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FACTBOX-Malaysia's FELDA -- palm oil and politics

Thu, 23 Feb 2012 09:10 GMT

Source: reuters // Reuters

KUALA LUMPUR, Feb 23 (Reuters) - Malaysia's government may delay its $2-billion listing of a state-linked palm oil firm as farmers' resistance to the deal risks undermining the ruling coalition in fiercely contested national elections expected this year.

Prime Minister Najib Razak had pushed for a listing of FELDA Global Ventures Holdings (FGVH) to create a blue chip plantation firm and attract investors to the local bourse:

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COMPLICATED CORPORATE, SOCIAL STRUCTURE

* Najib's father and former prime minister Abdul Razak started the Federal Land Development Authority (FELDA) in the 1950s. The government agency was tasked with opening up and handing over farming land to poor Malays on mainland Malaysia.

* To qualify for land, the settlers had to be aged between 21 and 50, married and physically fit. They took cheap 15-year loans from the government to acquire and develop the land, allocated in lots of 10 to 14 acres.

* The land development authority set up FELDA Holdings in 1995 to manage its business dealings and oversee the processing of palm oil from the farmers' land and other estates it owns, which in recent years had grown to 880,000 hectares.

* In comparison, Sime Darby, the world's largest listed planter in terms of estates, has slightly smaller planted landholdings of 877,000 hectares.

* The farmers' investment cooperative (KPF) holds a stake of 51 percent in FELDA Holdings. FELDA owns the rest of the company via FELDA Global Ventures -- which was set up in 2009 to fuel expansion into international markets.

* FELDA's firms have forged partnerships with other foreign companies. FELDA Holdings jointly owns and runs an oleochemicals plant with Procter & Gamble in Malaysia.

* The firm also supplies Malaysian rubber grades such as SMR 10 and SMR 20 to international tyre manufacturers like Michelin , Bridgestone, Goodyear and Continental.

POLITICAL INFLUENCE

* There are more than 300 FELDA settlements across Malaysia, making the small farmers and their families politically important as they represent the bulk of the voters in 54 of the 222 parliament seats and 92 of more than 500 state seats.

* Some FELDA-dominated state seats fell to the opposition in 1999 after former deputy prime minister Anwar Ibrahim was jailed on charges of corruption and sodomy.

* Record palm oil prices in 2008 saw FELDA settlers in rural areas backing the government in the face of unprecedented parliamentary seat gains by the opposition in urban centres.

* Political analysts say the older generation of settlers is more loyal to the ruling Barisan Nasional coalition as the land was initially handed to them by the same government in the late 1950s and early 1960s.

* Their descendants and new settlers are more politically minded and the opposition has been reaching out to them.

(Reporting by Niluksi Koswanage; Editing by Sugita Katyal)