Burning votive paper in public places will become a crime punishable by fines, starting next month.
The cash penalties will range between VND500,000-1 million (US$51.53), according to a new government decree.
Official estimates state that Vietnamese citizens burn tens of thousands of tons of votive paper every year. Hanoians spend the most on votive paper--an estimated VND400 billion ($20.6 million) a year.
Traditionally, grieving relatives have burned paper models of houses, clothes, and vehicles in the hope that the objects will pass on to their ancestors in the spirit world.
The tradition is believed to have originated in China.
Those who do not follow the practice say it is costly, smoky and dangerous as it has actually caused a lot of fires.
Local authorities in Ho Chi Minh City have carried out campaigns asking residents to limit the practice to save money and the environment.
A pagoda in District 11 has reported saving nearly VND6 billion ($309,200) over the past ten years by giving up the practice.