Vietnam is set to allow companies to import gold for the first time in more than a decade, aiming to bridge the growing gap between local prices and international benchmarks, an industry official told.
The Vietnam Gold Traders Association (VGTA) has been engaged in lengthy discussions with the government to address the imbalance in gold supply and demand, according to Huynh Trung Khanh, the association’s vice chair.
Since 2012, Vietnam’s government has virtually monopolized gold imports and local bullion sales, with only select large companies permitted to import gold for conversion into jewelry for export purposes.
“The government has indicated that official gold imports will commence by July or August. We are hopeful that by July, gold companies will be allowed to import directly,” Khanh stated on the sidelines of the Asia Pacific Precious Metals Conference.
The VGTA anticipates that the proposed policy change could take effect as early as next month. This would represent a significant shift from the current framework under which the central bank exercises stringent control over gold imports. The State Bank of Vietnam did not immediately respond to requests for comment.
Efforts to narrow the gap with international benchmarks through auctions and permitting four local banks to sell gold to boost liquidity have largely been unsuccessful, with domestic prices continuing to trade at high premiums relative to global prices.
Reducing premiums on domestic prices is critical, as VGTA forecasts a surge in Vietnam’s gold demand this year. Vietnam ranks among the top 10 gold-consuming nations.
Gold purchases are projected to rise 10% year-on-year to 33 million metric tons in the first half of this year, Khanh revealed in his conference presentation.
Retail buyers, who view gold as a safeguard against economic uncertainty, drive the majority of purchases in Vietnam, a country with a population of about 100 million.
“The main factors driving this strong retail investment demand include a sharp drop in savings interest rates, a stagnant real estate market, and the continuous devaluation of the national currency against the U.S. dollar,” Khanh explained.
“We have witnessed people queuing in the streets, enduring sun and rain to buy more gold.”
The sharp rise in gold demand has also led to increased smuggling, particularly from neighboring Cambodia, making immediate policy action essential, Khanh noted.
“There is a substantial underground network. With such a significant price increase, the rate of smuggling remains high.”
The VGTA, in collaboration with the World Gold Council, is working with the Vietnamese central bank and other government agencies to establish a national gold exchange, a move they believe would enhance market stability.
