Lao banks issue warning on dubious financing companies
Lao banks issue warning on dubious financing companies
Commercial banks in Laos are advising people considering making deposits with other financial institutions to make a careful assessment of these companies' viability before going ahead.
Various financing companies are encouraging people to deposit with them by offering a higher rate of interest than that provided by banks.
But despite the glowing promises of financial gain made by such companies, their long-term viability is uncertain, bankers warn.
People who deposit money with these companies run the risk of losing their savings if these businesses go bust, the Bank of the Lao PDR says.
The bank has said it will not be responsible for any such problem, even if the financing company in question has legally registered its business operations in Laos.
The PS Agriculture and Industry Promotion Import-Export Company of Laos is one such institution that is encouraging farmers to pay into a fund run by the company for the purpose of agricultural and industrial business expansion.
Those who pay into the fund are promised a monthly interest of 4 percent.
A bonus of 24 percent will be paid to those who maintain their deposit for a year, bringing the total projected return to 72 percent, company President Ms Souknaly Thepsimeuang told local media recently.
Investors are required to deposit between 500,000 kip and five million kip per person.
Deposits can be made via the Banque pour le Commerce Exterieur Lao Public, the Agricultural Promotion Bank or the Lao Development Bank.
Interest will be paid into depositors' accounts monthly. The company currently has about 13,000 members around the country.
Maxkey W orldwide International, which has its headquarters in Singapore and is running a business in Laos, provides 3 percent interest a month for savings deposits, 3.5 percent for fixed deposits for one year, and 4 percent for fixed deposits over two years.
People who have a savings account can draw out money at any time but depositors with fixed accounts will be fined 27 percent of the capital amount if they withdraw money before the end of the stated term.
Any one considering this form of investment should make a detailed check of the sources of revenue of these companies, the kind of business they operate, and how sustainable their business appears to be in the long term, Director General of the National Economic Research Institute, Dr Leeber Leebouapao, advised.
He pointed out that the interest rate paid by commercial banks in Laos was high and sustainable, and that if other financial bodies were offering a higher rate of interest they would need to be a commercial company of considerable and standing.
Some years ago, one such company operating in Laos failed because it could not make sufficient profit, resulting in many people losing the money they had deposited.
