While reforms to the mechanisms for gold bar production and importation are essential, they are insufficient on their own. To effectively unlock the vast gold reserves held by the public for economic development, policy should be adopted from a long-term perspective and backed by a coherent and synchronized roadmap for reform.
Central to this vision is the creation of a comprehensive gold ecosystem, featuring a centralized trading exchange, derivative instruments, and a transparent data infrastructure. The gold market must evolve beyond serving merely as a repository of assets and instead become an integrated, dynamic component of the national financial system.
After more than a decade of enforcement, the need to revise Decree 24/2012/ND-CP on the management of gold trading has become urgent, garnering significant attention from experts, businesses, and the general public. The proposed amendment—outlined in the draft decree—seeks to eliminate the monopoly on gold bar production and allow controlled expansion of gold imports. A key issue highlighted in this reform is the persistent and substantial disparity between domestic and international gold prices.
However, adjusting the mechanisms governing the physical supply and demand of gold addresses only part of the challenge. To foster a stable and transparent gold market that integrates effectively into the broader financial system, a long-term strategic vision is essential. More critically, the Government must devise solutions to mobilize the vast gold holdings from the public for socio-economic development. This approach hinges on establishing a comprehensive financial services ecosystem tailored to the gold market.
Clarify the notion of “other gold trading activities”
The draft decree continues to maintain the regulation for “other gold trading activities” as outlined in Decree 24. However, the maintenance of this regulation raises many legal and technical issues that need careful consideration, especially regarding its definition and scope of adjustment.
First, the phrase “other gold trading activities” is not clearly defined. Expressed by exclusion, that is, by including all activities not clearly listed, the regulation can be interpreted in many different ways during its enforcement. This causes not only difficulty in implementation but also potential legal risks, especially during disputes or inspections and supervision.
Furthermore, according to the Vietnam Chamber of Commerce and Industry (VCCI), the unclear scope of adjustment may lead to a misunderstanding of some normal civil transactions, such as lending and keeping gold without fee between individuals, as trading activities. If there is no concrete guidance, the regulation may be applied mechanically, affecting the legitimate interests of people and organizations that do not engage in gold trading.
For activities such as trading gold on accounts and derivatives, the draft decree does not specify the management mechanism. This legal loophole leaves stakeholders unclear about the licensing requirement, the procedure, or the method for executing transactions, reducing the feasibility upon implementation.
Additionally, the classification of these activities in the list of commodities and services restricted for trade poses a problem. This list is no longer applied and was officially abolished when Decree 173/2024/ND-CP took effect. The current Investment Law only regulates trades under three categories: banned, conditional and free.
Given these problems, many agencies, along with the VCCI and commercial banks, proposed clarifying the concept and establishing a comprehensive legal mechanism for related activities. The State Bank of Vietnam (SBV) stated that the draft decree does not amend the content of other gold trading activities; however, the central bank will continue to study guidelines for the development of the concentrated gold exchange.
Regarding derivatives related to gold, the SBV stated that it would review and amend relevant regulations, including Circular 40/2016/TT-NHNN, to establish the legal basis for commercial banks to offer these products. Over the long term, the SBV would include these contents in the process of amending the Investment Law to ensure consistency with the current legal system.
Derivative tools: The key to controlling gold price risk
One of the biggest risks that gold production and import businesses face is the unpredictable fluctuation of the gold price in the international market. Without suitable hedging tools, businesses will have to bear all price risks throughout the process from gold import to marketing. Therefore, the development of the gold derivative market is a pressing imperative to protect businesses and stabilize operations in the gold trading sector.
The draft decree has opened a suitable direction, allowing commercial banks to conduct derivative activities under the regulation of the Law on Credit Organization. In their policy feedback, many businesses and trade associations have many times suggested this content. If well-designed and deployed, tools such as gold futures contracts, forward contracts, options, and swaps will bring numerous practical benefits to the market.
Derivative tools play a crucial role in helping businesses proactively manage price risks. It is a solution for businesses to set the buy or sell price of gold in the future, allowing them to safeguard their production and business plans amid unfavorable market developments and maintain a stable profit margin. For investors, the derivative tool helps diversify their portfolios. It is also an effective option for mitigating risks or profiting from gold price fluctuations.
However, apart from its clear benefits, the derivative market also poses many potential risks if it is abused for speculative purposes. The uncontrolled use of derivative tools may destabilize the market and affect the entire related financial ecosystem. Therefore, the development of the gold derivative market must always be accompanied by a strict management and supervision mechanism from authorities.
In the initial phase, participation in the derivative market should be limited to commercial banks and businesses licensed for gold production or import. The goal should be defined clearly as risk prevention, not speculation. Along with this, the SBV and the Ministry of Finance should collaborate to establish a concrete legal framework that specifies permitted derivative products for development, capital requirements, depository mechanisms, risk control, and transparent reporting. Over the long term, derivative transactions should be conducted through a commodity exchange or a dedicated exchange. This will ensure openness and transparency and minimize risks from partners. It will provide an important foundation for developing an effective gold derivative market and stabilizing the domestic gold ecosystem.
Necessary steps for transparent market
Party General Secretary To Lam’s instruction to study the establishment of the national gold exchange demonstrates the determination for systematic, in-depth reform of the gold market. Currently, gold trading activities are primarily decentralized, unregulated, and spontaneous. This not only causes prices to change unpredictably but also makes monetary policy regulation and market management difficult.
The establishment of a national gold exchange, modeled after those in developed countries, will create a concentrated, open, and transparent exchange. The exchange will establish a unified reference price nationwide, which closely reflects practical demand and supply, thereby narrowing the price gap between different gold brands and increasing connectivity with the international market. Market liquidity will be significantly improved when trading activities are conducted through a concentrated and effective order-matching system.
Apart from hosting transactions, the national gold exchange serves as the central repository for all market information, enabling the management agency to gain a comprehensive view and issue policies in a timely manner. This is also an important tool for preventing money laundering, smuggling, and violations related to gold.
Besides physical gold, the national gold exchange can serve as a platform for the development of other financial tools. The diversification of products and the standardization of the transaction process will pave the way for the professional and sustainable development of the domestic gold market. Therefore, the proposal for establishing a national gold exchange is drawing great attention from experts and policymakers. Many opined that it is necessary to study a suitable roadmap for this model to mobilize gold resources in the public and increase connectivity with the international gold market. Additionally, there are suggestions for establishing a legal corridor to facilitate the development of liquidity support products, such as gold forwards and gold certificates.
Nevertheless, the establishment of the national gold exchange is assessed as a complex task that needs close, synchronous coordination among many agencies. The plans currently under consideration include establishing a concentrated gold exchange, transacting gold at the commodity exchange and developing a gold exchange in the international financial centers in Vietnam. Whatever option is chosen, all of them are substantial contents that fall beyond the scope of the draft decree and should be implemented following a separate roadmap. Trading gold on accounts is also directed to follow this process.
Although challenges are not small, in terms of technical and legal requirements and operational capacity, establishing the national gold exchange is a strategic step that Vietnam should follow to not only enhance management efficiency but also gradually develop a modern, transparent financial ecosystem in line with the global integration trend.
The amendment of Decree 24 is an opportunity to restructure the gold market towards modernism, transparency and efficiency.
(*) Economics and Law University, HCMC National University.
