This article first appeared in The Edge Malaysia Weekly on June 22, 2026 - June 28, 2026

FGV Dairy Farm Sdn Bhd, the vehicle for FGV Holdings Bhd’s planned dairy venture, was wound up five years after the investment. The group had invested about RM10 million into the company.

FGV Dairy Farm and its wholly-owned subsidiary, FGV Dairy Industries Sdn Bhd, now owe about RM4 million to more than 100 vendors and farmers.

Relatively modest in scale, the episode may be viewed as a minor misstep in contrast to FGV Holdings’ much larger, multibillion-ringgit acquisitions.

A businessman, who declined to be named, says: “I don’t understand what’s going on. In the past, Felda and FGV [Holdings] couldn’t seem to get their act together doing big deals and business. Now, even small ventures such as dairy farming are proving to be challenging. What’s going on?”

In the broader scheme of things, however, the following instances are among the investments that failed to bear fruit and, in some cases, resulted in losses.

In August 2014, FGV Holdings, which has since been taken private by the Federal Land Development Authority (Felda), announced plans to acquire Asian Plantation Ltd (APL) via a voluntary conditional cash offer at £2.20 per share.

The offer represented a 295% premium over APL’s net asset value per share as at Dec 31, 2013. FGV Holdings also assumed APL’s RM517 million in debt, bringing the total acquisition price to RM1.1 billion.

APL was then listed on the Alternative Investments Market of the London Stock Exchange and delisted after the voluntary general offer.

There were murmurs that FGV Holdings might have paid too much for APL, which owned 24,622ha of oil palm plantations across five wholly-owned estates in Miri and Bintulu, Sarawak.

According to news reports, as much as 40% of APL’s land, or about 7,300ha, was unplantable and close to 2,600ha was encumbered by Native Customary Rights claims, meaning that as much as 9,900ha, or 40%, of APL’s 24,622ha cannot be developed for planting.

A forensic investigation, which commenced in January 2018, confirmed the high price tag. FGV Holdings subsequently initiated legal proceedings in the Kuala Lumpur High Court against 14 defendants, comprising former directors and employees of FGV Holdings.

FGV Holdings sought damages totalling RM514 million for losses arising from the acquisition of APL, among others, on the grounds that the directors failed to discharge their fiduciary duties, duties of fideli­ty and duties to exercise reasonable care, skill and diligence in relation to the 2014 purchase of APL.

It is almost ironic that FGV Holdings’ initial public offering in June 2012 was the second largest in the world after Meta Platforms Inc. The flotation boosted its cash pile of RM5.09 billion. Since 2015, however, it has fallen into a net debt position.

In 1999, Felda set up Sutrajaya Shipping Sdn Bhd to transport its own crude palm oil (CPO) cargo. The move into shipping initially appeared strategic, with plans to charter vessels from owners to better manage costs and mitigate risks.

A shift in the business model a few months later, however, saw Sutrajaya acquiring its own tankers. In mid-2002, it purchased two vessels — the 7,800-deadweight tonne Hosho, built in 1994 for US$6.2 million, and the 8,400dwt Oshamu, built in 1996 for US$9.2 million — and rapidly expanded its fleet to five ships within a short span of time.

At one point Sutrajaya was reportedly operating an additional 15 chartered vessels over and above the five it owned.

By June 2006, international shipping publications reported Oslo-listed Camillo Eitzen & Co acquiring Sutra Empat, a 7,800dwt chemical tanker built in 1994, for US$10.25 million, and in August that year, Sutrajaya disposed of the 8,400dwt Sutra Satu, built in 1990, to a South Korean shipping outfit, and buyers were being sought for MT Sutra Tiga and MT Sutra Lima, with Felda looking to exit the shipping business.

Since a ship’s value typically declines with age, Sutrajaya is likely to have sold its vessels at a loss.

There are few public reports on this venture and little explanation as to whether it succeeded or what led Felda to exit the shipping business after such a short period. It remains unclear whether there was a lack of planning or what challenges prompted the decision to abandon the initiative.

Nonetheless, the episode has drawn attention as another instance where aspects of Felda’s investments and missteps appear to have been swept under the carpet.

Perhaps Felda’s most publicised blunder is its acquisition of a 37% stake in plantation outfit PT Eagle High Plantations Tbk from Tan Sri Peter Sondakh’s Rajawali group for US$505.4 million in late 2016.

Felda’s wholly-owned property arm, FIC Properties, executed the acquisition, paying IDR775 per share — or a 95.86% premium over Eagle High’s prevailing market value.

In a press release on Christmas day 2016 defending the acquisition, Felda said: “This is the last opportunity for Felda/Malaysia or any other foreign parties to acquire an Indonesian company with a massive land bank. The Indonesian government agrees to a one-time exception to this deal.”

So far, there has been no evident benefit to Felda from the acquisition of the 37% stake, and many have questioned the merits of the investment.

It is also noteworthy that Peter Sondakh was a close associate of former prime minister Datuk Seri Najib Razak, and that the acquisition by FIC Properties was undertaken during Najib’s tenure as prime minister.

FGV Holdings was in fact the first party to be approached to seize what was described as “the last opportunity to buy plantation estates in Indonesia”. It ultimately avoided the deal after plans changed as concerns grew that minority shareholders were unlikely to approve the acquisition at such a high price for a non-controlling stake and given that FGV Holdings would not have control of Eagle High after such an expensive acquisition.

