Viet Nam Gold Business Association suggests not to increase the current export duty on gold jewellery of zero per cent to help local producers.— Photo kinhdoanh.vnexpress.net

HA NOI (Biz Hub)— The Viet Nam Gold Business Association (VGTA) asked the Ministry of Finance (MoF) on November 12 to maintain the export duty on gold jewellery at zero per cent.

The VGTA was responding to the MoF's recent draft circular that suggested a two-per cent export tax on gold jewellery products with more than 95 per cent purity.

Last month, the Government Office also sent a document ordering the MoF to gather comments on the proposed tax adjustment on gold jewellery.

According to the VGTA representative, gold demand has sharply declined in Viet Nam, and domestic producers of gold jewellery and fine arts were seeking ways to promote their products in other countries.

However, they either have no access to domestic bank credit or are barred from importing raw materials for their production. On top of a number of difficulties, they must rely on gold materials in the flea market for their production.

With domestic gold prices always exceeding international gold prices by a wide margin, the difficulties become more significant.

On November 13, the price of one tael (1.205 ounce) of gold in Viet Nam was $274 higher than the world price.

The association also noted that foreign competitors such as China, Thailand, Indonesia and India have no export tax on gold jewellery and are allowed to import raw materials, hire cheaper labour and purchase modern equipment and technology.

This has made competition extremely difficult for domestic producers, and a two-per cent tax will make it even worse, the VGTA added.

To ease the producers' burdens, the VGTA wants the MoF to retain a zero export tax on gold jewellery until immediate difficulties are solved, production becomes stable and export markets are developed and expanded.

According to the association, the export of gold jewellery and fine art will bring in more foreign currencies and create thousands of jobs for people in the villages.

The difficulties that the VGTA cited have led to the departure of a number of jewellery companies from the market. Based on the association's estimates, about 70 per cent of 3,000 enterprises have either been dissolved or have stopped production.

Meanwhile, Phu Nhuan Jewelry Company (PNJ), the enterprise with the largest gold jewellery export revenues in Viet Nam, told Saigon Economic Times that most of the gold it used to make jewellery was less than 95 per cent in purity, so it would hardly affected its exports. — VNS