The gold market has warmed up after the draft
decree on gold bullion trade has opened for public opinions. However, worries
have been raised that the new regulations would lead to the monopoly on the
market.

The final draft of the decree on bullion gold trade has been sent to
ministries, enterprises and associations for collecting opinions. Under the
draft decree, individuals and institutions will still have the right to purchase
and sell bullion gold at the enterprises which have trade licenses granted by
the State Bank of Vietnam. However, the behavior of using gold as a payment
instrument will be considered illegal.

Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewelry (PNJ),
commented that buying gold and hoarding gold is the habit of Vietnamese people.
Keeping assets in gold is also the method people like to use to preserve their
money. Therefore, the new decree on gold trade management needs to reflect the
situation.

Gold market warming up

Gold trade companies all say that the information that people still can
purchase and sell bullion gold has helped warm up the gold market. Several
months ago, a rumor was spread that the State Bank may prohibit people to
purchase gold, and they would only be able to sell gold to the State Bank.
However, people now can sigh with relief, because they will be still able to
purchase, sell and store gold.

PNJ said that the trade on June 20 was much improved, even though the gold
price exceeded the 38 million dong per tael threshold later on the day, making a
new record of 38.03-38.09 million dong per tael (purchase and sale prices).

On June 20, PNJ purchased 1600 taels of gold and sold 400 taels. A tael is
equal to 1.2 oz.

Meanwhile, SJC and SBJ reported the trade volumes of over 2000 taels a
day.

“Once investors can take off their worries, the market has immediately
been improved,” Cuc said.

Under the draft decree, only the enterprises which are capable enough to
meet the requirements set by the State Bank will be granted the licenses to
trade bullion gold. The tentative regulation has been applauded by Cuc.

“If the draft document is approved, the trade in the gold market will be
fair,” Cuc said.

Currently, gold trading companies pay tax in accordance with two methods:
fixed tax and tax rates. The enterprises, which pay fixed tax always pay the
same sum of tax everyone, no matter how much profits they earn. Meanwhile, the
enterprises, which pay tax under the latter method, have to pay different tax
sums, depending on the declared trading volumes. In this case, even if
enterprises can sell only 0.1 taels of gold, they still have to pay tax.

“The way of calculating tax proves to be unfair, which does not bring
opportunities to the enterprises with good long term development strategies,”
she said.

New regulations may create monopoly?

Meanwhile, Nguyen Trung Anh, Deputy General Director of Vina Gold Company,
said the market has had no reaction to the draft decree, because the draft
decree does not show any new points in comparison with the current real
situation of bullion gold trade. The only new thing is that the number of
enterprises to be allowed to trade bullion gold will be narrowed.

Anh has expressed his worry that if the draft regulations are approved,
they would “distort” the market, because they would create the monopoly in
bullion gold trade.

He said that the new regulations will only bring benefits to the
enterprises which have the licenses to trade bullion gold. A lot of different
kinds of bullion gold would appear in the market. The big companies, which have
licenses, will join forces to import gold and sell gold at the unreasonable
prices.

“In this case, the gold prices will be artificial, which will make it more
difficult to manage the gold market. And the profits and the market will be
controlled by big enterprises,” Anh said.

Dat Viet