Peter Sondakh retained a 37.7% stake via PT Rajawali Capital International, and Felda secured no board representation on Eagle High.

To enable the acquisition of Eagle High, FIC Properties secured a RM2.77 billion loan from GovCo Holdings Bhd and is still servicing it under a 20-year Tawarruq financing agreement, scheduled to mature in 2043.

Last Thursday, Eagle High was trading at IDR78, almost 90% lower than the IDR775 paid in late 2016. Its market capitalisation stood at US$137.73 million (RM567.11 million), implying Felda’s 37% stake had a market value of US$50.96 million, or just 10.08% of the amount paid in late 2016.

Interestingly, there was a put option that was part of the agreement between FIC Properties and Rajawali for the former to sell its 37% stake in Eagle High back to Rajawali group at US$505.4 million, with an additional 6% interest a year. Felda has yet to enforce an arbitration award in its favour, as the Rajawali group filed a petition to block its enforcement in the Indonesian courts.

How Felda hopes to enforce the put option against the Rajawali group in Indonesia is anyone’s guess.

In June 2014, FIC Properties acquired a 72.27% stake in developer Encorp Bhd (KL:ENCORP) from Tan Sri Mohd Effendi Norwawi at RM1.55 per share, 55 sen per warrant and RM1.55 for Encorp’s redeemable convertible unsecured loan stocks, forking out a total of RM306.11 million. Mohd Effendi was a known associate of former premier Najib.

Last Thursday, Encorp ended trading at 11.5 sen and had a market capitalisation of RM36.4 million, which means Felda’s 67.13% stake in the company today is worth only RM22.66 million (less than 10% of the sum it invested), and the development authority is sitting on a hefty paper loss.

Encorp has not been performing well financially. The company has suffered six consecutive quarters of losses. For its first financial quarter ended March, it recorded a net loss of RM5.24 million on revenue of RM13.99 million. In the corresponding quarter a year earlier, the property deve­loper posted a net loss of RM2.96 million on revenue of RM18.75 million.

As at end-March this year, Encorp had other investments of RM180.98 million and its cash balance was at RM3.33 million. Its long-term debt commitments amounted to RM193.17 million and short-term borrowings were at RM175.09 million.

On Nov 21, 2014, Felda Investment Corp Sdn Bhd acquired 73.5 million shares, or 9.73%, in Barakah Offshore Petroleum Bhd for RM99.96 million, or RM1.36 apiece.

Nearly four years later in June 2018, Felda Investment Corp started selling its Barakah shares and ceased to be a substantial shareholder on June 20. The shares were trading at below 20 sen then, meaning Felda Investment Corp’s 73.5 million shares would have fetched about RM14.7 million (at 20 sen each) — a loss of RM85 million on back-of-the-envelope calculations.

Felda’s investment in Barakah was intended to serve as a launching pad for the development authority to tap the growth of the domestic oil and gas industry. The move raised questions over its diversification from palm oil into fossil fuels.

In July 2013, Felda and South Korea-based MMC Hassed Co Ltd announced the construction of a RM120 million sturgeon farm to produce caviar, in either Jerantut or Jengka in Pahang, as part of the East Coast Economic Region (ECER) project.

According to an ECER statement, the project was expected to help boost the income of about 1,300 Felda settlers and generate a monthly income of roughly RM10,000 for them.

“At full production capacity, the farm can produce up to 30 tonnes of caviar per year with a potential revenue of nearly RM100 million,” the statement said.

Roughly three years later, the Auditor-General’s (AG) Report 2015, tabled in the Dewan Rakyat, disclosed that Felda had yet to obtain returns, assets or technology transfer from the project. Worse, the sturgeon could not be sent to Pahang, as the aquaculture farm had yet to be built, as the Pahang Department of Environment had withdrawn its approval for the project site.

The AG’s report stated that the contract signed by Felda for the sturgeon business was lopsided and unfavourable to Felda.

In January 2017, the Malaysian Anti-Corruption Commission detained three serving and two former staff of Felda over suspected corruption linked to the sturgeon farming project. A month later, two were charged with four counts of criminal breach of trust involving RM47.6 million, though the charges ultimately did not hold.

Several transactions at Felda raised eyebrows, including Felda Investment Corp’s acquisition of The Merdeka Palace Hotel and Suites in Kuching, Sarawak, for RM160 million between late 2014 and early 2015 — despite professional valuers CH Williams Talhar Wong & Yeo Sdn Bhd estimating its value at only RM80 million.

Another initiative involved Savaro, a concept store venture established through a joint venture with Schneeballen Korea Co Ltd, to produce and distribute schneeballen pastries. Savaro began operations in July 2013 but went into liquidation in April 2016, resulting in losses of RM2.24 million — a relatively modest sum compared with other failed ventures. Questions were raised, however, over irregularities, including rental payments being directed to the outlet mana­ger’s account rather than the building owner’s designated bank account.

Against this backdrop of repeated setbacks and blunders, the latest dairy farm fiasco — which has left more than 100 farmers and vendors out of pocket — is unlikely to prove the catalyst for any meaningful change at the agency.

Read also:
Cover Story: Bitter lessons from dairy venture with Felda
Cover Story: How secure is Malaysia’s food supply?

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