KUALA LUMPUR: Contrary to recent reports that the listing of Felda Global Ventures Holdings Sdn Bhd is on track despite management changes, the investing fraternity is doubtful the entity will be able to list by April 2012 as announced by the group.
“Since the land belongs to the settlers...The main issue is how the dispute between the settlers will be resolved (or the listing may be delayed),” said an analyst at MIDF Research.
Felda itself has almost 350,000ha of land, gazetted by state governments as tanah Felda, managed by Felda Plantations Sdn Bhd.
The 112,635 settlers own more than half a million hectares of land under the group.
The Felda Settlers’ Children Association (Anak) has been vocal in its resistance to the listing exercise. The association claimed the settlers will have to swap their current 51% stake in Felda Holdings for a 61% share in Felda Global Ventures, whose international subsidiaries have reportedly lost some RM500 million up to 2010.
“The question is will the settlers be made into shareholders, or will they receive a one-off payment in return for their land?,” she told The Edge Financial Daily.
“A one-off payment may not be the best choice for the settlers as it will make it harder for them to continue living off the land. Furthermore, the timing of the listing must also be taken into consideration given the concerns over the global economic front, as the company cannot just enter the stock market even if conditions are not suitable”, she continued.
To complicate matters, a source said that the group was having trouble identifying who should take up the top positions in the new listed company.
It has been reported that Felda general manager Datuk Dzulkifli Abd Wahab was asked to go on eight months’ leave, which news reports attributed it to differences in views between Dzulkifli and Felda Investment Co-operative’s (KPF) new chairman, Tan Sri Isa Samad, who replaced the former a few months ago.
A boardroom tussle has emerged within top management of the group after Isa was appointed the chairman of the Felda Investment Co-operative (KPF) and after Felda director-general, Datuk Dzulkifli Wahab was issued a letter by the prime minister to go on eight months’ leave.
Isa’s position as chairman of KPF has faced objection from the settlers themselves as his appointment is said to violate the by-laws of KPF.
According to reports, its by-laws state that nine of the committee members must be elected by delegates at its general assembly, while the Felda board appoints three additional members subject to confirmation in the general assembly of delegates.
However, the three appointed members of the committee must either be a Felda settler or children of the settlers, a Felda employee, his wife or child. It also states that a board member must also be a member of KPF for at least 10 years. The three appointed by Felda must either be a member of KPF or Felda employee’s co-operative.
Furthermore, he or she must be a co-operative member for at least two years and must come from the governing board of the co-operative he or she represents.
Meanwhile, some market observers said the issues ran much deeper than just a management tussle as reported in the press.
“We are currently having trouble consolidating the subsidiaries (which are to be under the new listed entity) under the Felda group, as many of these companies overlap each other,” a source familiar with the matter told The Edge Financial Daily.
The Felda group is a major player in the palm oil industry with 47 active companies, including Felda Holdings Bhd, Felda Plantations Sdn Bhd and sugar manufacturer MSM Malaysia Holdings Bhd to name a few.
The group has 70 mills, seven refineries, seven bulking installations and owns refineries in Indonesia, China, Turkey, the US, Canada and South Africa.
“Whatever profit obtained from the land (mostly with oil palm trees) is returned to Felda. In turn Felda uses the money to develop Felda settlements throughout Malaysia,” explained an observer.
The federal government does not give any allocation to Felda, it is self-funding, she said. In fact, Felda develops most of the basic amenities like water and electricity supply, roads, schools and public buildings on the settlements, she added.
In the case of the Federal Land Development Authority or Felda, under the scheme, settlers buy seeds, fertiliser and pesticides from other Felda subsidiaries. Any profit made as a result of working on their land are retained by the settlers. The settlers also sell their fresh fruit bunch (FFB) to Felda Palm Industries Sdn Bhd, which operates factories in the settlement areas.
While it is true that the group has some 880,000ha of land, it functions more like a plantation management company rather than a plantation company like Sime Darby or IOI Corp, explained the source.
However, analysts said this should be seen as a strength rather than a hindrance to how the group will perform after the listing exercise.
“In terms of operations, it shouldn’t be a problem for Felda as they have been in the industry for a long time and they have the knowhow in running a plantation company,” an analyst said.
He observed that the market is excited and confident of the group’s abilities, although the aforementioned issues are causing some apprehension among players.
Such strong debate towards the listing of Felda Global Ventures was last seen seven years ago after then prime minister Tun Dr Mahathir Mohamed announced plans to list the entity in the 2004 Budget.
The question that begs to be answered now is could these internal problems brewing in Felda halt the listing again? And if so, what will be the fate of the settlers’ “durian runtuh” as promised by the prime minister?
