Prof. Dr. Hoang Van Cuong – member of the National Assembly’s Finance and Budget Committee – shared that for a long time, gold has always been a favorite choice of the public to prevent risks, which is legitimate and easy to understand.
However, when this defensive state is more popular in the community, private investment amounts for socio-economic growth will be extremely limited since the investment capital flow is becoming more passive under the form of stored gold. This is even more troublesome since other methods to mobilize finance in the community (credits or bonds) are rather weak.
Assoc. Prof. Dr. Ngo Tri Long – former Vice Chairman of the Institute for Price Market Management (under the Finance Ministry) – commented that for many years, the domestic price of gold bars has always been higher than its international counterpart. The abnormal matter is a significant price rise of gold rings lately.
This stems from multiple reasons. Firstly, the currently limited domestic supply of gold cannot satisfy the large demand of the community. Secondly, when other investment channels are less attractive, gold seems to be a safe-haven asset. In addition, as to management, it is the monopoly of SJC gold as the national brand name that has led to inequality in gold bar trading and even more disadvantages to consumers.
Dr. Can Van Luc – member of the National Advisory Council for Monetary and Financial Policies –agreed that it is normal for a price rise because of huge demands in society. Storing gold is also popular and necessary in any economies in the world.
Regarding inadequacies in the gold market, Dr. Long stressed that this market is an organic part of the finance-monetary one, so flexibly managing this gold market according to each development stage of the economy is critical. Vietnam has not been able to offer gold products and suitable policies to buyers. Only the physical aspect but not forward gold contract or digital gold attracts the attention of lawmakers, which means applicable gold-related policies in Vietnam cannot keep up with the development of the gold market.
Dr. Cuong added that it is time to diversify gold products and trading in the market because this will allow gold-buying money to flow efficiently for more developments. Moreover, this diversity will help to change the mind of the public as they do not need to store their gold physically. Gold certificates ensure the value of digital gold while the bought gold amount is still able to circulate in the market.
Dr. Luc mentioned that Decree No.24/2012/ND-CP about controlling gold trading activities was born 12 years ago, which is rather outdated now and should be adjusted to strictly follow the trends of the gold market and create a supply-demand balance.
It is important to consider the management policies to suit current fluctuations of gold prices in the world. Establishing a gold trading floor used to be appropriate ten years ago but not now, when it might boost the growth of buying physical gold and is opposite to the policy of anti-gold-trading rush that has been maintained until now.
The global trend now is not to create more physical gold trading floors but switching to digital gold purchasing. Vietnam should follow this tendency. More logical policies related to gold and stricter monitoring mechanisms will obviously make the domestic market more stable and will lessen the gap between national and international gold prices. This will ultimately lead to a stop of unreasonable price pushup owing to gold speculation or hoarding.
Chief Economist of the Asian Development Bank Nguyen Ba Hung commented that recent increases in gold prices in the world display the viewpoint of state banks to prevent risks when political instabilities are on the rise. This, to some extent, affects domestic prices, along with a higher demand than supply. Moreover, low deposit interest rates are luring investors towards buying gold. Finally, in Vietnam, gold is still considered a ‘special’ commodity, and under ‘special’ state management.
Deputy Governor Pham Thanh Ha of the State Bank of Vietnam said that the State Bank of Vietnam is going to adopt suitable solutions to increase the domestic supply of gold bars to address the huge gap between the national and international gold prices as well as to ensure sufficient material for the creation and export of gold jewelry.
This Bank is cooperating with relevant functional units to help businesses use e-invoices in gold transactions to increase transparency and management efficiency. The State Bank has proposed a number of amendments to Decree 24/2012/ND-CP to be implemented in the upcoming time.
