Brian Jeffrey
SJC is a gold trading company owned by the state, overseen by the Ho Chi Minh City People’s Committee. With over 35 years of history, it operates more than 200 retail stores alongside numerous authorized agents, focusing on SJC bullion trading.
In 2012, the State Bank of Vietnam (SBV) recognized SJC as the national gold brand, tasked with producing SJC bullion and ensuring their gold bars meet quality standards.
Recent investigations indicate that certain individuals exploited price-stabilization measures, generating fake documents to gain illegal profits. The Police Investigation Agency is currently gathering evidence and working to recover state assets implicated in this case.
Monopoly Revenue: SJC’s High Earnings, Low Returns
SJC reports impressive revenues annually but sees limited profits, particularly in the bullion sector. The company’s 2023 audit showed revenues exceeding VND 28.4 trillion (around USD 1.1 billion), yet the post-tax profit was only VND 61 billion, as almost all income was consumed by production costs totaling nearly VND 28.2 trillion.
This disparity indicates exceptionally high input costs. Notably, in the first four months of 2023, SJC gold prices often outstripped international ones by over VND 10 million per tael, hitting a peak of VND 18 million more at times.
This trend of high earnings with meager profits isn’t new. In 2022, SJC reported revenues of nearly VND 27.2 trillion, but post-tax profits were a mere VND 49.2 billion. The previous years’ revenue and profit figures were also low:
– 2021: VND 17.7 trillion in revenue; VND 43.3 billion profit.
– 2020: VND 23.5 trillion in revenue; VND 55.8 billion profit.
– 2019: VND 18.6 trillion in revenue; VND 52.5 billion profit.
– 2018: VND 20.9 trillion in revenue; VND 27.8 billion profit.
– 2017: VND 22.9 trillion in revenue; VND 81.3 billion profit.
As of late 2023, SJC’s inventory, mainly gold, was valued at VND 1.446 trillion, forming a significant part of its total assets of VND 1.898 trillion.
Even with the advantage of a bullion monopoly, SJC’s profitability remains lower compared to competitors in the market. In 2023, for instance, Phu Nhuan Jewelry (PNJ) reported net revenues of VND 33.1 trillion alongside a gross profit of VND 6.058 trillion, resulting in a post-tax profit exceeding VND 1.971 trillion. PNJ’s performance in recent years has also been strong, with its 2022 profits surpassing VND 1.810 trillion and nearly VND 29.2 trillion in revenue for the first three quarters of 2024, yielding VND 1.382 trillion in post-tax profit.
Doji Jewelry Group, led by Do Minh Phu, achieved a post-tax profit of VND 491 billion in 2023 (approximately VND 1.3 billion daily), although this represented a decline from VND 1.017 trillion in 2022. Previous results included post-tax profits of VND 150 billion and VND 187 billion in 2019 and 2020, respectively.
Despite holding a dominant market position, SJC’s financial performance has not mirrored this competitive advantage.
Since late 2023, gold prices for both SJC bullion and local jewelry have risen remarkably, peaking at VND 92.5 million per tael in May. By late October and early November, prices hovered around VND 90 million per tael, slightly higher than international rates by about VND 4-5 million.
As of late 2023, leadership included Chairman Tran Van Tinh (appointed in November 2019), CEO Le Thuy Hang, also appointed in November 2019, and Chief Accountant Tran Hien Phuc (since May 2023). Their auditor is A&C Auditing and Consulting Co., Ltd.
SJC’s Contribution to Gold Price Stabilization
Starting June 3, SJC, alongside four other state-owned banks, received authorization from the SBV to buy gold for resale to the public, following the suspension of gold auctions by the SBV. This shift intends to minimize the price gap between SJC gold and international bullion. By October 29, the SBV had infused 11.46 tons of gold into the marketplace via these entities.
Earlier attempts at price stabilization through gold auctions faced challenges, with nine auctions since April 22 yielding limited success, and the domestic-international price gap often soaring up to VND 18 million per tael, particularly during May. Concerns arose among National Assembly delegates about how such discrepancies could incite smuggling and threaten economic stability.
During a May 29 meeting, SBV Governor Nguyen Thi Hong indicated that the government is actively working to rectify the domestic-international gold price disparity, increasing market supply through auctions, albeit with restricted outcomes.
The SBV has since moved to direct sales through the five authorized bodies, including SJC, implementing measures for greater transparency in market transactions. An interagency inspection team has been formed to ensure compliance with anti-money laundering regulations and to scrutinize transaction records for any potential illegal activities in gold trading, aiming to deter speculation and price manipulation.
The ongoing investigation into SJC pertains to allegations of misuse of price stabilization transactions.
Manh Ha
