Gold sales to fall due to restrictions, largest trader says

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Vietnam's largest gold trader, SJC, is expecting sales to fall after the central bank introduces new restrictions on gold trading.

"SJC gold bars now hold the largest share of the market thanks to the company's reputation and a wide retail network of SJC outlets and other thousands of gold shops around the country," General Director Nguyen Thanh Long said in an interview published Monday in Tuoi Tre newspaper.

"But when most of these gold shops are not allowed to trade gold bars anymore, the presence of SJC bars will be narrowed, which will lead to declines in sales and revenues," he said.

Under a draft decree introduced by the State Bank of Vietnam late last month, gold bar traders will be required to have a minimum capital of VND100 billion (US$4.76 million) and operate in at least three major cities.

For gold bar producers, the requirements are a capital of at least VND500 billion and a minimum market share of 25 percent.

Industry insiders believe SJC will become the only eligible producer because it holds more than 90 percent of the market.

But Long said the draft decree is not official yet and "everything will be clearer" when the final version is introduced.

"There has been no policy to stop the legal circulation of other gold bar products," he said. "In a market economy, nobody will support a monopoly," he added.

However, Long confirmed the central bank's plan to use SJC as a national brand for gold products. If the plan is approved, SJC will work with the central bank to ensure fair exchanges for gold bars produced by other companies.

Long, also chairman of the Vietnam Gold Traders Association, said authorities need to take into consideration the public's habit of keeping gold and give them six months to a year to get used to the new regulations.

All measures taken need to protect the right of having gold holdings, he said.

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