26/3/07 KUALA LUMPUR (Bernama) -- The merger of three Malaysian plantation groups into the world's biggest listed palm oil producer will not pose unhealthy competition to Felda (Federal Land Development Authority), the Dewan Rakyat was assured Monday.

"The issue of this mega plantation group competing with Felda doesn't arise," said Finance Ministry Parliamentary Secretary Datuk Seri Dr Hilmi Yahaya.

The merger will result in a corporate entity, not a government entity like Felda, he stressed.

"On the other hand, the management of the merged entity will become more efficient because it will be huge and compete on a global scale," he said when replying to a question from Datuk Rozali Ismail (BN-Kuala Terengganu).

Rozali had asked about the immediate and long-term implications of the mega merger of the three companies under the control of Permodalan Nasional Bhd (PNB) - Sime Darby Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd.

Hilmi explained that the merger will eliminate the unhealthy competition between the three and enable them to better face the challenges from global giants in competing for international business.

The move, he added, will result in the merged entity becoming the world's largest listed palm oil producer in terms of output and market value, as well as the largest counter on Bursa Malaysia.

It will have a market capitalisation of RM31 billion and have about 600,000 ha of plantation, the largest combined holding after Felda.

"Its operational and managerial efficiency will be through consolidating its facilities, research work and joint development," he added.

It will also better utilise its human capital, as the three firms have people with wide knowledge, experience and skill, he added.

"The merger will also benefit PNB's unit trust holders in view of the larger market capitalisation and prospects of much better dividends in future," Hilmi said.

At present, the three firms are also working on developing to a global level the by-products of palm oil - fuel and gas for the motor industry - as well as property development, he added.

-- BERNAMA