NEWS

Gold management for country's sake

28/11/2011 | Source: PNJ

State Bank Governor Nguyen Van Binh answered questions during the National Assembly last week about the issue of the central bank has made final decision about the exclusive production of gold bar and used SJC brand to become State Bank of Vietnam gold brand (SBV). This issue may affect the rights and interests of other gold brands, including the PNJ-DongA Bank gold bar. Mrs. Cao Thi Ngoc Dung – General Director of Phu Nhuan Jewelry Joint Stock Company had a short talk about this issue with Saigon Investment Finance Newspaper:

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- Since the past time, we always support the policies of the central bank must be the “host” in the regulation of the gold market. We have advised to the State Bank about this point of view many times before. We even advised about the State Bank must be the direct unit to regulate the gold market to stamp the gold rush out at that time. To date, State Bank has decided to be the exclusive unit in producing and regulating the gold bar business which is reasonable. Due to the fact that Saigon Jewelry Company (SJC) is a 100% state capital unit. Moreover, there are no international rules for chaotic gold business as in Vietnam, the citizens in other countries do not own physical gold but there are only companies who focus on trading gold bullions, gold blocks, and the State issue gold coins. Their citizens buy gold on the gold account crucially. In Vietnam, the people prefer storing physical gold which is kind of a “tradition” since the past time; hence, in order to stabilize the macro-economy, the gold production and business must be put into a unified orbit and controlled by the central bank. However, the central bank must control the gold import and distribute gold business. It is not a good decision if the central bank assigns this for a monopoly company. Therefore, there should be an organization of the State managing the business of the national gold brand, and the profits should be put into the gold market stabilization fund.

 

Correspondent – There are many comments that the situation when people had to queue to buy the price-stabilized gold at SJC has creating psychological confusion for the market?

Ms. Cao Thi Ngoc Dung: - I support the solutions of State Bank for the gold market during recent time, although that is only the situation solution. There must be solutions for the excessive period because it is impossible to lead the market into order in a short time. However, there is a problem has arisen – when State Bank circles some unit selling price-stabilized gold but it is very difficult for people to buy. According to SJC, there were even some days they sell up to 20,000 luong per day, there were many people queue to wait but could not buy. While the gold distributors of SJC gold bar like PNJ with dozens of store nationwide, PNJ did not have the resource of SJC gold to sell and we did not know where to buy, as the banks who are assigned for market stabilizing only sold for their customers who buy and store gold at their banks. There also were people buy SJC gold and then sell with higher price. The price of SJC gold in the market was higher than the price issued by SJC and other commercial banks at least 300,000 – 500,000 VND per luong. PNJ is a brand which is established by the Government as a national brand, hence, we have to keep our prestige and seriously list the selling price as regulated however we do not have the SJC gold resource to sell. Therefore, State Bank should issue clear regulations in distribution of SJC gold bar to avoid different places have different pricing. Once the Government recognizes people can store, buy and sell gold bar, the Government needs to clearly facilitate for people to buy gold conveniently so that it can build a secured psychology of mind and confidence for the people.

- Acording to your opinion, why the G5+1 group has already sold the price-stabilized gold however our local price is still higher than international price more than 1 millsion VND per luong?

- As selling price-stabilized gold, the local price and foreign price different 300,000 VND per luong is reasonable, but there were days that the gold price different 1,5 – 2 million VND per luong, which was really absurd. With this trend, the ones who are able to buy and sell price-stabilized gold have great benefits. Besides, if the local ad foreign gold price different over 500,000 VND there will be smuggled gold for sure. The smugglers may also make fake SJC gold – SJC and the police has already warned about this. Therefore, State Bank must solve the situation of price differences between local and foreign gold.

- As no longer produce gold with PNJ’s brand name, does PNJ suffer any loss and what is the plan for PNJ to redirect activities?

- According to the draft of State Bank’s Gold Control Circular, it is banned to produce some of gold brands but not yet banned from transaction. There are parts of people feeling not safe so they sell gold of other brands, and there are people sell PNJ gold but not many. In many years, PNJ is always a prestige brand, a national brand and we never let our customer’s benefit to become disadvantage. PNJ also is waiting for the central bank’s reactions, and hopefully, in long term, the central bank will have a roadmap for exchanging other gold brands into SJC’s gold brand, or still allow other brands to circulate their existing gold bars but not produce new ones. As for PNJ, the profits from gold bar business accounts for not very large proportion within the company’s profits. Since many years, PNJ has made a long-term manufacturing and trading jewelry strategy, which is our strength and core value. In present, with a network of more than 150 stores nationwide, PNJ is a leading enterprise in trading gold jewelry in Vietnam, and we will focus on manufacturing jewelry and develop the retail system the most, which includes retailing gold. Therefore, with the criteria for gold trading by the draft of State Bank’s Gold Control Circular, PNJ has exceed the criteria for having enough conditions to buy, sell and distribute gold bar.

- How do you evaluate about there are many proposals to allow companies who are qualified for gold trading to hired-stamp for SJC gold bar?

These proposals are not feasible because SJC has excessive capacity to produce gold bar with its own brand name, excluding the peak periods. Moreover, it is difficult to control the SJC gold processing of other companies. Of course there are stamp, sign and seial of the processing gold but it is also very difficult to control the processing unit not producing extra gold to sell to the market. And if this happens, it is really hard to blame the processing unit producing over the quota to sell to the market. Management of this area is quite complicated. Even in our company, management of the gold manufacturing unit requires intense work and lots of efforts; otherwise it is very difficult to control the quality and quantity produced by the factory. If State Bank allows hired – processing, PNJ will be a gold trading company who has lots of advantages, and we truly want and willing to do whatever most beneficial to the country, not only because of the sake of a small number of enterprises. I believe that in a near future, the State Bank will have a clear roadmap and will evaluate for the priority is the country’s sake and ensuring the citizen’s benefits.

- Thank you.