This article appeared in The Edge Financial Daily, December 27, 2011.
“Since the land belongs to the settlers...The main issue is how the dispute between the settlers will be resolved (or the listing may be delayed),” said an analyst at MIDF Research.
Felda itself has almost 350,000ha of land, gazetted by state governments as tanah Felda, managed by Felda Plantations Sdn Bhd.
The 112,635 settlers own more than half a million hectares of land under the group.
The Felda Settlers’ Children Association (Anak) has been vocal in its resistance to the listing exercise. The association claimed the settlers will have to swap their current 51% stake in Felda Holdings for a 61% share in Felda Global Ventures, whose international subsidiaries have reportedly lost some RM500 million up to 2010.
The group functions more like a plantation management company.
“The question is will the settlers be made into shareholders, or will they receive a one-off payment in return for their land?,” she told The Edge Financial Daily.
“A one-off payment may not be the best choice for the settlers as it will make it harder for them to continue living off the land. Furthermore, the timing of the listing must also be taken into consideration given the concerns over the global economic front, as the company cannot just enter the stock market even if conditions are not suitable”, she continued.
To complicate matters, a source said that the group was having trouble identifying who should take up the top positions in the new listed company.
It has been reported that Felda general manager Datuk Dzulkifli Abd Wahab was asked to go on eight months’ leave, which news reports attributed it to differences in views between Dzulkifli and Felda Investment Co-operative’s (KPF) new chairman, Tan Sri Isa Samad, who replaced the former a few months ago.
A boardroom tussle has emerged within top management of the group after Isa was appointed the chairman of the Felda Investment Co-operative (KPF) and after Felda director-general, Datuk Dzulkifli Wahab was issued a letter by the prime minister to go on eight months’ leave.
Isa’s position as chairman of KPF has faced objection from the settlers themselves as his appointment is said to violate the by-laws of KPF.
According to reports, its by-laws state that nine of the committee members must be elected by delegates at its general assembly, while the Felda board appoints three additional members subject to confirmation in the general assembly of delegates.
However, the three appointed members of the committee must either be a Felda settler or children of the settlers, a Felda employee, his wife or child. It also states that a board member must also be a member of KPF for at least 10 years. The three appointed by Felda must either be a member of KPF or Felda employee’s co-operative.
Furthermore, he or she must be a co-operative member for at least two years and must come from the governing board of the co-operative he or she represents.
Meanwhile, some market observers said the issues ran much deeper than just a management tussle as reported in the press.
“We are currently having trouble consolidating the subsidiaries (which are to be under the new listed entity) under the Felda group, as many of these companies overlap each other,” a source familiar with the matter told The Edge Financial Daily.
The Felda group is a major player in the palm oil industry with 47 active companies, including Felda Holdings Bhd, Felda Plantations Sdn Bhd and sugar manufacturer MSM Malaysia Holdings Bhd to name a few.
The group has 70 mills, seven refineries, seven bulking installations and owns refineries in Indonesia, China, Turkey, the US, Canada and South Africa.
“Whatever profit obtained from the land (mostly with oil palm trees) is returned to Felda. In turn Felda uses the money to develop Felda settlements throughout Malaysia,” explained an observer.
The federal government does not give any allocation to Felda, it is self-funding, she said. In fact, Felda develops most of the basic amenities like water and electricity supply, roads, schools and public buildings on the settlements, she added.
In the case of the Federal Land Development Authority or Felda, under the scheme, settlers buy seeds, fertiliser and pesticides from other Felda subsidiaries. Any profit made as a result of working on their land are retained by the settlers. The settlers also sell their fresh fruit bunch (FFB) to Felda Palm Industries Sdn Bhd, which operates factories in the settlement areas.
While it is true that the group has some 880,000ha of land, it functions more like a plantation management company rather than a plantation company like Sime Darby or IOI Corp, explained the source.
However, analysts said this should be seen as a strength rather than a hindrance to how the group will perform after the listing exercise.
“In terms of operations, it shouldn’t be a problem for Felda as they have been in the industry for a long time and they have the knowhow in running a plantation company,” an analyst said.
He observed that the market is excited and confident of the group’s abilities, although the aforementioned issues are causing some apprehension among players.
Such strong debate towards the listing of Felda Global Ventures was last seen seven years ago after then prime minister Tun Dr Mahathir Mohamed announced plans to list the entity in the 2004 Budget.
The question that begs to be answered now is could these internal problems brewing in Felda halt the listing again? And if so, what will be the fate of the settlers’ “durian runtuh” as promised by the prime minister?
This article appeared in The Edge Financial Daily, December 27, 2011.
