By Dzung Trieu law firm
The decree on the gold market management would take effects as of May 25. However, goldsmith companies have been facing big difficulties over the last many years in the economic downturn.
Private goldsmith facing difficulties from all sides
Under the Decree No. 24, enterprises would be able to obtain the license from the State Bank to buy and sell bullion gold only when they can satisfy five conditions. If referring to the regulation stipulated in the decree, only 10 or 20 companies would be able to meet the requirements, while other companies, including small gold shops and private enterprises would be weeded out from the playing field.
Though anticipating that many gold companies would have to shut down their businesses, the State Bank of Vietnam still insists on tightening the control over the gold market. It said that the liberalization in gold trade at 12,000 operational gold companies has been putting big difficulties for the management agencies, while increasing the risk of “goldenizing the national economy.’
Governor of the State Bank Nguyen van Binh said before the National Assembly’s session in November 2011 that it’s necessary to sacrifice some things for the national benefits and for the macroeconomic stability.
The owner of a big gold shop at Ben Thanh Market in HCM City said he is considering relocating the shop to the Tan Dinh market area, while he would lease the current retail premises for money. The merchant said that it’s no more profitable to trade gold, and that he needs to find a way out in the current situation.
Bullion gold trading was the main source of income for gold companies. However, the trade has been stopped since late last year, thus pushing the shop against the wall. “Jewelry sales alone would not bring profits,” he said.
Duc, who was the owner of five gold shops in Binh Tan district in HCM City which traded hundreds of taels of gold every day, now has only one shop left, while the trading volume is no more than 10 taels per day.
Duc went on to say that since the beginning of the year, he has been mainly selling jewelries, while bullion gold trade just brought 10 percent of the total turnover. However, even jewelries have been selling very slowly now. Duc said he would try some other kinds of business to earn money, because the gold shop alone cannot feed him.
Tran Quy Hai, who has a big gold shop in Binh Thanh district, complained that the trade has gone down right after the draft decree was opened for public opinions.
Hai said he is now at the T-junction and he still needs to wait to see how the market would perform before deciding what to do next.
Big companies also fallen into distress
The Saigon Jewelry Company SJC, one of the biggest bullion gold suppliers to gold shops in HCM City, has also reported the sharp fall in demand.
Nguyen Cong Tuong, a senior executive of SJC said despite the gold price decreases, the purchasing power has been very weak with the demand just equal to 1/10 of that in previous years.
Director of the Foreign Exchange Management Department under the State Bank of Vietnam Nguyen Quang Huy affirmed that there would be no discriminatory treatment between SJC brand gold, which has been chosen as the national brand, and other brands.
However, people, who always keep cautious about any new policies laid down by the State, still have decided to keep away from non-SJC gold, which has resulted in the sharp falls of non-SJC gold prices.
Source: TBKTSG
