The SJC gold prices in the domestic market have cooled down, but the price gap between Vietnam and global prices remains wide, VND14 million per tael. The SJC gold price in Vietnam was even higher by VND18.5 million per tael at times.

The wide price gap, in the eyes of experts, is a major problem and needs to be stopped by removing the state monopoly regime.

Nguyen Tri Hieu, a respected financial expert, commented that the State Bank of Vietnam (SBV) has been slow to react to the wide gold price gap. SBV is now the only unit which has the right to import gold and it doesn’t want to give up the power.

“SBV imports gold, then assigns SJC to produce bullion gold and recognizes SJC as the national gold brand,” Hieu said. 

He said that in a competitive market, monopoly creates advantages and bring profits to monopoly holders. Since monopoly can control supply, it can control market prices.

At a press conference on implementing tasks for the banking sector in 2024 on January 3, 2024, SBV deputy governor Dao Minh Tu stressed that the state doesn’t accept the wide gold price gap of up to VND20 million per tael as seen recently, and the price gap of several million dong per tael between bullion gold bearing SJC and other brands.

According to Hieu, though SBV doesn’t accept such a wide price gap, it still holds the monopoly in gold import and SJC brand use.

The price gap of VND2 million per tael is ‘acceptable’, while the gap of VND2-5 million is ‘high’ and the price gap of over VND5 million is ‘overly high’.

He stressed that removing the state monopoly is the only solution to keep the price gap at a reasonable level of VND2 million. It is necessary to allow prestigious and capable gold companies to import gold to ensure supply in the domestic market, which will help balance supply and demand.

“State management agencies must not state that one certain product is national brand, and that other products are not,” Hieu said.

Some analysts said SBV wants to hold the monopoly in gold imports because it considers this an effective tool to eliminate so called ‘goldenization’. This is the phenomenon when people rush to buy gold, hoard gold, and make valuations of commodities based on gold or US dollars.

However, they said this is now under control and there is no need for the central bank to continue to secure the monopoly. What the central bank needs to do is encourage many different gold products to ensure healthy competition.

What will happen if the monopoly is removed?

Hieu said enterprises may end up importing too much gold, leading to abundant supply and sharp price falls.

He stressed that the regulation in Decree 24 on SBV monopoly in gold import and SJC brand use must be changed. It is also necessary to set up a gold trading floor open to anyone who can go there and update information.

Huynh Trung Khanh, deputy chair of the Vietnam Gold Business Association and advisor to the World Gold Council in Vietnam, said if the state had taken action promptly, the wide price gap of VND20 million per tael would not have hit the VND20 million per tael threshold.

Khanh said the association in August 2023 sent a document asking for permission for three companies – Doji, SJC and Phu Nhuan Jewlery - to import gold, but the proposal has not been approved. 

“The problem won’t be solved if SBV still prohibits businesses from importing gold,” Khanh warned.

He said that there won’t be any risk if the watchdog agency gives up the monopoly in gold import. He noted that the association has designed an import plan under strict control.

In the latest news, the SJC bullion gold price dropped sharply after SBV announced plans to amend Decree 24, increase the SJC gold supply, and re-assess the role of SJC bullion gold.

Manh Ha