Gold smuggling increases in border gates due to high price difference

An Giang Customs and Border Guard forces seize a case of smuggling five kg of gold. Photo: T. Tuan

Transporting gold across border gate

Recently, competent forces at An Giang Border Gate have continuously seized gold smuggling cases with large quantities.

On September 27, Vinh Xuong Border Gate Customs Branch (An Giang Customs Department) and the working team of border guard force at the Vinh Xuong International Border Gate arrested Nguyen Van Nghiep, 39, transporting over 2.2 kg of suspected gold jewelry worth VND 2.7 billion. He said that he was hired by Pham Hai Duong to transport this gold.

With more than 100 km adjacent to Cambodia, An Giang Border Gate route is considered a hot spot for transporting contraband goods, including gold.

On September 9, the working team working team of border guard force at the Tinh Bien International Border Gate and Tinh Bien Customs Branch detected over 2.8 kg of gold jewelry hidden inside a truck.

In May, the competent forces arrested Huynh Thi Nguyen carrying five 9999 Gold Bars and 1,040,000 Riel (Cambodian currency). She said that she was hired to transport the gold from Cambodia to Vietnam to deliver to Ms. Sau in Tinh Bien Distric, An Giang province.

The illegal transport of gold across the border also takes place in the Central Highland border route.

On September 21, Bo Y Customs Branch seized 0.65 kg of gold from Laos to Vietnam and arrested Nguyen Thi Vui. She said that she bought the gold from Laos to Vietnam.

How to control the situation?

The smuggling gold from abroad to Vietnam has taken place for many years due to the high difference between the domestic and the world gold price.

The World Gold Council assessed that when the domestic gold price is about 2% higher than the global price, the gold smuggling will occur. The difference in Vietnam is much higher than in the world. The domestic price even is higher than VND9 million /tael for gold bars and nearly VND3 million/tael for gold jewelry, Senior Advisor of the World Gold Council in Vietnam, Vice President of the Vietnam Gold Business Association Huynh Trung Khanh said.

Meanwhile, the gold smuggling is not difficult because it is easy to hide due to its small size and high value. The fines for gold smuggling are lower than the profits if the smuggled gold is transported smoothly.

Therefore, the quantity seized by competent authorities accounts for a small volume compared with the actual quantity.

Although authorities have made great efforts to tackle smuggling rings, the performance has not yet resolved this situation. However, the main reason for this issue is that the high price difference between the domestic and global price.

The domestic gold market has been closed for nearly ten years without connection to the world market, leading to an imbalance in supply and demand. Since the Decree 24 was issued, gold enterprises are not allowed to import raw gold for production of gold jewelry and fine jewelry. The State Bank of Vietnam (SBV) also does not import gold and allows the SJC Company to process SJC gold bars.

Meanwhile, three neighboring countries to Vietnam, Laos, Cambodia and China, open to the gold market. Especially in Laos and Cambodia, the trading of gold is very easy and convenient.

“Cambodia imports 40-50 tons of gold per year, while the population is only about 15 million people. Due to the high supply and low price, smugglers have transported gold to Vietnam to sell for profits,” said Khanh.

Therefore, Mr. Khanh suggested that the SBV should allow enterprises to import raw gold to make gold jewelry.

“Currently, we have a large source of foreign currency due to trade surplus and have foreign exchange reserves of around US$100 billion. Therefore, Vietnam has enough resources to import raw gold, thereby narrowing the difference with world prices, and the smuggling will reduce,” Khanh said.

If the gold import is allowed, it will open opportunities for enterprises producing gold jewelry for export. Because the skills of Vietnamese jewelers is highly appreciated compared with other countries. However, this market has been exploited by other countries such as Indonesia, Malaysia, and Thailand. Even many Vietnamese jewelers have worked for other countries which export jewelry worth tens of millions of dollars.