MALAYSIA Tanah Tumpah Darahku


Wednesday, February 29, 2012

The future of FELDA after the LISTING

We have to interrupt the series on the Superhuman of Malaysia with this breaking news.

It’s about the Felda FGV listing. The question we should ask all thought leaders of FELDA is this. Why should a loss making business entity, be allowed to do a reverse takeover of FELDA holdings? FGV owns 49% of FELDA Holdings which has been making money all the time. FGV hasn’t got a track record and has not standing at all to come out with this proposal in the first place.

FGV is the business unit formed while Dato Bakee ( who is now Sime Darby CEO) was in FELDA. The idea of forming FGV to carry out international businesses was proposed by Ethos Consulting group. That adds some flavor to the meal.

Can FELDA tell everyone, how much did FGV lose really? We were only told of losses amounting to RM 500 million. One thing we do know is, FGV is consistent. It has CONSISTENTLY lost money for 5 consecutive years. Perhaps Dato Sabri Ahmad can disclose fully and honestly, how much FGV lost during those 5 years.

If FGV lost money over 5 consecutive years that would strongly suggest that it is incompetent. Two, it would also suggest, just as in most GLC’s subsidiary companies, some people got very rich while the companies they helmed suffers financial hemorrhage. Before FGV comes along and wishes to take FELDA Holdings, it must come clean about itself.

The next big question is what is the purpose of this listing? Is it an attempt to save a losing business concern (FGV) itself? Is it done to raise money for FELDA? FELDA has a lot of money. It has the mother lode of financial resource which is provided by their palm oil plantations. Unless you are a super moron, all plantations make money.

Everyone is talking about the good things that come along with the heist-inglisting. Because everyone can cook up a good story. MAS was making money and doing fine, when suddenly some smart alec suggested that it was good to privatize MAS. So Tajuddin Ramli in the name of service to the enation agreed to take 32% of MAS provided he was given a guarantee over his purchase of the share.

Likewise you can see the chicken shit analyses over the benefits of the listing. Good analyses are a dime a dozen. So, can we ask FELDA how much they paid Ethos to come out with the listing proposal? It must be a large amount, sufficiently large to allow a leading member of Ethos to buy a RM 15 million penthouse unit in an upscale condominium.

So, we ask Dato Sabri, how much did FELDA pay Ethos?

Up to this point, we have asked him 2 questions. (1) How much did FGV lose really and (2) how much did FELDA pay Ethos?

This loss making business entity promises the moon and stars to FELDA settlers. What is the basis of its promises? It is run by incompetents which can explain why it’s making losses over 5 years. It simply doesn’t have the wherewithal to bring the listed and enlarged FGV to new heights. So how can it makes promises? Because the PM guarantees it says Chairman Isa. Coming from someone who has made a mess of Negri Sembilan- now that’s something. Isa is the man of Mahathir’s heart. The captain of the NEP.

The government is bent in seeing the listing. Why the insistence? Ahmadd Maslan said the listing exercise will raise RM 21 billion.

How much will FELDA get?

It’s rumored that Dato Dabri told the PM, the bulk of the money raised will be channeled to the PM’s department. The PM is elated at the prospects of getting RM 13 billion or so. He can go back to Pekan and replace all the dilapidated hoses of the rakyat in Pekan. His generosity will be ululated by the ladies and wanita UMNO Pekan for generations to come.

As to FELDA, FELDA will probably get RM 8 billion. That will mean PM department will get around RM 13 billion to allow the PM to play Santa Claus for a long time like in the above example we gave.

What will FELDA do with the RM 8 billion? Since it has borrowed money from EPF, it must now pay EPF. The outstanding is about RM 3 billion. If FELDA pays RM 3 billion, it is left with 5 billion. From this 5 billion, it must pay the windfall to FELDA settlers- 112,000 of them. That will probably mean another RM 2 billion gone.

It’s not FGV or the government that will pay the windfall. That money comes from FELDA itself out of the profit share it gets from the listing. The biggest beneficiary is the PM’s department which will get some 13 billion from the listing exercise.

With RM 3 billion left, Felda can operate at its current level of providing benefits to the 112,000 settlers in the various FLEDA schemes for only one year. After that, it will be reduced to a beggar.

We come now to the biggest question about FELDA itself. With the listing, what will the settlers lose? It will lose the bulk of revenue. How come? It will immediately lose the 350,000 hectares of oil palm plantations managed by FELDA Plantations. The 350,000 hectares of land will be leased to FGV for 99 years.

How much does FELDA need to run its operations? By operations I mean to take care of its operational staff and to carry out much social work in FELDA schemes. FELDA needs around RM 3 billion each year. From its plantation business, it gets about RM 2 billion a year and the balance it gets from its other investments. With the cessation of 350,000 hectares, FELDA is leftwith about RM 400 million a year.

With the 400 million, how will FELDA provide welfare to the 112,000 FELDA settlers and to FELDA schemes? Perhaps Isa Samad will say the government will guarantee this. Why should the government spend over RM 3 billion a year on FELDA when all this time, FELDA has been self-financing? Why should the government be forced to fork out more money simply because the Felda board and its executives wanted to go listing?

That will be a severe financial drain on the government. Unless of course, it will use the money the PM department gets to make up for the loss of revenue. That will allow the PM to play Santa Claus for another 3 -4 years. But the PM will not use the 13 billion on Felda alone. He needs to take care of the people first and the people are not made up of only FELDA settlers. Where will the government get money to give FELDA the finances to carry out its social obligations at the same level it’s now providing?

Has anyone thought about the future of FELDA and FELDA settlers?

What about the terms of the lease? We have not seen the terms of the 99 year lease. How will FELDA get paid? It’s said that FELDA will get paid every quester? Why every quarter when FGV makes monthly profits? If you lease a house or office building, revision of the rentals or lease are done on say, a 5 year basis. Why is the lease to FGV revisable only at 20 year intervals? How can the FELDA board and those who manage FELDA agree to this scorched earth deal?

Again Sabri Ahmad and Isa Samad must come out with full disclosure about the listing.

Posted by sakmongkol AK47 

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