A draft decree by the State Bank of Vietnam (SBV) seeks to restrict the trade in gold bullion to stabilise the gold market, check hoarding and speculation, and minimise the influence of the gold market on monetary policy.
The decree, submitted to Prime Minister Nguyen Tan Dung for approval, focuses on seven measures to closely monitor the gold market while still ensuring people's rights to keep and trade bullion.
Firstly, the central bank will regulate bullion production and periodically announce quotas.
Businesses seeking production licences will have to satisfy several requirements like having legal capital of at least 500 billion VND(23.8 million USD), facilities and equipment needed for production, and a 25 percent market share of production for three consecutive years.
They will have to scrupulously follow regulations related to origin of gold they use to produce the bars.
This is expected to enable the central bank to stop illegal imports and ensure balance between demand and supply.
Analysts expect the stringent rules to significantly reduce the number of producers from the current eight.
Secondly, the decree seeks to reduce the number of bullion traders and discourage trading by requiring institutions and individuals who want to trade gold bars to get a licence and follow regulations related to capital, revenues and network.
Traders must have a prescribed capital of at least 100 billion VND (4,800 USD), two years' experience in gold trading, and paid taxes of more than 500 VND (24,000 USD) million a year on trading for two years.
They will also be required to have sales outlets in at least three provinces and centrally administered cities.
Analysts expect these rules to again reduce significantly the number of bullion traders from the current 12,000.
With such a high number, regulators are unable to control trading activities, thus enabling speculation and hoarding to flourish, they pointed out.
A recent Government decree warns that those found trading without a licence will be severely punished.
Thirdly, the SBV will closely supervise import and export of physical gold, be responsible for issuing licences for it, and occasionally carry out the trade itself.
This will enable it to better monitor demand and supply of gold to prevent illegal imports and exports.
Fourthly, the central bank will more closely supervise production, sales, and purchase of gold jewellery and art products.
Organisations that produce and trade gold jewellery and art products must be certified by the central bank as meeting certain conditions.
This certificate can be used for obtaining permission to import gold.
The producers will also be required to put their seals and spell out the gold content in their jewellery.
Fifthly, the decree says, all gold trading activities not covered in the draft decree will be licensed by the SBV only with express Government permission.
Sixthly, the central bank will be allowed to intervene in the gold market in case of adverse conditions to grant licences for bullion production, arrange sales and purchases of bullion, facilitate imports and exports of gold, and allow banks to accept gold deposits from individuals and organisations.
Finally, the decree wants the Government to regulate the domestic gold market through tax policies.
The Ministry of Finance will suggest import-export duty policies, value-added tax, excise duty, and income tax on gold trading at certain times to reduce the attractiveness of gold, thus preventing hoarding.
The new decree also spells out the responsibilities and duties of the SBV, ministries, Government agencies, and provincial and city people's committees in implementing gold trading and production management policies./.
The decree, submitted to Prime Minister Nguyen Tan Dung for approval, focuses on seven measures to closely monitor the gold market while still ensuring people's rights to keep and trade bullion.
Firstly, the central bank will regulate bullion production and periodically announce quotas.
Businesses seeking production licences will have to satisfy several requirements like having legal capital of at least 500 billion VND(23.8 million USD), facilities and equipment needed for production, and a 25 percent market share of production for three consecutive years.
They will have to scrupulously follow regulations related to origin of gold they use to produce the bars.
This is expected to enable the central bank to stop illegal imports and ensure balance between demand and supply.
Analysts expect the stringent rules to significantly reduce the number of producers from the current eight.
Secondly, the decree seeks to reduce the number of bullion traders and discourage trading by requiring institutions and individuals who want to trade gold bars to get a licence and follow regulations related to capital, revenues and network.
Traders must have a prescribed capital of at least 100 billion VND (4,800 USD), two years' experience in gold trading, and paid taxes of more than 500 VND (24,000 USD) million a year on trading for two years.
They will also be required to have sales outlets in at least three provinces and centrally administered cities.
Analysts expect these rules to again reduce significantly the number of bullion traders from the current 12,000.
With such a high number, regulators are unable to control trading activities, thus enabling speculation and hoarding to flourish, they pointed out.
A recent Government decree warns that those found trading without a licence will be severely punished.
Thirdly, the SBV will closely supervise import and export of physical gold, be responsible for issuing licences for it, and occasionally carry out the trade itself.
This will enable it to better monitor demand and supply of gold to prevent illegal imports and exports.
Fourthly, the central bank will more closely supervise production, sales, and purchase of gold jewellery and art products.
Organisations that produce and trade gold jewellery and art products must be certified by the central bank as meeting certain conditions.
This certificate can be used for obtaining permission to import gold.
The producers will also be required to put their seals and spell out the gold content in their jewellery.
Fifthly, the decree says, all gold trading activities not covered in the draft decree will be licensed by the SBV only with express Government permission.
Sixthly, the central bank will be allowed to intervene in the gold market in case of adverse conditions to grant licences for bullion production, arrange sales and purchases of bullion, facilitate imports and exports of gold, and allow banks to accept gold deposits from individuals and organisations.
Finally, the decree wants the Government to regulate the domestic gold market through tax policies.
The Ministry of Finance will suggest import-export duty policies, value-added tax, excise duty, and income tax on gold trading at certain times to reduce the attractiveness of gold, thus preventing hoarding.
The new decree also spells out the responsibilities and duties of the SBV, ministries, Government agencies, and provincial and city people's committees in implementing gold trading and production management policies./.
