VietNamNet Bridge – Vietnam consumed around 110 tons of gold in 2013, higher than previous years, despite global gold prices falling steadily and less gold sales points in the country, according to a source from the World Gold Council.

Illustrative image. – File photo

Last year, Vietnam officially imported nearly 70 tons of gold. The council estimated that the remaining 40 tons were smuggled into Vietnam by calculating sudden gold demands in nations bordering Vietnam.

Most of the smuggled gold volume was processed into rings or other types of jewelries, the source said.

Meanwhile, gold consumption among local people fell in 2013. Local banks needed 30 tons of gold to finalize all gold lending and mobilization activities last year.

In recent years, Vietnam has consumed around 100 tons of gold annually, although the nation did not perform official gold imports in some of those years.

In 2013, official gold imports were the right decision as the State could benefit from domestic-global gold price differences. Otherwise, if enterprises smuggled gold, the nation would have suffered foreign currency depletion and tax losses, he added.

However, the central bank should encourage material gold imports for jewelry production so that local enterprises can buy material gold with clear origins and gold smuggling will be less prevalent.

In addition, there must be suitable solutions for private gold holdings mobilization. At present, local citizens primarily buy gold and don’t sell the precious metal.

Speaking at the summarizing conference of the banking sector in Hanoi City last year, Prime Minister Nguyen Tan Dung ordered the central bank to seek solutions for mobilizing gold from local people this year to raise funds for socioeconomic development.

Concerning the guideline, Le Minh Hung, deputy governor of the central bank, said that mobilization will be conduced via trading, not through local credit institutions. Citizens will transact gold through the network of banks and gold trading firms.

The Government will apply measures to ensure that keeping Vietnam dong will bring more benefits for citizens than the precious metal. This will enable them to sell gold to the market following the laws of supply and demand. When banks and enterprises have gold demands, the central bank will sell or buy gold as the last unit in the trading chain, he said.

Domestic and international gold prices plunged 25% last year after rising steadily in the previous five years. Positive developments in the global economy have made gold less attractive in the eyes of investors.

Gold investment funds worldwide have also reduced their holdings, sending the price of the precious metal down.

Source: SGT