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Sakmongkol ak 47

ariff.sabri@gmail.com

Monday, 26 December 2011

FGV listing: Corporate vs. Peasant Settler


2 upcoming events are waited upon with great anticipation. (1) The outcome of an injunction application by a few settlers to stop the FELDA FGV listing and (2) the 5th January EGM of Koperasi Permodalan FELDA.
The outcome of the second event is a foregone conclusion. Chairman Isa will get elected as the KPF chairman despite not having the qualifications to become an office bearer. He is not a settler nor is he a FELDA employee. But the Minister in Charge of FELDA has given his approval, what can people do. The Minister is also the PM. He is lord over whoever lives in this land.
We must not be sidetracked by this sideshow involving the two bit actor Isa Samad. The more pressing matter concerns the listing exercise.
Why the injunction? Why should 4 people extend energy and time and assume the risks of being called traitors and all that, want to apply an injunction? Greed can’t be the overriding objective? If it is, its more profitable for the 4 people to side with Chairman Isa who can be generous as he is pleased.
The object of the injunction is to stop FGV taking over assets and shares belonging to KPF in FELDA Holdings. These people believed that the 350,000 hectares of land which FELDA took was actually meant for settlers. All the assets owned by KPF in FELDA Holdings will be leased to FGV for the next 99 years. They will no longer exercise control over the assets as their interests are all converted into shares. FELDA Holdings is 51% owned by settlers and 49% owned by FELDA Global.
They are willing to risk it all, because they believe settlers are being sold out.
This listing is the ultimate shortchanging of settlers. The first occurred when FELDA withheld more than 300,000 hectares of land from being given to settlers.  By assuming ownership of the land, FELDA was able to become a planter itself. So we have the peasant settler and the corporate settler. The corporate settlers have moved on to becoming fabulously rich while the peasant settler ( Tun Razak’s regimented landless and jobless) have remained relatively behind. They get to enjoy the trickle down effects defined and determined by FELDA who practically run the business on behalf and for the benefit of settlers.
The corporate settler sells CPO and busies itself in a wide range of downstream manufacturing and marketing activities. They were even able to go into various businesses out of the capital created from ownership of the land which was supposed to go to the landless and jobless.
The second took place, when FELDA listed its sugar refining business. It made over RM 800 million out of that IPO. How much did KPF make by virtue of owning 20% of the business? On paper it made 300 million?  How did Sabri Ahmad cull this figure? If KPF makes a paper gain of 300 million and the 300m is 20%, then the whole gain is 1.5 billion. But Sabri says, FELDA made 800 million. Maybe it’s just a figure of speech- the point is, he wanted to say KPF made money albeit on paper.  Does that raise the share value of KPF in FELDA Holdings now that it made 300m paper gain?
If the injunction is successful, the proposed listing of FELDA Global will be delayed. The listing will see the merger of FELDA Holdings with FELDA Global. The smaller partner in terms of equity, FELDA Global is buying out KPF who has 51%.
How is the nature of the transaction? Does it involve and offer by FGV to buy out KPF at a certain price or will it involve just a share swap? You priced it with premium fella- that’s why KPF is getting 61%.
But the share price of the new listed entity is also at a premium. You can easily inflate the price of the would be listed entity, paint glossy pictures, introduce exotic phrase such as unlocking value and so forth- you will probably induce KPF representatives to believe they are getting a good deal. KPF will get 61%. That’s good you say. Isa Samad goes around berating ungrateful settlers- apa lagi awak semua mahu- dari 51% jadi 61%?
But we ask in return- 61% of how much? If 30% of the shares are sold to the public, the settlers end up with 61% of 70% of the business.  That’s not all. 30% is held by the public- the interests of settlers are converted into shares which are tradable in the market place. As with the track record of bumiputera held equities, you can bet that chances are, the shares will be sold.
We have to go back to the primary source of dissatisfaction. The peasant settler has remained more or less the same. The corporate settler has made it big. The peasant settlers get palliatives- bonuses here and there. RM 1200 as yearly bonus translates into RM 100 per month. 400 per year translate into 30 Ringgit per month- not even enough to buy a T-bone steak at Meatworks. The peasant settler gets MRSM colleges, indoor stadiums, futsal stadiums and other social amenities but the value of these, pale in comparison with the amenities and wealth enhancing resources obtained by the corporate settler. The corporate settler has moved on into oleo chemicals, downstream activities, hotels, sugar business etc. why can’t the peasant settler be organized that same way?
The fundamental reason why this listing is vehemently opposed is that people believed it’s a sellout and it’s the culmination of unconscionable acts by FELDA.

