VINACHEM

Vietnam eyes gold market reform with quota-based imports, tighter control, and more competition.

There were times when long queues formed outside gold shops, with anxious eyes fixed on fluctuating digital boards.

Each price surge triggered public alarm. The ongoing revision of Decree 24 aims to finally address long-standing distortions in Vietnam’s gold market.

Ending the monopoly on gold bar imports is a positive signal for market reform. However, the key challenge lies not just in opening the market, but in how it is opened - ensuring transparency and preventing new interest groups from manipulating prices behind closed doors.

Dao Xuan Tuan, Director of the Foreign Exchange Management Department at the State Bank of Vietnam (SBV), recently confirmed that a draft amendment to Decree 24 has been completed. One significant change is ending the monopoly on gold bar production.

In addition to SJC, other brands meeting specific conditions will be allowed to manufacture gold bars. This provides more choices for consumers and pushes the market toward fairer competition.

Boosting market competition

Since Decree 24 was enacted in 2012, the SBV has been the sole entity authorized to produce gold bars. SJC was designated the national brand, replacing nine previously existing brands.

Banks were prohibited from gold mobilization and forced to shut down gold trading floors.

After more than a decade of operating under this system, its limitations have become evident. The gold retail network has shrunk from over 12,000 outlets to just around 2,600 today, operated by 38 banks and companies. Meanwhile, the SBV has not issued new licenses for production or raw gold imports.

The monopoly policy has led to significant inefficiencies. Domestic gold prices consistently exceed international prices by $400–900 per tael, peaking at over $1,000 (May 2024). With no alternatives, consumers are left with only SJC gold bars.

The lack of competition and irrational price gaps have fueled speculation, short-term investing, and market anxiety, encouraging hoarding. The upcoming regulatory changes are expected to ease supply bottlenecks and foster competition.

As more brands are allowed to produce gold bars, price gaps will narrow - reducing speculative behavior and manipulation risks.

Still, liberalization does not mean deregulation. The draft amendment proposes strict requirements for entities wishing to enter the gold bar market. F

irms must have a charter capital of at least VND 1 trillion ($39 million), while banks must hold at least VND 50 trillion ($1.95 billion).

All entities must already be licensed by the SBV to trade in precious metals and have no outstanding violations.

Currently, 38 banks and enterprises are licensed to trade in gold bars. However, only a few meet the capital requirements, including major players like PNJ, DOJI, and SJC. Among banks, Vietcombank, VPBank, Techcombank, BIDV, MB, VietinBank, and Agribank qualify.

Huynh Trung Khanh, Vice President of the Vietnam Gold Trading Association, believes the new draft will help remove outdated restrictions that have distorted the market. However, challenges remain.

For instance, SJC has distributed over 20 million taels of gold, commanding 95% of the market. This gives its bars high liquidity and widespread public trust - significant hurdles for any new entrant trying to compete in the near term.

Others argue that while the SBV proposes allowing “a few” entities to import gold, how many is “few,” and on what criteria? If only a handful of major companies are granted import rights, could a new “cartel” emerge - manipulating prices and maintaining high domestic-international price gaps as a “privilege”?

Avoiding old pitfalls

Concerns about market instability are valid, especially since the gold market has seen misconduct even under strict regulation for over a decade. A recent SBV inspection uncovered serious violations at six major banks and enterprises, including SJC, DOJI, PNJ, Bao Tin Minh Chau, TPBank, and Eximbank.

SJC’s CEO set gold prices without any internal controls, risking price manipulation. DOJI offered unlicensed online gold trading and falsified documentation, with signs of tax evasion. PNJ breached reporting, invoicing, labeling, and anti-money laundering regulations. Bao Tin Minh Chau violated e-commerce rules and lacked transparency in logistics.

Among banks, Eximbank was found facilitating fake transactions, distorting its reported turnover. TPBank failed to seal stored gold and allowed repeated high-value individual transactions exceeding trillions of dong annually.

Granting import privileges to a select few companies raises the risk of creating a new oligopoly. Control over supply - the main pricing factor - could easily lead to renewed manipulation if left unchecked.

To avoid this, a transparent and public oversight mechanism must be established - covering import quotas, pricing, and distribution channels. Regulatory agencies must be ready to intervene if unusual pricing behavior arises. A healthy market must rest on law and oversight, not on trust alone.

Associate Professor Dr. Nguyen Huu Huan of Ho Chi Minh City University of Economics agrees. While past concerns existed over gold imports impacting exchange rates, the draft law now sets clear import quotas for each period. This allows for managed forex exposure and rate stability.

Dr. Huan explained that uncontrolled gold imports would create risks for money flow and exchange rate management. But under the proposed quota system, the SBV can align import levels with balance-of-payment surpluses - and suspend them during deficits.

On reform strategy, economist Dr. Le Xuan Nghia suggested adopting a physical gold trading platform model. Licensed banks and firms could list gold for inter-organizational trading only - excluding retail transactions. Prices would reflect international benchmarks plus import costs, and be transparently posted.

This would connect domestic and global gold prices, reduce irrational spreads, and curb price manipulation by major players. More importantly, the SBV could monitor foreign currency flows and gold import volumes more effectively. Dr. Nghia also argued it is time to eliminate the regulatory distinction between gold bars and jewelry rings, which has no basis in international practice.

Beyond regulation, experts noted that surging gold prices reflect not only asset-safety demand but also a lack of attractive, safe investment channels. Without avenues like corporate bonds or healthy stock markets, gold remains a “lifeline” for household savings. Policymakers must boost communication to help the public understand that gold is not a stable, long-term investment.

What the market needs is both regulation and transparency - so that when gold prices spike, people no longer have to wonder who’s holding the power behind the scenes.  – Source: VNN