Economists call for abolishment of State Bank of Vietnam’s gold bar production monopoly

Eminent economists have called on the State Bank of Vietnam (SBV), the country’s central bank, to relinquish its decade-old monopoly on gold bullion production.

Decree 24, dated in April 2012, which regulates gold trading, has helped the government push back “goldization” (a term that indicates a preference for keeping gold as a means of reserve to hedge inflation) of the economy.

Such a decree has its mission completed and it is high time the SBV got rid of the monopoly on SJC-branded gold bar production, economists said at a meeting of the National Advisory Council for Financial and Monetary Policies on Thursday.

Eligible companies should be allowed to produce gold bars, they added.

The potential dropping of gold bar production monopoly was raised by the SBV at a government meeting on March 20.

The SBV stopped gold auctions in 2014 and has not resumed sales of this precious metal since. Given thin supply, gold prices in Vietnam have soared in recent years, widening the price gap with international markets, reaching nearly VND20 million ($800) per tael at certain moments. The gap now moves around VND14-15 million per tael.

SJC-brand gold was trading at VND79-81 million ($3,163-3,243) per tael for buying and selling on Friday afternoon, little changed from Thursday.

High demand for gold bullion has caused ring prices to rise to VND69.2-70.55 million a mace, an all-time high. A mace is equivalent to 3.75 grams or 1.2 ounces.

Speaking at the meeting, the SBV’s Deputy Governor Pham Thanh Ha said the gold bar market in Vietnam has restored order and stabilized, with a narrower gold trade network than around a decade ago. Gold mobilization and lending have terminated.

The gold market in Vietnam has experienced ups and downs recently, but it is much steadier than before, causing an insignificant impact on the official forex market like it did years ago, Ha added.

Deputy Prime Minister Le Minh Khai, head of the council, directed the SBV to consider economists’ comments and propose solutions and submit them to the Prime Minister for consideration.

Khai also asked for perfecting the legal framework to ensure that the gold market operates in a transparent and sound manner.