By Xavier Kong
When Tiger heard about Felda Global Ventures Holdings Bhd incorporating a new subsidiary, Tiger had felt curious. After Tiger saw what the subsidiary was to do, Tiger could only sigh. Whatever happened to focusing on core competencies?
There is a thing to be said about history, and that history will be repeated by those who do not heed its lessons. For some reason, Tiger believes this applies to Felda Global Ventures (FGV). Why, you may ask? To answer this, Tiger would like to point towards the newly incorporated subsidiary of FGV, FGV Logistics Sdn Bhd.
Incorporating subsidiaries is all well and good, but in this event, Tiger can hardly agree. FGV Logistics, which was incorporated on Nov 20, 2015, is to be utilised as a (you guessed it) logistics arm of FGV. In case it has slipped minds, Tiger would like to bring up the point that FGV is a plantations upstream and downstream player, as well as the previous attempt FGV had made at diversifying into multiple fields.
So is this going to be a new core business? If yes, it may not be wise.
Tiger can only ask, what happened to FGV’s promise of focusing on existing core competencies, after the criticism FGV had faced that had led to the group divesting itself of its non-core competencies? Considering the number of issues already being faced by FGV at the moment, such as its average tree age which stands on the “old” side of the line, or the issue of the land its plantations are on, which continue to represent a cost to FGV every quarter, should FGV not focus on what it is doing at hand before looking to such lofty heights?
For that matter, what about the current fracas between FGV and Eagle High Plantations? Why not fix all of these issues first? Tiger believes that those issues deserve all the attention they can demand from FGV, and would be a better direction for the group’s funds and resources.
Speaking of funds and resources, the subsidiary will of course have a facility, a warehousing and logistics facility, in fact, in Tanjung Langsat. Why divert the funds in this direction, when the group’s core competencies are themselves facing issues?
To be fair, Tiger is not against moving towards new competencies. It is definitely a valid direction of growth for a company or group. However, there is also the issue of focus, especially when the core competency might very well be facing production issues in the coming year. Of course, this is not just an issue for FGV, but rather, a lot of local plantation players may very well be facing lower fresh fruit bunch production due to the lagged impact of El Nino. A fruitful palm oil production, dry weather does not make.
Again on the matter of core competencies, just what is FGV doing moving into logistics, of which it knows not a whit? Surely it already has existing ways to move its own things around as part of its operational procedures, so does it need to go down this road? A full-fledged logistics set-up may take resources more than FGV should be willing (or able, arguably) to spare right now.
As it is, Tiger feels that this step into the logistics sector, and away from FGV’s core of plantations, is a bad move at a bad time. Considering the group is already under pressure from the Eagle High deal, which would only see resolution in the first quarter of the 2016 calendar year, as well as the condition of the group’s assets like aging palm trees and the constant need to pay for the use of their planted land, Tiger feels that the focus of FGV should remain on the group’s core competencies.
Tiger’s animal instinct is screaming that this is not the best of moves, and Tiger can only wonder if this is part of some grand strategy, or if this is a misstep that will be paid for by the shareholders of FGV.
GRRRRR!!!
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