With monthly interest rate reaching 3 per cent, investment advisory companies are luring huge capital amounts from the community which prove highly risky ventures since these monies are mostly poured into gold and forex trade but not serving production or business activities.
Similarly, in the recent past Vipro Investment JSC, also based in Hanoi, launched an appealing ‘entrusted investment’ package where the customers would be given interest rates from 2-3 per cent per month (tantamount to 24 to 36 per cent per year) for their deposits from three month to 24 month terms at the company.
The country is now home to several dozen investment advisory firms providing entrusted investment services with similar interest rates to woo customers.
Usually, these firms require their customers to deposit money at least three months with a minimal amount of VND50 million ($2,380).
Such firms were reported to lure several dozen billion Vietnam dong (from hundreds of thousands to millions of US dollars) in the form of entrusted investments from their customers every month.
According to the staff at Khai Thai and Vipro, the main source of incomes from investment advisory firms like theirs comes from forex trading.
“The investors can put their mind at ease with save investments at Khai Thai. No investor incurred losses at our company in the past two years,” said a Khai Thai staff.
“Our company has a regulation that the advisory staff shall bear 75 per cent of the transaction order value if the orders entailed losses to investors, so the investors should not be worried,” the staff added.
Financial experts, however, assumed such investments were very risky. A typical example for this was the case with Golden Hanoi Financial Investment Company Limited’s southern branch in 2012. Accordingly, the branch denied paying back money to its customers when entrusted investment terms ended.
According to lawyer Truong Thanh Duc, chairman of Hanoi-based Basico law firm, the profit rate of 36 per cent per year is unrealistic for common production and business activities in current context. Besides, entrusted investment services relevant to gold and forex trade is also unusual, impinged on the law and the investors face losing their money at any time.
Senior financial and banking expert Dr. Le Tham Duong said entrusted investments as offered by such investment advisory firms were fraught with risks since this form of investment did not exist in any current legal document (including the Civil Code). Therefore, investors would be at disadvantages where disputes occurred.
By Ha Tam