Malaysian palm oil plantation giant's corporate listing faces strong headwind
By M. Jegathesan, AFPBUKIT KUANTAN, Malaysia -- A planned corporate listing aimed at transforming Malaysia's vital palm oil industry has been clouded by allegations it could short-change the country's politically powerful farmers.
April 30, 2012, 11:09 am TWN
Prime Minister Najib Razak touts the plan as a new era for Malaysian palm oil, but charges that farmers will be hurt pose a political dilemma for the premier as he tries to shore up support ahead of elections expected soon.
Najib announced plans in October to float the commercial arm of the Federal Land Development Authority (FELDA), an agency that grants land for smallholder farms and is the world's biggest plantation entity at 850,000 hectares (2.1 million acres).
But vocal farmers and the political opposition have cried foul, alleging smallholders who have tilled FELDA-granted plots for decades could lose control of their futures in the complicated scheme — and possibly their land.
“Now my children and I have new fears that our land will be grabbed,” said Osman Abdul Rahman, 80, who began farming in the eastern Malaysian town of Bukit Kuantan in the 1970s, when tigers and wild elephants still roamed.
FELDA pioneered resettlement of poor rural Malays onto farmland after it was founded in 1956, and many now enjoy solid incomes and rising land values.
Rocking that boat is considered politically risky.
While multi-ethnic Malaysia has sizeable Chinese and Indian minorities, Muslim Malays, or “sons of the soil,” make up about 60 percent of its 28 million people and their support is considered vital in winning elections.
Palm oil is a key ingredient in soap and a range of food products whose consumption is predicted to soar in coming decades.
The listing of FELDA Global Ventures Holdings (FGVH) would be one of Malaysia's largest ever, part of a plan to attract billions in foreign investment.
FGVH would seek to sell 2.19 billion shares, it told Malaysia's securities regulator this week, amid estimates it could raise up to US$3 billion, making it one of the world's largest IPOs this year.