This article first appeared in The Edge Malaysia Weekly on April 2, 2018 - April 8, 2018

BACK in September last year, when The Edge approached Felda Global Ventures Holdings Bhd’s (FGV) newly appointed chairman Datuk Azhar Abdul Hamid for comments, he said the company “was not that bad” and that it was “still salvageable”.

Now, about six months down the road, Azhar, in his first media interview since being appointed chairman, and FGV’s CEO Datuk Zakaria Arshad share their thoughts on how things are panning out at the agribusiness group.

The Edge: How has it been after six months?

Datuk Azhar Abdul Hamid: Well, it has been great. I think if you look at FGV, we are now basically very well on track. We’re looking at the quality of the company’s assets, we’re looking at the way forward, we’re looking at some of the key issues that we have and resolving all those issues, like we have a labour shortage and others, and most of these issues have now been resolved.

Is it very political here compared with the other places you have worked at?

Azhar: FGV being political, I think it is just a perception. Because before, you had a chairman (Tan Sri Mohd Isa Abdul Samad) who was both chairman of FGV and FELDA (Federal Land Development Authority). And rightly or wrongly, the chairman at that point in time was a very experienced politician. So, of course, FGV will be perceived as a political animal.

Datuk Zakaria Arshad: What we have is a responsibility towards the smallholders in 54 constituencies. But even that is actually more so for the chairman of FELDA (Tan Sri Shahrir Samad) as opposed to the chairman of FGV.

Azhar: Tan Sri Shahrir is the chairman of a government agency. I’m the chairman of a public-listed company. And FGV has got clear stakeholders; we have FELDA as our shareholder, we have got other institutional investors as our shareholders and 36% of our shares are being held by the public. So really, we are just like any other normal public-listed company.

But given the perception of FGV being political, have you ever had to deal with influences from outside or politicians? If so, how did you deal with it?

Azhar: I am 57 and I have been here for six months, and I’ve not had any. I was with MRT and other organisations before, and I think when the government decided to offer me chairmanship of FGV, they knew I would basically run it like any other pure commercial entity. I don’t think a pure commercial entity will do anything without first prudently and objectively evaluating whatever initiative it wants to undertake. It cannot just blindly move because it is told to do so.

Our responsibility is to all the stakeholders and already, we are being challenged with the fact that when we did our IPO (initial public offering), it was RM4.55 and when I came in, the share price was about RM1.50 to RM1.60. We are struggling to make sure that value is being demonstrated.

It gets complicated when other factors beyond our control affect the equity market. But we are trying to put that aside and just focus on adding value to FGV. I’m confident that over time, the value we have created and will continue to create will be recognised by the market and we will be given fair valuation. I’m quite confident of that because right now, our focus on operations and making sure the corporate culture we develop in FGV is sustainable are going to add value to the company. All of these things that we are doing are positive, which I believe will be recognised at some stage, if not immediately then in the near future.

How long do you think you will take, roughly, to get everything in order?

Azhar: That’s a very tough question. But what I perceive or what I think will happen is that we can actually show something that people will like by the end of the year, if not by early 2019.

You’re a non-executive chairman, right? But do you feel you’re playing an executive role?

Azhar: I am a non-executive chairman, let me stress that. Granted, when I came in, there were a lot of challenges, so I didn’t have a choice but to spend a lot of time on this organisation.

But when Datuk Zakaria came back, basically he runs FGV. I am the chairman of the board.

Zakaria: Actually with the board today, we have very good sessions where we deliberate on a lot of the things to make sure that every step that we take right now adds value to FGV.

On that note, is any action going to be taken against past wrongdoings?

Azhar: I can’t comment right now. But when I came in, we sat down at the board level as well as had discussions with management, and there are some irregularities. Let’s not say wrongdoings.

Is this the only problematic issue?

Azhar: There are a few other areas that we are looking at as well. Some other matters that we are looking at happened even before Datuk Zakaria was appointed the CEO.

I’m looking at it from a professional angle, we look at it objectively, and we take whatever necessary action that we need to take based on the facts that we have established.

