All that is gold does not glitter

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A file photo shows a woman displaying SJC gold bars at a shop in Hanoi. Photo: Reuters

In recent weeks, many Vietnamese citizens have had to face the bitter truth that not all of their gold holdings have equal value.

Since the State Bank of Vietnam has taken over gold production and is set to make SJC the national brand under a decree that took effect last month, some gold shops have refused to buy non-SJC bullion from their customers.

Others who still accept them are paying around VND1 million per tael lower than the SJC gold bars produced by the Saigon Jewelry Company. SJC bars were bought at more than VND42 million per tael this week. A tael is equal to 1.2 ounces of gold.

The discriminating treatment has sparked panic with many people trying to sell off all gold bars that are not SJC products.

The situation got worse after the central bank's branch in Ho Chi Minh City announced this week that it is considering having only SJC bars in the market, despite previous confirmations that other brands will be allowed.

Nguyen Hoang Minh, deputy head of the branch, said a plan to convert all non-SJC gold bullion into SJC bars is being considered because with one single brand, it would be easier for the monetary authority to manage the gold market.

Industry insiders say that if the plan is actually put into practice, it will cost a huge amount of money to recast all the non-SJC bullion. Even though SJC has dominated the market for long with the lion's share of 95 percent, gold bars of other brands could weigh more than 10 tons in total.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry, urged the government not to proceed with this plan. She said it is still unclear who will have to pay for the cost of recasting the central bank, owners of the gold, or non-SJC producers.


"Other brands should be allowed to stay alongside SJC," she said.

Nguyen Ngoc Que Chi, general director of SBJ, the gold trading arm of Sacombank, said her company still has non-SJC bullion in store.

"We are still waiting for further instructions concerning the plan to convert all the gold into the national brand. The question is whether there would be a fee for doing this, and if there is, how much it would be," she said.

Professor Le Tham Duong of the Ho Chi Minh City Banking University agreed that the transition would be costly.

"If the government wants to manage the market then it should bear the cost without passing it on to businesses or consumers," he said.

But Duong also said that local people, unsure of what will happen, are very worried about keeping non-JSC gold. As they no longer have confidence in other gold brands, they will try to get rid of these, with or without the central bank's plan to recast gold.

Tran Thanh Hai, general director of the Vietnam Gold Business Co., said he is more concerned about how gold producers will deal with their production facilities if their brands are completely eliminated from the market.

A source told Vietweek that the central bank plans to outsource bullion production to various companies under its supervision.

However, with no decision being taken so far, many gold producers are already looking for buyers for their machinery, months after they had stopping manufacturing.

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