Lao banks - high term interest rates (11%)

[simon43]

I have seen (for many years) that some Lao banks offer up to 11% interest per year for local KIP term accounts (60 months).

I have also read dire warnings that one can lose all one's investment in these 'third world banks' (ANZ is 3rd world??)

But I have never heard of anyone actually losing their investment with these term accounts.

Have any members in Laos taken out any term accounts? Did it all work out OK with the correct interest paid each year and ability to withdraw all your funds at the end of the term?

[mjnaus]

Please note that this does not only happen in third world countries. Many European savers lost their deposits with Iceland banks a couple of years back... Granted, some of the money came back after several years, but this was never certain.

If something seems to good to be true, it often is

[asdecas]

Hehe, give it a try old boy, why don't you?

Have you studied the depreciation of the Kip against so-called 'hard' currencies over the long term?

Even the Thai Baht, which is by no means the softest of currencies, has gone from 25B:$1 in 1987 to 36B:$1 today, a 40% decrease, and that in the face of massive and successive QE programmes the US.

Any interest you earn will more than be eaten up by depreciation of the local currency and inflation. You may want to think again.

[simon43]

Quotes getting messed up here.....

How relevant is the depreciation against hard currencies if one lives/works in Lao PDR?

According to Dr Google, the inflation rate was just 1.23% over the past 12 months

Have you studied the depreciation of the Kip against so-called 'hard' currencies over the long term?

Edited October 10, 2015 by simon43

[Scouse123]

I just don't think it is a great idea swapping USD or Euros or GBP etc for Lao kip!

Another point what the OP made about ANZ being third world?? No, ANZ Australia is not but a lot of these international banks that open up and use their corporate colours to fool the public, the funds however are not guaranteed by the parent company.

That is why in Cambodia, although it is ANZ, it is ANZ Royal.....!! which identifies it as a subsidiary bank under the rules and regulations of Cambodia.

[Briggsy]

No need for Kip accounts. Lao banks offer great rates on THB accounts but not as good as 11%.

[Scouse123]

No need for Kip accounts. Lao banks offer great rates on THB accounts but not as good as 11%.

Agreed,

Cambodia as well.

[laobali]

I had no problems whatsoever with term deposits in several Lao banks (ANZ, JDB, PSV from when the rates were up to 15% a few years ago). LAK earns much better interest than THB or USD and you can exchange freely between them whenever you want. You need a Work Permit to open a fixed deposit account in your own name. Kip rates are stable and haven't changed much for several years.

Edited October 10, 2015 by laobali

[Scouse123]

I had no problems whatsoever with term deposits in several Lao banks (ANZ, JDB, PSV from when the rates were up to 15% a few years ago). LAK earns much better interest than THB or USD and you can exchange freely between them whenever you want. You need a Work Permit to open a fixed deposit account in your own name.

Well, it's horses for courses, if the guy is happy doing it, up to him!

[salim94]

hi l dont know about laos but in cambodia you need only your passeport for open

u can open usd , baht , euro , riel and interest depend currency and month and if payment interest monthly or at end

in cambodia l open account with aba bank and for 36 month l get 6.2% after tax 14 % l get 5.3% , tax not resident 14 and resident 6%)

visa card cost me 8 dollars for 1 year and u can withdraw 1000 usd day or 10000 dollars day depend what you want

and u can use internet banking for transfert ur money oversea or in cambodia

WEBSITE

https://www.ababank.com/personal/deposits/fixed-deposit/

MY SECOND BANK

and with phnom phen comercial bank for 12 month l get 6% after tax l get 5% for 36 month u can get up 7 % u can check

visa card can be use only in cambodia they still dont have international visa , card cost me 5 dollars year they dont have internet banking right now

WEBSITE

http://www.ppcb.com.kh/

sry for my english hope its help u

and there is many other bank ,

Edited October 10, 2015 by salim94

[ozyjon]

Overheard at a Lao grocery store,,,

I would like a bag of Kip's please.

[50baht]

AMERICANS NEED NOT APPLY.

[spambot]

I had no problems whatsoever with term deposits in several Lao banks (ANZ, JDB, PSV from when the rates were up to 15% a few years ago). LAK earns much better interest than THB or USD and you can exchange freely between them whenever you want. You need a Work Permit to open a fixed deposit account in your own name. Kip rates are stable and haven't changed much for several years.

Hi Laobali - Good info - So the barrier to opening a term account seems to be just the work permit - is that correct?

Main Question 1: Once you get the work permit does the access to the term rate remain then forever and not dependent upon holding a current work permit or does the right to hold a term deposit disappear when the work permit terminates?

