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MPI: Gold imports shouldn’t be figured into trade deficit
Opinions vary about the recent move by the Ministry of Finance (MOF) to raise the gold import tax rate from 0.5% to 1%.
Explaining its move, MOF said that it aims to reduce gold imports in order to help reduce the trade deficit, which has been alarmingly high so far this year. However, Thai Doan Tuu, Deputy Director of the Trade and Service Department under the Ministry of Planning and Investment (MPI), thinks that gold imports should not be counted when calculating the trade deficit.
Tuu said that gold should not be considered a kind of consumer product, but a kind of special commodity, a kind of foreign currency. Other countries in the world consider gold a kind of foreign currency, while they reserve gold together with other hard foreign currencies. With its advantages, gold is a popular tool in international payment. Gold transactions can bring any currencies export countries want.
Unlike other consumer commodities, which may devaluate, gold never loses its value. Gold can easily be returned to circulation. Recently, Russia, the UK and the International Monetary Fund (IMF) sold a big volume of gold to turn this precious metal into cash.
Enterprises have recently spent a lot of money to import gold. Has this led to the international payment imbalance?
Yes, if you look at the issue from the angle of international payment. However, you should understand that this is a kind of transaction to convert a foreign currency into another kind, and the conversion, to some extent, benefits all involved parties.
Could you please elaborate on this?
The gold saving by the public, to some extent, encourages people to economise and cut spending, thus helping curb inflation. Moreover, in many cases, gold can help create added value when converted into other products or services.
As for the state, if it creates favourable conditions for trading gold, it can easily regulate the supply and demand of the gold market.
However, the government does not allow enterprises to export gold, while enterprises have imported too much gold recently. What do you think will happen, then?
I personally think that the government should allow enterprises to export gold, as it will bring many advantages.
Domestic gold reserves can become foreign currencies. The money can be saved up, or put into investment in production, and can be used in international payment, which can help reduce the current balance deficit.
Gold exports will bring added value, while the government will be able to collect tax from gold exports. Moreover, as the government allows the import of gold, it needs to allow the export of gold in order to balance the supply and demand.
* In the first four months of the year, Vietnam imported some 43 tonnes of gold worth $1.2bil. The figure is expected to reach $4bil by the end of this year. In order to reduce the trade balance deficit, the Vietnam Gold Business Association many times has proposed the government allow gold to be exported.
VNN
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