This is one of the recommendations put forward by Prof. Dr. Tran Tho Dat, head of the scientific research team at National Economics University (NEU), to help stabilize the gold market and support its sustainable development.

According to the expert, the Commodity Exchange should soon be allowed to trade gold for future delivery through forward contracts and options contracts, as in advanced countries around the world.

According to Prof. Dr. Tran Tho Dat, the Government’s Decree No. 24/2012/NĐ-CP on the management of gold trading activities helped address outstanding issues and shortcomings in gold market management policy in the early 2000s, when the market faced many complex developments.

However, after more than 10 years of implementation, alongside continuous changes in the economy, people’s purposes for using or investing in gold have also changed. This requires the state to improve the effectiveness of gold market management by adjusting provisions of the Decree that are no longer appropriate in the new era.

To support stable and sustainable development of the gold market, the NEU research team proposed the following four recommendations:

Minimize direct administrative intervention in the gold market:

The State Bank of Vietnam (SBV) should promptly amend Decree No. 24 so that it no longer intervenes directly in the gold market through administrative measures, but instead focuses solely on management, policymaking, and regulating foreign exchange reserves held in gold in accordance with current law.

Specifically, it should not retain the exclusive right to produce gold bars, but should consider licensing eligible enterprises to import gold and produce gold bars to balance supply and demand and meet people’s investment and gold accumulation needs.

Changes should be made promptly, and a new decree consistent with international practices should be issued. Under Clause 1, Article 14 of Decree No. 24/2012/NĐ-CP, the SBV is the sole entity authorized to import and export raw gold for gold bar production. The SBV should manage the gold market by issuing other optimal policies rather than acting as a gold trading organization that buys and sells gold, as it currently does.

Research should be undertaken to develop strategies and development plans linking the gold market with commodity and financial markets, in line with efforts to promote economic growth and economic integration.

“The gold market cannot be treated in isolation; we must make it a component of the financial market that contributes to the country’s economic development. Decree No. 24 needs to be amended to eliminate the current shortcomings outlined above,” said Prof. Dr. Tran Tho Dat.

Connect the domestic gold market with the global gold market:

The SBV should take measures to eliminate price discrepancies, particularly for SJC gold, and move toward liberalizing gold imports and exports, including considering allowing certain enterprises to produce gold bars to supply the market. This is consistent with international practices and would help narrow the gap between domestic and international prices for SJC gold bars.

Insufficient attention has been paid to developing the industry encompassing the production, domestic consumption, and export of gold jewelry and decorative gold items. It is recommended that the production and trading of gold jewelry and decorative gold items be removed from the list of conditional business sectors in Appendix IV of the 2020 Law on Investment, because, unlike gold bars, gold jewelry and decorative gold items are ordinary commodities.

The SBV should consider allowing gold jewelry manufacturers to import raw gold. With the gold market currently relatively stable, considering the issuance of import licenses to enterprises is necessary; the “stopgap measure” applied over the past 10 years should not be extended further.

The SBV should develop a plan to help domestic gold enterprises access imported gold, giving them a choice of input sources and helping improve the quality of their finished products.

In addition, a policy opening up access to raw gold would create incentives and opportunities for domestic enterprises to cooperate with international enterprises, learn from one another, and improve their competitiveness.

This would also encourage private enterprises to invest with confidence in modern machinery and equipment for production, promoting the industry’s sustainable development.

It is recommended that the Ministry of Finance restore the gold jewelry export tax to its previous rate of 0%, rather than raising it to 1% as recently enacted, to encourage exports, replenish foreign currency resources, and enhance the competitiveness of Vietnam’s jewelry-making industry.

“A 0% tax rate would help Vietnam’s gold jewelry and decorative gold products compete more effectively with products from other countries in the Association of Southeast Asian Nations (ASEAN), as these countries also all apply a 0% tax rate,” Prof. Dr. Tran Tho Dat emphasized.

Fund certificates could also be traded on the Commodity Exchange, encouraging people to deposit gold and commit capital to production, business, and investment instead of holding gold bars.

Move promptly from a physical gold market to a market for gold for future delivery:

Currently, Vietnam’s gold market is a market in the narrow sense: only physical gold commodities may be traded, while trading in gold for future delivery is not permitted because no regulations exist for it. Article 19 of Decree No. 24/2012/NĐ-CP explicitly stipulates that other gold trading activities conducted without permission from the Prime Minister and a license from the SBV constitute violations of the law. To develop its gold market, Vietnam should promptly transition to a market for gold for future delivery, traded through forward contracts and options contracts.

Capital mobilization through the issuance of gold certificates should be permitted. Gold certificates offer safety and convenience, with no concerns about counterfeit gold, insufficient purity or weight, or fees for fabricating and stamping gold bars.

Under gold mobilization through certificate issuance, depositors cannot withdraw their gold before maturity, unlike under the previous savings arrangement. To ensure consistency, the SBV would issue gold certificates with safeguards in place, and the scheme would be implemented through commercial banks.

The purchase and sale of gold certificates would be permitted under strict SBV regulations and would constitute entirely voluntary investment transactions. Gold certificate holders would also have the right to convert their certificates into physical gold after the term specified on the certificates.

In the long term, the Government should develop a modern gold market connecting the domestic and global gold markets, allowing gold held by the public to circulate within the credit system through gold certificates and a national gold exchange.

In conjunction with these steps, the SBV should establish specific conditions and criteria for each type of gold business and ensure its ability to supervise the gold market through more effective supervisory tools.

Studying the formal establishment of a gold market system with appropriate centralized institutional structures would be important in unlocking this significant source of physical capital for the economy.

Change the management mindset to increase the mobilization of gold resources held by the public:

In recent years, the SBV has achieved notable results by implementing a coordinated range of measures to stabilize the macroeconomy, curb dollarization and goldization in the economy, effectively manage the foreign exchange and gold markets, and strengthen asset management.

The approach to gold market management therefore needs to change boldly. Goldization cannot be countered through administrative measures; instead, trading must shift from gold bars to other gold products, such as gold certificates and derivatives, at a centralized trading center.

To achieve this goal, the Government and the SBV need to create a stable business environment with considerable potential to channel people’s investment capital into more beneficial assets and investment channels. Rooted in generations of customs and beliefs, Vietnamese people continue to keep gold bars in their homes.

Only when people see that leaving capital “buried” in gold is less beneficial than investing money in the economy will they be motivated to channel their gold holdings into the economy. People’s spending on gold accumulation can be understood as reflecting a “defensive” stance.

“Therefore, encouraging them to abandon that ‘defensive’ stance requires the state and relevant agencies to develop and establish a stable gold market that protects and safeguards the legitimate interests of gold holders,” Prof. Dr. Tran Tho Dat stated.

The Commodity Exchange should soon be allowed to trade gold for future delivery through forward contracts and options contracts, as in advanced countries around the world. Participating members must meet strict standards and be authorized to import and export gold, based on the specifications for standardized gold forward contracts issued by the Commodity Exchange.

The establishment of gold trust funds (ETF- Exchange Traded Fund) should be permitted as an international financial instrument. Fund certificates could also be traded on the Commodity Exchange, encouraging people to deposit gold and commit capital to production, business and investment rather than holding gold bars.

“If ETFs can be traded and can participate in forward, futures, and options transactions on global exchanges, and are permitted to import and export gold, their gold reserves will serve as a stabilization fund, easing pressure on the State Bank of Vietnam during price spikes and helping create a stable macroeconomic environment,” Prof. Dr. Tran Tho Dat affirmed.

NGUYEN VIET

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