Felda Global Ventures changes management

From the Star:

Felda Global Ventures Holdings Bhd (FGV), whose market capitalisation is now almost half of what it was at its initial public offering (IPO) in 2012, is poised for a change in its top leadership.

Tan Sri Ismee Ismail is expected to replace FGV’s current group president and CEO Dr Mohammed Emir Mavani Abdullah, whose contract comes to an end this July.

Ismee, the managing director and CEO of Lembaga Tabung Haji (LTH), a position he has held for the last eight years, is speculated to be leaving the pilgrim fund and that the fund will be headed by Datuk Johan Abdullah.

According to LTH’s website, Johan was appointed as LTH deputy group managing director and CEO on January 15 this year.

Anyone will tell you a journey begins with a single step.  But with Felda, It's really just a step and won't solve legacy issues.

Replacing the current group president with the CEO of Lembaga Tabung Haji is not what I would say an ideal replacement.  Aside from financial engineering, it's doubtful a finance guy can be up to the task of putting Felda back on the right track.

Felda needs a few things, freedom to enact negotiations with suppliers, in other words, it needs to not be a punching bag for the Felda settlers.  They have to leverage their infrastructure strength to take the lions share of margins from it's suppliers.   They have to say"  pay the prices we want , or go find someone else."

As it stands, Felda Global Ventures has two major problems.  The first is that it is too lenient on suppliers.  The second goes deeper down on a political scale.  Felda settlers are very status quo oriented.  Basically the current government is in power due in large part to the settlers.  If FGV has the corporate will to push through reforms, the government may just stop them dead in their tracks.

To make FGV an investable entity, we need the government to give some sort of subsidy to FGV so they can make better margins. The second option is that they are able to go through corporate reforms politically unscathed.  I'll probably choose the first one of subsidy as the government just simply won't let their voting base erode away.