Hoang Van Cuong, a National Assembly deputy, said the state holds the monopoly in making bullion gold and uses SJC as the national gold brand. Therefore, people tend to hoard SJC gold as a valuable asset in anticipation of high inflation and currency devaluation.

This creates unfairness in the market as SJC gold is always more expensive than other brands.

The other problem is the big price gaps between international and domestic markets. And because of the differences, gold smuggling has become more and more serious.

“With the current way of management, the government cannot control the gold market, which causes losses to state budget collections, and it cannot create competitiveness, transparency and fairness,” Cuong said. 

“There is no need to hold a state monopoly in gold. When the gold supply observes market rules, gold shortages will no longer occur,” Cuong said.

He said that gold must be imported and exported with no licensing or quota scheme. The management under the ask-and-grant scheme must be replaced with financial tools.

Cuong believes that market-based management methods are needed. For example, the state sets up gold trading floors, allows buying/selling under contracts, and issues credits in gold.

Vietnamese like to buy bullion gold as a safe shelter, rather than jewelry

Gold trading via futures contracts

Nguyen The Hung, deputy chair of the Vietnam Gold Business Council, said in the world market, gold materials (bullion gold, jewelry, gold bars, etc) and bank accounts and certificates in gold can be used in transactions in the market.

In Vietnam, Decree 24 released in 2012 only mentions transactions of gold in kind and clearly stipulates that SJC bullion gold is the national brand. The state holds the monopoly in gold production and trade.

In other countries, central banks do not directly manage gold trading activities, because gold is considered a kind of asset and is managed by state agencies, such as the Ministry of Trade and Industry in Singapore and Thailand. State banks are only responsible for managing the forex market, regulating cash flow, and controlling national reserve, which includes gold, and ensuring monetary security.

In Vietnam, gold is considered a tool to store assets and prevent risks. Today, Vietnam’s currency and exchange rates are stable, so people no longer use gold as a means of payment.

Therefore, in order to increase the surplus value in business and imports/exports, it is necessary to reconsider the managing of the gold market. If gold is a kind of good, the commodity should not be under the control of the central bank.

Tran Tho Dat from the National Economics University said it is necessary to change of the way of thinking about gold market management. Policies and strategies need to consider the gold market as part of the financial market, communicating with the world market. It is necessary to amend Decree 24 to facilitate the development of the gold market in a transparent way.

According to experts, other countries mobilize capital in gold via certificates. The buying/selling of gold certificates must be in accordance with strict regulations, because gold is defined as a special kind of commodity.

Estimating that about 400 tons of gold are in people’s coffers, Dat said this is a huge amount of capital the state should mobilize.

Manh Ha