Vietnam plans to ease gold import rules

Vietnam plans to allow direct gold imports for the first time in over a decade to address the price gap between domestic and international markets, according to Reuters on Tuesday.

The Vietnam Gold Traders Association (VGTA) is urging the government to address the gold supply shortage. Vice Chair Huynh Trung Khanh mentioned plans for official gold imports starting in July or August, with direct imports for gold companies possibly beginning next month.

Since 2012, Vietnam’s government has tightly controlled gold imports, with limited exceptions for specific exports. The central bank’s attempts to bridge the price gap through auctions and authorised bank sales proved ineffective.

Vietnam’s gold demand is expected to rise sharply in 2024, with a projected 10 per cent year-on-year increase to 33 million metric tons in the first half. This growth is driven by factors such as low saving interest rates, a sluggish real estate market, and a weakening Vietnamese currency.

Retail investors, seeking to safeguard their wealth during economic uncertainty, are the primary drivers of gold demand in Vietnam. Khanh highlighted scenes of people queuing outdoors to purchase gold, underlining the intensity of this demand.

The significant price discrepancy has also fuelled a rise in gold smuggling, particularly from neighbouring Cambodia. The VGTA emphasises the urgency of policy changes to curb this illegal activity.

The VGTA, in collaboration with the World Gold Council, is advocating for the establishment of a national gold exchange. This initiative is believed to promote greater market stability in the Vietnamese gold sector.