Vietnam lifts state monopoly on gold

[Ben Graham]

Vietnam, the third-largest importer of gold in Asia, issued a decree on Tuesday abolishing its 13-year-old state monopoly on gold trading, causing a spike in local prices even as the government aims to normalize the market in the longer term.

Gold bars sold by Saigon Jewelry Co., Vietnam’s largest state-owned gold and jewelry enterprise and the benchmark for bullion trading in the country, climbed to 125.7 million Vietnamese dong per tael for sellers, or about $4,096 per ounce at an exchange rate of 25,450 dong per dollar and 1.2 oz. per tael. Buyers were paying $4,162 per oz., as the new measures introduced short-term volatility.

The country, which imported 55 tonnes of gold bars, jewelry and coins last year, compared with 857 tonnes for China and 803 tonnes for India, is addressing market distortions. Sole control by the State Bank of Vietnam caused large price premiums and rampant black-market trading and smuggling. The new decree, licensing commercial banks and eligible businesses to produce, trade and manage gold bars, pivots towards liberalization, competition and greater oversight. It helps align Vietnam’s gold market with international norms.

“This ends the long-running state monopoly over the sector, which has at times led to a disconnect between local and global gold prices,” BMO Capital Markets said on Wednesday. “The change should ultimately enable gold imports to move in closer tandem with domestic demand, hence we see this as a positive development for the global gold market.”

Transparency

The decree also tightens transaction transparency. Any purchase or sale over 20 million dong (about $760) per person per day must be conducted through bank accounts. Licensed entities must issue electronic invoices and share transaction data with the central bank.

While ending the monopoly, the state bank will still manage imports through quotas tied to macroeconomic conditions, monetary policy and market fluctuations. A more competitive market is expected to narrow price differentials between brands, expand consumer choices and reduce gold smuggling by creating a more orderly market.

The changes have come quickly. In May, Prime Minister Phạm Minh Chính called for revisions to reduce distortions and restore macroeconomic stability. The Vietnamese dong had weakened sharply, prompting a surge in gold demand as a safe-haven asset. As of early August, gold was trading at a 32% premium locally, fueled by cultural demand and currency instability.

Like in India and China, gold is deeply embedded in Vietnamese culture as a store of wealth, with demand rising during festivals and weddings.