I AM writing in response to the opinion article It is time for Felda to act, and I agree with calls for Felda to take stern action against its former subsidiary, FGV Holdings.

FGV did not just record billion-ringgit losses last year, but it also failed to fulfil its contractual commitment to the land development agency.

According to the Felda white paper tabled in Parliament, the annual RM400 million net income received by Felda from FGV through the land lease agreement (LLA) was much lower than the estimated RM800 million before FGV’s initial public offering (IPO).

That, combined with the billion-ringgit losses, should be a clear sign that a radical change needs to happen within the ranks of the company in order to put it back on track.

An apparently promising change seemed to have taken place with the recent appointment of a face familiar to FGV, Bakke Salleh, this time as the new Felda chairman. There are hopes that he can bring the consortium back to profitability. 

However, Bakke’s appointment has raised concerns, especially considering his track record during his previous tenure as group managing director of Felda in 2005 and CEO of Felda Global Ventures in January 2009 – before he left for Sime Darby in 2010.

As a senior executive in the consortium, Bakke must have been instrumental in charting FGV’s path. In fact, he would have been instrumental in developing FGV’s business plan even before the company was listed on Bursa Malaysia in 2012.

We all know what happened to Felda and FGV after the latter was listed. Felda recorded losses after losses, from 2013, while FGV’s performance continued to decline until it recorded a RM1.08 billion loss in 2018.

The latter failed to record high productivity in fresh fruit bunch processing, which resulted in the company’s worsening performance year after year. Its liabilities also increased by 274% from 2011 to 2017, and its cash reserves reduced by 70% in the same period due to increased spending.

Basically, all the hard work put in by the settlers had gone to waste.

Even before Bakke’s resignation from FGV in 2010, he was rumoured to be involved in questionable and vague investments (not proven though) that resulted in losses to Felda.

These investments, ranging from oleochemical factories in the United States to a rapeseed filtering factory in Canada, have caused substantial losses for the agency.

And now, we are bringing him back to revive Felda?

The economic situation during Bakke’s previous tenure at Felda was different than today. Add to that his questionable record during that time, is bringing him back a good idea?

Aren’t there other corporate figures who can revive Felda to its former glory? What can we expect from Bakke now?

Even the previous chairman, Megat Zaharuddin Megat Mohd Nor, failed to guide Felda after 11 months in the job. So, how is Bakke going to make a difference? He should state his intentions on the matter and perhaps highlight his plans rather than dragging Felda into another whirlpool again.

If Bakke thinks the RM6.23 billion allocated under the government’s white paper is the solution to Felda’s woes, then he is mistaken. Why? Because there are various shortcomings in the white paper.

From the breakdown announced by Economic Affairs Minister Azmin Ali, most of the funds will be spent on settling interest payments, Felda’s short-term loans, living expenses, building homes for second generation settlers, etc.

Where is the allocation for long-term investments, such as planting new oil palm trees to replace the old trees not yielding efficiently? This should be the priority so that within the six years, settlers can enjoy the fruits of their labour. They can have decent income. This is sustainable farming and is missing from the equation.

Settlers have lost their trust in Felda, which resulted from the incompetence of FGV to serve its contractual obligations.

Felda should return to its original purpose of developing the socio-economic prosperity of rural folk, and the agency’s decision to halt the payment of the salaries of underperforming FGV board members is a sign that Felda is starting to take a firm stance against incompetent directors and management. – August 6, 2019.

* Hannah J reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.