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Vietnam needs gold exchange and quality centre
General Secretary of the Viet Nam Gold Businesses Association Dinh Nho Bang spoke with local newspapers about disparity in gold prices and the establishment of an independent gold-quality centre.
Why is there such a difference between world and domestic prices?
The difference is foreseeable because the domestic gold market has applied a closed-door policy. At times when enterprises were allowed to import gold, market demand for gold was satisfied and the difference was only about VND30,000 ($1.8) per tael.
However, while the importation of gold has been temporarily halted by the Government, the domestic price has been affected by other factors. These include the exchange rate between dong and US dollar, supply and demand, import-export policies, and reserves held by gold companies.
For example, in the first months of the year, the domestic price always followed rises and falls in global prices. But recently, when domestic gold prices were low, people rushed to buy, creating an imbalance between supply and demand. Gold companies took this opportunity to raise prices, despite the downward global trend.
Do you think recent domestic prices are unreasonable?
It is hard to say they are unreasonable, although sometimes the difference between the world and domestic prices reached VND1 million per tael. The State now does not manage the domestic gold price. Companies are the ones to decide selling and buying prices, especially as there is no national gold-exchange centre.
Companies bought gold at high prices before the world price went down, thus, to avoid losses, they had to sell at higher-than-world prices. Therefore, it is unreasonable, based on the world gold price, to say their selling prices were too high.
The supply-demand factor did not have much influence on domestic prices. This meant that even when demand was down, gold companies could not lower prices.
Some say these companies co-operate with each other to distort prices. Is it true?
There is no foundation to affirm this, especially for members of the association. The association’s leaders always pay attention to the problem and members are supervised closely to ensure they run their business in compliance with the the Prime Minister’s directions.
As there is no gold-exchange centre, gold prices vary among companies.
What do you think about the quality of gold products in the market?
Currently, gold bars account for 70 per cent of gold products in the country’s market, and gold bars produced by SJC, AAA, Bao Tin Minh Chau, and PNJ are highly sought after. The quality of gold in a bar is often guaranteed. Gold jewellery products from these companies have held their prestige in recent years. No customers complain about the quality of products.
Most gold products investigated are sold by small companies with little repute. These goods are easy to recognise because they often have no trademarks. Companies that do not run their business seriously are not members of the association, thus their products are not under our control.
Who is responsible for managing the quality of gold? Do you think authorities should manage gold prices to protect customers?
Currently, there is no regulation. The Government issued decree No 177 in 1999 to regulate companies’ responsibility for gold quality, but some regulations no longer suit the reality.
I think the legal framework must be developed further. An independent gold quality examining centre should be set up to control gold quality.
In my opinion, we should not manage the market by administrative orders. The gold market is very sensitive to policies. To make the market more transparent, it is better to set up a gold-exchange floor and develop gold trading via accounts. This will help ensure benefits to the State, companies and investors.
VNN
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