General Secretary To Lam’s directive to abolish the state monopoly on gold bullion branding is nothing short of a cannon shot at the entrenched mindset of “if it can’t be controlled, ban it” and the outdated “ask-and-grant” mechanism.

During a recent working session with the Central Committee for Policy and Strategy on the gold market, General Secretary To Lam called for a decisive shift: “Move away from administrative thinking to a disciplined market-based mindset, from ‘tightening for control’ to ‘opening for governance’. We must completely eliminate the mentality of ‘if it can’t be controlled, ban it’. The gold market must operate in accordance with market principles under state management, avoiding rigid interference that restricts its function and potential. Ensure respect for property rights, freedom of business, and transparency for both citizens and enterprises.”

These are not only groundbreaking directives for the gold market but also a call to reform governance across other sectors. National conferences tied to Resolutions 66 and 68 have already initiated the shift in mindset, but To Lam’s statement now demands actionable transformation.

The monopoly on gold

To be fair, between 2008 and 2012, Vietnam’s economy faced significant macroeconomic turbulence and high inflation. Gold became a safe-haven asset. Yet repeated price surges and a drain on foreign currency reserves only exacerbated instability.

In response, the government issued Decree 24/2012/ND-CP to stabilize the gold market. It granted the state exclusive rights to produce gold bullion and import raw gold for bullion production, naming SJC as the sole state-backed bullion brand.

Since then, Vietnam has stood alone  -  alongside North Korea  -  in maintaining a state monopoly over gold bullion. Thirteen years later, instead of achieving stability, this model has created a distorted, non-transparent, and uncompetitive gold market, inflicting serious consequences on the broader economy.

The price gap between domestic and international gold has widened significantly  -  at times reaching 20 million VND (approx. $780) per tael. This disparity fueled rampant smuggling, including the notorious case of over 6 tons of gold smuggled from Cambodia, worth more than 8.4 trillion VND ($330 million).

Designating SJC as “national gold” effectively devalued other reputable 99.99% gold brands, harming businesses and consumers while killing off healthy market competition.

Meanwhile, the State Bank of Vietnam (SBV) plays the dual role of market regulator and participant, resulting in a conflict of interest that weakens its ability to manage the market objectively.

In late 2024, police prosecuted six individuals from SJC, including CEO Le Thuy Hang, for fabricating documents related to price-stabilization gold sales, enabling them to embezzle funds and profit illegally.

As long as the monopoly remains, so will the opportunity for policy manipulation, with both financial and human costs.

Widespread consequences

According to a report from the Central Committee for Policy and Strategy, the consequences of this outdated system include:

An inflexible market misaligned with global supply-demand dynamics, promoting smuggling and foreign currency outflow;
A monopolistic environment that discourages competition and healthy gold trading;
Policies that fail to mobilize idle domestic gold reserves for socio-economic development;
Outdated management methods lacking modernization and global relevance.

Gold bullion is a commodity, not a state instrument. Assigning exclusive production rights to a regulatory agency like the SBV contradicts market logic.

Vietnamese people buying gold is a response to inflation fears and economic uncertainty  -  a consequence, not a cause. A study by Fulbright University affirms that gold-buying sprees in Vietnam are triggered by macroeconomic instability, soaring global prices, or both.

Yet, according to government reports in recent years, Vietnam’s macroeconomic conditions have stabilized  -  making now the ideal time to revise Decree 24 in line with market-oriented reforms.

The General Secretary outlined nine core solutions:

Finalize the legal framework and promptly revise Decree 24/2012/ND-CP to marketize gold regulation in a controlled, phased manner. Improve integration between domestic and global gold markets.

Dismantle the state monopoly on gold bullion branding in a controlled fashion. While the state continues regulating bullion production, qualified private firms should be licensed to participate, fostering fair competition, diversifying supply, and stabilizing prices.

Expand controlled gold import rights to increase supply, narrow the domestic-international price gap, and reduce gold smuggling.

Promote the domestic gold jewelry market, aiming to position Vietnam as a regional hub for high-quality gold jewelry manufacturing and exports, thereby converting hoarded gold into higher-value products.

Develop attractive alternative investment channels to mobilize idle gold reserves from the public into the formal economy.

Strengthen management efficiency and inter-agency coordination, especially in combating gold smuggling.

Empower the Vietnam Gold Traders Association as a bridge between gold enterprises and regulators, enabling timely feedback and coordinated market-stabilizing actions.

Maintain macroeconomic stability and public trust in the Vietnamese dong  -  a long-term foundation to channel gold-based wealth into economic development.

Build a transparent gold market information system to facilitate taxation, regulation, and policy impact assessments across forex, investment, and pricing mechanisms.

Tu Giang