Saturday, January 26, 2013

Nest egg or bubble? Birds living in hot property market

Nest egg or bubble? Birds living in hot property market

Business Times
JANUARY 26, 2013

They live in houses that cost more than the average Malaysian's. But because of their potential harvest of 1.5-2 kg of edible birdnest every month, developer-cum-licensed swiftlet farmer Swiftlet Eco Park Group is attentive to the swiftlets' creature comforts.

In 14 sites throughout Malaysia, the group has more than 600 bird houses in various phases of construction. It has set a target of RM240 million (S$97 million) for 1,000 bird houses by 2015.

Thus far it has raised RM180 million - RM100 million from RBN Global, a related unit that operates a multi-level marketing scheme to distribute its products, and the balance RM80 million from 3,000 investors who paid RM10,000 for one Interest Scheme Unit (ISU). The amount has been since raised to RM11,000 per unit.

Although a mouthful, Swiftlet Eco Park claims one ISU of its Edible-Birdnest Swiftlet Ranching Interest Scheme can return RM270,000 within 35 years and over the past two years, has paid a guaranteed fixed return of 8 per cent.

Is the scheme feasible or one akin to the current gold trading schemes being investigated as shams?

Swiftlet Eco Park group managing director Loke Yeu Loong said the forecast is based on independent projections (of birdnest output) by the Department of Veterinary Services.

Each bird house is around three stories high and spans 22 feet by 80 feet or so. Up to 20,000 swiftlets can cram into a single unit. Once they are home and dry, so are the investors, if the people behind the project are to be believed.

"Through this scheme, investors are involved in a certified and systematic large scale swiftlet ranching business," Swiftlet Eco Park group executive chairman Abdullah Fadzil Che Wan said at the launch of RBN Global this week. He claimed that investment in the scheme could preserve capital and act as a hedge against inflation.

Edible birdnest is made from the saliva of swiftlets, and Malaysia is one of the world's biggest producers, exporting about nine-tenths of the expensive delicacy to China where demand is strong.

Although the current price of birdnest is about RM2,000 (S$810) per kg, Mr Loke, who has been involved in swiftlet rearing since 1995, is confident prices will climb much higher once China and Malaysia work out outstanding issues which have affected Malaysian exporters.

He maintains that the scheme is "low risk", listing the reasons: a reputable trustee - currently TMF Trustees Services - is made custodian of the invested sums; except for the first three years, investors can exercise the option to sell back to the company any time over the 35 years; they can also trade or transfer the ISU to a third party; and under a 10-day cooling period they can get a full refund if they change their minds.

The Malaysian authorities have not only licensed its swiftlet ranching business, but also given its investment and direct selling schemes the green light. It is one of 10 investment schemes approved by the Companies Commission of Malaysia; there are others for arowana fish, cat fish and oil palm.

To move further downstream, commercialisation of birdnest is being undertaken in earnest across sectors such as food, healthcare supplements, cosmetics and nutraceuticals.

Through RBN, Swiftlet Eco Park aims to increase the distribution channel and hit sales of RM15 million and RM50 million for FY13 and FY14 respectively. By year-end, it hopes to have 2,000 direct sales agents from 300 plus at present.

The volume of sales will also depend on whether the swiftlets like their homes.

"It costs RM350,000 to RM400,000 to build a bird house (essentially a shop house) and that's excluding the land," said Mr Loke. Its value when completed is an estimated RM750,000, rising to RM1 million when equipped with sound equipment and other essentials needed to draw the birds inside to build their valuable nests.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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