The lucky story about gold exports…

Statistics showed that the export turnover of precious metals and gemstones in the first two months of the year soared thirty times over the same period of the last year, bringing the turnover of US $939 million.

While Vietnam exported US $13 million worth of precious metals and gemstones in February 2008, it exported up to US $800 million in February 2009.

The sharp increase in export turnover in the last two months has been explained by the fact that the State Bank of Vietnam granted license to export bar gold in February. The licensing also helped enterprises earn a large profit from re-exporting the gold bars they imported before at low prices.

If excluding the gold export turnover from the reckoned total export turnover of the country in the last two months, Vietnam would see imports higher by US $617 million more than exports. Meanwhile, if counting on the gold export turnover, Vietnam would have the trade surplus of US $300 million.

Luu Quang Dien, Director of SJC Hanoi, applauded the decision on allowing exporting gold, saying that the gold exports help the domestic prices come closer to the world’s prices. The gold exports helped bring a large profit to enterprises and a big volume of foreign currencies which helped stabilize the exchange rate and payment balance.

In long term, Dien said that it is necessary to allow enterprises to export and import gold as well to keep the market in healthy operation. At the end of 2008, Vietnam ordered to stop gold imports in order to help curb the trade deficit. However, as the situation has changed, it needs to think of allowing import resumption in order to balance the domestic market’s supply and demand.

… and an unlucky story about steel

Meanwhile, the same luck did not occur with steel.

In 2008, when the world’s ingot steel price began increasing, Vietnamese enterprises, fearing that the prices would go up further, rushed to import ingot steel to hoard up. However, as the domestic consumption decreased significantly, enterprises had large inventory volumes of ingot steel.

At that time, the world’s ingot steel price increased sharply. A lot of Vietnamese enterprises re-exported the ingot steel to receive profit. However, the re-export was asked to stop as relevant ministries want to keep the ingot steel in Vietnam to help stabilize the domestic market.

The steel export stop pushed many enterprises against the wall as they had ingot steel in excess, while they could not sell. The steel stocks once reached US $1 billion in value.

However, the world’s prices then dropped dramatically and the ingot steel Vietnamese enterprises imported before became expensive. At that moment, even with the tax decrease (from 20% to 5%), Vietnamese enterprises could not export any more when the world’s prices were lower than the prices at which they import ingot steel.

Pham Chi Cuong, Chairman of the Vietnam Steel Association, said that Vietnam should keep flexible policies when it has joined the global market.

Cuong related that many countries in the world do not have ore mines, and they import iron ore to make ingot steel to sell globally. However, once scrap steel and iron ore prices become higher, they would sell raw materials to get prompt profit. If the material prices decrease, they will put the materials into lamination to receive profits from the processing.

It is true that Vietnam cannot make gold and make enough ingot steel to feed itself. However, this does not mean that Vietnam cannot do business and earn profit from these products on the world market.