Bakke back to Felda, a homecoming at crucial and challenging time

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KUALA LUMPUR (June 26): It is a sort of homecoming for Tan Sri Mohd Bakke Salleh after he has been appointed to succeed Tan Sri Megat Zaharuddin Megat Mohd Nor as the chairman of  the Federal Land Development Authority (FELDA), albeit at a crucial and more challenging time.

His appointment, effective July 1, is for two years.

Mohd Bakke was the group managing director of Felda Holdings Bhd in 2009 and was subsequently appointed as the group president and chief executive officer of the then Felda Global Ventures Holdings Bhd, which is now known as FGV Holdings Bhd.

Having vast experience in the plantation industry, Mohd Bakke is the perfect candidate for the post as he can ensure the State-owned plantation agency’s smooth turnaround, Public Investment Bank analyst Chong Hoe Leong told Bernama when asked on the appointment.

However, his job will not be short of challenges amid the financial woes with debts and losses soaring, as well as the challenges within the plantation sector itself, he said.

A white paper released to Parliament in April revealed that FELDA's total liabilities increased substantially by 1,100 percent from RM1.2 billion in 2007 to RM14.4 billion in 2017 compared with an increase in asset value by only 107 percent.

Forensic audit findings also showed a loss or impairment of RM2.2 billion for eight transactions that are being investigated, constituting 50 percent of the original investment value.

“For any plantation company, the crude palm oil (CPO) price is always the crucial factor that will determine the company’s sales and cost structure and most of the companies in the industry are facing a similar problem. Plantation companies have posted bad financial results over the last two, three quarters.”

On top of all these, there is obviously a lot of pressure to perform after the RM6.23 billion aid that the Government decided to provide to FELDA to ensure its sustainability.

For a start, Chong believes there could be further cost-cutting measures within FELDA amid the ongoing land lease agreement (LLA) issue with FGV.

Last week, FGV said in a letter to shareholders that the company would remain on track to become a high-performing company even if the other shareholders agreed to return the land managed under the LLA.

FGV noted that it owns all its mills and refineries as they are not part of the LLA agreement and they would remain with the plantation company.

On the contrary, CIMB Equities Research was reported as saying that the termination of the LLA was negative for FGV and its plan to move downstream would take a longer time to bear fruit.