The government recently issued Decree 232, amending and supplementing Decree 24 on gold trading management. This marks the first policy shift in the gold market in over a decade.

Shifting from a state monopoly on gold bars, the State Bank of Vietnam will now grant gold bar import and production rights to select qualified banks and businesses. An estimated 8 banks and 3 businesses, including PNJ, DOJI, and SJC, are expected to meet the charter capital requirements for gold bar production.

Speaking with VnExpress, Huynh Trung Khanh, Vice President of the Vietnam Gold Business Association (VGTA), described Decree 232 as a turning point for the gold market.

"However, the impact of these new regulations on domestic gold prices will take time. Prices won't immediately align with global rates overnight. We need to await the circular guiding the decree and allow time for an official gold supply to enter the market," he said.

In the medium to long term, he believes the new regulations will bring gold bar prices closer to global levels. The difference could fluctuate around a few percent, about 4-5 million VND, instead of the current near-20 million VND premium. However, Khanh emphasized the importance of monitoring the actual supply entering the market through import licensing.

Similarly, a representative of a licensed gold bar trading company told VnExpress that the degree to which the price gap between domestic and global gold narrows depends on the import quotas set by regulators. "Sufficient supply to meet demand will significantly reduce the difference," the representative stated.

Gold bar transactions at a store. Photo: Giang Huy

According to a representative of Phu Quy Gold Investment Company, the government's issuance of the new decree, abolishing the gold bar production monopoly and allowing qualified banks and businesses to participate, is a crucial step towards market transparency and product diversification.

"With broader participation from banks and businesses in the gold bar market, the price gap between domestic and global markets will undoubtedly narrow, the domestic gold market will operate more stably, and speculation will be curbed," the Phu Quy representative said. This is a positive signal that benefits consumers, investors, and contributes to macroeconomic stability.

Nguyen Trung Anh, Chairman of Ancarat Precious Metals Company, told VnExpress, "The elimination of the monopoly will have a positive and comprehensive impact on the Vietnamese gold market."

This policy will increase competition by removing market manipulation, encouraging more businesses to participate and promoting healthy competition in price, quality, and service. It also presents an opportunity for market transparency. Ultimately, according to Anh, this policy allows businesses to leverage their production capabilities, creating quality gold bar products to meet diverse market demands.

In the long term, according to Ancarat's leadership, the policy of abolishing the monopoly will contribute to narrowing the price difference between domestic and international gold. With a diversified supply and increased competition, domestic gold prices will more closely reflect global prices.

However, Anh also noted that gold prices depend on various macroeconomic factors such as fluctuations in the global gold market, exchange rates, and the State Bank's monetary policy. Therefore, whether gold prices decrease immediately depends on these factors.

Experts have repeatedly pointed to the SJC gold bar monopoly and limited supply as the main reasons for the large price gap between domestic and global gold, sometimes reaching nearly 20 million VND per tael. The monopoly has fostered a preference for holding gold among consumers, leading to shortages and long queues during price fluctuations.

The State Bank also acknowledges the shortcomings of maintaining the current gold bar monopoly. When the market faces a supply shortage, the regulatory body has to intervene and stabilize prices by using foreign currency from the Exchange Rate Stabilization Fund and the Gold Market Management Fund (a component of the national foreign exchange reserves) to import international standard gold, process it into gold bars, and sell it to the market.

"Meanwhile, the advantage of importing under the new mechanism is that it doesn't require using national foreign exchange reserves like the current method," Huynh Trung Khanh commented. The VGTA Vice President assessed that the demand for gold imports is also small compared to the current demand for foreign currency imports.

With the average annual demand for investment gold, including gold bars and 24K plain rings, estimated at around 30 tons, the required foreign currency is about 3.5 billion USD, based on the current world price of 118,000 USD per kg. Meanwhile, Vietnam imports 326 billion USD worth of goods internationally, with some items like tobacco raw materials consuming hundreds of millions of USD and imported fruits and vegetables nearly 2 billion USD.

Another important new aspect for the gold industry is licensing certain entities to import raw gold and then distribute it to jewelry manufacturers and businesses.

With an official supply source, according to the VGTA representative, gold jewelry businesses will no longer have to worry about the origin of their raw gold as they have in the past. The new regulation will greatly assist many businesses in sourcing raw gold for ring and jewelry manufacturing.

Recently, authorities have tightened controls on gold smuggling across the border while not licensing official imports. Consequently, many businesses have faced material shortages. PNJ's leadership previously stated that they faced extremely significant difficulties with raw materials, sometimes lacking gold for manufacturing and sales.

"The crucial factor for businesses is having a sufficient supply of raw materials, which provides strong motivation to expand production and meet customer demand. Ensuring abundant raw materials is an opportunity for domestic businesses to expand production, increase productivity, and reduce product costs," Anh added.

Quynh Trang