Cover Story: FGV's political legacy


  • While the FELDA settlements are largely loyal to BN, there have been pockets of discontent with mostly the same complaint — FGV has not taken care of the settlers
-A +A
This article first appeared in Corporate, The Edge Malaysia Weekly, on August 1 - 7, 2016.

 

WHEN asked how he was coping with what appears to be a political appointment, Felda Global Ventures Holdings Bhd president and CEO Datuk Zakaria Arshad replies: “Whether or not my appointment was politically driven, I still need to manage a huge business entity and deliver on the expectations set for me. FGV owes its genesis to FELDA (the Federal Land Development Authority) — a successful poverty eradication programme.”

FGV’s largest shareholder is FELDA with a 17.29% stake, followed by Felda Asset Holdings Co Sdn Bhd with 13.66%, pilgrims fund Lembaga Tabung Haji with 7.78% and Koperasi Permodalan Felda with 5.74%.

Considering that as many as 54 constituencies are dominated by FELDA settlers, FGV is an important company to the government.

The 54 constituencies are Barisan Nasional (BN) strongholds and make up 24% of the 222 parliamentary seats. In 2013, Sabah and Sarawak — generally BN bastions — contributed 47 seats or 35% of BN’s haul of 133 seats, which means FELDA and its settlers could be deemed more important. Thus, goodies have consistently been dished out to FELDA settlements. 

For instance, from FGV’s initial public offering proceeds of RM10.4 billion, 112,000 FELDA families were given RM15,000 each, which works out to a whopping RM1.68 billion. The “windfall” was staggered in three payments of RM5,000 each.

FGV’s IPO in 2012 was the second largest in the world after Facebook’s and was timed just before the 13th general election in May 2013. 

Another significant event that happened during the IPO was that 90% of FELDA settlers took out soft loans to buy their allocated 800 shares in FGV. Initially, the loans were meant to be taken from a commercial bank but FELDA reportedly stepped in, offering to lend the money.

It is understood that the settlers had hoped that the shares would be given to them for free as reward for their years of loyalty and contribution. Meanwhile, those who took out loans with FELDA have to pay it RM50 a month for six years. 

Another “windfall” for the settlers is duit raya and dividends. In July last year, before Hari Raya Aidilfitri, 98,688 FELDA settlers received a total of RM88.8 million in dividends and duit raya from FGV. The dividends worked out to RM600 per settler and the duit raya to RM300 each. 

In June this year, the government gave 99,046 FELDA settlers throughout the country a special Hari Raya cash incentive of RM500 each. The initial plan was to pay only RM300 per settler but when making the announcement, Prime Minister Datuk Seri Najib Razak upped the amount by RM200.

To recap, FGV was listed in June 2012 at an IPO price of RM4.55. Considering that it closed at RM1.85 last Thursday, investments in the IPO have lost 59.34% or RM2.70 per share.  

Will the government allow FGV to continue to bleed and become an unsuccessful entity?

It is worth noting that Najib’s father, the late Tun Abdul Razak Hussein, was behind the formation of FELDA as a means to eradicate poverty.  

While the opposition has been making inroads into the FELDA settlements, for example, via Persatuan Anak Peneroka Felda Kebangsaan, it has no real traction as yet. 

In the run-up to GE13, Datuk Chua Jui Ming — a former MCA strongman and ex-health minister but a Pakatan Rakyat candidate since 2010 — could only muster an attendance of 20 at his ceramah at Felda Palong Timur, about 30km from Segamat, Johor. Some of the 20 even wore BN T-shirts.

While the FELDA settlements are largely loyal to BN, there have been pockets of discontent with mostly the same complaint — FGV has not taken care of the settlers.

Former FGV CEO Datuk Mohd Emir Mavani Abdullah was also criticised for not having the settlers’ interests at heart.

When asked to comment on this, Zakaria says: “I have an advantage because I am a settler myself. Maybe in the past, they [the settlers] looked at FGV as a corporate entity. But now, it’s me and I’m one of them. 

So, it’s easy for them to accept me. I’m not a politician and the response to my appointment has been good.”