In a significant shift in policy, Vietnam is poised to allow companies to import gold for the first time in over a decade. This move comes as the nation aims to address the widening disparity between local gold prices and international benchmarks, according to a senior official from the Vietnam Gold Traders Association (VGTA).
Huynh Trung Khanh, the vice-chair of the VGTA, revealed that the association has been engaged in prolonged discussions with the government to rectify the imbalance in the supply and demand of gold. Vietnam’s government had assumed virtual control over gold imports and local bullion sales back in 2012, with only select large companies permitted to import gold provided it was repurposed as jewelry for export.
Khanh disclosed during the Asia Pacific Precious Metals conference that the government has signaled its intent to commence official gold imports by July or August. This anticipated change would mark a significant departure from the existing policy, wherein the central bank tightly regulates imports. However, the State Bank of Vietnam has yet to issue a response to requests for comment on the matter.
Efforts to narrow the gap with international benchmarks through auctions and permitting four local banks to sell gold have yielded limited success, with domestic prices persistently trading at premiums to global prices.
Immediate reduction of premiums on domestic prices is deemed crucial, particularly as VGTA foresees a surge in gold demand within Vietnam this year. The Southeast Asian nation ranks among the top 10 consumers of gold globally.
According to Khanh’s presentation at the conference, gold purchases are expected to climb by 10% annually to reach 33 million metric tons during the first half of this year. In Vietnam’s economy, which boasts a population of approximately 100 million people, retail buyers, considering gold as a hedge against economic uncertainty, dominate purchases.
Khanh attributed the surge in retail investment demand to a combination of factors, including reduced savings interest rates, stagnant real estate, and the continual depreciation of the national currency against the US dollar.
Amidst the heightened demand for gold, smuggling has also increased, especially from neighboring Cambodia. Khanh emphasized the necessity for immediate policy action, describing the smuggling network as extensive.
To enhance market stability, VGTA and the World Gold Council are collaborating with the Vietnamese central bank and other government agencies to establish a national gold exchange. It is believed that this initiative would provide a more structured and regulated platform for gold trading within the country.
As Vietnam charts its course towards liberalizing gold imports, it anticipates mitigating price discrepancies and fostering a more transparent and efficient gold market, aligning with global standards and facilitating smoother transactions for industry stakeholders and consumers alike.
