Associate Prof. Nguyen Huu Huan, a senior lecturer at the University of Economics in Ho Chi Minh City, highlighted the intricate dynamics of Vietnam’s gold market, particularly in the southern region. He pointed out that small gold shops primarily procure their inventory from wholesale traders who dictate market prices.
Speaking at a recent seminar on gold management, Huan emphasized, “These wholesale traders wield considerable influence over market prices by virtue of their substantial market share. Economically, they function as market makers or, in a more critical light, as speculators who manipulate market dynamics.”
This control over pricing by wholesalers predates the regulatory reforms of 2012 and encompasses all forms of gold transactions—from bars and jewelry to raw gold. The persistence of this influence underscores the imperative for more stringent oversight to foster transparency and curb market manipulation.
Similarly, Pham Xuan Hoe, General Secretary of the Vietnam Leasing Association and former Deputy Director of the Banking Strategy Institute under the State Bank of Vietnam (SBV), underscored the impact of these market makers. He noted their possession of significant quantities of smuggled gold, enabling them to distort market conditions and drive up unofficial exchange rates.
“While the SBV has made initial strides in stabilizing the gold market through direct sales via state-controlled entities,” Hoe explained, “there are indications that these market players are actively seeking to disrupt stability. Reports of orchestrated queues for gold purchases and shortages in larger stores suggest deliberate hoarding in anticipation of destabilization efforts by the SBV, potentially resulting in domestic price hikes.”
Nguyen Thanh Ha, Chairman of SBLAW, emphasized the necessity for stringent adherence to SBV regulations within gold trading enterprises. He highlighted the stipulations of the Anti-money Laundering Law, which mandates reporting transactions exceeding VND400 million ($16,000) to authorities. Additionally, all gold transactions must be meticulously documented with electronic invoices linked to tax authorities.
“To bolster regulatory measures,” Ha continued, “the government has recently introduced a new non-cash payment mechanism, outlining protocols for payment intermediaries and defining the roles of state agencies and businesses in promoting transactions via banking systems or non-cash methods to bolster anti-money laundering efforts.”
Since the SBV’s intervention in stabilizing gold prices through direct sales via four commercial banks and SJC, reports have emerged of individuals queuing to purchase gold. Despite these efforts, instances of proxy gold purchases and black market activities have surged, underscoring ongoing challenges in achieving market stability and transparency.
“This trend indicates a substantial number of individuals engaging in gold transactions without proper disclosure of personal information or executing significant purchases,” Ha observed. “This gray area in anti-money laundering and tax evasion demands heightened regulatory scrutiny.”
Nguyen Van Phung, a member of the Vietnam Association of Accountants and Auditors, cautioned against the potential for illicit activities in cash-based gold transactions. “The absence of invoices in cash transactions could pave the way for new avenues of illegal activities,” Phung noted. “Those facilitating gold purchases for others without proper documentation are essentially enabling illegal practices.”
In tandem, market watchdogs echoed the necessity for robust gold market oversight to combat underground economic activities, illicit transactions, and money laundering. They advocated for the implementation of tools such as invoices and non-cash payments to enhance transparency. They also suggested integrating store computers with tax authorities to generate invoices promptly after each transaction, thus deterring potential money laundering schemes.
Pham Xuan Hoe of the Vietnam Leasing Association called for a holistic approach to gold trading regulation. “Regulating non-cash payments and requiring gold invoices is a step in the right direction,” Hoe remarked. “However, in the long run, all income-earning citizens should transparently declare their earnings to prevent cross-ownership or proxy gold purchases. While such transactions are legal under current frameworks in Vietnam’s developing economy, limits on gold transactions must be established. Effective control of money laundering is only feasible when the cash ratio in total means of payment is minimal.”
In summary, stakeholders advocate for intensified oversight to ensure the stability and integrity of Vietnam’s gold market amidst evolving challenges. They stress the urgency of implementing comprehensive regulatory frameworks to safeguard against market manipulation, illegal transactions, and po
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