SBV reconsidering gold quota imports to reduce trade deficit

Monday, May 12, 2008
The Ministry of Finance (MOF) is considering adjusting the import taxes of commodities that are believed to have impacts on the trade deficit and foreign currency payment balance.

MOF is joining forces with the Ministry of Industry and Trade and the State Bank of Viet Nam to take a series of measures in an effort to curb inflation.

The State Bank is considering adjusting the quota on gold imports in order to limit imports and stabilise the domestic market.

Gold in Asia’s market this morning saw prices increase for the third consecutive trading session on the firmly high oil price at over $125/barrel and the slight decrease of the dollar against the euro. The market seems to be waiting for more information to create bigger changes.

At 10 am, the gold price with spot delivery in Asia was $885.8/oz, up by $1/oz (0.1%) over the previous trading session. Meanwhile, the price for later deliveries has surged by $0.4/oz to $886.2/oz.

The domestic market did not see big changes this morning. SJC gold prices are quoted at VND17,380,000/tael (purchasing) and VND17,450,000/tael (selling). While the purchasing price remains unchanged, the sale price saw the slight increase of VND10,000/tael over Saturday.

Bao Tinh Minh Chau gold is now trading at VND17,400,000-17,540,000/tael (purchasing and selling), increasing by VND20,000 and 40,000/tael, respectively.

Last week, the Vietnam Association of Financial Investors (VAFI) proposed raising the import tax on gold from 10% currently to 20%, and closing gold trading floors.

However, the proposal has not been applauded by experts, who called this the coercive measure of investors.

It is the right of investors to choose kinds of assets to hold. Therefore, measures that force investors to give up one kind of asset to hold another must not be applied.

Chu Van Hoc, Deputy Business Director of SJC Hanoi, said that the trading volume of the company did not see any changes after the said proposal by VAFI.

Hoc said that the proposal does not come in line with the gold market tendency and comes contrary to Vietnam’s WTO commitments.

“Raising the tax will bring losses to people, who need gold as a tool to protect them in times of high inflation,” Hoc said.

Hoc added that the domestic gold price is equal to the world’s level. Currently, gold importers are purchasing dollars from commercial banks at VND16,200/US$1.

The world’s oil price, though witnessing a slight decrease, is staying firmly above $125/barrel. At 10 am this morning, light sweet oil with delivery in June 2008 was traded at $125.5/barrel. At the same time, one euro is converted to $1.54.

Hoc has declined to give any forecasts about the gold price for this week.

Meanwhile, Bloomberg gave different forecasts about gold prices. Quoting an investment expert, Rowan Menzies with Sydney-based Commodity Warrants Australia, a newswire forecasts that the dollar is becoming stronger against the euro, which may lead to a gold price decrease.

A survey conducted by the same newswire showed that 9 of 19 polled investors advocated purchasing gold this week, six selling gold and four had a neutral viewpoint.

On Saigon Gold Trading Floor, the trading volume reached 133,550 taels.

The dollar value keeps rising on the domestic market. Vietcombank quotes prices at VND16,140/US$1 (purchasing) and VND16,155/US$1 (selling). Eximbank’s quotes are VND16,130/US$1 and VND16,155/US$1, respectively. However, the prices slightly decrease. Bao Tin Minh Chau purchases dollars at VND16,290/US$1 and sells at VND16,340/US41. (VNE, TBKTVN)