Govt to overhaul FGV Holdings

FGV needs a major revamp as its current performance directly affects Felda and its settlers, says Azmin


The federal government intends to restructure troubled FGV Holdings Bhd, the listed commercial unit of the Federal Land Development Authority (Felda) and at one time the world’s largest palm oil producer.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said FGV needs a major revamp because its current performance directly affects Felda and its settlers.

“Felda and FGV will be restructured…FGV certainly because it affects Felda,” he told The Malaysian Reserve (TMR) in Parliament yesterday.

Azmin said Felda’s management board is currently evaluating several proposals to restructure FGV. He also hinted that Felda would not be able to rely on government guarantees to raise funds anytime soon because the government is not in a position to grant more guarantees.

“I don’t think we have the capacity (to issue guarantees) at this moment, but certainly we have other options to improve and strengthen the financial status of Felda,” he said.

The minister, however, declined to say whether the exercise could involve a reverse takeover, transfer or disposal of assets. He said the recommendations would be made together with a parliamentary white paper to be tabled in the Dewan Rakyat in two weeks.

“We will present the white paper by early December and we will know exactly the current situation of Felda.

“Then, we will have some recommendations on how do we stabilise the financial status of Felda and how do we move on from here,” Azmin said.

Speaking to reporters earlier, Azmin said the white paper will contain serious revelations about Felda, including several cases that are currently being investigated by the Malaysian Anti-Corruption Commission (MACC).

“I’ve seen the first draft, but the ministry is now looking into it. Some of the issues are being investigated by the MACC, so we are not privy to the details and we are not supposed to encroach into that matter.

“It certainly includes some properties and assets that were bought at a high premium. It is much higher than the market prices, so these are some of the issues (that will be highlighted).

“Even if we decide to monetise these assets, we will not be able to get the full value of those assets, which is our concern now. Let the government present the white paper first and we will then make some recommendations on ways to move forward,” he said.

In recent years, the revelation of Felda’s involvement in several real estate deals has put the agency in bad light. This includes the purchase of hotels in London and Kuching at prices above prevalent market value, as well as dubious transfer of several plots of land along Jalan Semarak in 2015 without the knowledge of Felda’s board of directors.

The MACC has started investigations into Felda’s 2014 purchase of the Merdeka Palace hotel in Kuching, Sarawak. The hotel was bought by Felda subsidiary, Felda Investment Corp Sdn Bhd, for RM160 million which is nearly double its market value.

FGV recently appointed chairman Datuk Wira Azhar Abdul Hamid as its interim CEO after Datuk Zakaria Arshad resigned as FGV group president and CEO on Sept 18, 2018.

TMR had previously reported that the integrated plantation group has shortlisted 11 candidates for the top executive role, and that Azhar will only be an interim CEO with a new CEO expected to be named by the end of the year.

The cash position of Felda, which is the single largest shareholder in FGV, is expected to recede further to about RM100 million by year-end, a long shot from the RM2.1 billion cash it had just after FGV went public in 2011. Its debt, on the other hand, stood at RM8.05 billion as at June this year.