Felda paid a hefty premium for assets, says Azmin

KUALA LUMPUR (Nov 22): The Federal Land Development Authority (Felda) had overpaid for some of its assets, forking out “much higher than market price” for acquisitions, said Economic Affairs Minister Datuk Seri Mohamed Azmin Ali.

Speaking to reporters at Parliament lobby yesterday, Mohamed Azmin said that because of the hefty premium dished out to buy these assets, the government was concerned that Felda would not be able to recover full value, if the assets were disposed.

“The properties and assets were bought at higher premium, not at market price, [actually] much higher than market price. So these are the issues.

“Even if we decide to monetise those assets, we will not be able to get back the full values [the amount paid]. This is our concern now,” he said.

Felda chairman Tan Sri Megat Zaharuddin Megat Mohd Nor had said in September that Felda’s debts were in excess of RM8 billion.

In view of the large debts, the government was coming up with a White Paper on Felda, addressing the plantation group’s issues and slated to be tabled in Parliament on Dec 10.

Mohamed Azmin said preparation of the White Paper on Felda is currently in its final phase, and it is expected to be tabled in the current Dewan Rakyat sitting.

“We have conducted [an] external audit to ensure that we get the true picture of Felda’s financial position, so that Felda settlers can understand the actual situation today, and what are the measures to be taken by the government to guarantee their future is being taken care of.

“I have seen the first draft [of the White Paper], but the ministry is looking into more details. You must understand that some of the issues are being investigated by the MACC (the Malaysian Anti-Corruption Commission), so we are not privy to the details,” he said.

Last Saturday, The Edge Malaysia weekly highlighted certain aspects of the White Paper, and reported that there were at least three proposals mooted to revive Felda, the beleaguered government agency founded in 1956 to resettle the poor and eradicate poverty.

The report had it that there were three proposals mooted to revive Felda, and its 33.67% unit Bursa Malaysia-listed FGV Holdings Bhd.
The three plans, involves beefing up Felda’s management, privatisation of FGV to get things back to before FGV’s floatation exercise in 2012, and the government merging Felda with another government-owned company that is involved in development, probably Federal Land Consolidation and Rehabilitation Authority Bhd (Felcra).

The proposal on taking FGV private seemed too difficult given its initial public offering was at RM4.55, which is more than double of yesterday’s closing of RM1.18.

For the six months ended June 30, FGV suffered a net loss of RM21.90 million from RM7.04 billion in revenue. The group’s cash stood at RM1.64 billion compared with its total debts of RM4.23 billion as at June 30.

FGV incurred a finance cost of RM95.13 million for the six-month period ended June 30.

As for the merger with Felcra, details are scarce. According to its annual report, Felcra provides plantation services focusing on integration, rehabilitation and development of land including the processing and marketing of commodity products.

According to its website, Felcra has 257,078ha of plantations. 
Felcra’s latest publicly available annual report for the year ended Dec 31, 2014 posted after tax profits of RM123.86 million from RM1.75 billion in revenue.

Felcra manages 220,086ha planted with oil palm, rubber and paddy, for a minimal management fee. As at end-December 2014, Felcra had a cash balance of RM1.07 billion and debt commitments of RM2.11 billion.