A draft decree by the State Bank of Vietnam (SBV) seeks to restrict thetrade in gold bullion to stabilise the gold market, check hoarding andspeculation, and minimise the influence of the gold market on monetarypolicy.
The decree, submitted to Prime MinisterNguyen Tan Dung for approval, focuses on seven measures to closelymonitor the gold market while still ensuring people's rights to keep andtrade bullion.
Firstly, the central bank will regulate bullion production and periodically announce quotas.
Businesses seeking production licences will have to satisfy severalrequirements like having legal capital of at least 500 billion VND(23.8million USD), facilities and equipment needed for production, and a 25percent market share of production for three consecutive years.
They will have to scrupulously follow regulations related to origin of gold they use to produce the bars.
This is expected to enable the central bank to stop illegal imports and ensure balance between demand and supply.
Analysts expect the stringent rules to significantly reduce the number of producers from the current eight.
Secondly, the decree seeks to reduce the number of bullion traders anddiscourage trading by requiring institutions and individuals who wantto trade gold bars to get a licence and follow regulations related tocapital, revenues and network.
Traders must have aprescribed capital of at least 100 billion VND (4,800 USD), two years'experience in gold trading, and paid taxes of more than 500 VND (24,000USD) million a year on trading for two years.
They will also be required to have sales outlets in at least three provinces and centrally administered cities.
Analysts expect these rules to again reduce significantly the number of bullion traders from the current 12,000.
With such a high number, regulators are unable to control tradingactivities, thus enabling speculation and hoarding to flourish, theypointed out.
A recent Government decree warns that those found trading without a licence will be severely punished.
Thirdly, the SBV will closely supervise import and export of physicalgold, be responsible for issuing licences for it, and occasionally carryout the trade itself.
This will enable it to better monitor demand and supply of gold to prevent illegal imports and exports.
Fourthly, the central bank will more closely supervise production, sales, and purchase of gold jewellery and art products.
Organisations that produce and trade gold jewellery and art productsmust be certified by the central bank as meeting certain conditions.
This certificate can be used for obtaining permission to import gold.
The producers will also be required to put their seals and spell out the gold content in their jewellery.
Fifthly, the decree says, all gold trading activities not covered inthe draft decree will be licensed by the SBV only with expressGovernment permission.
Sixthly, the central bankwill be allowed to intervene in the gold market in case of adverseconditions to grant licences for bullion production, arrange sales andpurchases of bullion, facilitate imports and exports of gold, and allowbanks to accept gold deposits from individuals and organisations.
Finally, the decree wants the Government to regulate the domestic gold market through tax policies.
The Ministry of Finance will suggest import-export duty policies,value-added tax, excise duty, and income tax on gold trading at certaintimes to reduce the attractiveness of gold, thus preventing hoarding.
The new decree also spells out the responsibilitiesand duties of the SBV, ministries, Government agencies, and provincialand city people's committees in implementing gold trading and productionmanagement policies./.
The decree, submitted to Prime MinisterNguyen Tan Dung for approval, focuses on seven measures to closelymonitor the gold market while still ensuring people's rights to keep andtrade bullion.
Firstly, the central bank will regulate bullion production and periodically announce quotas.
Businesses seeking production licences will have to satisfy severalrequirements like having legal capital of at least 500 billion VND(23.8million USD), facilities and equipment needed for production, and a 25percent market share of production for three consecutive years.
They will have to scrupulously follow regulations related to origin of gold they use to produce the bars.
This is expected to enable the central bank to stop illegal imports and ensure balance between demand and supply.
Analysts expect the stringent rules to significantly reduce the number of producers from the current eight.
Secondly, the decree seeks to reduce the number of bullion traders anddiscourage trading by requiring institutions and individuals who wantto trade gold bars to get a licence and follow regulations related tocapital, revenues and network.
Traders must have aprescribed capital of at least 100 billion VND (4,800 USD), two years'experience in gold trading, and paid taxes of more than 500 VND (24,000USD) million a year on trading for two years.
They will also be required to have sales outlets in at least three provinces and centrally administered cities.
Analysts expect these rules to again reduce significantly the number of bullion traders from the current 12,000.
With such a high number, regulators are unable to control tradingactivities, thus enabling speculation and hoarding to flourish, theypointed out.
A recent Government decree warns that those found trading without a licence will be severely punished.
Thirdly, the SBV will closely supervise import and export of physicalgold, be responsible for issuing licences for it, and occasionally carryout the trade itself.
This will enable it to better monitor demand and supply of gold to prevent illegal imports and exports.
Fourthly, the central bank will more closely supervise production, sales, and purchase of gold jewellery and art products.
Organisations that produce and trade gold jewellery and art productsmust be certified by the central bank as meeting certain conditions.
This certificate can be used for obtaining permission to import gold.
The producers will also be required to put their seals and spell out the gold content in their jewellery.
Fifthly, the decree says, all gold trading activities not covered inthe draft decree will be licensed by the SBV only with expressGovernment permission.
Sixthly, the central bankwill be allowed to intervene in the gold market in case of adverseconditions to grant licences for bullion production, arrange sales andpurchases of bullion, facilitate imports and exports of gold, and allowbanks to accept gold deposits from individuals and organisations.
Finally, the decree wants the Government to regulate the domestic gold market through tax policies.
The Ministry of Finance will suggest import-export duty policies,value-added tax, excise duty, and income tax on gold trading at certaintimes to reduce the attractiveness of gold, thus preventing hoarding.
The new decree also spells out the responsibilitiesand duties of the SBV, ministries, Government agencies, and provincialand city people's committees in implementing gold trading and productionmanagement policies./.
