Supply Shortage and Inflated Prices
The Vietnamese government’s monopoly on gold has led to a shortage of supply and inflated prices, according to a report by VnExpress. National Assembly member Nguyen Thi Yen raised concerns about the gap between Saigon Jewelry Company (SJC) gold price and the global rate, highlighting the shortage in the gold market. Since 2012, the State Bank of Vietnam has held the manufacturing and management of gold, with SJC being the only recognized brand in the market. However, this monopoly has resulted in a significant difference in prices, with one tael of gold in Vietnam costing VND 14.5 million ($590.63) more than the global spot price.
Regulatory Changes and Gold Trading
To address the supply shortage and encourage transparency, lawmakers have called for regulatory changes. Assembly member Nguyen Thi Yen emphasized the need to allow businesses to import and manufacture gold. She also proposed the establishment of a national gold trading exchange to link Vietnam’s gold market with the global market. Additionally, Yen suggested issuing gold bonds to mobilize gold from the public. Assemblyman Do Manh Hien echoed these sentiments, urging the government to craft policies that would mobilize gold and dollars from the public. He highlighted the profitable nature of investing in gold and dollars compared to bank deposits.
Protecting the Currency and Revenues of SJC
While discussing the gold monopoly issue with SBV Governor Nguyen Thi Hong, lawmakers recognized the importance of safeguarding Vietnam’s national currency, the dong, and preventing ‘goldization.’ This term refers to the phenomenon of using gold for payments due to fears of currency depreciation. The government aims to strike a balance between addressing the gold supply issue and maintaining currency stability.
Saigon Jewelry Company’s Revenue Growth
Saigon Jewelry Company reported a significant increase in revenue in 2022. Their revenue soared by 60%, amounting to VND 27.15 trillion ($1.2 billion), compared to the previous year. This surge in revenue was driven by record-high gold bullion prices in Vietnam. Despite the substantial increase in gross profit, before-tax profits only saw a 23% increase due to rising sales and administrative expenses.