Vietnam is poised to authorize companies to import gold for the first time in more than ten years, aiming to address the widening disparity between local prices and international benchmarks, according to a senior industry official speaking exclusively to Reuters.
Huynh Trung Khanh, Vice Chair of the Vietnam Gold Traders Association (VGTA), disclosed that prolonged discussions between the association and the government have focused on rectifying the supply-demand imbalance of gold in the country.
Since 2012, Vietnam’s government has largely monopolized gold imports and local bullion sales, permitting only certain large firms to import gold under the condition that it is repurposed as jewelry for exports.
Khanh stated, “The government indicated they will commence official gold imports by July or August. We anticipate that gold companies will be allowed to import directly by July.” He made these remarks on the sidelines of the Asia Pacific Precious Metals conference.
The VGTA anticipates that the proposed policy change could take effect as soon as next month, representing a significant departure from the current regime where the central bank tightly controls imports. The State Bank of Vietnam did not provide an immediate response to Reuters’ request for comment.
Efforts to narrow the gap with international benchmarks through auctions and allowing four local banks to sell gold have not had a sustained impact, with domestic prices still commanding stubbornly high premiums over global prices.
Swiftly reducing premiums on domestic prices is imperative, as VGTA forecasts a surge in Vietnam’s gold demand this year, with the country ranking among the top 10 consumers of gold.
Khanh estimated that gold purchases would escalate by 10% year-on-year to 33 million metric tons during the first half of this year. Retail buyers, perceiving gold as a hedge against economic uncertainty, constitute a significant portion of purchases in Vietnam.
The sharp decrease in saving interest rates, the stagnation in real estate, and the constant devaluation of the national currency against the U.S. dollar” are cited as key reasons for strong retail investment demand, Khanh noted.
Moreover, a pronounced increase in gold demand has led to heightened smuggling, particularly from neighboring Cambodia, Khanh emphasized, underscoring the urgency for immediate policy action.
The VGTA, in collaboration with the World Gold Council, is actively engaging with the Vietnamese central bank and other government entities to establish a national gold exchange, which it believes would enhance market stability.
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