercial banks is monetary business, especially lending, and providing payment services.

Engaging in gold bar production would require substantial capital investment in factories, equipment, and skilled labour, areas outside the banks’ primary mandates.

Such a shift could undermine the key responsibility of banks.

The VGTA further recommended that the SBV set annual quotas for the import and export of gold bars and raw gold, with allocations made publicly at the beginning of each year.

This would allow businesses to plan their import volumes within their allotted quotas and submit periodic reports to the SBV. Any adjustments to import/export quotas would be at the SBV’s discretion.

At a policy meeting in late May with the Central Economic Commission on the efficient management of the gold market, General Secretary To Lam called for a swift overhaul of Decree 24, emphasising a controlled market-oriented approach with a clear roadmap. He advocated expanding regulated gold import rights to boost supply, help align domestic prices with global levels, and curb cross-border gold smuggling.

At the same time, it is necessary to encourage the development of the gold jewellery market to gradually position Vietnam as a regional hub for high-quality gold processing and exports. This transformation would help convert hoarded gold into higher value-added products.

VIR