(Kitco News) – Vietnam’s long-standing state control over gold is set to end as the government has announced plans to liberalize the country’s gold bullion market, according to local reports.
During a recent working session on the gold market with the Central Committee for Policy and Strategy, To Lam, Vietnam’s General Secretary, called for a decisive shift in regulation.
“Move away from administrative thinking to a disciplined market-based mindset, from ‘tightening for control’ to ‘opening for governance’,” he told the Committee. “We must completely eliminate the mentality of ‘if it can’t be controlled, ban it’. The gold market must operate in accordance with market principles under state management, avoiding rigid interference that restricts its function and potential. Ensure respect for property rights, freedom of business, and transparency for both citizens and enterprises.”
The General Secretary’s directives constitute a historic turning point for gold. The yellow metal became extremely in demand as a safe-haven asset when Vietnam’s economy faced significant macroeconomic turbulence and high inflation during the 2008 to 2012 period, but repeated price surges and the draining of foreign currency reserves only exacerbated the country’s economic instability.
To address the turmoil, the government issued a decree to ‘stabilize’ the gold market, granting the state exclusive rights to produce gold bullion and import raw gold for bullion production and granting Saigon Jewelry Company (SJC) the exclusive right to sell the state’s gold bullion.
Since 2012, Vietnam and North Korea have been the only countries on Earth that maintain a state monopoly over gold bullion. But rather than an orderly and fair market, the policy resulted in widespread price distortions, corruption, and smuggling. Under the state monopoly regime, the price premium of domestic over international gold has reached as high as $586 per ounce.
According to a Central Committee for Policy and Strategy report, the impacts of the state control system included “An inflexible market misaligned with global supply-demand dynamics, promoting smuggling and foreign currency outflow; A monopolistic environment that discourages competition and healthy gold trading; Policies that fail to mobilize idle domestic gold reserves for socio-economic development; Outdated management methods lacking modernization and global relevance.”
To address these issues, the General Secretary outlined nine solutions, including revising the 2012 gold decree “to marketize gold regulation in a controlled, phased manner,” to “improve integration between domestic and global gold markets,” to “dismantle the state monopoly on gold bullion branding” and to “expand controlled gold import rights to increase supply, narrow the domestic-international price gap, and reduce gold smuggling.”
