Illegal exports of material gold exposed

By May 15, 2010, customs agencies had discovered 4520 cases of violations and seized nine kilograms of gold that were illegally carried across the border, according to the Ministry of Finance.

Prior to that, on June 24, the General Statistics Office (GSO) reported that JJune export revenue of precious metal, precious stone and products reached $350 million. In May, the export revenue was $884 million. In all, a total of $1.343 billion in such products, or 36 tons of gold, were exported in the first six months.

The nine kilograms of illegally exported gold is rumored to be just the ‘tip of the iceberg’. The actual volume of gold illegally exported could be even higher. Some argue that world prices were much higher than the domestic prices and that domestic traders would not miss the opportunity.

Since the beginning of 2010, especially in the second quarter, the domestic price has been lower than the world’s. If the world price is higher by 100,000 dong than the domestic price, exporters can pocket two million dong for every kilogram exported. In reality, the world price has been higher by 300,000 dong per tael and the gap reached 500,000 dong per tael on June 22.

Under current regulations set by the State Bank of Vietnam (SBV), Vietnamese companies are not allowed to export material gold, only gold jewelry products. Still, firms can find ways to export material gold, dodging the laws by exporting so-called ‘jewelry’ that is manipulated in a very simple way.

Some export companies revealed their “jewelry” exports are bracelets weighing several taels each, or ash-trays weighing several kilograms. The products land in the hands of foreign importers who will render it again, maintaining the gold’s purity at 99.99 percent.

A gold exporter noted that he still profits despite the expenses. He pays $2.54 per ounce for transport, procedures and insurance, 40,000 dong per tael for authorized exporters, and 30,000 dong to manipulate bar gold into jewelry gold, and can still profit 150,000 dong per tael. Illegal exporters can earn even larger profits, because they do not have to pay such expenses.

According to the World Gold Council, since 2005, the volume of gold imported to Vietnam through official and unofficial channels has reached 70 tons annually. Huynh Trung Khanh, Deputy Chair of the Vietnam Gold Business Council, has estimated that the volume held privately may be up to 500 tons.

Since the beginning of 2010, SBV has granted quotas to import only 5-6 tons of gold, while the official export volume has reached 36 tons. This does not include gold that has been exported illegally.

Currently, many gold trading companies want SBV to open the gold market wider and allow enterprises to import and export gold more easily.

Nguyen Thi Cuc, Deputy General Director of PNJ, remarked that Vietnam should not consider gold as a commodity. He claimed that the increase in gold imports would lead to a higher trade deficit. Instead, he explained, gold should be seen as a special commodity that can bring dollars to Vietnam through export.

Gold trading companies believe that an open gold market will reduce illegal exports and narrow the gap between domestic and world prices. They also asserted that this will provide them with chances to join the global gold market.

Tags: vietnam gold, Vietnam gold exports, Vietnam gold market