The Old & New Palm Oil Growers Scheme

Both schemes have been categorized as "share-farming" interest scheme by Securities Commission of Malaysia, yet, both were in the limelight lately due to their contradict directions. The old one (Country Heights Growers Scheme) is wooing investors to terminate it, while the new one (Golden Agro Growers Scheme) is wooing investors to invest.

Why CHGS was in HOT water?

CHGS was the 1st oil palm plantation investment scheme in Malaysia. Launched in 2007, it guaranteed a 8% return annually for first 3 years, and subsequently it is projected to distribute the returns of over 11% per year throughout a period of 20 years. However, voluntary early termination of the scheme was proposed recently, citing that CHGS was unable to reach its full potential because of poor fresh fruit bunches (FFB) yield. Various factors were given such as unpredictable weather conditions, incursions of wild elephants into the estate, poor soil fertility, shortage of key personnel and manual workers, and uncompromising terrain.

How Good is GAGS?

On the other hand, the new GAGS guaranteed 7% return yearly for first 5 years. Subsequently, investors will enjoy 100% of the net profit of the plantation until 20 years maturity. Investors were told that margins associated with the palm oil industry have always been good traditionally. So, in the event of falling CPO prices, it still can make money if the estate was managed well and efficiently. A mill was also planned to be set up in 4 to 5 years to avoid uncertainties of refusal by external millers.

Are they related?

Although Finance Malaysia opines that both schemes were not related, but the timing of it is somewhat makes us curious. Is it really so coincidence? It was like giving the existing investors of CHGS the chance to switch over their investments to GAGS. Both schemes are very much similar, but with different people managing them which is the key determining factors for its success or failure. Anyway, Finance Malaysia doubt the success of the new GAGS which don't have proven track record and was planted in Sarawak where peat soil may increase the cost of planting. The problems faced by CHGS may reoccurred on GAGS in the future. Estate management plays an important part in such scheme.

Click here to read the prospectus of GAGS

What is INTEREST SCHEME?

There are numerous interest scheme being offered to public to participate for the past few years. It heats up when investors are looking to various instruments to grow their money after the 2008 global financial crisis. But, before we participate in those scheme, are we really fully understand what is Interest Scheme?

Interest Scheme is a way of doing business in Malaysia. Interest Scheme involves the pooling of financial contribution from the public in exchange for an interest in a particular scheme. Such interest includes the usage of the facilities and services provided under the scheme or profit or returns, depending on the nature of the scheme.

Rules and Regulations

Promoter of an interest scheme must register the scheme with SSM before it can be offered to the public. The sale of interest is governed by the provision of Division 5 of Part IV of the Companies Act. The promoter of an interest scheme is also required to comply with the Policy Guidelines and Requirements issued by SSM from time to time.

'Interest' is defined under section 84 of the Companies Act as:

A right to participate or interest in any:

• profits, assets or realization of a business;
• common enterprise with expectation of profits, rent or interest;
• time sharing scheme; and
• investment contract.

How to identify an Interest Scheme?

• You will be required to make payment to participate in the scheme
• You are not a shareholder of the company
• You are not involved in the day-to-day management of the scheme
• You have interest in the business or the scheme offered

AND any one of the following criteria:

• You have interest in the profit, asset and realization of a business or a scheme in Malaysia or elsewhere
• You are promised that you will procure returns from the payment you made
• You acquire the rights/interest in a property which includes the right to use the facilities on the property for a period of more than 12 months
• You have the right to occupy any property for 2 or more times during the tenure of the time-sharing scheme

There are various types of Interest Scheme which offers:

1. membership subscriptions of more than 12 months by Gold Clubs, Recreational Clubs and Fitness Clubs
2. participate in time-sharing scheme
3. invest in plantation and aquaculture scheme for commercial purposes (etc. Sharefarming)
4. invest in Breeding of Livestock for commercial purposes (etc. swiftlets, catfish)
5. invest in business whereby the investors are not involved in day-to-day management
6. purchase burial plots, urns and columbaria by Memorial Park
7. purchase undivided interest in greebelt land where by purchasers are let to expect profit from the sale of the appreciated value of the land (Land Banking Scheme)

Click here for FULL list of registered scheme in Malaysia
Click here for FULL list of TERMINATED scheme in Malaysia

Source: Suruhanjaya Syarikat Malaysia (SSM)