FGV clarifies LLA terms with Felda

It specifies that the assets involved are estates that do not include land cultivated by existing Felda settlers and FGV’s palm oil mills


FGV Holdings Bhd stated that the land it leased from the Federal Land Development Authority (Felda) does not include land cultivated by existing Felda settlers.

“The land lease agreement (LLA), which was signed on Nov 1, 2011, specifies that the assets involved are estates that do not include land cultivated by existing Felda settlers and do not include FGV’s palm oil mills.

“Currently, the size of Felda’s plot of land amounts to more than 850,000ha, and the parcel of land owned by Felda settlers amounts to 450,632ha. Felda-owned land plot that was leased to FGV amounts to 350,733ha,” it noted in a statement yesterday.

This makes the amount payable to Felda to stand at RM248 million, based on the hectarage plus 15% of operating profit from the LLA land yearly, instead of RM800 million.

Beginning from 2016, there was a decrease in the LLA fixed payment to Felda due to adjustments in hectarage leased, FGV noted.

“This decrease was due to several reasons including land acquisition by Felda, surrender of land to Felda for the purpose of mining, encroachment to third-party land, overlapping of mill land, and the reconciliation process between land title and the Department of Survey and Mapping Malaysia,” it said, adding that FGV’s IPO in 2012 led to Felda representatives being placed on FGV’s board.

As at Aug 28, 2020, Felda’s shareholding in FGV stood at 21.24% and Felda Asset Holdings Co Sdn Bhd’s shareholding was 12.42%. Meanwhile, Koperasi Permodalan Felda Malaysia Bhd’s shareholding stood at 4.751%.

Felda chairman Datuk Seri Idris Jusoh recently said the state agency’s declining revenue in the past eight years was caused by FGV’s IPO, claiming Felda should have received RM800 million annually from FGV through the LLA instead of RM250 million.

Disputing the claims on Oct 20, 2020, FGV said the contributions, which ended up lower than projected, were caused by weaker crude palm oil prices after the LLA, on top of having a high percentage of old trees.

It said the real issue was the use of proceeds from FGV’s IPO, as Felda earned RM5.7 billion, while FGV earned RM4.5 billion from the listing exercise.

The company reiterated that it paid over RM2.5 billion to Felda from 2012 to 2019.

At present, FGV said Felda has yet to contact the former on the LLA and is prepared to follow the procedures outlined once it has received a notice.