A week after newly-licensed gold bar trading businesses began operations, the domestic gold market saw positive changes, but several problems emerged requiring timely adjustment from managerial agencies.
>> More problems emerge in gold bullion restriction
The first positive sign recorded was the narrowed disparity between domestic and world gold prices after the State Bank of Vietnam (SBV)'s regulation on gold bar trading, which took effect on January 10. Moreover, the rights of gold bar buyers will be protected by the State when they purchase gold bullion at licensed stores.
However, an apparent problem arose when the SBV restricted gold bar trading which was uneven distribution of gold bar trading points across the country.
More than 1,300 trading points out of the total 2,500 licensed points concentrate in Hanoi and Ho Chi Minh City and the remainder is mainly located in big provinces and cities including Hai Phong, Quang Ninh, Can Tho and others. A large number of localities have only two to four trading points, which are placed in the centre of its provinces or cities. As a result, local people at many localities, especially at remote communes have to travel a long way, some even hundreds of kilometres to find a gold bar trading point.
Because of the narrowed trading system, the market has seen a shift towards trading other kinds of gold, such as jewelry and gold rings that bear similar features to bullion, hallmarked with a company's brand and seal. This type of gold rings is 99.99% pure gold and traded near SJC gold bar price. As there are no restrictions on gold rings, people can buy them at any trading points. Although the SBV advises people not to trade in gold bar at unlicensed stores, illegal trading still occurs.
Gold businesses are not interested in opening gold stores at remote and rural areas because of low trading volume, high investment cost and low profits. However, storing gold is a legitimate need of the people in both urban and rural areas. Therefore, the SBV should urgently implement the next steps to gradually eliminate 'blank areas' of gold bar trading. Along with policies to encourage licensed businesses to establish trading network in remote areas, the SBV should impose compulsory sanctions to those who only invest in big provinces and cities.
In addition, qualified gold bar trading businesses need to co-operate with their partners and State authorised agencies to create a legal trading network while meeting customers' need and protecting their rights.