Ending monopoly, removing bottlenecks in gold market in Vietnam

Party General Secretary To Lam's recent call for mechanisms and policies to effectively manage the gold market, during a working session with the Central Committee for Policy and Strategy, has become a hot topic in recent days.

The issue has heated up because the nearly-13-year-old policy of monopolizing gold bullion has led to certain 'side effects.'

While the price gap between domestic gold and global gold was once just a few hundred thousand to a few million dong per tael, the difference has recently reached VND18–20 million (US$692-768) per tael for both SJC gold bullion and jewelry-grade gold. (1 tael = 37.5 grams)

Over the past year, as global gold prices have continued to rise due to geopolitical instability, Vietnam's gold market has faced mounting pressure. This is largely because the supply of SJC gold bullion has dwindled, with no new production in years.

Limited supply, while market demand remains — and has even increased — has widened the gap between domestic and international gold prices.

In 2024, a phenomenon never seen before occurred: people lined up for days to buy gold. Gold companies were forced to limit sales to just one tael of bullion or one to two taels of gold rings per person owing to supply shortages. At various times this year, long queues formed again as people rushed to purchase gold.

As a key stakeholder, SJC itself has complained about the monopoly mechanism, saying it does not benefit from it and is unfairly accused of manipulating gold prices.

Meanwhile, jewelry companies have also voiced frustration over a lack of raw materials, as they have not been granted official import licenses for many years.

Decree 24 was originally introduced as a temporary solution to stabilize a volatile gold market. It aimed to curb persistent gold fever by ending the practice of banks mobilizing gold deposits and converting gold into cash — a system that encouraged speculative behavior from the lenders.

The decree not only tightened control over the production of SJC gold bullion but also helped block the inflow of smuggled gold, contributing to a drop and eventual stabilization of the unofficial VND/USD exchange rate.

However, today's market context has changed, and policy must adapt accordingly to improve regulatory effectiveness and ensure the gold market operates smoothly, openly, and transparently.

Swiftly amending Decree 24, ending the monopoly on gold bullion, and allowing 'controlled expansion of import rights' will significantly increase domestic gold supply. This will enable multiple gold bullion brands to compete fairly, diversify supply sources, and help stabilize prices.

It may take a few months to revise the policy, but these upcoming changes have already sparked renewed confidence in the market.

Once the state commits to removing these gold market bottlenecks, public sentiment will stabilize. People will no longer rush to pour their money into gold as they have recently.

Smuggled gold will lose its footing, and domestic gold prices will no longer remain unjustifiably out of sync with global rates.