The Lao Securities Commission Office is advising people considering making deposits with financial institutions to make a careful assessment before going ahead.Various financing companies in Laos 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, the securities office warned.
People who deposit money with those companies run the risk of losing their savings if these businesses go bust, a commission official said.
The commission 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.
Only five companies registered on the Lao Securities Exchange (LSX) are able to encourage deposits from people legally and confidently, he said.
These are the EDL Generation Public Company, the Banque Pour Le Commerce Exterieur Lao Public, the Lao World Public Company, the Petroleum Trading Lao Public Company and the Souvanny Home Center Public Company, the commission announced.
By contrast, Maxkey Lao Worldwide Limited is one example case of an entity which the government requested to cease its business operations in Laos after the company contravened laws and regulations governing banks and capital markets.
The company began operating in Laos in 2013, encouraging people to deposit money and promising 3 percent interest per month for savings deposits, 3.5 percent for fixed deposits for one year, and 4 percent for fixed deposits over two years.
People who held a savings account could draw out money at any time but depositors with fixed accounts were to be fined 27 percent of the capital amount if they withdrew money before the end of the stated term.
Many people have lost their money after the company left with large amounts of money owing to customers.
In another example, the PS Agriculture and Industry Promotion Import-Export Company of Laos is one such company that is encouraging people 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 rate 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.
Many people are still depositing with the company despite the fact it is operating outside the laws governing banks and capital markets.
The government is now seeking measures to work with the company to wind down its operations after banning further trade.
Source: Vientiane Times