I ask this since on my recent visit to Vietnam - I inquired if I could apply for a bank account and open a term deposit VND to take advantage of between 6.5 to 7.5% interest return (depending upon deposit term and bank).

Almost all banks I visited seemed happy for me to open an account, but the term deposit time would need to be linked to the length of time of my visa.

Since I do not believe I would be able to get anything more than a tourist visa for 3 moths - My choices were 1 month fixed at 4.4% (single bank quoted) or a 3 month term deposit between 5 - 5.5% quoted from a few other different banks.

Practically if anyone like me was also trying to do this and take advantage of these rates they would need to keep returning to Vietnam with a new 3 moth tourist visa in order to open a new a term deposit interest rate - I am not sure what the situation might be for extending the existing Vietnamese visa for another 3 moths and if this would allow the rate to continue for a new term deposit for an extra 3 moths.

Possibly Scouse123 (on this thread and a long history of being in Vietnam) - Can help with understanding what the situation might be for visa extensions and using this to open a new 3 moth term deposit?

Minor Question 2: How difficult is it to get a work permit in Lao - Is there a strict scrutiny of the employer and the system is highly regulated or is it more like a relaxed acceptance and without too much checking that the employer is actually supplying a real job?

[Scouse123]

I can see Acleda ( Lao ) branch are offering very good rates. can anyone tell me which is the biggest bank in Lao PDR as the other banks are not being upfront with their deposit rates or at least they aren't where I am looking online.

[how241]

AMERICANS NEED NOT APPLY.

Why ?

[how241]

Fixed Term Deposit

types

Interest Rate per 1 year

LAK

THB

USD

3 month

3.34%

3.00%

3.50%

6 month

4.22%

4.00%

4.50%

12 month

6.13%

6.50%

6.50%

18 month

8.15%

7.50%

7.50%

24 month

8.63%

7.75%

7.75%

36 month

9.54%

8.00%

8.00%

http://www.phongsavanhbank.com/psv/modules.php?modules=interest_rates&lg=ENG

[bazza40]

The 11% rate is there for a reason. It's called risk. The risk of expropriation of foreigner-owned assets, or being dudded by currency depreciation i.e. printing money, is priced into the rate.

You could probably get a 60% interest rate on your money in Zimbabwe, but that doesn't mean any sane person would invest there.

Rule No. 1, as previously posted, is if it sounds too good to be true, it probably is.

Rule No. 2 is never invest in anything you don't understand.

[puukao]

OK, I'm in.....gave them $30,000 USD and should get 8%. I will hold it for a year. They were very happy in the bank, I got gifts (umbrellas) and many thank yous.

But then the bank closed early and said big meeting. Told me to come back in 6-months.

their smiles were very big....i am so happy now

they want more...i give them more!!!

[how241]

The 11% rate is there for a reason. It's called risk. The risk of expropriation of foreigner-owned assets, or being dudded by currency depreciation i.e. printing money, is priced into the rate.

You could probably get a 60% interest rate on your money in Zimbabwe, but that doesn't mean any sane person would invest there.

Rule No. 1, as previously posted, is if it sounds too good to be true, it probably is.

Rule No. 2 is never invest in anything you don't understand.

2 good rules to follow.

[how241]

Are there any posters who have real life experiences getting 8% or better in these banks ? Especially for the shorter term of 6-12 months.

[laobali]

I can see Acleda ( Lao ) branch are offering very good rates. can anyone tell me which is the biggest bank in Lao PDR as the other banks are not being upfront with their deposit rates or at least they aren't where I am looking online.

BCEL is the main commercial bank, owned by the Lao government. Their deposit rates are not the highest, but possibly lowest risk, although I don't think any Lao bank has failed for quite a few years due to stricter regulation. Good info at www.retire-asia.com/lao-bank.shtml Also a list of Lao banks.

Edited October 10, 2015 by laobali

[KKr]

Rule of thumb: weak currencies tend to have high interest rates.

This has to do with the interest rate necessary to keep a currency stable.

Sometimes however, if you can ride out volatility, it is profitable to hold the weak currency and one can make a little money.

The ideal scheme is where one can get a premium interest rate for a foreign currency.
There was some time when Russian Banks paid a high premium on Hard currency deposits and the deposits were Government insured on top ! (And yes, the Insurance Agency does pay out, albeit in local currency at the rate on the day of default, as I know from my own experience)
Maybe something like that exists in Lao or elsewhere in the Region?

[laobali]

The 11% rate is there for a reason. It's called risk. The risk of expropriation of foreigner-owned assets, or being dudded by currency depreciation i.e. printing money, is priced into the rate.

