It is not easy to participate in gold bar production.

Minimum charter capital of 1,000 billion VND to participate in gold bar production is too big a barrier.

By the end of June 26, the price of SJC gold bars on the market remained at 119.8 million VND/tael, higher than the world gold price by over 13 million VND/tael. The main reason is that the "thirst" for gold bar supply has not been relieved, while the draft amendment to Decree 24/2012 continues to receive many conflicting opinions.

There are still barriers

The Vietnam Chamber of Commerce and Industry (VCCI) has just issued a document providing comments on the draft Decree amending and supplementing a number of articles of Decree 24 on the management of gold trading activities. This comment was built on the basis of synthesizing opinions from the business community.

VCCI believes that the condition of having a minimum charter capital of VND1,000 billion to be allowed to participate in gold bar production is too high, becoming a major barrier, eliminating the majority of businesses from accessing this field.

According to the new draft decree, only a few enterprises are qualified to participate in the production of gold bars, reducing competition and not diversifying supply sources, thereby affecting the choice and interests of consumers. Therefore, VCCI requested the drafting agency to reconsider this regulation.

SJC Company is the exclusive enterprise producing SJC gold bars but its charter capital is only about 500 billion VND. Photo: LAM GIANG

The Vietnam Gold Trading Association (VGTA) also believes that the charter capital requirement of VND1,000 billion or more is too strict. According to VGTA, currently, only about 1-3 enterprises in the market meet this requirement. If the regulation is kept as it is, the number of enterprises participating in gold bar production will be insignificant, and supply will continue to be limited.

VGTA recommends selecting about 5-7 reputable, efficient and capable enterprises to participate in the production and supply of gold bars to the market. This will help increase the supply and diversify the gold bar brands, while still ensuring quality standards and market demand.

"It is recommended that the State Bank (SBV) refer to the actual initial capital needs of Saigon Jewelry Company (SJC) when investing in gold bar production, in order to have a basis for regulating charter capital conditions in accordance with reality. A charter capital of VND500 billion or more for an enterprise is appropriate" - VGTA representative acknowledged.

Previously, in the draft decree, the State Bank said that the addition of the charter capital condition was to comply with the policy of shifting from the monopoly mechanism of gold bar production to a conditional licensing mechanism. The setting of financial criteria is to ensure that licensed enterprises have sufficient capacity, comply with the law and carry out production within the state management framework.

Gold imports should be allowed to limit gold smuggling.

According to many businesses, the reason why domestic gold prices are continuously higher than world prices is due to limited supply. From 2014 to April 2024, the State Bank of Vietnam did not increase the supply of SJC gold bars to the market. Meanwhile, the demand for gold bars has always remained high, especially at times when gold prices fluctuated strongly.

The State Bank also acknowledged that the monopoly mechanism for the production, export and import of raw gold for the production of gold bars has revealed some limitations. In fact, the management agency had to use foreign currency from the national reserve to import gold to intervene and stabilize the market.

Dr. Nguyen Tuan Anh, a finance lecturer at the Faculty of Business, RMIT University Vietnam, said that the domestic gold bar price is continuously higher than the world price due to the scarce supply.

This is a consequence of the monopoly production mechanism through SJC and the ban on gold imports since 2012. This has isolated the domestic gold market, increased smuggling activities, and put pressure on exchange rates and foreign exchange reserves.

Mr. Tuan Anh believes that it is necessary to reform in the direction of marketization, increase supply and transparency to narrow the price gap, limit speculation and gradually integrate the Vietnamese gold market with the world. "Instead of maintaining the monopoly of the SJC brand, the state should license a number of enterprises that meet strict criteria such as minimum capital, modern technology and market experience to participate in the production of gold bars.

Regarding gold imports, it is necessary to set annual quotas suitable to domestic demand, grant them to qualified enterprises to control foreign currency flows, avoid gold price inflation, and gradually lift the current import ban," he proposed.

Economist , Associate Professor, Dr. Ngo Tri Long emphasized the need to amend Decree 24 in the direction of controlled marketization. The goal is to connect the domestic gold market with the world, limiting the situation of prolonged price differences, causing macroeconomic instability.

Mr. Long proposed to conditionally abolish the monopoly on gold bars and expand production rights to qualified enterprises through a transparent licensing mechanism. This would help increase supply, reduce monopoly, bring domestic gold prices closer to world prices, and promote healthy competition.

"The State Bank's monopoly on importing raw gold used to help stabilize the macro economy and control the market. But in the current context, this mechanism has revealed many shortcomings. It is necessary to consider adjusting the policy, allowing gold imports for qualified enterprises to promote competition, stabilize the market and protect consumer rights," Mr. Long emphasized.

Application of technology to control imported gold

Experts say allowing more businesses to import gold is an important step to increase supply, narrow the price gap between domestic and international prices, and promote competition in the market.

Dr. Nguyen Tuan Anh proposed the need to closely monitor foreign currency flows - a key factor to protect exchange rates and foreign exchange reserves. Importing enterprises must clearly report on the source of foreign currency used to avoid capital withdrawal from the free market.

"Blockchain technology can be applied to track the flow of gold from import to distribution, ensuring transparency of origin and limiting market manipulation. If implemented synchronously, Vietnam can take advantage of the benefits of liberalizing gold imports while still maintaining economic stability," said Dr. Nguyen Tuan Anh.

Source: https://nld.com.vn/khong-de-tham-gia-san-xuat-vang-mieng-196250626211731186.htm