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MOJ whistles down central bank move to ban non-bank gold trading floors   2009-09-21 - DTCK

The Ministry of Justice has objected to a State Bank of Vietnam draft order that would give banks a monopoly on the operation of ‘gold trading floors.’  It’s an unlawful restriction on business freedom, says the ministry.


Pending central bank order gives banks monopoly of ‘gold trading floors’


Replying to the central bank’s request for Justice Ministry concurrence, Deputy Director Nguyen Am Hieu of the Economic and Civil Law Department said sharply that current law does not list either gold trading in general or gold trading on account in particular as kinds of business that need to be prohibited or restricted.


In fact, Hieu continued, SBV (the State Bank) is obliged not to upset the stability and continuity of all businesses that trade in ‘goods and services not prohibited by law.’  It must ensure ‘a fair business environmen for all enterprises that are allowed to provide on-account gold trading services.’


In short, says the Ministry of Justice, SBV’s proposed circular order (reportedly now in its 10th draft) would unlawfully give commercial banks a monopoly on gold trading services.


It has been understood that the purpose of the proposed circular is to bring order to a market that has been characterized by a great deal of speculative investing and heavy losses by inexperienced participants.


The Justice Ministry official suggested that the draft circular may be allowed if it is amended to expand the businesses eligible to organize gold trading floors.  Or, alternatively, it could be thrown out because Article 7 of the Enterprise Law clearly bars ministries, provincial governments and agencies of equivalent rank (e.g., the central bank) from setting conditions on lines or conduct of business .


Gold industry speaks up


Also, the Vietnam Gold Business Association (VGB) has petitioned the compilers of the draft circular order to reconsider the drafted regulations.  VGB Chairman Nguyen Thanh Long said that the cooperation of gold trading companies is really necessary in the organization of gold trading floors.


Thanh’s organization represents non-bank operators of gold floors as well as firms that supply investment-quality gold to the market. “With [our] cooperation,” Long said, “commercial banks will have more experience and capability in managing gold trading floors, thus helping the market development in a healthy manner and ensuring investors’ benefit.”

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