Why are gold and USD strictly controlled?

In recent years, the monetary and foreign exchange market and gold management of Vietnam have experienced fluctuations due to the ineffective implementation of regulations on these issues, said economist Dr. Nguyen Duc Kien.

Dr. Kien, a member of the National Assembly (NA)’s Economics Committee, who is also an NA deputy of Soc Trang province, made the remarks in an interview granted to the media as part of the on-going 9th session of the 12th NA. He said that investors and consumers have voiced concerns over the ban of gold bullion trading in the black market.

Reporter: What do you think about the ban on trading gold bullion and USD in the black market?

Dr. Kien: The State should not intervene on consumers’ choice to buy gold in any form. It’s the right of consumers. The State should have made public documents on the management of the monetary and gold bullion market so that people can make their own choices. In fact, the government has no regulations or instructions in connection with the Law on Foreign Currency Management and the Law on Banks.

The media should disseminate information to increase public awareness of consumer rights to buy, trade and hoard gold within the law. All citizens have rights, which are protected by the State, to buy US dollars or withdraw them from banks. It is up to people to “buy” or “not to buy”. For example, those who have relatives living abroad and receive remittance from them in USD can get USD from the State and they have their option to send their money to the bank or keep it at home. The State does not object to this. The State only encourages them to invest in production and job generation in order to create more sources of income.

Reporter: How to mobilise gold and USD in the population?

Dr. Kien: The State has a policy on mobilising gold and USD from the population in order to invest in business operations. Vietnam has offered business operating in the country a 5% tax exemption in the first three years and tax reduction in the three following years.

Reporter: Do you think that the country is moving in the right direction?

Dr Kien: In recent years, there has been loose control on the monetary, foreign exchange and gold markets. The dollarization issue in the Vietnamese market and the payment in gold for the real estate market are two sides of the same coin. Therefore, it is necessary to implement strict measures in order to protect the rights of people.

Reporter: In fact, the demands for foreign currency reserves are true. Could you explain elaborate the reason why?

Dr Kien: I affirm that the State has not issued any document or regulation banning people from foreign currency reserves and asked people to make transactions at the right place. The recent tightening of the foreign currency market aims to warn people to make transactions in the right place under the State’s regulations.

Anti-dollarization is a measure against the trend of buying and paying in US dollars. It does not mean that the State has banned people from owning US dollars. If they have US dollars, they are encouraged to deposit them into banks for good interest rates. Currently, the interest rate on foreign currency deposit in Vietnam is five to ten times higher than in the US.

We do not encourage people to have foreign currency reserves. Why do people hesitate to save in Vietnamese dongs? At the moment, the interest rate on the Vietnamese currency is rather high at 14 percent while the inflation rate is estimated at 11.7 percent. No other countries in the world have such a high interest rate as in Vietnam.

The bottom line is that people have lost their trust in the value of the domestic currency due to one-sided information in the media.

Reporter: Thank you. – VOV

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