Regarding the search for management solutions when the price of gold continues to “dance”, Labor Newspaper continues to receive feedback from experts.
No pressure on exchange rates
On March 5, the SJC gold price reached nearly 81 million VND/tael, and the 24K gold ring reached a new peak of around 68.6 million VND/tael. Meanwhile, in the world market, the gold price was trading at around 2,116 USD/ounce, equivalent to only about 63.3 million VND/tael converted at the posted exchange rate. The price difference between domestic and global gold is widening, increasing from 12-13 million VND/tael in the beginning of 2023 to a record level of 17-19 million VND/tael today.
According to Mr. Nguyen Minh Tuan, the founder of TOPI – a personal financial investment and management platform, the gold price in the country is rising sharply due to the impact of the global gold increase when many central banks increase their gold purchases to balance their investment portfolios. In the country, the demand is also increasing, especially during the recent Lunar New Year. “Bank deposit interest rates are low, so people tend to switch some of their maturity amounts to other investment channels, including gold,” Mr. Tuan pointed out.
One of the proposed solutions for managing the domestic gold market by experts is to use taxation tools. Photo: LAM GIANG
It is worth noting that despite the surge in demand and the record price difference between domestic and global gold, it does not put pressure on exchange rates. “Through gold market management, the State Bank of Vietnam (SBV) does not signal the sale of foreign currency to import gold, thereby extinguishing the speculation into the exchange rate. Decree 24/2012 on the management of gold business activities has contributed to preventing the goldization and dollarization of the economy,” said Mr. Le Dat Chi, Director of the Bachelor of Applied Finance program at Rennes University.
Tax tools needed for regulation
To stabilize the gold market, many opinions suggest abolishing the exclusive mechanism for SJC gold and allowing the import of gold raw materials for the production of SJC gold pieces.
In terms of management agencies, SBV is considering amending Decree 24/2012. This agency has also submitted a recommendation to the Prime Minister, assigning SBV as the coordinating unit with ministries and sectors to continue implementing solutions in accordance with the regulations of Decree 24/2012. At the same time, coordinate with the Ministry of Public Security to inspect, inspect, and assess the gold market, especially gold pieces; coordinate with the Ministry of Public Security on gold market management solutions in the first quarter of 2024. In particular, complete the assessment report, summarize the implementation of Decree 24/2012 for submission to the Government.
Experts recommend studying the use of tax tools to regulate the gold market. A specialist compares: Both gold buyers and sellers are not required to pay taxes when trading – including personal income tax, and businesses are not required to issue invoices. Meanwhile, investors in stocks, bonds, or real estate have to pay taxes. “Gold, although not a means of payment, banks do not mobilize and lend gold, but it is still a currency that needs to be managed. When it is necessary to regulate the gold market through tax tools to create fairness,” this expert stated.
Mr. Nguyen Minh Tuan suggests that the State can refer to gold market management policies through taxation in India – a country with a large demand for gold investment. “The core issue is what orientation Vietnam has for gold market management? It is necessary to allocate resources to economic development, while also considering gold as a defensive asset. When interest rates are low, people’s investment in the gold channel is reasonable, so it needs to be managed based on market approaches and using regulatory tools,” Mr. Tuan said.
From a macro perspective, anti-goldization of the economy is not only the responsibility of SBV but also requires the participation of ministries and sectors in the formation of attractive investment channels to attract capital flows. For example, developing a healthy, transparent stock market; developing an attractive bond market; creating an investment environment that encourages startups… “At that time, people will not buy gold and keep it, or put it in a safe with the expectation of price increases, which leads to stagnant capital flows instead of circulating, flowing into the economy,” said Mr. Le Dat Chi.
Do not establish a gold trading floor
Mr. Can Van Luc, a member of the National Financial-Monetary Policy Advisory Council, believes that the solution of establishing a physical gold trading floor is unnecessary. This goes against the policy of preventing the goldization of the economy for over a decade.
“The world is not currently trending towards establishing gold trading floors. India and China have established gold floors, but have adjusted towards encouraging trading through gold accounts more, thereby promoting non-cash transactions in the economy,” said Mr. Can Van Luc.
