In Vietnam, property as good as gold
HANOI - Vietnam's property boom is spurring demand for gold
bars used to pay for homes, bucking a slump in bullion sales
across Southeast Asia.
Vietnam's gold demand rose 5.4 percent in the third quarter even
as total Southeast Asian sales fell 5 percent, the World Gold
Council said. In five years, the number of gold shops in Hanoi
doubled to about 400, said Vu Duong, deputy director of Kim
Quy, a trader of the metal based in the capital city.
Economic growth that averaged about 6 percent over the past five
years left the Vietnamese with cash to invest, and property is
among their favored assets. The price of an inner-city home can
total several garbage bags of Vietnamese dong - so gold bars have
become a favored currency.
"The country's economy is now open," Duong said. "The life of the
people has improved, and that's one reason why gold demand
increased."
While sales of the metal rose in Vietnam in the third quarter,
purchases slowed in Indonesia, Thailand, Malaysia and Singapore.
"The primary reason that people buy gold here is to buy property,"
said Brett Ashton, director of the Ho Chi Minh City branch of the
property consulting firm Chesterton Petty Vietnam.
Vietnam's standard gold bar - known as a tael and stamped for
authenticity by companies such as Kim Quy and Saigon Jewelry
Co. - has become an alternate denomination in which the price of
a house is frequently negotiated.
"The inner-city property market revived once more, boosting
demand for gold bars which are used in property transactions," the
Gold Council said.
Property-buying isn't the only spur to gold sales. The Vietnamese
have traditionally avoided putting surplus cash into bank accounts
that invite the scrutiny of tax officials, and offer low interest and
little growth after inflation.
Retail investment in gold rose 9.1 percent in the third quarter, the
Gold Council said in its "Gold Demand Trends" report.
The revival in Vietnamese gold demand was driven in part by a
shift to more expensive inner-city property buying after the
government introduced regulations to stem rural land purchases
and avoid a speculative bubble. Many investors had bought rural
and suburban land betting that it would become more valuable.
By Jason Folkmanis - Bloomberg News - November 28, 2002.
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