“Breaking the SJC Gold Monopoly: Strategies for a Level Playing Field”

Gold bar prices remained stable on June 5 compared to the previous day, with buying and selling rates at VND 114.9 million and VND 117.2 million per tael, respectively. However, these rates were still significantly higher than global rates, with a difference of over VND 10 million per tael. To bridge this gap, experts suggest ending SJC gold bar monopoly as recently directed by Party General Secretary To Lam, along with implementing comprehensive solutions.

A Market Cannot be “One-Door”

In an interview with Nguoi Lao Dong newspaper, Mr. Nguyen Tu Mi, CEO of Mi Hong Gold Company, shared that his company is one of the 38 enterprises licensed to trade gold bars since 2012, as per the Government’s Decree No. 24/2012/ND-CP. “Over the past decade, Mi Hong has not only participated but also witnessed the ups and downs of this market, understanding the pros and cons that the monopoly mechanism brings,” he said. Mr. Tu Mi expressed support for ending the monopoly, stating that a market needs competition and options to thrive.

According to Mi Hong Gold Company, a diverse supply chain with more participants would lead to a richer source of gold bars, narrowing the gap between domestic and global prices. This would reduce anxiety among the people and bring order to the market. The market would become more transparent, inclusive, and fair. Enterprises with a solid foundation, well-established systems, and strategic plans would have opportunities to expand their operations and even break free from previous limitations.

“With additional qualified enterprises joining the market, the supply and demand dynamics would be more accurately reflected, and price manipulation due to psychological factors or false rumors would be mitigated,” said Mr. Tu Mi. “The gap between domestic and global gold prices would narrow, and abnormal fluctuations due to local shortages would be reduced. Moreover, if policies allowed for transparent gold material imports, it would not only serve the domestic market but also pave the way for exports,” he added.

Dr. Nguyen Tuan Anh, a lecturer in Finance at RMIT University Vietnam, attributed the price difference to the monopoly on SJC gold bar production by the State Bank of Vietnam (SBV) through the Saigon Jewelry Company (SJC) and restrictions on gold imports since 2012. As a result, the domestic gold market has become isolated, leading to increased gold smuggling, putting pressure on exchange rates and foreign reserves.

“Allowing multiple enterprises to produce gold bars is feasible if there are clear licensing criteria regarding capital, technology, and reputation, similar to how Singapore manages its recognized gold providers,” suggested Dr. Tuan Anh. “Regarding gold imports, we can look at India’s approach, where import taxes are used to regulate the amount of gold entering the country instead of relying on total quotas. However, this also depends on the SBV’s ability to build a robust legal framework and enhance its supervisory capacity,” he added.

Dr. Tuan Anh cited India’s flexible import quota system, where they limit gold imports to 140 tons for the 2023-2024 period, ensuring control over gold inflows while meeting market demands. “Vietnam could adopt a similar model by setting annual import quotas based on domestic needs and macroeconomic conditions,” he said. “Additionally, implementing blockchain technology to track gold origin and circulation, similar to the model used by the Dubai Multi Commodities Centre (DMCC), would enhance transparency and reduce price manipulation,” the expert suggested.

How Far Should We Open the Door?

Economist Prof. Dr. Ngo Tri Long agreed on the need to allow gold imports with strict control measures. “It is necessary to consider policy revisions to permit gold imports for qualified enterprises to promote competition, stabilize the market, and protect consumers’ interests,” he said. “Instead of relying solely on auctions for gold imports, a controlled quota system should be implemented, taking into account the actual capacity, business efficiency, legal compliance, and transparent audit results of the enterprises. This approach ensures fairness, transparency, and efficiency while fostering healthy competition and preventing market speculation,” Prof. Long added.

The experts discussed the extent of marketization required for sustainable development while mitigating speculation risks. While market reforms in the gold sector bring benefits, they also carry potential pitfalls. Liberalizing gold imports could put pressure on foreign reserves, and ending the gold bar production monopoly without proper controls could lead to market chaos, affect gold quality, and erode consumer trust.

Dr. Nguyen Tuan Anh suggested that to effectively marketize Decree No. 24, regulators need to strike a delicate balance between liberalization to increase gold supply and maintaining tight control to prevent speculative risks, which have been the primary cause of domestic gold price instability. The degree of marketization should be based on promoting competition while maintaining oversight to ensure market transparency and stability.

“Regarding gold bar production, instead of a monopoly on the SJC brand, the state could license a few large enterprises that meet stringent criteria, such as minimum capital requirements, advanced technology, and market experience, to participate,” Dr. Tuan Anh proposed. “This model is similar to how Australia operates with refineries like Perth Mint, where competition is encouraged but remains under government supervision. For gold imports, allocating annual quotas equivalent to domestic demand to qualified enterprises will help control foreign currency flows, curb gold price inflation, and gradually eliminate the current import ban,” he added.

Monitoring foreign currency flows is crucial to safeguarding exchange rates and foreign reserves if gold imports by enterprises are permitted. Some experts suggested that the SBV closely coordinate with the Ministry of Finance to track money flows, similar to how the People’s Bank of China (PBoC) requires approval for all gold import batches. In China, major banks like ICBC, HSBC, and ANZ are allocated import quotas, ensuring centralized control while facilitating market operations.