The research team proposed a series of solutions to develop the gold market.

Recently, a research team from the National Economics University made four proposals and recommendations to develop the gold market, including the need to minimize direct administrative intervention in the gold market.

The Vietnamese gold market is a narrowly understood market, meaning that only physical gold is allowed to be traded. (Source: dangcongsan.vn)

The research team of the National Economics University stated that although it is no longer known as a currency, gold still holds an important position in the economy. Vietnam is a country where people have a habit and high demand for storing, consuming, investing, and speculating in gold. Therefore, in the past 20 years, the Government and ministries, departments, and branches have continuously changed management policies related to the gold market to operate and regulate the market effectively, ensuring that fluctuations in gold prices do not affect exchange rates, the foreign exchange market, and macroeconomic stability.

Specifically, in the face of the complicated developments of the gold market in the early 2000s, the State issued a series of documents to tighten gold market activities in order to stabilize the gold market in particular and the macro economy in general.

However, after more than 10 years of application along with the constant changes of the economy, the purpose of using or investing in gold of the people has also changed, requiring the State to have measures to improve the effectiveness of gold market management through adjusting the inappropriate points of the Decree on gold management in the context of the new era.

Proposing solutions to develop a stable and sustainable gold market, the research team of the National Economics University put forward 4 proposals and recommendations, including:

First, it is necessary to minimize direct administrative intervention in the gold market.

The State Bank of Vietnam (SBV) needs to soon amend Decree 24 in the direction of not directly intervening in the gold market by administrative measures, only managing and formulating policies, and regulating foreign exchange reserves in gold according to current laws. Specifically: It should not hold the right to produce gold bars alone, but should consider studying the licensing of a number of qualified enterprises to import and produce gold bars to balance supply and demand and meet people's investment and storage needs.

It is necessary to change and issue a new decree in accordance with international practice soon. According to Clause 1, Article 14, Decree 24/2012/ND-CP, the State Bank is the only unit that imports and exports raw gold to produce gold bars. The State Bank should maintain its position as a gold market manager through issuing other optimal policies instead of acting as a gold trading organization with the current function of buying and selling.

Research and develop strategies and development plans linking the gold market with the commodity market and the financial market in line with the orientation of promoting the economy and economic integration. It is impossible to separate them, but it is necessary to turn the gold market into a component of the financial market, contributing to the economic development of the country. Decree 24 needs to be amended to eliminate the current shortcomings mentioned above.

Second, connect the domestic gold market with the world gold market.

The State Bank of Vietnam needs to take measures to eliminate price differences, especially the price of SJC gold, and move towards liberalizing gold import and export: Consider allowing some enterprises to produce gold bars to supply the market. This is in line with international practice and will help reduce the price difference between domestic and international SJC gold bars.

The industry of production, domestic consumption and export of gold jewelry and fine arts has not been given much attention for development. It is proposed to remove the production and trading of gold jewelry and fine arts from the list of conditional businesses in Appendix IV of the 2020 Investment Law, because unlike gold bars, gold jewelry and fine arts are normal goods.

The State Bank of Vietnam is considering allowing gold jewelry manufacturing enterprises to import raw gold. Currently, the gold market is relatively stable, so considering granting import licenses to enterprises is necessary. It is not advisable to continue to prolong the "temporary solution" that has been applied for the past 10 years. The State Bank of Vietnam should propose a plan to support domestic gold enterprises to access imported gold sources so that enterprises have a choice of input supply sources, helping to improve the quality of final products.

In addition, the open-door policy for raw gold also creates incentives for domestic enterprises to have the opportunity to cooperate with international enterprises to learn from each other and improve competitiveness. This is also a motivation for the private sector to confidently invest in modern machinery and equipment used in the production process, promoting the industry to develop in a sustainable direction.

