Why Vietnam Should Not Embrace a Cashless Society
Despite the rapid advancement in technology, Vietnam should remain anchored in its current cash-based economy. This article explores the reasons why Vietnam is not ready to transition to a cashless society, discusses the potential risks, and argues that embracing such a system might harm a significant part of the population.
The Importance of the Informal Economy
The economic landscape of Vietnam is heavily influenced by its informal sector, which plays a crucial role in sustaining the livelihood of many citizens. According to the Vietnamese government, nearly 56% of the workforce is employed in the informal economy, where transactions are predominantly made in cash. This sector includes street vendors, small business owners, and migrant workers. These individuals cannot afford the costs associated with digital payment systems due to the absence of adequate infrastructure and financial capabilities.
The Challenges of Transitioning to a Cashless Society
Transitioning to a cashless society comes with a multitude of challenges. One of the main hurdles is the potential negative impact on the informal economy. If gone viral, cryptocurrencies and digital payments might make it difficult for low-wage workers and small business owners to conduct transactions, which could exacerbate poverty and unemployment. Moreover, the informal sector operates on a tax-free system, allowing it to compete effectively with formal businesses. Any shift towards digital payments would require a significant overhaul of tax collection and enforcement mechanisms, increasing the cost and complexity of transactions for this segment.
Long-Term Economic Implications
Even if one were to assume that the informal economy could be eradicated or dramatically reduced in 10 years, the transition to a cashless society would still pose significant risks. Small businesses and households might be forced to rely on assets such as real estate and gold as a means to store wealth, leading to speculative bubbles and financial instability. Additionally, Vietnam, being a key player in regional geo-politics, faces geopolitical risks that could destabilize the nation. A cash-based economic system would provide a safety net for citizens in the event of technological failures or political turmoil, making it an indispensable component of the national infrastructure.
Conclusion
Given the multifaceted factors that influence Vietnam's economic and social landscape, the transition to a cashless society is not advisable. The informal economy remains a vital lifeline for millions of Vietnamese, and any hasty move towards a digital economy could have severe repercussions on economic stability and social welfare. It is essential for policymakers to consider these factors and develop strategies that balance technological advancement with the needs of the broader population.