Illustrative image (Photo: tin247.com) Hanoi (VNA) – It is time for the central bank to loosen its control overgold imports as a shortage of gold material in the domestic market has led toadverse consequences, the Vietnam Gold Trading Association (VGTA) said.
Accordingto the VGTA, due to the shortage of gold material sources, domestic gold pricesare generally higher than global prices, leaving domestic consumersdisadvantaged.
Inthe past two weeks, for example, the gap between domestic and global goldprices was 2.7-3 million VND per tael and sometimes even going up to 4 millionVND.
Theshortage of material sources also caused local producers of gold jewellery andfine art to reduce their competitiveness as they had to buy gold material atcostly prices.
Besidesthis, the shortage also forced local jewellery makers to go to the unofficialmarket for gold material, which in turn would encourage gold smuggling,according to the VGTA.
Accordingto the VGTA, since the Government issued Decree 24 on management of goldtrading in 2012, which enables the central bank to directly intervene in thelocal gold market, the market has become stable. However, the association saidthe decree, which also made the central bank the only gold importer in Vietnam,was causing a lot of trouble for local gold jewellery manufacturers when theycould no longer access the gold material market for import.
Thecentral bank only allowed a few firms to import gold material under its strictsupervision. Without permission, others must buy gold from unofficial markets,which encouraged gold smuggling into the country.
VGTAvice chairman and general secretary Dinh Nho Bang said that besides minimisinggold smuggling, gold material imports with certain itineraries, if allowed,would help boost the domestic jewellery industry to develop and increaseexports. Bang estimated that the state could have an additional foreigncurrency source of roughly 8.68 million USD to 17.36 million USD yearly fromjewellery exports and tax.
Sincethere are concerns that gold material imports would put pressure on thecountry’s foreign exchange market, Bang also said State management agenciesshould not worry as domestic demand of gold material is only some 20 tonnes,worth roughly 868 million USD yearly, insignificant compared with the country’stotal import value of nearly 200 billion USD.
Besidesthis, as the gap between domestic and global gold prices would be reduced, noone would be interested in smuggling. At that time, domestic gold prices andthe USD/VND exchange rate would be pulled down, Bang said.-VNA
VNA
