Vietnam Gold Trading Association (VGTA) asked the State Bank of Vietnam to allow local producers of gold jewellery and fine art to import gold materials.
VGTA’s chair Nguyen Thanh Long said when the local gold prices were higher than the international prices, firms needed to import gold materials so that they can have better prices to make their products.
Since the government issued Decree 24 on management of gold trading in 2012, which enables the central bank to directly intervene in the local gold market, the market has become stable. Gold traders decreased sharply from 12,000 units then to 38 now.
However, Long said that the decree which also made SBV the only gold importer in Vietnam, was making a lot of trouble for local gold jewellery manufacturers when they could no longer have accessible gold material for import.
SBV only allowed a few firms to import gold materials under their strict supervision. Without permission, others must buy gold from unofficial markets, which encouraged gold smuggling into the country.
At the same time, according to data from HCM City’s Jewellery Association, over 70 per cent of producers were faced with the tight regulation of SBV’s on credit loans for manufacturing.
Thus, the association suggested the central bank grant import licenses to gold jewellery and fine art manufacturers with SBV permission.
In a further development, VGTA also asked for the government to let local firms borrow gold materials from people for their production. Chair Long said the Law on Credit Institutions in 2010 did not stipulate the conditions for mobilising gold while SBV’s circular No 11/2011/TT only terminated the mobilising capital in gold of the credit institutions. Thus, Long said corporate gold mobilisation should be adjusted under the Investment Law 2014, Law on Enterprises 2014 and the Civil Code 2005.
Long said under the Investment Law 2014, the gold borrowing from local organisations and individuals for production were not listed under the conditional investment. Long added that the activity was not on the gold business activities as stipulated in Decree No 24/ND-CP because, the gold loans were only to serve the production of gold jewellery and fine art, not for trading for profit.
So the association suggested the central bank and the Ministry of Justice not to consider the mobilisation as the profitable trading that needs a license.
As a response, deputy director of the State Bank of Vietnam (SBV)’s HCM City branch, Nguyen Hoang Minh told local media that the production of gold jewellery and fine arts were one of the traditional handicrafts that brought profit to the city and created jobs for local people.
Thus, Minh said, SBV’s branch has been collecting information on the matter to see if the bank could solve the problem, adding that without a timely solution, there were chances for gold smuggling in the country when local manufacturers had to buy gold from the unofficial market.
While Minh did not mention about the gold loans from local sources for their production in May, SBV refused the VGTA’s proposal to mobilise privately owned gold.
An anonymous official from the central bank told the local media it would be very risky in terms of the price movements it might cause, claiming there has been no precedent by any government in the world in this regard.