You could probably get a 60% interest rate on your money in Zimbabwe, but that doesn't mean any sane person would invest there.

Rule No. 1, as previously posted, is if it sounds too good to be true, it probably is.

Rule No. 2 is never invest in anything you don't understand.

It's not a realistic comparison. Zimbabwe no longer has its own currency; now uses the USD. The Lao kip is a non-convertible currency; it can only be exchanged within Laos at rates controlled by the government. The term interest rates in Laos are kept relatively high to encourage mostly foreign cash investment which is then converted to kips and lent out at much higher rates for local mortgages and business loans; secured by property. Real estate prices have risen significantly in the past few years.

Edited October 10, 2015 by laobali

[how241]

" Foreigners can open US$, Thai baht or Lao kip savings or fixed deposit accounts with most Lao banks. They require work permits...Non-Lao citizens need a current work permit to open fixed deposit accounts with a Lao bank."..The work permit kills the deal for me.

[Scouse123]

I had no problems whatsoever with term deposits in several Lao banks (ANZ, JDB, PSV from when the rates were up to 15% a few years ago). LAK earns much better interest than THB or USD and you can exchange freely between them whenever you want. You need a Work Permit to open a fixed deposit account in your own name. Kip rates are stable and haven't changed much for several years.

Hi Laobali - Good info - So the barrier to opening a term account seems to be just the work permit - is that correct?

Main Question 1: Once you get the work permit does the access to the term rate remain then forever and not dependent upon holding a current work permit or does the right to hold a term deposit disappear when the work permit terminates?

I ask this since on my recent visit to Vietnam - I inquired if I could apply for a bank account and open a term deposit VND to take advantage of between 6.5 to 7.5% interest return (depending upon deposit term and bank).

Almost all banks I visited seemed happy for me to open an account, but the term deposit time would need to be linked to the length of time of my visa.

Since I do not believe I would be able to get anything more than a tourist visa for 3 moths - My choices were 1 month fixed at 4.4% (single bank quoted) or a 3 month term deposit between 5 - 5.5% quoted from a few other different banks.

Practically if anyone like me was also trying to do this and take advantage of these rates they would need to keep returning to Vietnam with a new 3 moth tourist visa in order to open a new a term deposit interest rate - I am not sure what the situation might be for extending the existing Vietnamese visa for another 3 moths and if this would allow the rate to continue for a new term deposit for an extra 3 moths.

Possibly Scouse123 (on this thread and a long history of being in Vietnam) - Can help with understanding what the situation might be for visa extensions and using this to open a new 3 moth term deposit?

Minor Question 2: How difficult is it to get a work permit in Lao - Is there a strict scrutiny of the employer and the system is highly regulated or is it more like a relaxed acceptance and without too much checking that the employer is actually supplying a real job?

Spambot,

For what I think you are looking for I would favour Cambodia. You can have an account in THB, USD, or Cambodian Riel. The rates are not as good as I am seeing quoted in PDR LAO.

Vietnam is just opening up and has certainly not yet got its act together with foreigners visas let alone bank accounts!

To obtain a USD account ( which is possible and important if you are in business there ) you need a work permit and visa. A VND account can be opened but only lasts as long as the visa which can be a year if you have a work permit. At present , with the exception of this and the visa through marriage, foreigners at the moment are having to go out and renew every three months etc so as far as your bank account goes, you are pretty much snookered to the best of my knowledge.

With PDR Lao, I believe they regularly check your status regards work permit and visa at the bank when doing transactions. For example, at the conclusion or maturity of a years term deposit they will check before allowing you to do a further year.

Moving now to Cambodia, the two easiest banks are ABA and Canadia.

Canadia is the oldest, circa 1991 and the biggest commercial bank in Cambodia involved with lending on shopping malls, skyscrapers, roads, airports etc.

The biggest overall bank in terms of branches, customers and assets is Acleda bank with a presence in all 24 provinces.This bank doesn't take huge risks and prefers SMEs, house mortgages and bread and butter business. A lot of the Khmer pay their utility and phone bills etc here and branches are deciedly downmarket compared to Canadia or ABA.

You must jump through a lot of hoops to get an account with Acleda. They want a police report, long term visa, six months with account opened before they accept you as a resident customer, resident address papers etc

Canadia, you must have a six months visa at least but I think it is one year to open a fixed deposit account at tax at resident rate,( a one year visa multiple entry is $285 USD) you are supposed to have a property lease or an address, sometimes they insist, sometimes they let it ride and that's it. This entitles you to pay tax at 6% resident rate on interest as opposed to 14%.

