HANOI – In a landmark decision poised to fundamentally reshape Vietnam's precious metals market, the government has officially issued a new regulation ending the state's long-held monopoly on the production of gold bars. The move is a significant step towards liberalizing the domestic bullion market and is widely expected to foster healthier competition and narrow the substantial gap that has long existed between local and international gold prices.
This new policy effectively dismantles the exclusive right previously held by the state-owned Saigon Jewelry Company (SJC) to mint gold bullion. For over a decade, under a policy known as Decree 24, the State Bank of Vietnam (SBV) was the sole entity permitted to organize the production of gold bars, and it designated the SJC brand as the national standard. This created a de facto monopoly.
The newly enacted framework will allow other qualified domestic enterprises to obtain licenses for gold bar production, subject to meeting stringent criteria set by the State Bank of Vietnam. This is anticipated to increase the supply of gold bars, which has been tightly restricted for years.
The End of an Era and its Consequences
The state monopoly was initially established to stabilize a volatile market, control foreign currency flows, and curb the phenomenon of "gold-ization," where citizens often preferred to hoard gold as a store of value rather than use the national currency, the Vietnamese Dong (VND).
However, over the years, this policy has led to significant market distortions. SJC-branded gold bars have consistently traded at a substantial premium—often millions of VND per tael (37.5 grams)—above both the international spot price and other 9999 gold products available in Vietnam. This price disparity created a disconnected, two-tiered market that limited consumer choice and often fueled speculation during times of economic uncertainty.
Expected Impact: A More Competitive Market
Economists and market analysts have hailed the government's decision as a crucial reform that will promote transparency and fairness. The key expectations from this policy shift include:
Increased Competition: By allowing multiple producers, the market will move away from a single dominant brand, encouraging companies to compete on quality, service, and potentially price.
Narrowing the Price Gap: With an increased and more flexible supply of gold bars, the extreme premium on SJC gold is expected to decrease, bringing domestic prices more in line with global market trends.
Greater Market Stability: A more competitive and liquid market is generally less susceptible to the supply shocks and volatility that have characterized Vietnam's gold market in the past.
Enhanced Consumer Choice: Investors and citizens will have a wider selection of trusted, standardized gold bars to choose from for their savings and investment needs.
The abolition of the gold production monopoly is seen as a progressive step in Vietnam's ongoing economic reforms, reflecting a commitment to leveraging market-based principles for management. All eyes will now be on the State Bank of Vietnam as it details the licensing requirements for new producers and on the market's reaction to this new, more competitive landscape.
