Vietnam may permit businesses to import gold for the first time in more than ten years in an effort to close the growing difference between domestic prices and global standards, Reuters reported.
According to Huynh Trung Khanh, vice chair of the Vietnam Gold Traders Association (VGTA), the government and the association have been in lengthy negotiations regarding how to address the disparity between the supply and demand of gold.
In 2012, the Vietnamese government essentially assumed complete control over imports and domestic bullion sales, allowing only a few big businesses to import precious metal as long as it was used to make jewellery that would be exported.
“The government said they will start official gold imports by July or August. We hope that by July they will allow gold companies to import directly,” Khanh said on the sidelines of the Asia Pacific Precious Metals conference, as reported by the Zawya.
He stated that the State Bank of Vietnam, the country’s central bank, would have the last say over whether or not to permit businesses to import gold. That would be a major change from the way things are now done, where the central bank strictly regulates imports.
The domestic gold market continues to trade at persistently high premiums to global prices, despite efforts to reduce the difference with international benchmarks by holding auctions and permitting four local banks to sell gold in an effort to increase liquidity.
According to Vietnam Gold Traders Association, the country’s gold demand is expected to soar this year, so premiums on domestic prices must be immediately reduced. Among the top 10 consumers of gold is the Southeast United States.
Khanh in his presentation at the conference stated that during the first half of this year, gold purchases are expected to increase by 10% annually to 33 million metric tons.
In the roughly 100 million-person economy of Southeast Asia, retail buyers make up the majority of gold purchases. These buyers see gold as a means of protecting wealth and fending off economic uncertainty.
Meanwhile, talking about the Vietnam economy, Singapore-based United Overseas Bank (UOB) has projected the Southeast Asian country’s economic growth rate at 6% in Q2 2024 and for the entire year. The growth in Q1 2024 was 5.66% and is expected to be 6.4% in 2025.
The reason cited was a rise in demand for chips, the recovery of Chinese and regional economies and ongoing supply chain drifts. Inflation will be controlled at 3.8%, the bank noted further.
The manufacturing purchasing managers’ index (PMI) remained unchanged at 50.3 in May 2024, signalling a second consecutive marginal monthly improvement in business conditions in the industry.
Industrial production rose by 8.9% in May, marking the third consecutive month of growth. Exports, on the other hand, posted two-digit growth for the third consecutive month, at 15.8% in May, up from 10.6% in April. Imports rose by 29.9% in May from 19.9% in April.
The trade surplus was USD 7.8 billion in the first five months of 2024, while foreign direct investment rose by 7.8% to reach USD 8.3 billion during the period—the fastest pace since 2018.