Side Views

The future of FELDA after the listing — Sakmongkol AK47

March 01, 2012

MARCH 1 — The question we should ask all thought leaders of FELDA is this. Why should a loss-making business entity, be allowed to do a reverse takeover of FELDA holdings? FGV owns 49 per cent of FELDA Holdings which has been making money all the time. FGV hasn’t got a track record and has no standing at all to come out with this proposal in the first place.

FGV is the business unit formed while Datuk Bakee (who is now Sime Darby CEO) was in FELDA. The idea of forming FGV to carry out international businesses was proposed by Ethos Consulting group. That adds some flavour to the meal.

Can FELDA tell everyone, how much did FGV lose really? We were only told of losses amounting to RM500 million. One thing we do know is, FGV is consistent. It has CONSISTENTLY lost money for five consecutive years. Perhaps Datuk Sabri Ahmad can disclose fully and honestly, how much FGV lost during those five years. Maybe he has gone to the PM and reported everything is OK sir. Najib is pleased to hear that kind of story.

If FGV lost money over five consecutive years that would strongly suggest that it is incompetent. Two, it would also suggest, just as in most GLCs’ subsidiary companies, some people got very rich while the companies they helmed suffered financial haemorrhage. Before FGV comes along and wishes to take FELDA Holdings, it must come clean about itself.

The next big question is what is the purpose of this listing? Is it an attempt to save a losing business concern (FGV) itself? Is it done to raise money for FELDA? FELDA has a lot of money. It has the mother lode of financial resource which is provided by the palm oil plantations. Unless you are a super moron, all plantations make money.

Everyone is talking about the good things that come along with the heist-ing listing. Because everyone can cook up a good story. MAS was making money and doing fine when suddenly some smart alec suggested that it was good to privatise MAS. So Tajudin Ramli, in the name of service to the nation, agreed to take 32 per cent of MAS provided he was given a guarantee over his purchase of the share. Mahathir gave him that because he considers Tajudin a captain who can pilot the NEP objectives.

Likewise, you can see the chicken shit analyses over the benefits of the FELDA listing. Good analyses are a dime a dozen. That fat slob with the lard-layered brain can always do that for a fee. So, can we ask FELDA how much it paid Ethos to come out with the listing proposal?

So, we ask Datuk Sabri, how much did FELDA pay Ethos?

Up to this point, we have asked him two questions. (1) How much did FGV lose really and (2) how much did FELDA pay Ethos?

This loss-making business entity promises the moon and stars to FELDA settlers. What is the basis of its promises? It is run by incompetents which is the only thing that can explain why it’s making losses over five years. It simply doesn’t have the wherewithal to bring the listed and enlarged FGV to new heights. So how can it makes promises?

Because the PM guarantees it, says chairman Isa. Coming from someone who has made a mess of Negri Sembilan — now that’s something. Isa is the man of Mahathir’s heart. The captain of the NEP.

The government is bent in seeing the listing. Why the insistence? Ahmad Maslan said the listing exercise will raise RM21 billion.

How much will FELDA get?

I was told that Datuk Sabri told the PM the bulk of the money raised will be channelled to the PM’s Department. The PM is elated at the prospect of getting RM13 billion or so. He can go back to Pekan and replace all the dilapidated houses of the rakyat in Pekan. His generosity will be ululated by the ladies and wanita of Pekan Umno for generations to come.

As to FELDA, FELDA will probably get RM8 billion. That will mean the PM’s Department will get around RM13 billion to allow the PM to play Santa Claus for a long time like in the above example we gave.

What will FELDA do with the RM8 billion? Since it has borrowed money from EPF, it must now pay EPF. The outstanding is about RM3 billion. If FELDA pays RM3 billion, it is left with RM5 billion. From this RM5 billion, it must pay the windfall to FELDA settlers — 112,000 of them. That will probably mean another RM2 billion gone.

Yes, my FELDA brothers. It’s not FGV or the government that will pay the windfall. That money comes from FELDA itself out of the profit share it gets from the listing. The biggest beneficiary is the PM’s Department which will get some RM13 billion from the listing exercise. That is why the PM supports the listing of an otherwise loss-making concern.

With RM3 billion left, Felda can operate at its current level of providing benefits to the 112,000 settlers in the various FLEDA schemes for only one year. After that, it will be reduced to a beggar.

We come now to the biggest question about FELDA itself. With the listing, what will the settlers lose? It will lose the bulk of revenue. How come? It will immediately lose the 350,000 hectares of oil palm plantations managed by FELDA Plantations. The 350,000 hectares of land will be leased to FGV for 99 years.

How much does FELDA need to run its operations? By operations I mean to take care of its operational staff and to carry out much social work in FELDA schemes. FELDA needs around RM3 billion each year. From its plantation business, it gets about RM2 billion a year and the balance it gets from its other investments. With the cessation of 350,000 hectares, FELDA is left with about RM400 million a year.

With the RM400 million, how will FELDA provide welfare to the 112,000 FELDA settlers and to FELDA schemes? Perhaps Isa Samad will say the government will guarantee this. Why should the government spend over RM3 billion a year on FELDA when all this time FELDA has been self-financing? Why should the government be forced to fork out more money simply because the FELDA board and its executives wanted to go for listing?

That will be a severe financial drain on the government. Unless of course, it will use the money the PM’s Department gets to make up for the loss of revenue. That will allow the PM to play Santa Claus for another 3 -4 years. But the PM will not use the RM13 billion on FELDA alone. He needs to take care of the people first and the people are not made up of only FELDA settlers. He needs money to pay Umno division heads. He needs money to pay dropped candidates who will otherwise go on the rampage. Where will the government get money to give FELDA the finances to carry out its social obligations at the same level it’s now providing?

Has anyone thought about the future of FELDA and FELDA settlers?

What about the terms of the lease? We have not seen the terms of the 99-year lease. How will FELDA get paid? It’s said that FELDA will get paid every quarter? Why every quarter when FGV makes monthly profits? If you lease a house or office building, revision of the rentals or lease is done on, say, a five-year basis. Why is the lease to FGV revisable only at 20-year intervals? How can the FELDA board and those who manage FELDA agree to this scorched-earth deal?

Again Sabri Ahmad and Isa Samad must come out with full disclosure about the listing. — sakmongkol.blogspot.com

* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).

* This is the personal opinion of the writer or publication. The Malaysian Insider does not endorse the view unless specified.