VietNamNet Bridge – A lot of gold companies have received the
proposal from big banks and goldsmith companies to cooperate with them as their
agents. This proves to be the only way for the companies to follow after the
new decree on gold market management takes effect.
More and more goldsmith companies to shut down
Deputy Governor of the State Bank
of Vietnam Le Minh Hung on July 4 affirmed that the State would hold the
monopoly in making bullion gold, and that SJC would be used as the national
gold brand.
Explaining why the central bank
decided to choose SJC, the existing gold brand of a company, as the national
gold brand, Hung said that SJC has been a well- known band both in Vietnam and
the world. The use of SJC as the national brand would allow reducing the costs
to develop a new brand, while this would help avoid big changes in the market
Once SJC becomes the national
gold brand, other well-known brands including Rong Thang Long of Bao Tin Minh
Chau Company, Phuong Hoang PNJ-DAB of Phu Nhuan Jewelry Company and Dong A
Bank, ACB of Asia Commercial Bank, Than Tai of Sacombank and SBJ of Saigon
Thuong Tin-SBJ, would not be able to exist on the market.
It is expected that a lot of gold
companies would disappear from the market, because they cannot satisfy the high
requirements set by the State Bank (100 billion dong in chartered capital,
2-year experience in gold trade, sale networks existing in at least three
central cities and provinces).
What to do to exist?
While goldsmith companies feel
worried stiff about their existence after the new gold market management decree
takes effect, they have received the cooperation proposal from big banks and
gold companies which can meet the requirements.
Tran Thanh Hai, General Director
of the Vietnam Gold Investment and Trade Company, said the big banks and
companies have invited him to act as the authorized agents for them. Hai added
that ready made contracts have been given to him for consideration.
Hai has pointed out that in
principle; the Circular No. 16 prohibits enterprises and credit institutions to
trade bullion gold through authorized agents. However, the big banks and
enterprises can use different methods to dodge the laws.
Hai thinks that acting as the
authorized agents proves to be an inevitable trend for small companies which
cannot satisfy the requirements, but do not intend to shift their business.
Analysts have also said that once
businesses are not allowed to trade bullion gold, they would have to try
everything they can to exist. Besides, the businesses may still keep operation,
sheltering behind the companies which can satisfy the requirements, which means
that contraband transactions would be carried out in the market.
In the past, the State Bank once
prohibited foreign currency trade. However, the foreign currency black market
has always been existing.
Doing more harm than good
Hai thinks that the tightened
control over bullion gold trade would lead to a lot of problems, which would
harm both the State and consumers.
The State would fail to collect
tax due to the complicated relations of enterprises through the contracts on
authorized agents. Meanwhile, consumers would have to buy products at higher
prices. This is simply because when two enterprises cooperate in doing
business, the production costs would be higher, which means that enterprises
would have to charge high prices on buyers to ensure their profits.
Especially, the companies acting
as authorized agents would be the biggest sufferers, because they cannot define
the sale prices, they have to follow the policies set up by other companies.
Besides, they have to pay “under table fees” to keep their operation.
Source: VTC
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