Vietnam is expected to allow companies to import gold directly in July and August, the country's first opening of gold imports in more than a decade, aiming to close a widening gap between local prices and international benchmarks, an industry official told Reuters.
Since 2012, the Vietnamese government has tightly controlled gold imports and local sales, allowing only a handful of large companies to process gold bars into jewelry for import and export. Hoang Trung Khanh, vice chairman of the Vietnam Gold Trading Association (VGTA), said the government has said it will allow gold companies to import directly. This is completely different from the current policy.
VGTA expects the reform, which will come into effect as early as next month, to significantly improve market liquidity and is expected to reduce the domestic gold price premium in Vietnam. Currently, Vietnam tries to close the gap with international benchmarks through auctions and gold sales by four local banks, but with little success.
VGTA estimates that Vietnam's gold demand will surge this year, with the country's gold purchases, one of the top 10 gold-consuming countries, expected to rise 10 percent year-on-year to 33 million tons in the first six months. Retail buyers, who see gold as a wealth preservation tool, accounted for most of the market.
Growing demand for gold has also triggered an increase in smuggling, especially from neighboring Cambodia. The VGTA and the World Gold Council are working with Vietnam's central bank and other government agencies to set up a national gold exchange to enhance market stability.