The State Bank of Vietnam has decided to lift restrictions on gold imports in an attempt to narrow the large gap between domestic and international gold prices.
Local traders can now import unlimited volumes of gold, central bank governor Nguyen Van Giau said Friday.
Many companies have already registered with the central bank to import gold. SJC, the country's largest gold trader, plans to import five tons while another Ho Chi Minh City-based company, PNJ, is seeking approval to import two tons.
The central bank's decision came as domestic gold prices soared to much higher levels than the rest of the world, prompting local traders to illegally import gold, taking advantage of the price gap of around VND500,000 (US$25) per tael. A tael is approximately equal to 1.2 ounces.
Analysts said gold prices in Vietnam have surged due to speculation that there is a scarcity of gold in the country as a result of large exports of the precious metal.
But Nguyen Thi Cuc, deputy general director of PNJ, rejected the speculation, saying that local demand for gold is not really high and trading volumes were only around a few hundred taels a day.
Governor Giau said that as of the end of June gold deposits at banks amounted to 120 tons.
The government halted gold imports in mid 2008 to control soaring prices and a ballooning trade gap.
Earlier this year the Vietnam Gold Business Association requested the government to remove restrictions on gold imports so that prices could be determined by local supply and demand. But Giau said in April that it's necessary for the central bank to continue regulating gold imports and they can impact the country's trade balance.
Vietnam exported around 36 tons of gold in the first six months, official statistics showed. SJC was the only gold trader allowed to import six tons of gold during the period.