Vietnam considers ceasing decade long gold import ban (2024)

Vietnam may begin allowing gold exports into the country for the first time in a decade.

Vietnam may soon allow companies to import gold for the first time in over a decade. Aiming to bridge the gap between local prices and international benchmarks, this development comes as the Vietnam Gold Traders Association (VGTA) continues its extended discussions with the government to address the supply and demand imbalance for gold.

Huynh Trung Khanh, vice chair of VGTA, disclosed the government plans to initiate official gold imports by July or August.

“We hope that by July they will allow gold companies to import directly.”

The decision awaits final approval from the State Bank of Vietnam, the nation’s central bank.

If implemented, this policy would signify the central bank exercising a less tight control over gold imports in Vietnam. Since 2012, the government has largely managed imports and local bullion sales, permitting only certain large companies to import gold for conversion into jewellery meant for export. The State Bank of Vietnam has not yet commented on this potential policy shift.

Efforts to align domestic gold prices with international benchmarks have included auctions and allowing four local banks to sell gold. However, these measures have not succeeded in creating a lasting impact. Domestic prices continue to carry high premiums compared to globally, and according to VGTA, reducing these premiums is essential as gold demand in Vietnam is expected to surge this year. The nation ranks among the top 10 global consumers of gold.

Golden opportunity

Khanh’s presentation at the conference indicated gold purchases in Vietnam are projected to rise by 10% annually, reaching 33 million metric tonnes in the first half of this year.

Retail buyers who use gold as a tool for wealth preservation amid economic uncertainty make up the majority of these purchases in a country with a population close to 100 million people, said Khanh.

“The key reasons for this strong retail investment demand were the sharp decrease in saving interest rates, the frozen real estate market, and the constant devaluation of the national currency versus the US dollar.

“We have had people queuing in the streets, in the sun and rain to buy more gold.”

The increased demand for gold has also led to a rise in smuggling, particularly from neighbouring Cambodia. Khanh highlighted the urgency for policy action.

“It is a very big underground system network. With such a big price hike, the rate of smuggling is still high.”

To provide more market stability, the VGTA and the World Gold Council are collaborating with the Vietnamese Central Bank and other government agencies to establish a national gold exchange. This initiative aims to offer a more regulated and stable market environment for gold trading in Vietnam, reported Bangkok Post.

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