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Seminar seeks gold exchange
A national gold exchange centre is urgently needed in order to help the State control gold trading activities on the domestic market more effectively, a seminar was told.
At the seminar, focused on the impact of gold on the financial market and organised by the Viet Nam National Financial Supervisory Committee (NFSC) in Ha Noi on Thursday, experts said that gold market management must embrace the principles of openness, transparency and equality.
Pham Duc An, deputy director of the Bank for Investment and Development of Viet Nam, said that there should only be one national gold exchange centre, operated similarly to a stock exchange in order to help make the gold market more transparent.
The gold trading centre, to be owned by the State or individuals, should be under State Bank of Viet Nam (SBV) control, An added.
Seminar participants said that the openness and transparency of the domestic gold market would help increase investor confidence in policies, enabling them to engage confidently in long-term investment strategies which would help avoid turmoil on the market.
Le Xuan Nghia, Vice Chairman of the committee, said that principles and standards related to supervision activities should be set in conformity with international regulations and Viet Nam's circumstances.
Gold import and export quotas have to be removed in order to avoid creating disparity between global and domestic prices, Nghia said, adding that import and export tariffs should not exceed 1 per cent.
A task force, managed by the SBV, should be established in order to develop a proper gold exchange centre.
Participants said that, although the current domestic gold market had been stabilised by Government measures, it still contained many risky factors due to the lack of effective management regulations.
According to the NFSC, idle gold is estimated at around 460-1,000 tonnes, equivalent to US$21billion - $45 billion.
The SBV has struggled to control Viet Nam's large gold reserves (estimated to be the fifth highest in the world), which has led to increased dollarisation that in turn has adversely impacting the nation's macro economy, monetary policies and foreign currency reserves.
Nghia said that a legal framework was needed in order to attract idle gold.
Participants agreed that the establishment of a gold exchange centre was critical, given most Asian countries already had such centres in place.
Nguyen Thanh Long, Chairman of the Viet Nam Gold Business Association, said that, since chaotic gold trading floors and gold trading on accounts from abroad were forced to close down last year, the domestic gold market had shifted to gold bar trading activities.
Long added that the domestic production of gold jewellery was still low due to the lack of a legal framework, adversely affecting consumers and scrupulous producers, while the demand for gold jewellery remained high.
Le Dang Doanh, a senior economist, said that gold alone was not to blame for the country's inflation.
Doanh explained that in order to control the domestic gold market, the State had to control gold smuggling and place 10,000 gold shops nationwide under State management.
According to the NFSC, 31.33 per cent of surveyed households had gold reserves. 92 per cent of which said that they held on to their gold reserves in order to resist inflationary pressures.
The SBV recently proposed to the Government a decree aimed at banning the free trading of gold bars on the market and placing this business under a tighter control via major importers.
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