May 5 2004 - ONCE upon a time, the Federal Land Development Authority’s(Felda) land schemes were seen as frontier land, outposts and even a finalwork place for those left without other options.

It’s not the same anymore today.

Felda these days has enormous potential and the Government, realising thisand the need for the agency to dance with the times, has moved swiftly toraise its profile.

The agency, which is a big local palm oil producer, has been placed in thePrime Minister’s Department, directly under the charge of Deputy PrimeMinister Datuk Seri Najib Abdul Razak.

Najib has moved fast. He has set up a think-tank to modernise Felda, itsoperations and its people.

The first of a series of brainstorming sessions to chart Felda’s futureand raise its game has been held.

More then 40 prominent people from various fields, including topexecutives of private plantation companies, academics and governmentofficials had met with the aim of ultimately transforming Feldasettlements into dynamic areas of growth.

Our aim is to develop Felda settlers and settlements so that progressiveand value-added economic activities are carried out. There are threegenerations of settlers in Felda. We have to see how we can bringdevelopment to all of them, Najib said recently.

For Felda, even standing as a player alongside the grandaddy ofagriculture, the US-based Cargill Inc, is a possibility.

The target is possible for Felda, which has a landbank only slightlysmaller than the size of northern Kedah, as it is one of the world’slargest plantation holding firms, if not the largest.

Felda, set up in July 1956, has a total landbank of 811,140ha of whichabout half is owned by smallholders.

It manages 275 land schemes nationwide and owns 72 oil palm mills and fourrefineries in 11 states. Its land schemes are home to about 105,000families.

Felda has the potential to become an even bigger revenue powerhouse forMalaysia than it is now and also be an important platform to launch thecountry’s modern and integrated agriculture policy.

Palm oil and its related products rake in some RM28 billion into thenation’s coffers annually more than even the revenue from petroleumexports.

Felda? Outposts? Frontierland? Think again.

But for Felda to stand alongside the likes of Cargill it may take a littlewhile since the agency’s foundations need to be strengthened, analystssaid.

The Government is keen that Felda thinks and acts value-added and looksinto integrated farming concepts and agro-industries, including venturinginto biotechnology.

These would diversify Felda’s earnings sources from only just palm oil.

Felda group chairman Tan Sri Dr Mohd Yusof Noor said Felda now gets itsorders directly from the top, not only to ensure it plays a key nationaleconomic role, but more importantly that the welfare of its most crucialelement its thousands of settlers is taken care of well.

National Economic Action Council working committee member Datuk Dr ZainalAznam Yusof said the Government wants to focus on upgrading the economicand social lot of the settlers and the agency.

Prime Minister Datuk Seri Abdullah Ahmad Badawi is concerned about thelong-term plight of the smallholders’ children who are now entering intothe second and third generation, said Zainal.

If the Government succeeds in improving the lot of the settlers, Felda asan entity, will be set to stand up alongside other key agencies that powerthe Malaysian economy.

Abdullah wants a five-point plan for Felda to be implemented.

Felda must diversify, improve its technology, venture into creating aone-region-one product concept, create more small- and medium-scaleindustries and tap the full potential of its younger generation.

Gabungan Wawasan Generasi Felda chairman Tan Sri Rozali Ismail said therationale behind the move is simple to propel Felda’s palm oil sector tothe forefront and to be at par with other industries.

It is time for Felda to play its role as one of the country’s main enginesof growth at par with the other sectors such as manufacturing, services,oil and gas and information technology, he said.

He said billions of ringgit has been invested in Felda and the Governmentis therefore reviewing the statutory body’s role.

Felda has all the foundations for becoming a successful and powerfulplayer in the commodities sector.

By sheer size, its landbank produces about 20 per cent of Malaysia’s palmoil and is a key contributor in the Malaysian agriculture sector.

Analysts look forward to the agency being restructured and then for it toprosper with the flotation of its subsidiary Felda Plantations Sdn Bhd onBursa Malaysia Securities Bhd.

The flotation would also benefit settlers with each receiving shares fromthe company for their participation.

The Felda group, which groups 40 wholly or partly-owned subsidiaries aswell as joint-venture firms, has consistently registered earnings betweenRM4 billion and RM5 billion annually.

Its annual net profit ranges from RM400 million to RM500 million a yearfrom businesses in plantations, agricultural services, bulking, shippingand catering.

Mohd Yusof said it is Felda’s long-term aim to boost earnings to RM8billion with a net profit of RM1 billion yearly.

Investors are going to like Felda because of its good profitability recordand its earnings potential is limitless, said MIDF Sisma Securities SdnBhd’s economist Azrul Azwar Ahmad Tajudin.

Mohd Yusof said details of the flotation have been finalised and areawaiting the Cabinet’s approval.

Market players said when former Prime Minister Tun Dr Mahathir Mohamadannounced Felda’s listing plan last September the news attracted worldwideattention.

They said it is time to bring back international trading in palm oil toits seat in Malaysia, the top world producer, and Felda’s presence as amajor world player may help achieve the aim.

Right now, the commodity’s outlook is partly determined by an industryforecaster based in Europe and its supply and demand scenario is dictatedfrom a commodities trading house thousands of kilometres away.

It’s time Malaysia emulates the US-based giant trading house Cargill Incwhich controls much of the world’s commodities trading and yet has nooperations in many of them in the first place, said Golden HopePlantations Bhd group chief executive Sabri Ahmad.

On product diversification, Mohd Yusof said Felda is venturing into theherbal products business as a new alternative source of income tocomplement the oil palm business.

The agency is preparing its Felda Herbal City in Pahang, which isdedicated to herbal products, from planting to processing and marketing,at a 405ha plot with an initial investment of RM10 million.

The plan is to plant the herbs alongside oil palm trees. Annually, theglobal herbs market is said to be worth about RM40 billion.

There are also plans to eventually do business overseas. Felda will sendits officers to assist Timor Leste in plantation management soon, and atleast one African state has indicated its readiness to receiveprofessional advice from the agency.

The possibility of Felda opening new land schemes abroad on joint-venturebasis with other governments has not been discounted by analysts.