17 comments:

Anything But UmNO,  26 December 2011 at 09:26  

Is it not Felda that is unlocking its asset but UMNO!

They will stand to make millions if not billions. They dont do think in millions much these days. They only talk with the big "B".

They will also be able to reward their warloads with chairmanships in Feldas new organizations as in the Sugar, hotel, property etc. Then the rewards for these people will be in the tens of thousands per month compared to what a Felda will get which as you say is not even enuf to get a decent steak in Meatworks.

Once they put their warlords in place, then the entire corporate structure will be run the way UMNO wants it and they will siphon even more money out with the contracts that these companies can dish out.

From a settlers prospective, they now wont "own" the lands they have worked on for as long as the settlers can remember. They are now squatters or hired laborers!

How much can their shares be worth ? If a typical Settler has 10 acres now, will he be issued with shares that may be worth at around RM250000 ? And is this based on par value or the revised value ?

In the end, I strongly believe that Felda should be kept as it is and we should do what we can to protect the settlers. Felda should be run by professionals and not politicians to really unlock is potential. There will be too much " slippage " if any politician were to run it.

If Felda wants to expand, it can use its profits to do so and profits will then be shared back with the respective owners of Felda.

BN/UMNO : keep your greedy hands of FELDA!

Anonymous,  26 December 2011 at 09:29  

Dato,
I believe the general public, more so the settlers, still cannot fully comprehend what actually happens out of the proposed privatisation. I'd thus suggest that this be shown diagrammatically to demostrate the movement-flow of interests. I, too, could not earlier on grasp as to how Felda came to own such a large acreage of plantation when they were merely supposed to be no more than ADMINISTRATORS for the settlers. At least now, thru your write ups, we can see more clearly that the settlers have been CHEATED OUTRIGHT. Good work, Dato !!! ALIAS DASUKI.

Anonymous,  26 December 2011 at 09:51  

Dato, why don't you suggest how the floating be done that will satisfy the settlers (by putting yourself as a settler). Assuming the deal goes through, make the equity tradeable amongst bumiputras only and it is equivalent to reserved Malay land. I would hate to hear Perkasa and UMNO later ranting that FELDA land falling into 'greedy' non-bumi hands.

bruno,  26 December 2011 at 10:00  

Dato,first of all although the settlers own small amount of shares each,the total amount all the settlers own is 51% and they are the majority shareholders.FGV only owned 49%.In the coporate sector the majority shareholders do the talking.But in the case of Felda the minority shareholder is the boss.

The settlers can object all they want,but the PM's department has the last say.In other words although the settlers are the bosses,they get the thorny end of the stick.Instead of the regular coporate sector practices of big fish eating small fish,in Felda's case it is small fish eating big fish.

FGV was started up with the intentions of gobbling up the small settlers.On the accounts FGV has already lost 500 million ringgit.If the sharks have admitted losing 500 million,in actual fact it should have lost many times more than have been reported.Rumours leaking out more than a year ago has it that FGV has lost a few billions in their overseas investment.

Once the proposed listing of Felda FGV goes on as scheduled,it will be the beginning of the end of Felda.Unless the GE comes first,and the settlers show the Umno GOM their muscle and land the first knock out punch and walk over them.

Anonymous,  26 December 2011 at 10:21  

There has not been a single venture undertaken by the UMNO led government that had been an astounding success. All the ventures have big capital letters written all over it "CORRUPTION" and are means of "Instant Get Rich Schemes" for UMNO Elites and Cronies.

