SJC finds processing gold products for foreign partners a better way than direct export of the products at the current time. — Photo Tigiavang.net

HA NOI (BizHub)— The Saigon Jewelry Company ( SJC ) resumed their gold jewelry exports on a small scale this month after stopping 2010, according to its general director Do Cong Chinh.

Chinh said the company has exported a small number of products to Europe to see how the market responds, adding that in the mean time SJC would processes products for some foreign partners in larger batches.

To support its new strategy, the company has also asked the State Bank of Vietnam (SBV) to permit temporary import of gold for re-export to meet the new orders.

According to the general director, processing the products for partners was the best way to operate at the current time as it was difficult to compete with experienced gold makers in the international market. Better processing technology is available in Thailand and Hong Kong, while in Viet Nam gold is more expensive and subject to higher export tax rates.

On Monday, the SJC posted a rate of VND37.17-37.27 million ($1,770-1,774) on its website at 3pm, while the kitco.com trading floor listed the price at $1,270.8 per ounce, or $1,531 per tael, leaving prices in Viet Nam $223 per tael higher than global rates.

Meanwhile, the current tax rate of 10 per cent for exported gold jewelry with gold content from 80 to 99.99 per cent was really damaging to the industry, argued Chinh.

It is these high costs that first prompted the company to halt their export operations in 2010.

SJC's biggest competitor, the PNJ Phu Nhuan Jewelry Company, exports more gold jewelry than any other company in Viet Nam, but its deputy general director Nguyen Thi Cuc also told local media that exports - which account for only 6 per cent of total revenues - could not bring much profit.

Cuc said they could only reach export turnover of US$12.5-13 million per year, less than half of what was achievable in the first five months of 2010 when the local price was lower than global rates.

However, things changed when SBV took control of the market to become the nation's only gold importer.

According to data, Viet Nam has around 12,000 gold trading companies, most of which work on a small-scale and are not eligible to trade gold bullion, only gold jewelry.

To support jewelry exporters, the Viet Nam Gold Trading Association has proposed a reduction in the tax rate, while earlier this year the Finance Ministry also said it would consider making a tax cut. However, change has yet to emerge.

The association said that as the export tax was zero in Thailand, their gold jewelry industry consistently gained a high export turnover of about $3 billion each year.— VNS