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Saturday, September 28, 2013

Felda's hotel-buying spree comes under attack


A hotel-buying spree by Felda, the country's largest state plantation body, has raised question marks for Penang Chief Minister Lim Guan Eng.

"What has operating and owning eight hotel properties spread out across Perak, Terengganu, Negeri Sembilan, Sabah and London, any remote connection to oil palm plantations? 

lim guan eng interview 160813 03"How does investing RM700 million into running hotels here and in London benefit the lives of more than one million people living in the Felda settlements across Malaysia?" he said in a statement today.

Lim drew parallels to the Penang state government which had similarly engaged in unrelated businesses prior to 2008 under BN's rule.

"When we first took over in 2008, we were shocked that the state government and its subsidiaries were heavily involved in non-core activities which it has no expertise such as operating oil palms, rubber plantations, fish farms, hotels, educational colleges and even a golf course.

"All these ill-considered ventures were making losses," he said, adding that his state government later divested and outsourced these businesses which return these ventures back in black.

Lack of expertise


Lim acknowledged that a company needs to diversify its businesses but they are normally in related fields.

He warned that Felda's lack of experience in such unrelated field may cost the government agency dearly.

"The corporate world is littered with the carcasses of reckless or irrational investments in businesses that the parent company possess little knowledge, much less expertise," he said.

Furthermore, Lim who is also Bagan MP, said the seemingly unrelated investments were against the federal government's Economic Transformation Programme which called for the divestment of non-core assets by government-linked companies.

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