Closing the Q&A session with the State Bank Governor Nguyen Thi Hong, National Assembly Chairman Vuong Dinh Hue asked to amend and supplement legal documents to perfect the legal framework on forex and gold market management, and banking operations, including Decree 24.

Several deputies asked the Governor about the state monopoly in gold trading. “We may remove the monopoly status and allow other brands to produce gold bullion. However, it is necessary to make thorough assessments and we will consult with relevant parties,” Hong said. The request of the National Assembly Chair and Hong’s commitment offer hope that the gold market management problem will end.

Ten years ago, Vietnam’s macro economy was in a whirlwind and inflation was high for many reasons, including loosened fiscal and monetary policies, and rampant and ineffective investments of state-owned enterprises. This prompted people to rush to buy gold. A gold price fever occurred, the gold market witnessed uncertainties, and foreign currencies flowed out of the country to import gold.

Decree 24/2012/ND-CP was then issued, which said that the State holds the monopoly in making gold bullion, and importing and exporting gold materials for bullion gold production. The state used SJC as its gold brand.

At several National Assembly sessions, some deputies said that since the decree was released, a gap occurred between domestic and international prices. All other gold brands (non-SJC) in Vietnam decreased in price which led to market instability. They questioned if there was collusion among involved parties to manipulate SJC gold in the market, and when the State Bank asked the Government to amend Decree 24 to settle the problems of gold trading activities.

Pham Van Hoa, a National Assembly deputy from Dong Thap, said that 10 years ago, when the decree was issued, the gold price in the world market was below $1,600 per ounce, and the figure is over $1,800 per ounce now. Prices in Vietnam were VND30-35 million 10 years ago and are VND70 million now.

“If the domestic gold price keeps escalating, the Vietnam dong will lose its value. It is necessary to reorganize the domestic gold market to be sure that it is in line with the world market,” he said.

Governor Hong said the central bank has not used forex reserves to import gold to intervene in the market. She defended the policy on allocating the state monopoly to SJC. “SJC selling prices are high, but its buying prices are also high. Meanwhile, non-SJC gold prices are lower, and their buying prices are also lower. So, if people choose to buy SJC gold, they have to pay high, but they will be able to sell at high prices later,” Hong explained. 

The monopoly in the gold market is a matter of public concern. This can be seen in the questions raised by deputies from the 13th to the 15th NA terms. The answers of the watchdog agency still cannot satisfy people.

Experts say that under the Law on State Bank of Vietnam and ordinance on forex management, the State Bank is a state management agency, not a business, so allocating the State Bank to produce gold bullion as stipulated in Decree 24 is not reasonable, because gold bullion gold is a ‘commodity’.

People rush to buy gold because of fear of high inflation and macroeconomic uncertainty. The move is a consequence, not a cause. The resolution of the 13th Party Congress and government’s reports about socio-economic development all affirm that the macro-economy has been stable and inflation has been curbed. The achievement gives another reason for the government to amend Decree 24.

Tu Giang