Felda financing keeps settlers’ votes intact
IN the run-up to the 14th General Election (GE), it is the bread-and-butter issues that will determine how the Felda settlers, who form the majority in 54 parliament seats, vote.
The settlers are well aware of national issues such as 1Malaysia Development Bhd (1MDB) and that nobody has been hauled up over the mismanagement of the fund.
The settlers are aware of the repercussions of the goods and services tax on the cost of living. They are also well aware that the price of crude oil is volatile and has a negative effect on crude palm oil (CPO).
But to the settlers, it is the certainty of getting a monthly income to carry on with their daily routine that matters. They look upon Felda as the entity that is responsible for resolving their problems – from supplying fertiliser to providing financial assistance such as small loans.
To understand the gravity of the situation, there are some 3,238 settlers that owe Felda more than RM180,000. There are many more who owe Felda lesser amounts. Essentially, Felda is the ultimate banker for the settlers and this relationship helps keep the votes intact.
The settlers are more sensitive to the price of CPO and fertiliser than the selldown in tech stocks. They are more concerned about the financial well-being of Felda than the financial performance of Felda Global Ventures Holdings Bhd (FGV).
Settlers are very much dependent on Felda for financial assistance – from replanting old palms to getting cheap fertiliser. Felda, in return, wants certainty that the settlers only sell their harvest to the entity.
The simple-but-strong relationship between the settlers and Felda started when the scheme was mooted years ago and has been a strong rallying point for Umno among the settlers when it comes to GEs.
Another important point for the first-generation Felda settlers is being able to perform the haj. This also is something that the government is handling by allocating higher quotas for settlers.
A year ago, FGV was an issue with the Felda settlers. The shares were under-performing due to low CPO prices, inefficient operations and a board that spent money on investments that were not providing adequate returns.
There were problems between the board, led by Tan Sri Isa Abdul Samad, and the chief executive Datuk Zakaria Arshad, who is the son of a settler. The confrontation between Isa and Zakaria came out in the open in June last year.
But considering that Felda was and continues to be an important bloc for Umno and the Barisan Nasional, it was clear that Zakaria was no pushover.
Isa was a big figure in Umno. He broke the monopoly of the old guards in Felda and saw to its listing in 2012. Zakaria, on the other hand, rose up the ranks to become the president/CEO of FGV.
The posts of the chairman and CEO of FGV are determined by the government, not the shareholders of FGV.
Right from the beginning a year ago, it was clear that Zakaria would win, considering that the GE had to take place soon.
In September last year, Zakaria got back at the helm of FGV. The board saw several changes. Isa is no longer in the picture.
In his place, Tan Sri Shahrir Abdul Samad has been appointed as the chairman of Felda – a position he took up in January 2017. As for FGV itself, the chairman is Datuk Wira Azhar Abdul Hamid, a non-politician.
Shahrir, who enjoys his round of golf, was coaxed out of semi-retirement to help fix things at Felda before the GE.
The primary issue he faced was to get funds for Felda to run its programmes with the settlers.
The settlers, amounting to some 112,000, faced a myriad of problems – particularly debts that forced many to sell their fresh fruit bunches (FFB) to third parties.
Shahrir needed some RM2bil to announce a set of goodies, something he managed to raise by the middle of last year.
In July last year, Felda announced a RM1.6bil package for settlers. There are six main thrusts to the package – ranging from replanting subsidies to loans for them to build or repair their existing homes.
Felda also announced a one-time RM5,000 incentive for those who have been selling their harvest to Felda or plantations that are managed by the organisation. It involves almost 95,000 settlers.
Felda also absorbed 50% of the liabilities of those who had taken loans to subscribe for shares in FGV. When FGV was listed, settlers were given 800 shares worth RM3,640. Felda absorbed RM1,820 of the loan.
After taking into account the dividends declared by FGV over the years, settlers still holding FGV shares would have got it for free. This is not the first time that the settlers received a bounty in the run-up to the GE.
In 2012, a year before the 2013 GE, each of the settlers received RM15,000. It was a oneoff payoff from the listing of FGV in June 2015.
The payoff in 2012 was greeted with big fanfare, unlike the announcement last year. Probably, the underperformance of FGV’s share price coupled with the low price of CPO are dampeners.
Nevertheless, Felda settlers are largely a contented lot, especially the first-generation settlers.
There are basic amenities in their homes. Most of them have their own transport and care more about the roads than public transport. They gripe about the rising cost of living, but do not have issues putting food on the table.
Largely, they lead a comfortable life with most of their children working outside the Felda schemes. For the first-generation settlers, Felda is always there to provide assistance should they need help with replanting or purchasing fertiliser.
Umno and PAS are probably the only two parties that the first-generation Felda settlers are familiar with when they go to the polls.
But it is a different game for the second-generation Felda settlers. Most of them work outside the Felda schemes.
They have to rent a place nearby where they work and can’t afford to buy a house in the city.
They hope to get a place in the Felda scheme, something which continues to be a problem for Felda.
The second-generation Felda settlers have no affinity for any political party. They tend to support personalities that they think would be able to make a difference in their income and standard of living.
The consolation for the ruling coalition is that the bulk of the voters in the schemes are still first-generation Felda settlers. However, the second-generation settlers are growing in numbers.