VietNamNet Bridge – The State Bank of Vietnam last week granted the quotas to import four tons of gold, aiming to narrow the gap between the domestic and the world’s prices. However, the imports still cannot satisfy the domestic demand, while the domestic prices are still 1.5-1.9 million dong per tael higher than the world’s prices.
Hanoians rush to purchase gold
According to Truong Cong Nhon, Deputy General Director of the Saigon Jewelry Company (SJC), SJC imported more than 500 kilos of gold last week after it got quotas for import before.
Meanwhile, Vietnamese people still have been rushing to purchase gold. By 4.30 pm of September 21, the volume of gold sold by SJC had reached 8000 taels. Nguyen Cong Tuong, a senior executive of SJC, said that some individuals purchased up to hundreds of taels of gold.
Tuong also said that the import volume of 500 kilos, or 13,300 taels, is just big enough to sell within two days, when the prices go down and people rush to buy gold. Therefore, the SJC’s imported gold has been sold out.
Gold traders say that the gap between the domestic and the world’s prices have not been narrowed, even though more gold has been imported, because the domestic demand remains high and people still queue up for buying gold.
Nguyen Thi Cuc, Deputy General Director of the Phu Nhuan Jewelry Company (PNJ), said that 2500 taels of gold were sold on September 21, while several thousands of taels were sold each day in previous days. Therefore, PNJ imported gold right after getting the quotas.
As the world’s gold price on September 22 decreased by 40 dollars per oz from the level of the previous day, the domestic price also decreased by 300,000 dong per tael to 46.65-46.82 million dong on the same day. The gap between the sale and the purchase prices has been narrowed to 150,000-200,000 dong per tael.
However, the domestic gold price decrease still cannot help narrow the gap between the domestic and the world’s prices. The price gap on September 22 increased to 1.9 million dong per tael from the 1.5 million dong per tael several days ago.
On September 19, the Vietnam Association of Financial Investors (VAFI) proposed the Ministry of Finance to consider the trading of bullion and jewelry gold as normal consumer goods and impose the value added tax (VAT) at10-15 percent of the sale prices in order to ease the reliance on gold.
According to VAFI, when people buy gold, they cause the so called “foreign currency drain”, because Vietnam is not a gold production country and 95 percent of bullion gold kept among people are imports. The demand for gold increases, while gold keepers do not want to sell gold, which will force the State to spend foreign currencies to import gold.
However, according to Nguyen Thanh Long, Chair of the Gold Business Association, the tax imposition may not bring the desired effects. Since the bank deposit interest rates have dropped to 14 percent, which are unsatisfactory for depositors, people have shifted from depositing money to buying gold. Those, who keep gold, do not intend to sell gold at this moment, because they believe the world’s prices would keep rising in the context of uncertainties.
Long stressed that people would only stop buying gold and keeping gold when the world economy and the national economy stabilize, and they do not need to seek a “safe shelter” any more. “If people decide that they must go on a certain road to reach their goal, they will still do even though they have to pay fee,” Long aid.
Meanwhile, Cuc has warned that if imposing tax, people would have to buy gold at even higher prices, while they now have to bear the prices higher than the world’s prices already. If so, the efforts by the State to narrow the world’s and the domestic prices will not succeed.