The Police have started now saying that if you have a one year visa permit, this must be accompanied by a work permit ( even though you are not working in many cases, work permits are $100 a year) THEY ARE NOW SLOWLY BUT SURELY ENFORCING THIS RECENT LAW AND BECOMING ACTIVE IN CHECKING ON PEOPLE.

They are also deporting foreigners whose visas have expired and doing household checks on foreigners, although the vast majority of deportees are Vietnamese.

At Canadia, you can have interest paid monthly, quarterly or yearly. Yearly pays the best rate obviously, somewhere in the region of 5.5% on USD accounts and much more usually in a Cambodian Riel account. You get a certificate and your interest goes into your savings account which will cost you about $20 to open.The maximum term deposit at Canadia is 2 years. You also get a debit card and can withdraw for outside the country, but subject to whatever the country charges for withdrawing on a foreign card. You can check your account online and make inter bank transfers but only to Canadia branches. Canadia automatically renews your fixed deposit unless you stop it. That can be good as they no longer check if you have a visa up to date!!!

ABA allows you to make international transfers as it is owned by a former Soviet state oligarch. A lot of my expat friends like ABA. You can get the astronomical rates from some of the smaller money lending co operatives in Cambodia that Lao is quoting but these I just don't have confidence in them.

Hope this helps.

Edited October 10, 2015 by Scouse123

[laobali]

For someone living/working in Laos (or at least with the right documentation) with spare cash which will most likely be spent there anyway, could consider this as a low risk investment. Anyone else, probably not. By the sound of it Cambodia and Vietnam are making it more difficult for foreigners, and Laos will follow.

[spambot]

Huge response Scouse123 - Thanks

I was in Cambodia 2 years ago trying to open an account I think it was with Canadia - I was at the bank signing up and then returning the week after and applying for 12 month business visa - They wanted an employer letter even though I told them was self employed. I did not really get to grips with the actual fundamentals of the Lao visa and banking process and I had thought being self employed was an option, but this was not being offered as such by the bank to open an account - Hence not really knowing the Cambodian rules at the time I had assumed wrongly I then thought that simply paying the extra $5 at immigration (border) for business rather than tourist and then the $300 to the agent for Visa would give me access - But the bank insisted on an employment letter and the proof of incorporation from the employer that they were register for Lao tax. I did find someone that would provide this, but also felt like I was entering into a process I did not fully understand and it wasn't clear to me how much I was dependent upon the guy and his business to ensure this was sustainable - So I stood down.

It sounds like I really should have another try at this again and be aware also that things have changed a little - That the police are enforcing new recent law and checking foreigners actively.

However assuming that Cambodia is an option open it does satisfy what I want to achieve, which is hold multiple currency accounts so this allow for a buffer across currency exchange changes so any reduction in one hopefully gets balanced by increase from another - Hence smoothing the FX shocks across many and not simply a change between two. Doing this allows fuller access to more of SE Asia with a bank and currency in place and not simply dependent upon Thailand and its rules for accessing its visas or exposed to the market swings and fluctuations in THB rate of exchange.

Again just want to say great info - Thanks

[wooloomooloo]

AMERICANS NEED NOT APPLY.

Why ?

Hmm. Think about it.

[Scouse123]

Spambot,

On a last note, I think the Police are checking those such as NGOs that they have the correct visas, and those teaching have the right permits etc etc. It's a general clampdown on these and as I said, the foreigners hanging around for months on end- no money- expired visas etc and of course, their favorite pet hate- the Vietnamese!!

People such as you and I, who will breeze into the country with a business visa, do our banking, and then bugger off to Vietnam or wherever, there is little or no chance of them stopping us, unless they are going to stop every tourist in Siem Reap.

I can say that at Canadia in Siem Reap, you will not be asked for all these employment requirements etc. They are only interested in the business visa and possibly an address, I don't think I even gave an address and they know I don't reside in Cambodia! Very straightforward and a strong bank! or just along the road if you want to do international transfers etc try ABA as all my pals seem to like it and they offer very good fixed deposit rates as well.

Most bars or guesthouses will do you an address letter!

[salim94]

hi there in cambodia you dont need to have visa for u can keep your deposit rate , l spend only 15 days or less in cambodia and l can keep my deposit

the diffrent is if you are not resident you pay 14 % tax and if ur resident u pay 6 %

as l said ABA BANK and phnom phen comercial bank ask only passeport ,

l saw ur post about canadian bank , they ask same bu llshit about 6 month or 1 years visa , and cambodia public bank also asked me a work permit ,

u can open with acelda bank , if u can have certificat of resident , if u have adress and 1 year visa

l think its best bank rate in cambodia , u can also find better bank but a small bank branch

the good thing its l keep my money in USD USA