Amid Rising Gold Price Disparity, Vietnamese Economist Urges Flexible Government Intervention for Market Stability
As the gap between domestic and global gold prices widens, Associate Professor Nguyen Huu Huan of the University of Economics in Ho Chi Minh City has called for flexible and phased government policies to regulate Vietnam's gold market. In an interview with Vietnam Economic Times, he emphasized the importance of balancing domestic market stability with the country's growing financial openness.
Containing the Price Gap Between Domestic and Global Gold Markets
Dr. Huan believes that proposals to increase gold imports to reduce the domestic-global price gap pose risks to foreign exchange reserves and exchange rate stability. Instead, he suggests that gold import quotas for licensed companies be tied to periods of trade or balance-of-payments surpluses, allowing for more imports when the economy is flush and limiting them during deficits.
He also emphasized that import rights should remain with specialized gold businesses, selected based on their financial strength, production capacity, and market reputation. Granting import rights to state-owned banks, which are not directly engaged in gold trading, would create unnecessary intermediaries and widen the price gap.
He further warned against repeating the pre-Decree No. 24 (issued in 2012) scenario, when excessive liberalization led to a proliferation of counterfeit and low-quality gold due to weak regulatory oversight.
A Gold Credit Market: Unlocking Idle Capital for Development
Dr. Huan proposed establishing a gold credit market as a mechanism to mobilize idle gold reserves hoarded by individuals and convert them into productive capital. Under this system, depositors would receive State Bank of Vietnam (SBV)-guaranteed gold ownership certificates, which could be traded or redeemed for physical gold later.
This mechanism would enhance the government's ability to fund major infrastructure projects, such as high-speed railways and metro lines, without relying on foreign debt. It would also curb speculative behavior and reduce the public's demand for physical gold.
In this context, Dr. Huan sees the creation of a gold exchange as a crucial step toward formalizing gold trading. Gold accounts could be linked to global benchmark prices, thereby narrowing the domestic-global price spread to less than 1%.
A Roadmap for Building a Modern Gold Exchange in Vietnam
Dr. Huan advocates a phased and cautious approach to developing Vietnam's gold exchange. This would begin with establishing a clear legal framework, including rules for trading, quality standards, custody and settlement mechanisms, and anti-money laundering (AML) protocols.
He recommends starting with non-physical gold trading, supervised by the SBV and implemented through major financial institutions, to test digital infrastructure and settlement systems. Once this foundation is secure, physical gold trading could be introduced.
In the medium term, advanced financial instruments such as futures and options could be added, while gradually broadening participation to include banks, investment institutions, and qualified retail investors.
In the long term, Vietnam could offer complementary gold-backed financial services, including gold loans, insurance, and asset management. Linking the domestic gold exchange to international markets would further enhance Vietnam's status in the global financial system.
Risk Management: A Pillar of Market and Financial System Stability
The report stresses the need for robust regulatory oversight to prevent speculation, manipulation, and money laundering in the gold market—factors that could undermine macroeconomic stability and investor confidence.
Recommended measures include establishing early warning systems, setting daily trading limits, regulating financial leverage, and integrating the exchange with the official banking settlement system. Full market transparency must be ensured through real-time publication of prices, trading volumes, and large transactions.
Moreover, Dr. Huan calls for strict enforcement of AML regulations, anti-terror financing laws, and know-your-customer (KYC) protocols, especially for high-risk foreign transactions.
Recommended Location: Ho Chi Minh City's International Financial Center
The report concludes by recommending that the gold exchange be headquartered at the International Financial Center (IFC) in Ho Chi Minh City, citing its superior financial infrastructure, skilled workforce, and global market connectivity.
Positioning the exchange in the IFC would attract international financial institutions, boost liquidity, and enhance market competitiveness. It would also support the development of a secure, digital, and transparent gold market that serves both investor needs and the broader goal of macroeconomic stability.
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