VietNamNet Bridge – The State Bank of Viet Nam on Tuesday, Jan 8, granted gold bar trading licences to seven more firms, bring the total number of bullion traders nation-wide to 38.

The 38 firms have a total of 2,497 transaction points.

The newly-licensed firms include five credit institutions and two gold trading companies.

Many of the banks licensed so far are those that were previously involved in mobilising and/or storing gold, including HDBank, Nam A, Maritime Bank, OCB and Southern Bank.

The central bank said that it would continue granting gold bar trading licences to "qualified" firms with registration documents in order.

As per Decree 24/2012/ND-CP, enterprises wanting to trade in gold bars are required to have a charted capital of at least VND100 billion and at least two years' gold trading experience.

They are also required to have made tax payments of at least VND500 million from gold trading annually for two consecutive years and have branches in at least three centrally governed provinces and cities.

For credit institutions, the SBV will consider granting business licenses for gold bar trading if they meet three conditions.

They should have a charted capital of at least VND3 trillion (US$142 million), completed registration for gold trading, and have trading networks in at least five centrally governed provinces and cities.

A representative of the Foreign Currency Management Department said that it had found that demand for gold bullion was high only in major provinces and cities since it is a special commodity with high value.

The current number of 2,500 transaction points is enough to meet market demand. However, they will compete with each other in prices and service quality, since they will have to buy gold bars and then sell them, he said.

The fact that there is only one firm producing gold bullion ensures that the product will be of uniform quality and major fluctuations are not likely, one market observer said.

The newly licensed gold bar traders are preparing to start trading today. The central bank will carry out inspections on these firms to discover and deal with any violations. It has also said that it will continue its strict management of the gold market as stipulated by Decree 14 issued by the Government and the subsequent Circular 16 issued by the central bank itself.

It has already provided the list of legal gold bar transaction points to the joint inspection team comprising SBV, police and market management officials.

Nguyen Hoang Minh, deputy director of the SBV branch in HCM City, said that gold trading at licensed points would ensure safety for buyers.

If authorised agencies find gold bar trading at unlicensed points, both sellers and buyers would be punished severely since gold bar trading now is treated on par with trading of foreign currency, Minh said.

Jewellery trading

Meanwhile, a recent VietNamNet newswire report says that that contrary to expectations, the central bank will also tighten its management of trading in gold jewellery by issuing new regulations.

The report cited a central bank official as saying they would begin implementing soon the provisions contained in Decree No.24 and Circular No 16 on gold market management.

Accordingly, household businesses will not be allowed to trade in gold jewellery. Gold shops should re-register themselves if they want to continue their operations. Gold sellers must prove the origin of the jewellery to be sold to customers. All gold jewellery transactions must be carried out with invoices that must be shown to competent agencies as required.

Nguyen Thanh Long, chairman of the Viet Nam Gold Trading Association, said that both organisations – those that are allowed to trade in gold bullion and those that are not allowed to be involved this business – need more time to adapt themselves to the new situation.

It would also be difficult for the central bank and state management agencies to control over 2,000 gold bar transaction points and nearly 10,000 gold jewellery trading points, according to Huynh Trung Khanh, an expert with the World Gold Council in Viet Nam.

If the management work is not carried out properly, it would create opportunities for red tape practices to rear again, Khanh said.

Source: VNS