Zakaria: Things are unfolding now partly because there are new people on the board now. Obviously, we have a new chairman. Even from the stakeholders’ perspective, we also need to understand that while the new chairman wants to look forward, people will always ask, ‘There are a lot of things that went wrong before; what are you doing about it?’

Azhar: When I came in, we were short of workers to the extent of 10,000.

Zakaria: We were supposed to have something like 32,000 [workers] and we were short of 10,000. So, a lot of the things that was required to happen in the plantations were not taking place because there were not enough workers. So, there were a lot of fruits not being harvested and there were a lot of leakages because of that.

Azhar: The other thing that we found was that the housing was not [in good shape]. We didn’t spend enough money on housing for the workers.

It was a sort of Catch-22 situation — if you don’t have good housing, you cannot attract good workers.

We are doing the housing now and I think by the end of this month, we will probably have something like 8,000 workers coming in.

Apart from workers, are there other issues?

Azhar: Well, if you look at our yield, to a large extent, you are right. If you look at 2017, we did only 15-plus tonnes of FFB [per hectare] but that’s because a lot of our age profile was basically off.

We are correcting that now. As I said just now, we are replanting and we are doing it very aggressively to make sure that the issue of age profile gets corrected.

So, there are two ways to correct it — one is to do aggressive replanting and the other is, if opportunities come our way we can acquire brownfields that add to or enhance or improve our age profile.

So, you are in M&A (mergers and acquisitions) mode?

Azhar: Yes.

One we heard about involves MSM Malaysia Holdings ...

Azhar: Yes, we have got that. We even have a proposal from [Tan Sri] Peter Sondakh. But as I said, we will still evaluate. You have to understand that we have a responsibility to all our stakeholders. Whatever we do, we must always bear them in mind and we are not going to do anything that is going to destroy value for our stakeholders.

Any particular place you are considering, brownfield or greenfield?

Zakaria: We are considering a few countries but actually we are not in a hurry to look for and acquire any plantations, whether greenfield or brownfield, because we have a lot of things to do here.

Is your cash sufficient for the acquisitions you talked about?

Azhar: At the moment, I dare say it’s not enough. But [what] we are going to do is we’re looking to do some refinancing and we’re looking to issue sukuk. We’re also looking to dispose of some of the assets that are not core to us, so that will also bring in cash.

Datuk Zakaria, there is talk that you might leave after the general election ...

Zakaria: I leave it to the board to decide.

Azhar: At the end of the day, it’s the board’s decision … I think the way things are going right now, as chairman of the board, I can say that I don’t have a problem with Datuk Zakaria. I can say that today, things are working out the way the board and the management agreed on.

Where do you hope to see FGV in three years?

Azhar: Let’s be really honest. When you talk about FGV and FELDA in recent years, there is a very negative [sentiment] attached to it.

It’s always discussed in a negative tone, and that has to change. It is changing. Today, I dare say that people are beginning to see the difference.

The end journey is that we must be recognised as a food entity. What we are doing is not only engaging in agriculture but also putting food on the table. At the end of the day, we should have a bigger presence as far as food production and distribution are concerned.

First and foremost, we need to get our identity right. We are still lost in that FGV-FELDA thing. Even our transport business is called Felda Transport. So, our next step now is to brand FGV and position the FGV brand properly.

Are you trying to distance yourself from FELDA?

Azhar: Not distance, just to put things in the right perspective. FELDA is our shareholder, we work with FELDA. We came from FELDA. But we are now a listed entity on our own. And we are not just responsible to FELDA but also all the other investors. So it’s only logical that we stay and look independent.

The sugar business seems to have done quite badly last year because sugar prices were very high.

Azhar: If you look at it, most sugar outfits, they suffered from very high raw sugar prices and a lot of them, including MSM, had to carry through it.

Basically, MSM is a refiner as far as the sugar business is concerned. I think MSM as a refiner will do well from 2018 to 2019 and onwards, but I think MSM should be more than a refiner.

So, right now, the MSM team is looking at how they should grow … should they grow horizontally or should they grow vertically?

And they are also addressing how they should participate in the export market.

So, it’s safe to say you’re not looking to let go of your sugar business?

Azhar: Letting go or keeping an investment is a day-to-day matter. You know the old saying, ‘anything can be bought or sold at the right price’.

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