Vietnam Yet to Take Full Advantage of Gems, Gold Resources

To mark the forthcoming 2^nd anniversary of Vietnam Gold Traders Association on October 11, 2004, Vietnam Business Forum magazine interviewed the chairman of the association Hoang The Ngu on the current situation of Vietnam’s gold and gemstone industry and development forecast for the sector in the future.

Can you tell us about the major activities of the Vietnam Gold Traders Association after two years of operation? What support have enterprises in the gold and gemstone sector received from the association?

The association is playing a representative role for gold and gem businesses in Vietnam, acting as a bridge between enterprises and the government. The association is also a bridge linking local businesses with each other and with foreign enterprises. We have organised many domestic and international seminars and conferences for State management bodies and local businesses to discuss measures to solve policy related impediments. For example, after the association filed proposals to the government, the import tax rate on gold bullion was cut to one per cent from five per cent previously and the new import tax rate on grain gold was 0.5 per cent. We also held domestic and international trade fairs to introduce products of businesses we represent.

What are the potentials and advantages of Vietnam’s gold and gemstone industry? How do local firms promote those advantages?

At international conferences, foreign experts have said that Vietnam’s jewelry industry has two strong points. First, Vietnam has great potential in its gemstone and gold resources including high value gems such as ruby and sapphire. Currently, most large ruby and sapphire gemstone mines in the world have been exhausted so Vietnam is emerging as a potential country in this sector. Second, Vietnam’s jewelry is appreciated because Vietnam can create products meeting the tastes of customers.

What are the major products of local gold and gemstone businesses? To further develop the sector, what is strategy of the association?

Currently Vietnamese businesses still focus on manufacturing jewelry products to serve domestic demand with only a small proportion for sale to foreign tourists. Vietnam’s jewelry has not yet entered big markets such as the US, Japan and European countries. We have brought out a plan to access these markets, however, we need support from the Vietnamese government and efforts in local enterprises in order to boost exports of precious metals there. Foreign markets are our main goal in coming times.

Are there any inadequate mechanisms and policies in the sector? What support is the association and local businesses seeking from the government for the development of the sector?

The recent tax reduction on imported gold was a positive move by the government to create favourable conditions for the gold and gemstone sector to reduce costs. However, the new tariffs are still higher than those of the regional countries. Local gemstone and diamond businesses now have to pay an import tax rate of one per cent plus ten per cent value-added tax. Moreover, when exporting processed products, they are not refunded the ten per cent VAT. This is an irrational regulation.

The association is working with local enterprises to propose that the government change the tax policy. Diamonds and gemstones for processing and then exporting must be considered input materials for export production.

In the future, we will further approach and research other markets and new technologies for local production. We will also hold courses to train management cadres and train workers and experts for the industry. Notably, we are planning to set up a vocational school. The association is preparing to submit for the government’s approval the establishment of gold trading centres and diamond trading and examining centres in Ho Chi Minh City and Hanoi. These centres will play a role in supplying materials for production of jewelry. The association is also supporting local businesses to ask the government to establish a gold store warehouse to immediately provide gold for the domestic market.

• Reported by Nguyen Thoa