16 Jun 2008 | Comments |
investment |
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Ride on the Oil Palm Industry Boom
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Recently I’ve got some clients asking my opinion about the oil palm investment opportunity. A few days later, I received an exclusive offer (is it really exclusive?) from Alliance Bank to participate in the Country Heights Grower Scheme (CHGS). By investing a minimum of RM7000 per plot of 1/4 acres, you will enjoy the upside exposure of oil palm boom.
Did I invest in it? No, I didn’t. But don’t go away yet. Read on to find out more.
What is CHGS?
According to the brochure:
Country Heights Grower Scheme is an innovative concept combining farm/estate ownership and investment. The returns are pegged to the CPO price and plantation output. This provides an opportunity for investors to own a piece of oil palm plantation and generate profit annually, as outlined in the graph below.
Click the image for larger view.
What is the income potential?
Again, according to the brochure, you will get
- 8% guaranteed return p.a. on year 1 to year 3 (2007-2009)
- 23 years continuous return on investment (12% to 17% nett return based on average 2007 CPO price and annual production yield of min 20 Metric tonne / Hectare of Fresh Fruit Bunch from year 4 to year 23 (2010-2030)
- Ownership of a plantation plot from 1/4 acre onwards
- Share of Nett Proceeds from the sale of plantation land upon maturity period.
We all know that palm oil industry is growing like a hot cake recently, due to the positive demand for bio-diesel and edible oil. However, I think bio-diesel is not a long term replacement of petroleum-based diesel. Bio-diesel still requires us to burn something to get energy.
What’s the Exclusive Offer?
The offer is either
12-month Instalment Payment Plan with 0% interest using my Alliance Bank credit card.
or
Purchase minimum 2 plots to enjoy 2D/1N stay worth RM780 at Palace of the Golden Horses
That’s nice. By the way, I am not tempted.
More information
For the most updated information, you can visit the website of CHGS. The best place to start is the FAQ (Frequently Asked Questions)
Did I mentioned the price is RM7000/plot at the beginning. At the point of writing, the CHGS website showed that the price is now RM8000/plot.
Before you invest, take a look at the Master Prospectus and the Agreement.
Now I know many would ask why didn’t I invest in it? The answer is simple: I invest in what I understand and have confidence in. Still remember the top rules of investment? I also prefer investment that gives me more control.
More consideration:
- Investors will not receive the land title upon investment because they are actually investing on the interest of the land. In layman terms, you invest in agriculture land, but without getting the title. You pay for a piece of land, but no title.
- It is not so liquid. However, growers (investors) are allowed to make transfers to a third party and the transfer fee is RM 100 per transaction. For those who bought earlier (probably paid only RM6000-7000), can you sell it now for RM8000? Who will help you to find a buyer?
- The long tenure of 23 years.
Did you buy a plot? Please share with us your experience.
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