The Ministry of Finance is requested to reduce the export tax on gold jewelry to 0% as before, instead of increasing it to 1% as recently issued, to encourage exports, regenerate foreign currency sources, and at the same time increase the competitiveness of Vietnam's gold and jewelry arts. The 0% tax rate will help Vietnam's gold jewelry and fine arts products compete better with products from other countries in the Association of Southeast Asian Nations (ASEAN), because these countries are also applying 0% tax.

Third, early transition from physical gold to gold futures market

Currently, the Vietnamese gold market is a narrow market, meaning that only physical gold is allowed to be traded, while gold futures are not allowed due to lack of regulations. Article 19 of Decree 24/2012/ND-CP clearly stipulates that other gold trading activities without the permission of the Prime Minister and the State Bank of Vietnam are illegal acts. To develop the gold market, Vietnam needs to soon switch to a gold futures market, trading through futures contracts and options contracts.

It is necessary to allow capital mobilization through the issuance of gold certificates. The advantages of using gold certificates are safety, convenience, no fear of fake gold, gold of insufficient age or weight, and no processing fees for stamping gold bars. The characteristic of gold mobilization through the issuance of certificates is that the depositor is not allowed to withdraw the gold before the maturity date, instead of the previous form of savings. To ensure consistency, gold certificates will be issued by the State Bank with safety measures and implemented through commercial banks. The purchase and sale of gold certificates will be allowed under strict regulations of the State Bank and are completely voluntary investment transactions. The owner of the gold certificate also has the right to convert the gold certificate into physical gold after the maturity date stated on the certificate.

In the long term, the Government should build a modern gold market, so that the domestic gold market is linked with the world gold market, a market that allows gold from the people to be circulated in the credit system through gold certificates and the national gold exchange.

In line with the above steps, the State Bank needs to develop specific conditions and criteria for each type of gold trading, as well as ensure the ability to monitor the gold market with more effective monitoring tools. Research to officially establish a gold market system with appropriate centralized institutions will be of great significance to unlock this important source of physical capital for the economy.

Fourth, change management thinking to increase the mobilization of gold resources among the population.

In recent years, thanks to the synchronous implementation of many solutions to stabilize the macro economy and solutions to limit dollarization and goldization in the economy, effective management of the foreign exchange market and the gold market along with solutions to strengthen asset management, the State Bank of Vietnam has achieved remarkable achievements. Therefore, it is necessary to boldly change the mindset of managing the gold market. Fighting goldization cannot be done by administrative solutions but must shift from trading gold bars to trading other gold products (gold certificates, derivatives, etc.) on a centralized trading center. To achieve this goal, the Government and the State Bank need to:

Creating a stable business environment with great potential to attract people's investment assets to flow through more profitable assets and investment channels. Based on long-standing customs and beliefs, Vietnamese people still maintain the habit of storing gold bars at home. Only when people see that the act of keeping capital "buried" in gold is not as beneficial as investing money in the economy, but something that "lies less dead", will urge the amount of gold in the people to flow into the economy. It can be understood that people pouring money into storing gold reflects that people are in a "defensive" position. Therefore, to get them to give up that "defensive" position, requires the State and relevant agencies to build and form a stable gold market, protect and ensure the reasonable interests of gold owners.

It is necessary to soon allow the Commodity Exchange to trade gold futures through Futures Contracts and Options Contracts like advanced countries in the world. Participating members must meet strict standards and be allowed to import and export gold (based on the specifications of the Gold Standard Futures Contract issued by the Commodity Exchange).

Allow the establishment of gold trust funds (ETF[1]Exchange Traded Fund) as an international financial instrument. Fund certificates can also be bought and sold on the Commodity Exchange, which will encourage people to deposit gold, invest in production, business, and investment, instead of holding gold bars. If ETFs are bought and sold, participate in forward, futures, and options products on the world market, and are allowed to import and export gold, the ETF's gold reserves will play a role as a stabilization fund, reducing pressure on the State Bank when price fever occurs, helping to create a stable macroeconomic environment.

Source: https://baoquocte.vn/nhom-nghien-cuu-de-xuat-loat-giai-phap-giai-phap-phat-trien-thi-truong-vang-276827.html