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Latest regulations to curtail Viet Nam's affinity for cash

Update: February, 01/2013 - 11:18

 

A showroom in Ha Noi displays and sells motorbikes. The use of cash in large transactions for items such as cars and motorbikes will be limited. — VNS Photo Doan Tung
HCM CITY (VNS)— A new draft decree being prepared by the State Bank of Viet Nam seeks to limit or stop the use of cash for large transactions like the purchase of motorbikes, cars and property.

The decree aims to weaken the black market economy by making commercial transactions more transparent.

Under the draft decree that is intended to replace the current one in force, Decree 161, people will be banned from using cash when they trade or transfer autos and securities.

Transactions involving motorised vehicles, houses, land and securities not traded at official exchanges will have to be conducted via a bank if the value exceeds the limit set by the central bank.

Organisations will not be allowed to pay in cash as they trade or transfer securities and properties.

Individuals or establishments that pay in cash for autos and properties with amounts exceeding the limit will not be able to apply for transferring ownership of or rights to use the assets being traded, according to Bui Quang Tien, director of the SBV's payments department.

However, the limit for cash transactions has not yet been set, Tien said.

The new draft aims to encourage the public to use non-cash payment forms because these would reduce risk of robbery and even mistakes in counting the money.

Restrictions on cash payments would also help the country better fight tax evasion, counterfeit money and money laundering.

The current decree, No.161, also has regulations that limit the use of cash in payments, but they apply mainly to agencies and organisations using the state budget. Meanwhile, capital disbursed from the State budget now accounts for a very small fraction of total payments made in the country.

Nguyen Thanh Toai, deputy director of the Asia Commercial Bank (ACB), agreed with the policy of restricting the use of cash payments.

He said high value transactions should be carried out via a bank to ensure transparency.

Since most high value transactions take place in major economic areas like Ha Noi and HCM City where there are many banks, it is easy to make non-cash payments there, Toai told the Tuoi Tre newspaper.

As of April 2012, most loan disbursements by banks were also in cash. Big lenders like Vietcombank and BIDV said 70 per cent of their loans were disbursed in cash, while the corresponding figure at Agribank and MHB was as high as 85 per cent.

The central bank said cash payments for large assets like houses and securities created plenty of opportunities for tax evasion as also concealing of assets.

This is the second time the decree on cash payment has been made public to collect opinions from relevant agencies and the public.

The draft is scheduled to be submitted to the Government for consideration in the second quarter of this year and set for approval in June.—VNS

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