The UMNO led government is not afraid of selling their mothers and children to enrich themselves. After all, wealthy UMNO elites and cronies can remarry young starlets and models to replace their aging wives and start their children reproduction cycle all over again.

ramleideas 26 December 2011 at 11:29  

With the listing, all three i.e Najib Isa and Mahathir will click together. This has been the intention of Mahathir before he retired. He didn't want to dirty his hand, expecting Pak Lah to deliver it. Unfortunately, Pak Lah sees that the listing will open the door for non bumis and foreigners to own shares in Felda. Now Mahathir sees the value of Najib appointing Isa as a BN candidate, which he opposed earlier. And having Isa as Felda's and KPF chairman, it will fast track the whole process. Mahathir is keeping quiet, waiting eagerly and anxiously for the listing to take place. Najib is saved from Mahathir's further criticism of his administration. Well done Najib. But never forget, Felda settlers and their generation will not forget this. Is the action taken benefitting the settlers or certain individuals? It would'nt be long before we see the result.

IbnAbdHalim 26 December 2011 at 12:13  

Dear Dato',

What can the people do? Well, in a democracy, the the masses is the lord. A right trigger will prompt an awareness. That is the most scaring to the corrupted leaders.

Anonymous,  26 December 2011 at 15:26  

For a structured flow of Felda plans, do read
http://rights2write.wordpress.com/2011/12/24/felda-the-smell-of-easy-money-part-vi/

rights2write 26 December 2011 at 15:29  

To those who wish to have a better understanding of Felda plans, do read my post

http://rights2write.wordpress.com/2011/12/24/felda-the-smell-of-easy-money-part-vi/

Let me know your thoughts. Dr Rafick

OneMalaysian,  26 December 2011 at 18:36  

Dear Sakmongkol

The Felda Global Venture IPO is sold to settlers on the basis that they have nothing to lose, but will instead gain a windfall. Currently, the settlers through Koperasi Permodalan Felda (KPF) own 51% of Felda Holdings the commercial arm that makes money. FGV currently owns the balance 49% of Felda Holdings. FGV itself in 2010 has lost some RM500 million. How, we don’t know. But if you lose money in a good palm oil market, something must be terribly wrong with the FGV management. It arises from either incompetence or corruption or both. This should not surprise us because in 2009 Sime Darby’s subsidiary called Jomalina Oil also lost a couple of hundred million through faulty palm oil trading.

The government says that before the IPO, after some “restructuring”, KPF will own 61% of FGV but all its land holdings will now be owned by Felda Holdings and/or FGV. So instead of holding land and shares in Felda Holdings (via KPF) the settlers will only own shares of FGV but through KPF. In other words, they have no direct ownership of the listed shares of FGV. As part of the IPO, FGV will issue 30% new shares to the public to raise funds for future FGV investments (presumably downstream activities). This then dilutes the settlers’ 61% to 42.7%. This is definitely less than the 51% that they currently own.

How can this be good? It can only be so IF the funds raised in the IPO are invested profitably so that 42.7% of the enlarged FGV profits exceeds 51% of the current Felda Holdings profits. But this we cannot be sure of given FGV’s management record. But we know that downstream processing earns much less than upstream production of CPO.

So how can the government entice the settlers to agree to the IPO. They offer something called a “windfall” profit for all settlers. Where does this come from, and how much is this windfall? Rights2write has posted a link to his blog, and in it he mentioned that the government through FELDA (the Authority) would distribute 9.3% of the 27% of FGV shares after the IPO. I assume these shares will be given free to all the settlers, hence the windfall. How much are these shares worth? Here we can only guess. If we assume that in 2010 FGV made a pretax profit of RM800 million (average of 2008 and 2009), and after tax profit is RM600 million, then using a PER multiple of 12 times (for low performing plantation company), FGV will be worth RM7200 million on listing. And 9.3% will work out to be RM670 million. As there are 220,000 settlers, each will receive (if they sell out at IPO price) RM3045. OK, let’s say this is RM4000 or even RM5000. Is this an irresistible windfall for settlers to permanently reduce their shareholding in Felda Holdings and go into the unknown with FGV and Isa Samad?

