Felda
Global Venture is a rush job and has all the hallmarks of becoming a minefield
for Prime Minister Najib Tun Razak.
COMMENT
With
a bottomless pit of scandals and irregularities, Prime Minister Najib Tun Razak
must be off his rockers when he says he will win 14-0 in the next election.
But
I know, the only time he has to say something like that, is when he knows the
chips are down.
We
know when Najib says he will win 14-0, it means Umno and Barisan Nasional are
finished. Otherwise, with a score of 14-0, Najib should have declared election
yesterday.
Let’s
talk about the Felda Global Venture (FGV) which was listed on June 28.
Najib
wants to rake in RM6 billion to pay his way through the next general election.
But
did you know that know that only 20% of Felda top management supported the idea
of FGV’s initial public offering (IPO)? Some 65% of the FGV staff thought FGV
simply isn’t ready to list.
This
is obviously a rush job and we must keep asking, why?
From
the beginning we have been saying: if settlers’ welfare and economics are the
prime concern, then allow KPF (Koperasi Permodalan Felda) to buy out FGV. Then
KPF will own 100% of Felda holdings and all the assets therein.
Then
what is to stop KPF from forming or hiring a first-rate management company to run
its business?
KPF
as the settlers’ keeper will then look after settlers’ welfare directly. Felda
doesn’t even have to list FGV as it’s out of orbit completely.
But
that would be the honest road to walk.
Felda,
a ‘minefield for Najib’
Najib’s
current world, however, is pretty much constructed by consultants. They provide
him with the idea and he goes out there to promote what he thinks are
earth-shattering ideas.
And
if readers are interested to read about the make-believe world consultants
construct, they may want to read House of Lies.
Now,
lets see the initial idea. The idea of a listing was mooted by CIMB.
Ethos
Consulting was brought in as global project coordinator. They brought in the
calvary – Hay Group, Boston Consulting, Aeon Hewitt and maybe more.
Their
advice: Don’t touch KPF, treat it like a leper.
The
way I see it, the FGV listing has all the hallmarks of becoming a minefield for
Najib.
What
is the immediate effect of the FGV IPO?
The
listing will allow 94.5 % of the subscribers who are not even Felda settlers
ride on the broken backs of Felda folks.
Felda
settlers get 91 million shares while 1.3 billion shares are taken up by state
governments, government-linked companies (GLCs) and cornerstone investors –
PNB, EPF and Tabung Haji (each have been asked to take up 20%).
Five
state governments, including my home state of Pahang, are also being
arm-twisted into taking up 30% shares.
Meanwhile,
420 million shares are set aside for rich individuals who must show they have a
least RM3 million in assets and companies worth RM 10 million.
No
future
An
increasing number of Felda people are becoming more sceptical by the day.
The
FGV prospectus is fast acquiring the stature of the bikini version of
statistical information – what it reveals is suggestive but what it hides is
vital.
For
instance, we have not been told that only 3% of Felda landbank is RSPO
certified (Roundtable on Sustainable Palm Oil).
This
means in future, we may find it difficult to sell CPO (crude palm oil) to the
world market because much of the landbank from where the CPO comes from is not
RSPO-certified.
Also,
because we haven’t shown commitment to RSPO, FGV’s plan expansion of
plantations in places like Indonesia and Africa may not progress as fast as FGV
wants.
Where
are the fundamentals to support the business? The productive trees? The market?
The price? The industry?
Over
50% of the trees in Felda plantations need to be replanted. That translates
into higher costs.
The
cost of cultivating a new field is about RM15,000. If 53% of 355,864 hectares
need to be re-planted, it will cost RM2.8 billion on replanting alone, spread
over five years.
And
if you find additional planting areas, you can only reap what you sow in three
to four years.
New
areas to be planted means more cost and a waiting period.
Dropping
demand
Demand
from big buyers is slowing down. China and India, for example, are cutting back
their purchase of CPO. Malaysia is not the only supplier of CPO.
Indonesia
is becoming more competitive and can unload its CPO onto the market, dampening
the price of Malaysian CPO.
The
fundamentals are not favourable to Malaysia. That being the case, you can’t
sustain the price post-listing for long.
This
rush job is likely to see Felda and FGV in the same position as ailing MAS
(Malaysia Airlines System).
The
writer is a former Umno state assemblyman but joined DAP earlier this year. He
is a FMT columnist.
The only way people in Sabah and Sarawak can see the truth of their respective history revealed is if they vote in Pakatan Rakyat in the 13th general election.
