State Bank tries to limit number of gold traders

Banks that trade in gold must establish separate companies with independent accounts, according to Viet Nam Gold Trading Association (VGTA).

The existence of independent gold trading companies would deter banks from mobilising account holders’ money to trade gold, which could cause chaos on the domestic market, the association said.

Under the final draft decree on gold trading put forward by the State Bank of Viet Nam (SBV), members of the public would still have the right to buy and sell gold at banks and authorised business outlets.

The SBV said it wanted to reduce the number of organisations trading in gold bullion.

In addition, businesses producing, outsourcing and trading gold jewellery must have a certificate from the SBV showing that they had met the necessary trading conditions.

Organisations that produce and trade in gold jewellery must re-register for a licence in accordance with the new regulation within a year of the decree becoming effective, according to the draft.

Last week, the SBV sought the opinions of policy makers and gold producers and traders on the draft before submitting it to the Government for approval.

Nguyen Thanh Truc, general director of the Viet Nam Agribank Gold Corporation, said numerous small jewellery processing groups had been set up with the Government’s approval in the past few years. He said it would be unreasonable to now limit their business activities.

The VGTA said policies that were too restrictive would negatively impact on the livelihoods of labourers in handicraft villages.

Several banks agreed with the SBV’s intention to apply more stringent regulations to gold bullion traders. They argued that current regulations were too lax and allowed small-time traders to enter the market, leading to speculation and poor quality gold finding its way on to the market.

Nguyen Minh Chau, director of Bao Tin Minh Chau Co Ltd, said the SBV should have more concrete regulations regarding capital, technology standards, human resources and quality management capability for gold bar trading companies.

He also said a gold trading company should have a network of branches in at least three cities or provinces, while a bank should have branches in at least five cities or provinces.

He added the three-month duration for organisations to re-register for a licence was too short and should be at least six months or more to allow businesses to fulfil all their SBV requirements regarding capital, technology and equipment.

Meanwhile, experts said the decree would not adversely affect the gold market if businesses had enough time to meet the new regulations and members of the public were still permitted to hold gold bars.

However, they said if the draft applied to jewellery producing, outsourcing and trading activities it would have a negative impact on the market and could lead to shortages of gold jewellery as small traders and producers were forced to close.

Senior economist Ngo Tri Long said members of the public should be allowed to buy gold bars as an investment and as a means of payment.

He said it would be unreasonable to prohibit citizens from paying in gold bars if they were allowed to buy and sell them, adding that gold bars were a common form of payment in the real estate industry.

Meanwhile, Nguyen Thanh Long, chairman of the association, said gold trading on accounts should be allowed as it was a common practice abroad. He also said a national trading floor managed by the SBV should be established.

The Ministry of Industry and Trade should also be involved in order to improve the quality of jewellery exports, he said. — VNS

Tags: vietnam gold, Vietnam gold market, Vietnam gold prices