I think the settlers have much greater opportunities in the CPO business. In 2009, each Felda mature acre earned RM1200 versus IOI's RM10800 and Sime's RM3380. There are lots of low hanging fruits that they can pluck. Felda’s operations will never catch up with the likes of IOI or UP or KLK, but they can match those of Sime Darby. Also, there is nothing to stop the settlers from expanding by using part of their profits to expand into Indonesia or East Malaysia. They need not be constrained forever by those 10-acre plots. Some creative thinking is needed.

Tinta Hitam 26 December 2011 at 22:22  

Datuk,

Reaksi saya ialah padan muak dgn peneroka Felda ni.Mereka adalh kubu kuat UMNO.Susah pihak lawan nak tembus hingglah sekarang.Sekarang lihat bagaimana UMNO terlah mengencing mereka.Itu pun mereka masih tak sedar sedar lagi kecuali sebahagian kecil shj..

Anonymous,  26 December 2011 at 23:50  

Dear Datuk,

U have written many things and among that great things that people will remember.I can imagine many things hurled against you after you had published your articles.Can you share with us any challenge you face while writing Felda issue?Not many Umno assemblyman would want to comment on this golden goose of Najib.On MAS and NFC issue,we can see some BN assemblyman going against the tide.While the mum over Felda issue?wonder wonder....

OneMalaysian...creative or no creative, you ethos and apco team are the scumbag of malaysia. could you find some other GLC out there to mess around?I dun buy what you said as long as you are promoting that 1Israel brother slogan.ABU!

Anonymous,  27 December 2011 at 00:08  

Does speaking your mind get you anywhere at all?
There have been countless issues raised by you dato dearest but did any positive change take place?
Hope you are not offended by my comments.Just curious to know.tq and happy new year .you still rule!

Anonymous,  27 December 2011 at 14:11  

Dear Anonymous @ 27 December 2011 00:08,
changes may not happen overnight , but what Dato' is doing has certainly raised awareness amongst the populace on the rampant corruption and abuse of power by the ruling elites.

I am sure the least Dato' has achieved is to keep these corrupted people on their toes.

Anonymous,  28 December 2011 at 16:05  

I'm not a Felda settler. But I do have my uncles , despite having small plots of padi and rubber land in the kampung, excitedly responded to the governmnt calls and became the first generation of Felda settlers in Negeri Sembilan. They had high hope that that would change their life. They were not the educated lot. But before they could really reap the benefits of their sweat and tears, they passed away. Their children, who have now become the second generation settlers continued from where their fathers have left. They are also not that educated - unlike few other settlers' children who have successfully got jobs in the public and private sectors and have since left the settlement.

Being just 'toilers' and less educated the word 'listing' is completely alien to them. Cannot blame them because after all not everybody is well conversant with the nitty gritty of IPO and the likes.

So, it needs someone who is honest and devoid of any ulterior motive to explain to these settlers in simple layman language about this impending listing. Perhaps in a table form sufficient and clear enough for the settlers to comprehend the differences between what is/are now and what it will be after the listing, covering all aspects of their interest and livelihood.

This will facilitate them to make a decision with a clear mind whether or not to agree with the listing.

You don't need all the sophisticated and colourful graphics and power points for they will only serve to confuse the settlers and therein lie the dubious intention.

And please don't anybody make these settlers pawns in their political games. And also do not under estimate these settlers' power and capacity to make changes.

Orang N9

Observer,  1 January 2012 at 09:43  

The father, Tun Abdul Razak implemented Felda to help out the settlers. The son, Najib Razak is selling out the settlers !
What a great start to a New Year !

amin,  2 January 2012 at 22:32  

Wonder how many MILLIONS were paid to RPK just to paint bad picture on DSAI and SELANGOR GOVT, the GOVT that put a surplus budget on the desk for the rakyat RPK is trying to bad mouth. PODAH ler RPK, DUNIA SUDAH TAHU. Syabas Dat for making the right decision. Me, my family AND FRIENDS AND THEIR FAMILIES will vote for you.

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