Cash in the hand? Less may be more

May 31, 2004 | 18:15
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Cash payments by Vietnam’s businesses and organisations may soon be limited in order to develop the non-cash payment system, the State Bank said.
The proposal would limit cash transactions at government administrative agencies to VND5 million ($318), and VND10 million ($635) to VND15 million ($950) for other businesses and organisations, regardless if they are state-owned, private or foreign-invested. Payments above these amounts would have to be made in non-cash forms such as cheques, payment collection or transfer.
Mai Van Ban, deputy director of the State Bank’s monetary policy department, said the regulations being drafted would be sent to various enterprises, commercial banks and financial experts before submission to the government.
“Our biggest concern is to ensure the proposed cap is feasible for the majority of businesses,” Ban said. “We will not set the final limit until we have received input from a variety of sources.”
In its initial stages, the regulation will apply only to businesses that have accounts at commercial banks and carry out trading transactions, such as commodity sales or purchases. Other payments, such as administrative costs, staff salaries or out-of-pocket expenses will not be effected.
“In the future, businesses without bank accounts and all transactions will be included in the legislation.”
It is expected that once the regulation takes effect, it will increase the country’s non-cash payments from the current level of 23 per cent.
Although the draft has not been released, business interests have been quick to express their opinions.
“This is a good move by the State Bank,” said Le Quoc Hung, deputy representative of Siemens AG in Vietnam.
“We have always encouraged non-cash payments within the company, even for amounts as small as one hundred dollars.”
“All Siemens’ staff have bank accounts and we already pay their salaries by direct deposit.”
But a representative from Nikko held a different view. “I agree that there should be limitations on cash payments, but a cap of $950 is too low,” said Le Quang Hai, the company’s finance director.
“As a big trading company, in addition to large transactions we also carry out payments via banks. Everyday, we make dozens of small- and medium-sized transactions that are often more convenient to pay in cash.”
“Because the local online payment system is not very developed, it would be time-consuming and troublesome to have to go a bank for such transactions.”
Hai proposed that the cap be raised to VND50 million ($3190) until the banking infrastructure was adequately improved.
Ban disagreed. “Look at China. The limitation on cash payments there is only RMB1,000, or $125. This rule has been maintained with virtually no difficulty for almost half a century. This is a matter of changing habits and that can happen quickly.”
He agreed, however, that the banking infrastructure should be updated to expedite payment services.

By Thuy Dung

vir.com.vn

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