TO part with one's hard-earned money is painful but to lose it completely in an investment gone awry is heartbreaking. With various investment tools and schemes coming to market, investors are inundated with choices.
While many investors opt for more well-known asset classes such as equities, bonds, properties and money markets, there are also those who are game to try a less popular option interest schemes.
According to the Companies Commission of Malaysia, interest schemes have been in existence for more than 20 years in Malaysia.
The commission says that properly registered and well-managed interest schemes could play a major role in contributing to the growth of the Malaysian economy and provide an alternative mode of fund raising through participation in a variety of business models.
There are seven types of registered interest schemes in Malaysia the sale of memberships by golf clubs, recreational clubs, marinas, time-sharing, fitness clubs, the sale of license for use of urns and burial plots by memorial parks, and the sale of growers' plot in share-farming schemes.
Local investors may be familiar with two registered share-farming schemes Country Heights Grower Scheme and Golden Palm Growers Scheme which allow investors to reap returns by purchasing oil palm plantation plots.
The latest edition to join the two existing share-farming schemes is Malaysia's first legalised edible-birdnest Swiftlet Ranching Share Farming Interest Scheme by Swiflet Eco Park Bhd.
According to the scheme's prospectus dated Sept 9, the management company plans to set up an interest scheme for a 35 year duration that involves edible-birdnest swiflet ranching and offer units for sale to the public. Some 2,060 interest scheme units will be sold to the public at RM10,000 per unit.
The company has been conducting seminars across Malaysia on its interest scheme. The current prospectus will expire next March and a new prospectus will be issued every six months.
Swiftlet Eco Park is part of a holding company that is involved in the planning, development, construction and marketing of customed-built and licensed swiftlet farms.
According to the group's website, its first project in Manjung, Perak was developed in collaboration with the Perak State Development Corp. The group is developing 14 other similar projects all over Malaysia and targets to complete 25 projects with 1,000 licensed buildings over the next three years at a gross development value of RM500mil.
Aside from upstream activities of swiflet ranching, the group is also involved in the downstream business such as the collection and buying of raw bird's nest and its processing. It also does manufacturing, branding, wholesale, retail, direct selling, setting up chain stores and research and development.
The company's chief executive officer CH Tan tells StarBizWeek that the group is looking at an integrated approach of upstream and downstream business, given the global demand for the edible swiftlet nest industry.
It is estimated that there are some 50,000 (bird) buildings in this country and that is expected to double by 2015. The raw unprocessed edible-birdnest price ranges between RM4,000-RM5,000 per kg while the processed price ranges from RM11,000-RM19,000 per kg, he says.
It has been reported that Malaysia is looking to table a swiftlet industry guideline in Cabinet to provide a framework for the industry to operate in a sustainable manner and place the country ahead of leading bird's nest producers like Indonesia and Thailand.
Tan says the Swiftlet Ranching Share Farming scheme, which has drawn interest from foreign and local investors alike, has appointed PB Trustee Services Bhd as the trustee for investors' monies. The appointment of the trustee was verified by StarBizWeek.
The monies will be held by the trustee during the cooling-off period and upon release of the funds for the construction of the bird buildings, the land title, grant and buildings will be kept under the trustee, Tan adds.
The prospectus also highlights the various risks associated with the swiftlet industry such as the changes in world demand for edible birdnest, price fluctuations of edible birdnest, threat of bird flu and other disease outbreaks and changes in the regulatory and economic conditions.
As with all investments, financial services practitioners do caution investors to carry-out their own checks before investing.
Understandably, there are those who are also wary of such schemes. Some financial planners contacted say they would prefer to stay clear from interest schemes that pose high risk and have no means of safeguarding investors' capital.
It is important for potential investors to do some homework, as in all other forms of investments.
Among the fundamentals investors should check for include an investment's legitimacy, the underlying business model, the risks, whether their principal is intact and/or repaid, guarantees, authorities' approvals, the underlying founders/promoters, other competition or such schemes in the market, says NewAsia Capital Sdn Bhd associate director Sherilyn Foong.
Foong says that investors need to realise that with any investment scheme, there is no such thing as zero risk for high returns.
There are many such schemes with different underlying income-generating assets or businesses in the market. Investors should look at the scheme to detect any ponzi-like or pyramid features, she adds.
Her advice is simple if the investor is happy with the commensurate risks and returns as well as the potential worst case scenario, then the investor can proceed to invest.