Land banking scams

Land banking scams have occurred in Singapore on many occasions in past years.

The promoter sells plots of agricultural land in western countries at a price that is a small fraction of residential land prices in Singapore. A typical plot is $5,000 sf and is sold at a price of $80,000 or $16 psf.

These land schemes are promoted at high profile marketing events in Singapore. The potential buyers are told that the land will be worth 3 to 5 times of the current price, when the promoter gets approval from the authority to convert the land into residential use. This would typically take 3 to 5 years.

Many buyers bought the land on that promise. They found, after waiting for 3 to 5 years, that the approval was not given, and that the land that they bought was useless. They were not able to sell the land at their cost, as they have paid a high price for the land.

The typical value of agriculture land at the time of purchase was $1 psf. They had paid 16 times of the actual market value.

What can the government do, to stop this type of scams?

Here are the typical responses from well educated people:

1. There is nothing that the Singapore government can do, as the land is located outside Singapore and is outside the jurisdiction of the Singapore law.
2. The best way is to educate the public about these scams, so that they do not fall in the trap.

I disagree with these views. Here are my reasons.

1. The Singapore government could pass a law to require marketing of certain types of investments, e.g. sale of land in overseas countries, to be approved by a relevant authority. This could also apply to certain types of investments that are the subject of frequent scams.

As most of these transactions are marketed in Singapore, the requirement to obtain prior approval could act as a deterrent to prevent these activities.

2. It is easy to suggest the approach to "educate" the public not to be "greedy". This approach has been suggested for several decades. They do not work. While some people may be able to detect these scams, there will be a large segment that will fall for the scams. It has happened many times over the past years.

In my view, it is the primary duty of the government to pass laws to stop criminal activities. While some of these laws cannot stop the crimes completely, they will be able to prevent them to a large extent.

All laws cannot stop the crimes totally. For example, murders still happen, when it carries a severe penalty. We cannot argue that there is no need to have a law against murder, just because it does not prevent the crime totally.

I apply the same reasoning for a law to stop land banking and other scams.

Tan Kin Lian

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