Experts: End monopoly in the gold market
An employee prepares a gold dragon statue inside a jewelry shop during Lunar New Year holidays in Hanoi, Vietnam, on Monday, Feb. 19, 2024. Photographer Linh Pham/Bloomberg
HANOI: It is time to fundamentally change the gold market structure through eliminating monopoly and building a gold trading exchange to effectively manage the market, say experts.
Many of them believe that to stabilise the domestic gold market, it is necessary to eliminate the monopoly of gold bars, as directed recently by the general secretary To Lam.
Only when more businesses are allowed to participate in the production and import of gold bars legally and transparently, can the market achieve a state of healthy competition, bringing domestic gold prices closer to world prices.
On the goal of narrowing the gap between domestic and world gold prices, vice-president of the Vietnam Gold Business Association Nguyen The Hung said this depends entirely on actual supply and demand in the market.
In principle, when demand exceeds supply, prices will increase, and gold is no exception.
If the local gold supply is supplemented, domestic gold prices will decrease.
According to Hung, a major bottleneck are the activities of gold jewellery manufacturing enterprises.
Although Decree 24/2012 allows the import of raw gold, gold manufacturing and trading enterprises have not been granted import quotas for more than 10 years.
As a result, they have to buy gold on the market unofficially at high prices with unknown origin.
It means the ultimate risk will be pushed to consumers because they will have to buy gold at prices much higher than the world price.
Another bottleneck of the gold market is the 1% export tax currently applied to jewellery. Vietnamese businesses import raw gold at global prices but are taxed when exporting, making the cost even higher.
Therefore, they cannot compete against their foreign rivals. They also have to bear a series of additional costs such as labour, machinery and depreciation.
Hùng said if the export tax is removed and the supply of raw gold is ensured, it will create a strong driver for jewellery gold exports, attracting foreign currency revenues into the country.
According to deputy Tran Anh Tuan of the National Assembly delegation of Ho Chi Minh City, if the government shifts to market-based management and create conditions for qualified enterprises to participate in the production, trading and distribution of gold as a normal commodity, the gap between domestic and global gold prices will be narrowed.
'It is necessary to open the door to qualified enterprises. If they have a licence, they should be allowed to import according to their actual capacity.' — Vietnam News/ANN
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