Should FELDA be Turned into a Social Enterprise?
MALAYSIA STUDIES PROGRAMME
Malaysia in Transition Seminar Series
About the Seminar
FELDA’s main focus has been land development for distributive justice and poverty alleviation. It has developed tracts of jungle land, mostly located in the remote part of the country, into oil palm and rubber plantations for distribution to settlers from impoverished backgrounds. FELDA was also responsible for managing the plantations on behalf of the settlers. The funds needed for carrying out these activities (including land cost) were advanced by the government and then recovered in installments from the settlers, beginning from the time when their plots started to earn income. These efforts were largely successful. FELDA has freed hundreds of thousands of poor and landless villagers and their family members from the clutches of poverty. They are now a middle-class society.
Over the years, FELDA’s activities expanded into various businesses carried out through its various subsidiaries. Today, FELDA is an agro-based business conglomerate of a global reach. Since 2012, its corporate arm, FELDA Global Ventures Holdings Berhad (FGV) is a listed company in Bursa Malaysia. FGV on its own was not qualified to be listed. To make it qualified, all profitable subsidiaries of FELDA were “pumped” into FGV, instantly turning it into one of the biggest plantation companies in the world. The FELDA Settlers’ Children Association or Persatuan Anak Peneroka FELDA (ANAK) was against the public listing of FGV since the idea was first mooted in 2004. Its opposition was conveyed to various authorities including the King of Malaysia.
However, opposition was bulldozed on the grounds that the listing would allow FELDA to generate billions of ringgit needed to rein in its debt, fund its operations and expand existing businesses as well as new ones, including those not related to agriculture. The stated aim was to turn FELDA into a financially self-sustaining government agency. To quell settlers’ opposition to the proposed listing, then-Prime Minister Najib Razak promised settlers that the listing would result “a big fortune for them like never before.” The settlers were convinced and the listing went on smoothly in June 2012.
Six years down the road, what promised to be a big success has turned sour. FGV failed to generate profits as planned due to lower commodity prices. But the bigger reason was the failures of its downstream businesses as well as its non-agriculture-based businesses to generate sizeable enough returns to compensate for uncertain commodity prices. As a result, FELDA lapsed into requiring government funds again. It was also forced to cut its corporate social responsibility programs. More significantly, due to lack of funding, the implementation of “housing for second generation settlers program” was delayed, and in some cases, abandoned, forcing many second generation settlers to continue living with their parents or to live outside land schemes. It is feared that many next-generation settlers will fall into the poverty trap again. ANAK’s earlier fear that the listing of FGV would not be beneficial to the settlers and their families appears to be not without reason.
The idea that “FELDA is for settlers” is advanced in this paper and to make this a reality, it is felt that “FELDA must be turned into a social enterprise.”
About the Speaker
Dr Rosli Bin Yaakop, 66 years, graduated with a PhD degree in Economics from University of Wisconsin, Milwaukee, Wisconsin, United States of America in 1988. He earned his Bachelor Degree in Economics from the University of Malaya in 1975. He was a Bank Negara Malaysia scholar.
Currently, he serves as a Business Consultant to a foreign exchange trading company based in Labuan, Malaysia. He has been Economic Advisor to FELDA Settlers Children Association (Persatuan Anak Peneroka FELDA – ANAK) since 2012.
From 1975 to 1994 he worked with Bank Negara Malaysia as an Economist. His last position at BNM before leaving for the corporate sector was Deputy Manager in the Personnel Department.
In 1994-2011 he served in various capacities including as CEO of a Shari’ah-based finance company, CEO of a Malaysian public listed company and CEO of a haj-related finance company based in Dhaka, Bangladesh. In Dhaka, he also served as Vice President, Bangladesh-Malaysia Chamber of Commerce and Industry (2009-2011).
Between 2014-2017, he served as CEO of Harakah, media arm of the Islamic Party of Malaysia (PAS).
He also lectured (part-time) at the Faculty of Economics and Administration, University of Malaya and the Graduate Business School, University of Selangor (UNISEL), Malaysia.
He contributed articles to various newspapers and periodicals in Malaysia and presented papers at seminars and conferences.