The Vietnam Gold Businesses’ Association said it has, once again, asked the State Bank of Vietnam to allow enterprises to export gold, which it believes will foster the gold market.
Nguyen Thanh Long, Director General of the Saigon Jewellery Company (SJC), said that gold exports will help balance the supply and demand, and create sources of foreign currencies in a short time.
In fact, gold trading companies once asked the central bank to allow them export gold in mid 2005, but the proposal was not accepted. Just several days ago, on the opening of the SJC’s new workshop in Hanoi, Mr Long, together with the association once again proposed the central bank to allow the exporting of gold.
The gold consumption level has been increasing rapidly in the last few years. According to the World Gold Council, Vietnam wanted more than 70 tonnes of gold a year in the last three years, and the figure unexpectedly rose to 86 tonnes last year, increasing by 41% over the previous year. It is estimated that the demand would be 75-80 tonnes in 2007.
Analysts said that with such a big consumption volume, gold will become ‘dead gold’ (which cannot be put into business and investment) if Vietnam only allows imports, while prohibiting exports. Every year, Vietnam has to spend several hundred millions dollars to import gold. Enterprises have to seek foreign currencies in the country to pay for import deals, while they cannot export gold to get foreign currencies, leading to the imbalance between imports and exports and foreign currency sources.
If enterprises are allowed to export gold, they can make profit from the price gap between the domestic and international prices.
Mr Long said that if Vietnam has a suitable mechanism for gold export, gold can be converted into foreign currencies, while the gold market will be cleared and further developed.
SJC is leading the domestic market in terms of market share and sales. In 2006, SJC’s gold sales reached VND16tril, or $1bil, holding 90% of the market share. The statistics from the General Department of Customs showed that SJC is one of the 10 enterprises which had the biggest imports of gold in the first six months of 2007 with 64 tonnes of gold imports.
Source: VNE
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