Felda overhaul could harden opposition to FGVH listing

By Yow Hong Chieh

February 20, 2012

KUALA LUMPUR, Feb 20 — Stiff resistance to the proposed Felda Global Ventures Holdings (FGVH) listing will likely grow once plans for a corporate overhaul of Felda are announced, Singapore’s Straits Times reported today.

The daily, quoting sources familiar with the deal, said “potentially contentious” issues include settlers handing over land to FGVH and surrendering control of the Koperasi Permodalan Felda (KPF) settlers cooperative to government-appointed representatives in exchange for shares.

“The main points of the deal appear palatable, but the conditions on the settlers to hand over their land through long-term lease agreement and surrender corporate control of their stake to the government will need to be resolved to get this deal to fly,” a senior Felda executive told the ST.

The as yet unfinalised proposal will also see the financially strong KPF transfer its assets to FGVH based on a valuation that will likely be hotly contested.

Prime Minister Datuk Seri Najib Razak is set to meet senior representatives from Felda and KPF this week to iron out any sticky issues that could derail the IPO.

The ST said Najib’s handling of the listing will have serious implications for Barisan Nasional (BN) and Umno in the coming election, noting that KPF was collectively owned by some 113,000 Malay settlers who represented a key demographic for the lynchpin party.

“Land is a sensitive matter for settlers, particularly from a family inheritance perspective. So any plan that doesn’t deal with this properly is surely to be exploited (by the opposition),” the chief executive of a financial institution involved in the listing plan told the paper.

Putrajaya has said it intends to list FGVH in April, instead of the middle of the year as announced earlier during the prime minister’s Budget 2012 speech.

But critics contend that the proposed listing, which will see loss-making FGVH assume control of KPF, will shortchange smallholders and saddle Felda with up to RM1.5 billion in yearly deficit.

FGVH units such as Felda Iffco Sdn Bhd, Felda Global Technologies, Felda Global Ventures Middle East and Felda Global Ventures Arabia reportedly chalked up accumulated losses of around RM500 million up to last year.

Opposition to the government’s plan to list FGVH has been led by the National Felda Settlers’ Children’s Association (Anak), which won a temporary court order on Friday blocking the transfer of shares from KPF to FGVH.