The government recently issued a decree allowing banks and businesses that meet certain requirements to import and produce gold bars, which was previously limited to state-owned Saigon Jewelry Company.
Some eight banks and three jewelry firms, including SJC, are expected to qualify following the first major change in gold market management policy in over a decade.
Huynh Trung Khanh, vice chairman of the Vietnam Gold Traders Association, told VnExpress that it would take some time for the new regulations to have an impact on gold prices.
“For now we need to wait for guidance on [how] the decree [should be implemented] and for more gold to enter the market.”
It remains to be seen how much gold would actually be imported, he said.
He said over the medium and long terms the new regulations would narrow the gap between local and global prices from the current VND20 million (US$760) to around VND4-5 million per tael of 37.5 grams or 1.2 ounces.
Concurring, a representative of gold trading firm Phu Quy added that ending the monopoly would reduce speculation and make the gold market more transparent and stable.
Nguyen Trung Anh, chairman of jeweler Ancarat, said the new policy creates an opportunity for businesses with adequate resources to capitalize on the demand for bullion.
It would promote healthy competition, helping lower prices and improve quality and service, he said.
But how quickly prices fall would depend on other factors such as foreign exchange rates and the State Bank of Vietnam’s monetary policies, he added.
Experts have for long blamed the monopoly and the resulting short supply for the wide gap between local and global prices.
The central bank has admitted the monopoly was problematic since it had to use foreign currency reserves to import gold and produce bullion whenever the market ran out of supply.
The gold traders association said the changes would help ease jewelers’ difficulties in sourcing gold.
A Phu Nhuan Jewelry executive has in the past complained about the extreme difficulty in securing gold for making jewelry.
