Thursday, October 28, 2021

FGV takeover plan could bring Felda back on track

Felda, once a global example of how the government tackled the resettlement of the urban poor to boost their economic status, has been sinking under its many financial problems.

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For the past year, Putrajaya has been embarking on efforts to rescue the Federal Land Development Authority or Felda, the government agency under the Prime Minister’s Department tasked with resettling the rural poor and organising smallholder farms, by taking over Felda Holdings Bhd (FGV) in order to restore its financial footing.

Felda chairman Idris Jusoh says it will not be long now before FGV is wholly owned by the agency.

“Felda has succeeded in taking over 81% of FGV’s shares together with the state governments of Pahang (5%) and Sabah (4%).

“Our stake has now exceeded 90%,” he told MalaysiaNow.

In a statement on Tuesday, Felda said this move was to enable the integration of the management of FGV’s land lease agreement (LLA) estates and the oil palm mills to boost efficiency in order to benefit both Felda and FGV.

“Felda’s acquisition of FGV is an important part of the recovery plan for Felda which has been approved by the government for the benefit of 112,638 settlers and two million in the wider Felda community,” it said.

FGV was first listed on the main board of Bursa Malaysia in 2012. The company’s initial public offering or IPO listing took place during the administration of former prime minister Najib Razak.

In 2019, Mohamad Azmin Ali who was economic affairs minister at the time, presented a Felda white paper which revealed that before FGV’s listing, the agency had generated its operating profit through the management of some 400,000 hectares of commercial farms.

The document said that from 2007 to 2011, Felda had recorded annual net profits of RM200 million to RM1.1 billion, and that for the purpose of listing FGV, the agency had handed over management of its commercial estates through the LLA for a period of 99 years.

“After FGV’s listing, specifically from 2013 onwards, Felda’s financial standing began to fall.

“Felda reported continuous losses which reached a peak of RM4.9 billion in 2017,” Azmin had said when presenting the white paper at the Dewan Rakyat on April 10, 2019.

Felda, founded by the country’s second prime minister Abdul Razak Hussein, was once a global example of how the Malaysian government tackled the resettlement of the urban poor in newly developed areas to boost their economic status.

It focused on the opening of smallholder farms for cash crops, not only for the poor Malays but for the Chinese and Indians as well.

Some of the earliest settlements such as Felda LBJ and Felda Lurah Bilut had taken in those from various races while in Sabah and Sarawak, settlers were from various ethnic backgrounds as well.

Fadila Awaludin contributed to this report.

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