Experts are supporting recent directives from General Secretary To Lam aimed at reforming the management of Vietnam’s gold market, calling for steps to stabilize and grow the domestic gold sector sustainably.
Unlocking Gold Reserves for Economic Development
Finance and banking expert Nguyen Tri Hieu emphasized that the government’s new directives could lead to significant changes in how the gold market is managed. The key objective is to mobilize the nation’s vast gold reserves, which are largely inactive, and integrate them into the market. By doing so, these gold resources could be used as collateral to secure funding for critical national projects.
Hieu proposed that Vietnam explore adopting a model similar to the Chicago Mercantile Exchange (COMEX), one of the world’s largest gold trading platforms. This would allow for various trading options such as gold futures and electronic trading. However, Hieu warned that for such a system to be successful in Vietnam, gold trading must be supported by the State Bank of Vietnam. He suggested issuing gold certificates that could be exchanged for physical gold, with a proposed interest rate of 2% per annum, providing a low-risk but secure investment option.
Standardizing Gold Transactions in the Market
Truong Minh Huy Vu, Director of the Ho Chi Minh City Institute for Development Studies, noted that Vietnam’s gold supply is heavily reliant on imports, and the State Bank holds limited gold reserves. He argued that direct price controls by the government would be ineffective. Instead, Vu emphasized the need for a national gold exchange and the creation of alternative investment channels to encourage the public to invest in gold. He believes this could lead to a more diversified and structured market within the next 3 to 5 years.
In the meantime, Vu proposed that large-scale gold transactions be conducted through retail systems or depository accounts at commercial banks. This would allow the government to maintain control and oversight while facilitating gold trading on a larger scale.
The ultimate goal, Vu said, is to standardize transactions within the domestic gold market, synchronize activities across various platforms, and minimize market risks. These measures, experts argue, would help stabilize the market while unlocking gold’s potential as a resource for economic growth.
