Prime Minister Nguyen Tan Dung has allowed the State Bank of Vietnam (SBV) to trade gold bars in an effort to stabilise the local gold market and stock gold bullion for the State foreign exchange reserve.
A Government Decision, signed on March 4, states that the central bank governor will be in charge of deciding when it is necessary to intervene in the local market.
SBV Deputy Governor Le Minh Hung said interventions aim to fight goldization and protect gold owners and consumers.
Hung told Vnexpress news wire on March 4 it is the proper step towards narrowing the domestic and global market price gap. It will help ensure the stable market in the long run.
He made it clear that any intervention by the SBV will not be for profit.
The Deputy Governor said the SBV will 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 believes that it will succeed in stabilizing the domestic gold market.
As government Decree 24 on gold trading management is 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 year, 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 Jewelry Company) as the country’s national brand. SJC-a wholly-State run company-had a 95 percent share of the local market before the SBV asked the Government to issue Decree 24.
Le Hung Dung, SJC Chairman, said the new policies from the Government have resulted in significant losses for his company.
Previously, gold bar production brought SJC 80 percent of its revenue. However, after Decree 24 was released, both revenue and profits fell by 20 percent.
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.