Shahrir’s new battle

(The Star) – THERE is no doubting that the Federal Land Development Authority (Felda) is a political hot potato.

It needs a strong leader to keep the momentum going for the organisation that handles the affairs of 112,000 settlers who decide the fortunes of 54 parliamentary seats.

The issues range from sustaining the income of the first-generation settlers to managing their plantations and providing affordable housing for the second-generation Felda settlers. It needs a candidate who is nationalistic and holds a great degree of commitment to do just the right thing for the settlers.

In this sense, 68-year-old Tan Sri Shahrir Abdul Samad fits the bill. A seasoned politician who is known to speak his mind on some matters, especially when it comes to parliamentary democracy and principles, Shahrir has his hands full as chairman of Felda.

He is the new face of an organisation that has business tentacles which are far-reaching, much more than the political prowess of the 54 parliamentary seats.

Felda’s yearly budget is about RM3bil and the settlers themselves receive an income of about RM4bil per annum. There are many more activities that are related to Felda, which is among the world’s largest plantation companies.

Its fertiliser procurement and transportation requirements are more than the annual turnover of some listed companies. That is the size of Felda.

“Felda is an economic powerhouse by itself,” says Shahrir when met at his office on the 49th floor of Menara Felda.

After assuming the post in January this year, Shahrir is now at ease when handling questions with regards to Felda. He rattles away numbers on key indicators that are associated with programmes to help lift the living standards of the settlers.

“The price of houses for the second-generation settlers has to be low and Felda does not need to build everything by itself. There are agencies that can deliver the houses at less than RM50,000,” he says.

His priority in the next few months will be to lift the sagging confidence associated with Felda and its related companies.

The confidence level in the organisation has taken a dip following a series of corporate exercises that have not brought about the desired results. Also, the fact that two top officials have been charged for criminal breach of trust associated with projects undertaken by Felda has not helped enhance its corporate governance image.

Last week, Shahrir did not hide his disappointment with the returns that Felda has received from its investments in Felda Investment Corp (FIC) and Felda Global Ventures Holdings Bhd (FGV).

Felda has invested RM2bil in FIC with no returns thus far. It is the single largest shareholder in FGV, the listed plantation arm of the group.

However, FGV’s performance is not compelling enough for investors to pour money into the stock. Felda receives a fixed lump sum of RM250mil per annum from FGV under a land lease arrangement. Apart from the land lease payment, Felda also gets a portion of FGV’s profits.

Last year, the total amount came to about RM300mil, which is below the expectations of Shahrir.

“We want to sweat the assets. It has to yield more,” says Shahrir when met at his office located near the Petronas Twin Towers.

Shahrir’s strongest asset is that he came into Felda with no baggage and no political ambitions. He has stepped down from high-profile Government positions in his political career more than once.

In fact, Shahrir would probably be among the few politicians who have resigned as an MP and minister in his political career which began in 1973.

The first instance happened in 1988 when he was the MP for Johor Baru and there was a crisis in Umno between Tun Dr Mahathir Mohamad and Tengku Razaleigh Hamzah. Shahrir was among those who were sacked from Umno.

As a matter of principle, he resigned from his MP’s seat and stood again under the new party called Umno Baru. Shahrir retained the Johor Baru seat under Umno Baru. Tengku Razaleigh went on to form Semangat 46 but Shahrir rejoined Umno.

That is the fighter in Shahrir.

In 2006, he was once again at the centre of controversy after he supported a motion put up by the Opposition on a matter where an MP from Barisan Nasional (BN) had asked the director-general of the Malacca Customs and Excise Department to “close an eye” on a timber shipment.

Shahrir’s stand was that it was only right to support the motion because it was the right thing to do to maintain the integrity of parliamentarians.

However, it went against the general rule where members of the ruling party are not allowed to support any motion of the Opposition party. Subsequently, Shahrir resigned as the chairman of the BN Backbenchers Club.

During the 1Malaysia Development Bhd controversy, Shahrir’s view was that the entire Cabinet should be held accountable. He also admitted to receiving RM1mil from Prime Minister Datuk Seri Najib Tun Razak after the general election (GE) in 2013.

In Felda, Shahrir has a corporate battle of sorts up his sleeves. He has to come up with ways where the investments of Felda pay better returns so that the entity has enough money to run programmes for the settlers.

At the moment, Felda gets less than RM2bil from its investments and is short of the RM3bil required per annum for its programmes. For the next two years, he is looking at taking up some borrowings, backed by the wealth of assets that Felda owns.

However, in the longer term, Shahrir needs to monetise Felda’s stake in FGV and its investments in FIC. For starters, Felda is said to be looking at divesting a hotel in London that FIC owns.

As for FGV, the corporate game is more difficult. The company was listed in 2012 at RM4.55. It is now at RM2.03, which is more than a 50% drop in value.

Post-listing, FGV was sitting pretty on a cash pile of more than RM5bil. However, between 2013 and early 2016, FGV under Datuk Mohd Emir Mavani Abdullah completed seven acquisitions, forking out RM4bil.

The cash pile disappeared. To make matters worse, FGV was the first party identified to take over a substantial stake in Indonesia’s PT Eagle High Plantations Tbk.

The present chief executive, Datuk Zakaria Arshad, pulled out of the deal. The Eagle High block of shares are now held at the Felda level and financed by the Government.

Shahrir has stated that the Eagle High deal has nothing to do with Felda. It is something that the Government has placed under the entity since it manages plantations.

However, that alone is not sufficient to instil confidence in Felda and FGV. With the GE around the corner, more is expected from Shahrir to revitalise the fortunes of both organisations.

Felda is the single largest shareholder in FGV and holds the key to any change in the fortunes of the listed company. Shahrir knows that. However, it is one tough battle for the seasoned politician.