Land Banking. Profitable Scheme or Scam?

Malaysians are quite receptive to investment products. It was reported that some 2,000 Malaysians have invested over RM50m in foreign land banking schemes. These schemes offer plots of land in foreign countries for investment, notably in England and Canada. However the bad news is the Companies Commission of Malaysia (SSM) is investigating three of these companies!

SSM decided to take action because of recent developments in Britain. Financial Services Authority stated that these companies bought land in areas which have not yet been granted planning permission and subdivide them for sale. These plots may be located in greenfield or greenbelt zones.

(Greenfield refers to previously undeveloped land, in a city or rural area, which is currently used for agriculture, landscape design, or just left to nature. Greenbelt is a designation used in land use planning to retain areas of largely undeveloped, wild, or agricultural land surrounding or neighbouring urban areas.)

In June, FSA asked the British High Court to wind up the country largest land banking company, UKLI Limited, for operating as an illegal collective investment scheme. In its press release, FSA said over 4,500 investors had paid some STG69 million (RM385 million) to buy the land, but none of the land sold was ever granted planning permission.

I did attend a presentation on the above investment scheme in a leading hotel but did not take the plunge as I prefer buying real property onshore!

Investors can contact SSM at 03-40476111/6222 or email enquiry@ssm.com.my to verify the status of schemes that they are interested in.