Non-cash Payment Decree to be Issued

The Decree on Non-cash Payment was firstly expected to be issued in late 2005 and take effect in 2006. However, at a symposium organised by the State Bank of Vietnam and the Vietnam Chamber of Commerce and Industry (VCCI) to gather inputs and comments to the draft decree, there were many very ideas that needed to be considered carefully. 

 

According to Bui Quang Tien, head of the Inspection Department of the State Bank of Vietnam, the issuance of the decree would help reduce unofficial incomes due to be controlled by the State in an effort to combat corruption. This is an open form of the issuance of new policies on cash circulation, which are expected to produce strong effects on money use among organisations, enterprises and people in Vietnam. The decree also helps the enforcement of the Government’s Decree N⁰ 72 on fighting money laundering.

Under the draft decree, only certain expenditures shall be paid in cash, including wages and salaries, allowances, royalties, insurance payments, social welfare payments, site clearance compensation, and payments for purchase of goods and services. Also under the decree, State-funded organisations shall not be allowed to make cash payments of more than VND10 million per transaction. The limit for cash payments of non-State-funded organisations shall be VND 15 million per transaction. The State Treasury will stipulate the stock of cash funds for State budget-funded organisations.

For non-State-funded organisations, account owners should stipulate the stock of their cash funds which shall be deposited at affiliates to State Bank of Vietnam. Any changes in the stock of cash funds shall be allowed by the State Bank of Vietnam and the State Treasury. In particular, when organisations provide payment services, the State Treasury shall collect fees in cash.

Pham Gia Tuc, general secretary of VCCI, said that the cash using habit had offered opportunities for smuggling, corruption, money laundering and tax evasion. Therefore, cash transactions should be reduced as soon as possible.

 

At present, the proportion of cash use in payments of organisations and enterprises in Vietnamese is over 20 per cent and has tended to fall over the past ten years. However, the proportion of cash use of the Vietnamese people remains unknown. Nguyen Dong Tien, deputy governor of the State Bank of Vietnam, said that the cash using habit of Vietnamese people for their transactions would be a difficulty for the implementation of the decree.

 

However, Nguyen Vo Lieu, general secretary of the Vietnam Automobile Manufacturers’ Association, said that the people were forced to use cash instead of intending to maintain the cash using habit. Lieu said that the Vietnamese people did not want to use cash but nobody helped them create a non-cash payment system. He went on to say that the State should find another way to manage cash payments, instead of forcing organisations to report their cash stock daily, which may hamper transactions. At the same time, the bank account transfer system in Vietnam was not strong enough to meet the people’s expenditure demand. Also, local banks are not yet ready to provide convenient services for people to use payment cards.

 

Phung Dac Loc from the Vietnam Insurance Association said that the banking system should take measures to provide enough non-cash payment tools for people, at least to ensure that they would be able to make transactions with banks 24 hours a day and seven days a week. The ATM system should be convenient enough for people to withdraw money at any time and anywhere they want.

 

This would be difficult to implement the decree in rural areas. At present, many people and around two million business households in Vietnam do not have bank accounts. According to the market rule, the supply should meet the demand. If the supply is limited, may emerge along with unofficial cheque exchange service, which caused severe long-term damage in Vietnam. According to Vu Xuan Tien, director of the VFFAM Vietnam Consultancy Company, the issuance of a non-cash payment decree was necessary but a list of allowed cash payment transactions should be added to match the factual situation. Tien said that there should not regulations on payment limit expenditures and the stock of cash funds. Most attendants of the symposium agreed on measures to improve awareness of the Vietnamese people and enterprises in non-cash payment, reducing obstacles on cash revenues and expenditures.