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Vietnam: Looking Forward to a More Open Gold Market in 2018

By HT Khanh, Vietnam Gold Traders Association

Published on January 9, 2018

2017 was an interesting year for the Vietnam gold market as the State Bank of Vietnam continued to adjust its gold policy since 2012 to contain inflation and currency devaluation in light of global economic uncertainties and a slow down domestically.

It seems like the changes have been a success, with inflation kept under 3.5% and the Vietnamese dong maintained at a stable level of US$1 to VND 22,700. The gold jewellery sector has been growing steadily again and PNJ, the country’s largest retail jewellery chain with 240 outlets, has grown from strength to strength while becoming one of the best retail jewellery chains in Southeast Asia and recognised as the Outstanding Enterprise of the Year in ASEAN by the JNA Awards in Hong Kong at its September Jewellery Fair this year. With a healthy GDP growth of 6.5% (est. 2017) and a booming retail market worth US$110 billion (2016), gold jewellery consumption in Vietnam will likely reach the 16 tonnes benchmark in 2017, while bar consumption will remain constant at the 42 tonnes level.

International bullion market players are keeping a close eye on the Vietnamese market as it is poised to move on to the next stage of development on the back of growth in the Southeast Asian economy, while in the globally, the United States has received a boost in its equity market since the election of US President Donald Trump, and tax cuts should boost the US economy further. In China, the confirmation of President Xi’s administration for another five-year term will provide political stability and the country’s growing dominance in the region will spur economic growth on a regional and global level.

As a long term follower of the Vietnam gold market since the 1990s, let me offer my observations on its development over the past few months to help the bullion market community prepare their strategies for 2018.

  1. The State Bank of Vietnam (SBV) has revised its gold management policy (which is implemented by the Decree No. 24 since 2012) in light of the actual status of the market and following the petition of the VN Gold Traders Association and its members for a more liberalised policy towards the gold industry as the country is an active member of APEC and AFTA. Therefore, the SBV is currently working on a draft of the new Decree on Gold Management Policy, which will be implemented in Q1 2018 and replace the old Decree No. 24.
  2. In the proposed draft of the new decree, the key changes in policy are:
    • The SBV will completely liberalise the gold jewellery sector, meaning there will be no more control or licensing of gold jewellery manufacturing and trading (including the import/export of gold jewellery which will only be regulated by tax duties). The SBV will still exercise control over the import of gold raw material as they are linked to forex controls.
    • The SBV will retain its monopoly on gold tael bar production and control the bar distribution network by licensing official retailers and their points of sales, but with simplified licensing conditions. The import/export of gold bars will be kept strictly under state control.
    • Gold mobilisation and gold margin trading (those forms of gold activities were not specified in the old decree) will be authorised but will be strictly under state control and monopoly.
  3. The results of the proposed changes in policy will be:
    • Gold raw material imports will be authorised again in 2018, subject to quotas granted by the Forex Department (estimated volume of authorised imports: 15–20 tonnes a 20–30 licensed manufacturers).
    • Bar trading volume will most probably increase with less limits and lower premiums.
    • A gold mobilisation scheme can be programmed and initiated along with a plan for a national gold exchange under the control and management of SBV.

Mr Huynh Trung Khanh has more than 20 years of experience in the Vietnamese gold industry, first working for the World Gold Council (Asia) as Vietnam Country Manager before setting up his own gold consultancy business (VGC) in 2003 providing brokering and consultancy services to Saigon Jewellery Company (SJC), PhuNhuan Jewellery Joint-Stock Company (PNJ), Standard Bank Plc and World Gold Council.

As a founding member of the Vietnam Gold Traders Association (VGTA), since 1998, Mr Khanh has actively participated in the deregulation of the Vietnam gold market as Vice Chairman of VGTA, heading the External Relations Department of its Executive Committee.

Mr Khanh is a graduate of the University of Economics (Ho Chi Minh City) and holds a MBA degree from the Paris School of Business (PSB).

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