Government Decree No.24, along with a draft circular for the implementation of the decree to gather ideas from the public, has failed to offer instructions for such a conversion.
“The State Bank of Vietnam (SBV) needs to announce the exchange mechanism so that the people can know how to switch the gold bullion of other brands into that of Saigon Jewelry Co."
"Such an announcement will be an effective psychological rehabilitation for the people,” said Nguyen Ngoc Que Chi, general manager of Sacombank Jewelry Co (SBJ).
Under the direction of the central bank, gold enterprises have stopped the production of gold bars since September 2011.
Nguyen Thanh Truc, vice president of the Vietnam Gold Business Association, told Tuoi Tre that since the producers of non-SJC gold bullions were previously licensed by the SBV, the central bank should be responsible for preserving the gold value for the owners of non-SJC gold bullion.
“SBV should allow the straight exchange from non-SJC gold bullions to SJC ones if testing shows that their weight and quality are sufficient,” he said.
“The central bank may collect some fees, such as the VND60,000 previously collected by SJC, for the testing.”
“Without clear guidelines on the matter, the conversion will be blocked.”
Vietnam Gold Business Joint Stock Company (VGB) general director Tran Thanh Hai said as SJC gold bullion made up the majority of the market, and SJC will be the gold monopoly with the recent decree, a number of organizations and individuals currently holding non-SJC gold bars will be disadvantaged when converted into SJC gold, later known as SBV gold.
As a result, he proposed that the central bank have an overall statistic on the total volume of non-SJC gold bars for registration so that there will be quality control and fee collections later for the switch on a 6-month roadmap.
Truc said when the regulations on the management of the official gold market are applied, gold trading activities will be managed more closely.
Therefore, the positive effect is that as the number of gold pieces circulated in the market declines, the volume of foreign currencies needed for the import of gold will fall. However, in terms of the market, gold business activity will be less exciting.
"But the biggest thing people are interested in is whether the local gold price will closely follow world prices. Recently, the price differences of about VND1-3 million a tael are still happening.”
“The market will only smooth out once the management mechanisms comply with the rules of the market "Truc said.
The owners of other brands of gold bars are worried, as after the announcement of the new law, many people rushed to sell theirs.
However, many brands are have also limited buying by listing low purchase prices.
Thanh, from Ho Chi Minh City’s Binh Thanh District, said the she had to sell about VND1 million a tael lower than the listing price, although the selling price was previously equivalent to that of SJC.
Quynh Hoa, from HCMC’s Go Vap District, told Tuoi Tre that there are many brands of gold taking advantage of price pressure to buy at lower price. She also proposed that the central bank should announce the schedule for the gold switch as soon as possible.
Tuoi Tre found that many other companies cut the bid and ask price of gold by VND1-2 million tael lower than that of SJC.
At 3:30pm, the Hanoi-based Bao Tin Minh Chau quoted their gold at VND 41.8 million a tael and VND41.5 million tael for bid and ask, some VND1.8 million tael cheaper than the listed price of SJC. The selling price of AAA gold bullion of Agribank was VND1.6 million a tael lower that of SJC.
Still in the transition time
The draft circular said that enterprises and credit institutions can continue trading gold 6 months from the effective date of the circular, but they must complete business registration with the registration agencies and submit the business license application with the central bank for future gold sales.
For organizations that are engaged in the production of gold jewelry and fine art, the switching route is 12 months from the effective date of the decree.
The State Bank branches in provinces and cities shall issue a certificate of eligibility for the production of gold jewelry and fine art.
Licenses for trading gold, gold import and export, and quotas for gold imports as raw materials will be handled by the Foreign Exchange Management Department under the central bank.