Decree 24 Struggles to Keep Pace

(SGI) - Despite over a decade of implementation, Decree 24/2012/ND-CP (ND24) by the Government aimed at regulating gold business activities and curbing goldization seems to be facing challenges in adapting to the current competitive market economy.

Decree 24 Struggles to Keep Pace

While ND24 successfully brought order to the gold market, recent years have seen domestic gold prices on a continuous upward trajectory, resulting in a significant price difference of VND 13-14 million compared to world prices.

Vietnamese Gold Takes the Lead in Costs

On November 28, the world gold price officially surpassed the USD 2,000 mark, reaching USD 2,043.94 per ounce on November 29, the highest since May 5, 2023. The US gold futures price also rose to USD 2,067.1 per ounce, with the US dollar hovering near a three-month low, making the precious metal more expensive for holders of other currencies.

However, the cost of SJC gold in Vietnam exceeds global prices significantly. Following the surge in world gold prices, the domestic price of SJC gold bars increased by half a million to 1 million VND in the last sessions of November. On November 29, SJC gold bars set a new record at VND 74.6 million per tael, surpassing the historical high of VND 74.4 million per tael in early March 2022. Despite a slight cooling down by November 30, SJC gold bars maintained a high level with a listed price of VND 72.4-73.6 million per tael (buy-sell).

With this pricing, SJC gold bars are VND 13.5 million per tael higher than the global price. From the beginning of the year until now, SJC gold has seen an increase of VND 6.5 million per tael. Notably, 99.99 gold rings closely followed suit, reaching a record price of VND 61.3-62.4 million per tael on the last day of November. Each unit of gold in the ring is VND 2.3 million more expensive than the world gold price. The difference in domestic gold buying and selling prices quickly widened to VND 1.2 million (SJC gold bars) and VND 1.1 million (gold rings), resulting in buyers losing more than 1 million VND immediately after purchasing 1 tael of gold.

According to an economic expert, while world gold prices fluctuate continuously, the raw gold used for SJC gold production remains a constant input source. Decree 24 stipulates that the State Bank of Vietnam has the exclusive right to stamp and supply SJC gold bars to the market, and this has not changed for more than a decade. The lack of flexibility in sourcing raw gold, as well as the exclusive role of the State Bank, is believed to contribute to the high cost of SJC gold, creating a significant gap with global prices and isolating Vietnam's gold market from the world market.

Impatience Grows

As of 2022, concerns about the shortcomings of Decree 24, a government regulation on gold business activities, have been raised in the National Assembly. Specifically, the substantial gap between domestic and world gold prices, sometimes reaching up to 20 million VND, has become increasingly difficult for the public to accept. In response to these concerns, the Governor of the State Bank of Vietnam, Nguyễn Thị Hồng, attributed the high listing prices of domestic gold bars to the decrease in supply and the volatility in world gold prices. She assured that the State Bank is prepared to regulate if necessary, but indicated that gold import interventions would only occur in essential cases.

In a recent government report presented to the National Assembly by the State Bank Governor, the Prime Minister acknowledged ongoing efforts to address issues related to gold business management policies. Meetings were organized to collect opinions from affected parties, including the Vietnam Gold Business Association, 33 credit institutions, and enterprises engaged in gold bar activities. Additionally, consultations were held with State Bank branches across provinces and cities, and discussions took place with gold business associations to gather insights on gold market management practices in Southeast Asian countries.

Based on the feedback received, the State Bank plans to refine the draft summary report, evaluate the implementation of Decree 24, submit it to the Government, and propose appropriate gold management policies if necessary. While the State Bank has not explicitly hinted at new changes in gold management policy, Decree 24's existing regulations have not only widened the disparity between domestic and global gold prices, causing financial losses for buyers, but also hindered the development of the gold jewelry industry. Under Decree 24, gold bars are exclusively produced by the State, with the State Bank overseeing production activities. The State Bank organizes the import of raw gold for gold bar production based on monetary policy goals and gold supply and demand.

Despite the potential for growth in Vietnam's gold jewelry industry, challenges persist, including difficulties in accessing raw gold sources, leading to delays in industry development. Over 70% of nearly 3,000 gold and jewelry businesses in Ho Chi Minh City have reportedly closed due to business bottlenecks arising from blocked production capital and stiff competition from Chinese jewelry products. In response to these challenges, several gold production and trading units have continuously urged the State Bank to permit the import of raw gold for gold jewelry production. Notably, the Vietnam Gold Trade Association (VGTA) and some major businesses have submitted a petition to the State Bank requesting approval for gold imports. However, despite several months passing, the petition has yet to be approved.

Các tin khác