Good morning! Hello to new readers, and welcome to the latest edition of the Vietnam Weekly, written by Ho Chi Minh City-based reporter Mike Tatarski.
Earlier in the week I published a story for paying supporters about the second phase of the Vạn Thịnh Phát scandal, with new charges coming for Trương Mỹ Lan and her alleged conspirators. If you haven’t already, you can upgrade to receive all future exclusive articles below. Group subscriptions are available at a 30% discount per reader.
A new episode of The Vietnam Weekly Podcast comes out Monday on all major podcast platforms.
I also recently wrote an article for Hunterbrook Media on Vietnam’s struggle to attract big-ticket AI and semiconductor investments while Google and Microsoft pledge billions to regional peers. Check out Hunterbrook’s free newsletter to follow their global business coverage.
On to the news.
Gold Mayhem
I’ve wanted to cover this for a while but I struggle to wrap my head around the topic, so I’ll just go in chronological order through Vietnam’s chaotic gold market over the last two months.
First, some history: in 2012, a government decree aimed at preventing “goldization” - or the preference to hold gold due to currency depreciation fears - gave the State Bank of Vietnam (SBV) a monopoly on gold production, with Saigon Jewelry Company (SJC) subsequently authorized to be the country’s sole bullion distributor.
All gold bars sold in Vietnam have the SJC logo imprinted on them.
SJC hasn’t been licensed to distribute any new gold for a decade, leading to limited supply and a situation in which domestic gold prices have been far higher than international prices.
In April, the SBV said it planned to increase the gold supply while requiring gold businesses to issue electronic invoices for gold sales.
On April 15th, the SBV announced it would hold its first gold auction since 2013, when 1.8 million taels were sold - a tael weighs 37.5 grams and their prices have hit record highs multiple times recently, including VND85.5 million (over US$3,360) per tael that same day - about US$1,000 more than international rates.
That same week the National Assembly asked the government to investigate gold trading shops for price manipulation, after which many gold shops in HCMC temporarily closed to avoid inspections.
Domestic media, meanwhile, proclaimed that gold had brought higher returns to investors than stocks or bank deposits through mid-April.
Meanwhile, the SBV had to postpone its gold bullion auction multiple times since too few participants registered, in part because the central bank had set the floor price at an even higher rate than retail prices.
In the meantime, crowds flocked to gold shops through early May, with many businesses running out of supply as domestic gold prices reached new highs - VND92.4 million (over US$3,600) per tael on May 10th.
The SBV finally managed a successful auction after five postponements on May 14th, injecting 8,100 taels of gold into the market - perhaps it helped that the bid price was lower than the market rate that day.
Around that time, SBV tax officials proposed banning cash purchases for gold, an idea roundly rejected by analysts as “impracticable” and “without precedent” anywhere in the world.
SJC - which holds the government-mandated gold bar monopoly - has asked for this monopoly to be eliminated so that other companies can import and produce bullion. In a meeting with HCMC officials, the company’s CEO said "Although people think we benefit from the monopoly, we actually do not gain anything from it even when domestic gold prices surge over global rates."
It’s not clear whether that will happen.
In late May, the central bank in turn announced a 45-day inspection of four gold businesses - including SJC - and two banks, namely TPBank and Eximbank, focused on “compliance with legal regulations on gold business, anti-money laundering practices, invoice issuance, use of receipts and accounting policies, and tax obligations.”
This month, bank branches have seen huge lines to buy gold at prices below the market rate, even as domestic prices hit a three-month low.
Last Friday the SBV dismissed rumors of a gold shortage while people reportedly hired others to wait in line at banks and gold shops. That situation was unchanged as of yesterday morning, with people sleeping on the sidewalk in Hanoi to save their place in line.
Reuters, meanwhile, reported that companies may be allowed to import gold at some point this year, a practice that is currently banned.
I don’t quite know what to make of all this - the concept of physically holding gold is foreign to me - but it certainly doesn’t speak of confidence in the banking sector.
An Imminent Putin Visit?
Back in March, General Secretary Nguyễn Phú Trọng invited Russian President Vladimir Putin to Hanoi. The two sides said they would “cooperate closely” to arrange a visit at an appropriate time.
This topic went relatively quiet, aside from rumors that Putin would potentially add Vietnam to his China trip in mid-May.
On Monday, the Russian news outlet Vedomosti reported that Putin will visit North Korea and Vietnam in the coming weeks, perhaps one after the other. Subsequent Reuters reporting placed the Hanoi dates as June 19-20, though this hasn’t been fully confirmed.
This would be Putin’s first Vietnam visit since 2017, though the global geopolitical situation has changed considerably since then and I’m curious how the United States and European Union would react.
In March, Ian Storey wrote a great feature on Vietnam’s ‘bamboo diplomacy’ in light of Russia’s ongoing invasion of Ukraine, highlighting how “Vietnam adopted an essentially neutral position so as to insulate itself from major power disputes arising from the war, preserve stable relations with all the main players and stakeholders, and defend its national interests.”
However, he also noted that the “conflict poses mid-to-long challenges for Vietnam’s Soviet/Russian-centric armed forces and the government’s long-running dispute with Beijing in the South China Sea due to Russia’s growing dependence on its strategic partner, China.”
Vietnam is not attending the Ukraine Peace Summit beginning in Switzerland tomorrow, while Deputy Minister of Foreign Affairs Nguyễn Minh Hằng was in Nizhny Novgorod, Russia for the BRICS Ministers of Foreign Affairs / International Relations Meeting earlier this week.
Weekend Cycling
Now for something different and more personal: some readers will know that I’m a fairly active road cyclist - even with the heat and traffic of HCMC. Last weekend I did a fantastic (and very hot) two-day ride with a few friends, covering 160 kilometers to La Gi in Bình Thuận on Saturday followed by 150 km (and over 2,000 meters of climbing) to Bảo Lộc on Sunday. (And then an interminable six-hour drive back to HCMC.)
I wanted to share a few photos, as there’s some amazing riding in Vietnam and I rarely mention things beyond the news here.
Extra Links:
Vietnam’s made-to-measure fashion brands are thriving in the TikTok era (Rest of World)
Lessons from decades exploring Vietnam (Rusty Compass)
Hanoi in High Gear: Vietnam’s Spratly Expansion Accelerates (Asia Maritime Transparency Initiative)
Vietnam Arrests Prominent Journalist for Facebook Posts (The New York Times)
As cheaper Vietnamese durians flood Thai market, expert urges govt to act (The Nation)
Have a great weekend!
Great article. Dogs, Cycling, Gold and Putin. I love 3 out of 4 of these.
There is also the cultural component to owning gold. Thank you God of Wealth!! I always buy gold on the God of Wealth day