Unlocking resources from gold
Nguyen Tri Hieu, a finance and banking expert, said that the instructions from General Secretary To Lam will pave the way for fundamental changes in the current management of the gold market. Revitalizing and fortifying the gold market will establish an optimal ecosystem for the dormant gold reserves in the society to be mobilized and integrated into the market.
However, it is essential to implement a policy that mobilizes this gold resource for investment in production and economic development. Once mobilized, gold can serve as collateral, enabling Vietnam to secure funding from financial institutions and organizations for critically important national projects.
He added that Vietnam could further explore the operational model of the Chicago Mercantile Exchange (COMEX) gold trading floor in the US, recognized as one of the world's largest and most significant. COMEX offers diverse trading methods, including gold futures contracts, gold options, electronic trading, self-managed account trading, and order trading.
Nevertheless, expert Nguyen Tri Hieu cautioned that establishing a gold trading floor or issuing gold certificates requires two essential guarantees: the guarantee of the State Bank and the ability for individuals to exchange the certificates for physical gold at any time. Furthermore, holders of State Bank–issued gold certificates should receive a specified interest rate.
At present, the average savings interest rate set by the State Bank is approximately 5 percent per annum, indicating a low level of risk. In contrast, gold certificates issued by the State Bank are regarded as having an extremely low risk, potentially even zero risk, which may result in a lower interest rate. Expert Nguyen Tri Hieu believed an interest rate of 2 percent per annum for gold certificates is suitable.
Standardizing transactions on the gold market
According to Director Truong Minh Huy Vu of the Ho Chi Minh City Institute for Development Studies, as of now, there is no country with a comparable level of economic development, culture, or gold usage habits to Vietnam that employs a monopoly management system. Specifically, these nations do not empower their central banks to directly engage in the import, export, or monopolization of gold bar production.
With Vietnam's gold supply heavily reliant on imports and the State Bank holding modest gold reserves, market interventions to control gold prices will likely prove ineffective.
Director Truong Minh Huy Vu stated that, following the government's precise assessment and specific directives from General Secretary To Lam—such as exploring the establishment of a national gold exchange, permitting gold to be traded on the commodity exchange, and developing alternative investment channels to mobilize gold from the public—the gold market in Vietnam could see diverse forms of gold circulating in parallel within just 3 to 5 years.
These would include internationally standardized gold produced by reputable global manufacturers, internationally standardized gold produced by Vietnamese companies recognized by international organizations, and gold made to traditional Vietnamese standards. Of these, the first two types are expected to be the primary products traded on the exchange.
He also suggested that from now until the establishment of the gold exchange, investors can transact and receive gold directly between investors and the retail store system of the manufacturer or gold shops or transact through gold depository accounts opened at commercial banks to encourage investors who need to trade gold in large quantities to conduct transactions.
Until the gold exchange is officially operational, physical gold transactions will be centralized to enable the State to manage, oversee, and adjust policies promptly, thereby stabilizing the gold market.
Simultaneously, this will standardize transactions within the domestic gold market and synchronize activities across the gold market to ensure safety and efficiency while minimizing risks.
