Pro-Syed Mokhtar Camp In Felda Wants Sondakh Ousted

Syed Mokhtar al-Bukhari is interested in Felda and within Felda there is already a pro-Syed Mokhtar camp, which includes a Cabinet Minister. However, not being a palm oil man, Syed Mokhtar is looking at Felda not for its palm oil business but for its huge land-bank and the potential to develop this land in non-core activities such as property. Felda is one of the largest landowners in Malaysia and has a huge land-bank worth tens of billions that can only increase in value in the future as the country continues to develop. The current controversy surrounding Ijok in Selangor is a case in point where land values have spiralled.

THE CORRIDORS OF POWER

Raja Petra Kamarudin

The palm oil industry is under severe attack from the West so Malaysian Prime Minister Najib Tun Razak and Indonesian President Joko Widodo or Jokowi decided that Malaysia and Indonesia have to jointly do something to defend what can be considered a very crucial industry to both countries. That was when Najib and Jokowi mooted the idea for both countries to collaborate and pool their resources through a joint-venture between Felda Global Ventures Holdings Bhd and the Rajawali Group of Indonesia.

Not many Malaysians may have heard of Peter Sondakh, or about Felda Global Ventures Holdings Bhd’s collaboration with the Rajawali Group of Indonesia to set up a joint-venture company called PT Eagle High Plantation. This is what would normally be known as a G2G or a government-to-government arrangement between Malaysia and Indonesia to develop a long term palm oil business. It is basically a win-win situation for both countries plus it allows Malaysia to expand what may be considered a ‘sunset business’ due to Felda’s ageing trees.

The Felda-Eagle High Plantation joint-venture is the brainchild of Najib and Jokowi

The critics of the PT Eagle High Plantation joint-venture are looking at this from a purely share-price issue whereas the issue is bigger than that. LSS Report had this to say in its 23rd February 2018 report titled ‘FELDA Old trees – a serious legacy problem that is being fixed’.

Tun Mahathir stopped all new FELDA settlers in 1990 and stopped yearly govt allocations to FELDA in 1996 – ordering FELDA to source for its own funds. Mahathir was more concerned about Proton, Sepang airport, KLCC, industrialisation, KLCC etc.. Agriculture and FELDA was not important to him.

As a result, FELDA was deprived of replanting funds and the trees got old. Yields started falling in 2008 and 2009. If urgent action was not taken then there may be no more FELDA in 10 years or 20 years time as all the trees would be too old to bear fruit.

In short, if Felda does not move forward and seek out new strategic partners and expand its core business, which is oil palm plantations, by the next generation Felda would no longer be able to continue in this industry. Hence the joint-venture with Indonesia not only brings Felda to the next level of becoming a global player, it is also a matter of survival and a move to stay viable and relevant. If not, Felda is doomed.

Malaysia has Felda while Indonesia does not have such an equivalent. So Peter Sondakh and his Rajawali Group was chosen by Jokowi to represent Indonesia’s interest in the joint-venture with Malaysia. Further to that, Rajawali managed to attract Martua Sitorus from Indonesia, the brains behind Singapore-listed Wilmar International Ltd, to participate in the venture. That, by any standards, is a feather in the cap or a coup for Felda.

Wilmar is a leading international player and the world’s biggest processor of palm oil, which is jointly-owned by Martua and William Kuok of Malaysia. Sondakh managed to convince Martua to leave Wimar and join Eagle High and this is a plus point for Felda as it strengthens the team. This collaboration between Felda and Peter Sondakh/Martua Sitorus will be a big blow to Wilmar because Martua is the brain behind Wilmar and hence an asset to the new joint-venture.

Syed Mokhtar al-Bukhari is also interested in Felda and within Felda there is already a pro-Syed Mokhtar camp, which includes a Cabinet Minister. Further to that, the Chairman of FGV, Azhar Abdul Hamid, used to work for Syed Mokhtar in Tradewinds Corp Bhd.  However, not being a palm oil man with the expertise in the industry, Syed Mokhtar is looking at Felda not for its palm oil business but for its huge land-bank and the potential to develop this land in non-core activities such as property.

Felda is one of the largest landowners in Malaysia and has a huge land-bank worth tens of billions that can only increase in value in the future as the country continues to develop. The current controversy surrounding Ijok in Selangor is a case in point where land values have spiralled.

Sondakh has set his sights on making Indonesia a global player in the palm oil business with the help of Felda, and hence the deal with Felda Global Ventures. However, there are those who argue that PT Eagle High Plantation is not viable. But then they are looking at this from a purely short-term view based on share price. In fact, they said the same thing about Bank Internasional Indonesia or BII when Maybank bought into it but the critics have now been proven wrong.

Malaysia and Indonesia cooperate to defend their palm oil businesses from Western attacks

The dream of the Indonesian Government is to make the country the global supply centre of oleochemicals. This is why they are having this arrangement with Felda Global Ventures. The reason why they like Felda Global Ventures is because the company has a strong downstream business with offices in 13 countries. Felda Global Ventures offers all sorts of synergies, which makes it very attractive for the Indonesians.

As for Felda, the advantage would be to own a stake in the third-largest plantation company in Indonesia that owns 284,000 hectares of land planted with oil palms. Hence Eagle High Plantation allows Felda a huge plantation holding that would never be possible to acquire otherwise.

The critics also say that Felda should be working with locals rather than foreigners. But then even Proton needs to work with Zhejiang Geely Holding Group Co Ltd of China to stay relevant. And both the Indonesians, Peter Sondakh and Martua Sitorus, have 284,000 hectares of land planted with oil palms while Syed Mokhtar has only 82,000 hectares in Sarawak.