>> New gold-trading decree worries dealers
The State Bank of Vietnam (SBV) is seeking Government approval for a draft decree to tighten control over gold bar production and trading.
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| The Saigon Jewellery Limited Company may hold a monopoly on gold bar production |
Once the proposed decree is approved, the Saigon Jewellery Limited Company (SJC) will hold a monopoly on gold bar production.
The regulation would leave SJC as the sole gold producer able to meet several strict requirements, including having a minimum market share of 25% for three consecutive years.
The SBV said only SJC could meet the requirement as it currently holds over 90% of the country’s gold bar market.
An anonymous gold expert said the regulation may result in inequality for other gold producers as many of them have invested in gold production technology and trademark development. Apart from SJC, another seven gold bar trademarks currently operate in the domestic market.
He admitted the necessity to manage the gold market, but called for careful consideration of the proposal.
“If only one firm produces gold bars, it would foster monopoly, harming consumer interests,” he emphasised.
According to an undisclosed source, the SBV aims to directly manage gold production and trading. The bank already regulates SJC’s daily gold buying and selling prices in order to stabilise the market.
The SBV wants to directly receive orders from traders, and then will request the SJC to produce gold bars to meet market demand, the source said, adding that such a model has been applied in many countries.
However, the anonymous expert worried that the country’s gold supply may not be guaranteed if the SJC refuses to take orders from the SBV, as the firm is not a SBV subsidiary. He also wondered if SJC was capable of ensuring stable gold bar supply for the whole market. Any disruption in supply could cause a major price hike.
He pointed out that the regulation would only allow firms with charter capital of over VND100 billion (USD4.76 million) and three subsidiaries in three big cities and provinces to trade in gold bars, contrary to the current situation that saw feverish gold trading at small gold shops.
He wondered if the currently 10,000 gold shops would be compelled to entirely stop operations or still operate illegally to meet demand.
