PETALING JAYA: FGV Holdings Bhd said it is still status quo for its land lease agreement (LLA) with the Federal Land Development Authority (Felda) as it has yet to receive any official notification, according to its group CEO Datuk Haris Fadzilah Hassan.
He disclosed that the group has written to Felda stating that a joint statement will be issued on behalf of the two parties should there be any further development in the issue.
Haris reiterated that the agreement only governs the estate that is currently under a 99-year leasehold to FGV and does not include the oil mills it owns.
“Any interest shown towards the oil mills will have to be taken on a commercial basis and we will take it on a willing seller-willing buyer basis, but there has been no discussion that has taken place to date,” he told the media at a virtual press briefing for its third-quarter 2020 results on Tuesday.
Haris highlighted that it owns 68 mills which are critical to the group’s business.
He pointed out that the LLA land only accounts for an estimated 30% of the fresh fruit bunches (FFB) processed by its mills, while the remaining capacity is taken up by FFB from settlers and third party suppliers.
Even without the LLA land, FGV needs the mills to process the remaining 70% of the FFB.
“It is a very critical part of FGV’s capabilities, in terms of processing the FFB as well as for the further downstream markets,” he explained.
When asked about the estimated value of the mills, Haris said it has yet to be ascertained as it will hinge on an independent valuation by a valuer.
However, he gave a rough guidance on the cost of a new mill, which is RM1 million for every tonne capacity.
In regard to the withhold release order (WRO) placed on the group by the US Customs & Border Protection (CBP), it reiterated that the action has a bigger impact on its reputation rather than financial, as the US is a small market for the group.
In 2020, the US market accounts for 40 tonnes out of the 3 million tonnes produced by the group.
“However, we take the accusation seriously as it relates to an area that it has been working hard to improve and some of the issues highlighted reference an article from 2015,” the group CEO explained.
Since 2015, a lot of improvements have been made and it is proud of the improvements made in housing, working conditions and the recruitment process for foreign workers, he said.
Following the WRO, it has been in discussions with the US CBP to ascertain the areas in which it is lacking but it has not received detailed information on the specific shortcomings but was referred to the 11 International Labour Organization indicators of forced labour.
At the moment, FGV is in the midst of selecting a suitable auditor or consultant to audit its operation in order to revoke its WRO status imposed by the US agency.
Meanwhile, Haris revealed that there are two planned divestments in the pipeline, in addition to the RM57.2 million divestment of KAO Malaysia and FGV Cambridge Nanosystems that were completed previously. “We hope to complete the negotiations by this year but we will see how best to finalise that and will make the necessary announcements, once completed.”
As for the proposal by Tan Sri Syed Mokhtar Albukhary’s Perspective Land (M) Sdn Bhd on the injection of plantation assets in exchange for shares, Haris stated that the group is studying the proposal.
He clarified that it is in the process of determining the assets that could be injected but they do not include Syed Mokhtar’s Central Sugars Refinery Sdn Bhd.
