Vietnam Could Permit Companies to Import Gold for the First Time in Years, Industry Official Says

Vietnam May Open Gold Imports for the First Time in Over a Decade

By Ashitha Shivaprasad and Brijesh Patel

SINGAPORE – Vietnam is considering allowing companies to import gold for the first time in more than ten years in a bid to address the growing disparity between local prices and international rates, according to an industry official.

The Vietnam Gold Traders Association (VGTA) has been in extensive discussions with the government about strategies to rectify the current supply and demand imbalance. Huynh Trung Khanh, the association’s vice chair, stated that they hope to see permission for gold companies to import raw materials for jewellery manufacturing by July.

The Vietnamese government assumed tight control over gold imports and local bullion sales in 2012. Exceptions were made for certain large companies, which could import gold provided it was processed into jewellery for export.

Khanh noted that the forward plan hinges upon a decision from the State Bank of Vietnam regarding the VGTA’s petition for changes in gold management policy. Such a shift would represent a notable change from the established protocol, where the central bank maintains strict control over imports. The State Bank of Vietnam has not commented on the matter.

Previous efforts to align domestic prices with international benchmarks through auctions and allowing four local banks to sell gold have mostly failed to yield significant results, with local prices still trading at substantial premiums over global values.

Reducing these premiums is vital, as the VGTA projects a substantial increase in gold demand this year, with Vietnam ranking among the top 10 gold consumers worldwide. Khanh indicated that gold purchases are expected to rise by 10% year-on-year, reaching 33 tonnes in the first half of the year.

Many retail buyers perceive gold as a safe investment to mitigate economic uncertainty, contributing to the majority of purchases in this Southeast Asian nation, which has a population of around 100 million. Khanh cited several key factors driving this retail investment demand: a notable decline in saving interest rates, stagnation in the real estate market, and ongoing devaluation of the national currency against the U.S. dollar.

Khanh remarked, "We’ve seen people lining up in the sun and rain to purchase gold." The surge in demand has also led to increased smuggling activities, particularly from neighboring Cambodia, making swift policy action imperative.

"It is a large underground network. With such a significant price increase, the smuggling rate remains high," he added.

Currently, the VGTA and the World Gold Council are collaborating with the Vietnamese central bank and other governmental bodies to establish a national gold exchange, which is anticipated to enhance market stability.

(Reporting by Ashitha Shivaprasad and Brijesh Patel in Singapore; Editing by Dave Gregorio and Neil Fullick.)