PKR has completed the financial analysis of the gains receivable by FELDA from the planned Initial Public Offering (IPO) of FGVH. Our review shows that FELDA stands to gain about RM18.7 billion from FGVH’s IPO. The gains are in three parts:

  1. Cash from share sale of 1.2 billion FGVH: RM5.6 billion
  2. 40% equity stake in FGVH: RM6.8 billion
  3. RM500 million a year lease payment for 99 years; net present value @ 8% discount rate:  RM6.2 billion
The windfall payment of RM1.7 billion (RM15,000 x 112,635 settlers) is a dismal 9% of the gains to be enjoyed by FELDA. A share of 9% is unfair and inadequate. We wish to remind the Prime Minister, Dato’ Seri Najib Tun Razak, that one of FELDA’s primary objectives, is to strive to ensure the settlers are able to enjoy a decent level of prosperity.  

We are also aware of “market talk” that FELDA will be transferring Felda Asset Holdings Company (FAHC) to Koperasi Permodalan Felda Malaysia Berhad (KPF). At the moment FAHC is a wholly owned company of FELDA and at IPO it will own 17% of FGVH. If indeed FAHC is transferred to KPF in the coming weeks, the windfall plus the FAHC equity will amount to RM4.6 billion. The sum appears to be large, but in percentage terms, the settlers may get only 25% of FELDA’s total gains (inclusive of potential transfer FAHC) from FGVH’s IPO.

So we ask yet again: Why is FELDA keeping the bulk (75 or 91%) of the gains? Why are settlers consistently being offered a bad deal?

We reiterate our belief that the windfall for settlers ought to be around RM50,000 per household; to be more precise, RM53,000 per household. With the payment of RM53,000 per settler household plus ownership of FAHC, our analysis shows that the settlers would get a more fair 50-50 deal from FELDA. A 50-50 deal is fair. We challenge PM Najib to be fair to the settlers. He should stop favouring an over-politicised FELDA, run by Tan Sri Isa Samad. FELDA needs to be freed of politics and politicians; and settlers need to be treated with respect and fairness.

11 MAY 2012