Tuesday, 22 April 2014

Felda's proven track record a model to follow

Felda Technoplant Krau 1 scheme assistant manager Abdul Rahman Mohamad Nazri (right) with Felda Scheme Krau 1 manager Suroto Ahamad.

Felda Technoplant Krau 1 scheme assistant manager Abdul Rahman Mohamad Nazri (right) with Felda Scheme Krau 1 manager Suroto Ahamad.

Felda's director-general says good human resource management and financial systems are the ingredients that make the scheme one to emulate.

Felda's origin and roots can be traced back to Malaysia’s pre-independence days when it was set up under the Land Development Ordinance 1956 to primarily develop lands (allocated by the state government) and conduct resettlement. This was, essentially, to eradicate poverty among the rural poor through crop cultivation and reduce the income disparity with the urban working class.

In 1958, the Felda model was created as a structured agriculture business model with a set of policies and criteria in place for applicants. Among them are that one must not own any land, must already be married, preferably have a family or children of their own, and have some agricultural background as well as basic carpentry skills for house building. The first batch of 28 settlers were recruited, arriving for work at the Lurah Bilut plantation the year after, which is a short drive from Felda Krau, Mempaga.

Though Felda started with rubber during its initial five years, the move to oil palm was made soon after its first oil palm plantation was cultivated at Felda Taib Andak in Johor, in 1965.

To date, Felda has under its wings 112,635 settlers who collectively own 397,600ha of oil palm smallholdings throughout the country, and a remaining 82,165ha of rubber land, making Felda Group the largest player in Malaysia for the commodities of oil palm and rubber (Felda contributes 18% of Malaysia’s crude palm oil production through one of its commercial arms Felda Global Ventures Holding Sdn Bhd).

Faizoull says Felda has a proven track record of taking rural folk out of poverty and elevating their socio-economic status.

When Felda became a statutory body in 1990, it had proven financial ability to stand on its own through various income-generating ventures and business arms beyond plantations, and the diversified investments were a welcome boon to the settlers. The created entities, meant to complement the entire value chain of Felda’s core activity, translated to additional sources of income for these settlers.

A case in point is Felda Cooperatives, which is now the second biggest income pool/provider; the first remains the estates. Just last year, a 16.5% dividend was declared from the Cooperatives thanks to the profits from the various entities, while the highest was 18%.

Today, through Felda Global Ventures, it has 49 subsidiaries and various other businesses that are dispersed across different states in the country, including refineries, sugar-producing facilities, rubber and cocoa manufacturing, and all along the supply chain of palm oil activities from refining and kernel oil production to palm oil trading and distribution of packed foods/cooking oil.

Globally, it is already making its presence felt in countries like China, Indonesia, Australia, Europe and even the US and Canada – with a host of business ventures like canola and soybean, oil and fats, oleochemicals, livestock, and bulking installation.

Last year, Felda established yet another new arm called Felda Investment Corporation (FIC) which incorporates other businesses that include hotel properties and travel-related services, and it is expected to become another important non-plantation income contributor in the near future.

Felda Krau 1 Scheme, located here in Mempaga Region of Pahang, is just one of the 317 schemes nationwide under Felda.
Felda Krau 1 Scheme, located in Mempaga Region, Pahang, is one of the 317 Felda schemes nationwide.

Felda director-general Datuk Faizoull Ahmad says the Felda Model has proven successful in bringing rural people out of poverty and elevating their socio-economic status.

“Before independence, about 70% of the population lived below the national poverty level, and our mission as the government’s invisible arm is to help them make the transition to middle class and inject some life into the rural economy,” says Faizoull during an interview at his office.

“By 2000, we have successfully done that, having given out more than 70% of land titles to settlers to own as rightful owners, after repayments made in the form of monthly cuts from their salaries with sales of the harvested fruits. We have a proven track record that speaks for itself, and I can say we have done well in the role we have been entrusted with, for the rural poor across all ethnicity.

“It really boils down to having prudent financial practices and good human resource management systems in place, and this is a model that some countries abroad have expressed interest to emulate. In fact, when we borrowed a loan from the World Bank to open up plantations and settlements, we managed to settle all of it 20 years ahead of the 2020 due date.”

More than just looking after the welfare of the original settlers, Felda is now committed to helping the younger generation, comprising some two million children and grandchildren, develop their potential and skills, and aid in entrepreneurship development. A Felda New Model called Sentuhan Kasih has recently been formed specifically to help this new generation, designed with a slightly different list of policies and criteria from their father’s or grandfather’s – such as a 0.003ha house lot with house title instead of plantation land title as previously.

“We grow with the people we serve, and that’s our philanthropic responsibility. There isn’t a non-listed plantation organisation in Malaysia that has cooperatives for settlers to hold shares and receive dividends as shareholders,” he adds.

Faizoull says the next step forward for Felda is to become an economic powerhouse by 2020.

“We envision for further expansion that would help generate a high-income livelihood for the settlers, and to give a growth impetus to rural areas even more. Among our plans are for a Felda Wellness Corporation, a multi-million dollar investment, the Felda National Food Warehouse project, and the Sturgeon Farm project to produce food products for both domestic and international demands. We are very focused on doing more for these settlers, and their next generation. Their success is also ours. It’s a winning formula that has benefited so many, and our commitment has never wavered.”

Tags / Keywords: Palm Oil , Felda , Land Development Ordinance 1956 , Felda model , Datuk Faizoull Ahmad , director general , Felda Global Ventures , poverty , rural people


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