Gold Association: About 5 billion USD needed to import raw gold each year

The Vietnam Gold Trading Association (VGTA) calculates that the demand for foreign currency to import raw gold is about 5 billion USD per year, or an average of about 416 million USD per month, which is very small compared to the foreign currency trading turnover on the interbank market of about 18.9 - 25.2 billion USD per month.

The Vietnam Gold Business Association (VGTA) has just commented on the Draft Amendment to Decree 24/2012/ND-CP on the management of gold business activities.

Accordingly, regarding the issue of increasing the supply of gold to the market, VGTA proposed that the State Bank (SBV) issue annual quotas for the import and export of gold bars; and import of raw gold to produce gold bars. The allocation should be made from the beginning of the year, following the principle of transparency and not generating sub-licenses. From there, businesses can proactively choose the time and volume (within the quota) to import, and will periodically report to the SBV on adjustments and additions to the quotas for the import and export of gold bars as decided by the SBV.

VGTA recommends that banks should not participate in the production and trading of gold bars.

The association recommends that gold jewelry businesses be given priority in importing raw gold, without any limit on volume. Businesses will report to relevant state agencies on the import turnover of raw materials and the volume of gold jewelry sales to meet domestic demand; and the export turnover of gold jewelry.

According to the Association's estimate, the demand for foreign currency to import raw gold is about 5 billion USD per year, or an average of about 416 million USD per month, which is very small compared to the foreign currency trading turnover in the interbank market of about 18.9 - 25.2 billion USD per month.

According to VGTA, Vietnamese gold production and processing enterprises are not only capable of producing and processing gold jewelry to meet domestic demand, but also competitive in exporting to the world market, and in the export value, more than 25% is the value of labor. Of the imported gold, half is used for the domestic market, the other half is for export. With 25 tons of exported gold jewelry, enterprises can earn 3.5-4 billion USD. Thus, importing raw gold not only serves domestic production but also helps regenerate foreign currency sources.

Another noteworthy content is that the draft mentions the removal of the monopoly on gold bar production and the granting of gold bar production licenses to a number of qualified enterprises and banks. However, VGTA believes that the draft amendment to Decree 24 to add credit institutions to participate in the production and trading of gold bars is not advisable. The reason is that, according to the Law on Credit Institutions 2024, commercial banks (CBs) do not have the function and task of producing gold; the main task of CBs is to trade in currency (especially credit activities) and provide payment services.

If commercial banks participate in the production and trading of gold bars, they will be forced to use a large amount of capital (investing in factories, machinery, and training workers) to invest in areas that are not their main functions and tasks. This will affect the core task of credit institutions in the 2025-2030 period, which is to provide credit and support capital for production and business enterprises to achieve economic growth targets.

For businesses, VGTA proposed to remove the regulations that "businesses must have a license to trade in gold bars" and "minimum charter capital of VND 1,000 billion" to be able to produce gold bars, leaving the number of businesses that can participate in gold bar production still insignificant, leading to the market still being able to fall into a state of monopoly in the production and supply of gold bars. VGTA also proposed that in addition to the charter capital condition, management agencies should focus on requirements on production capacity (assets, facilities, techniques); business efficiency; reputation and brand...

Source: https://baolangson.vn/hiep-hoi-vang-can-khoang-5-ty-usd-de-nhap-vang-nguyen-lieu-moi-nam-5050677.html