The Felda constituencies offer new opportunities for the Opposition in the coming general election owing to Felda’s mounting financial problems and the BN’s more limited resources, writes Johan Saravanamuttu.
It would seem that all is not well at Felda Global Ventures (FGV). The new Felda head apparently wanted to know where a balance of RM3.5bn had gone after its listing in 2012.
FGV was set up in June 2012 with much fanfare as Asia’s biggest and the world’s second largest IPO (after Facebook), with a market capitalisation of RM10.5bn. FGV’s shares rocketed from its initial price of RM4.55 to as high as RM5.50.
But over the years its share price has slid precipitously and stands today at a mere RM1.90. The declining palm oil price is said to be the main cause of this fall in share price with the concomitant implication of declining incomes for settlers – but there could well be more causes than meet the eye.
Felda’s projected and protracted purchase of a 37 per cent stake in the Indonesian PT Eagle High plantation company for more than USD500m has been severely criticised for being unnecessary, extravagant and possibly crony-related.
Crucially, one of FGV’s major domestic investors, the Employees Provident Fund (EPF) has pulled out its 3.85 per cent of shares. Even the parent Felda entity’s cooperative arm, Koperasi Permodalan Felda (KPF), of which FGV holds a 51 per cent interest, has sold off 5m FGV shares at a loss. These sales suggest that there are more issues with the global venture than meets the eye.
The latest available audit of 2014 showed that FGV was RM6bn in the red. The Najib government in January 2017 removed Mohd Isa Abdul Samad as chairman of the parent Felda and replaced him with Umno veteran trouble shooter Shahrir Abdul Samad. FGV remains under Isa.
Shahrir sacked the entire board of Felda’s investment arm, FIC, and is now handling the Eagle High purchase. He has also promised to reinstate the old settler-friendly Felda model.
But it is not just the Eagle High purchase that has raised eyebrows. Malaysia’s anti-corruption agency, MACC, on 24 January arrested five persons, including a ‘datuk’ over suspicion of malfeasance in a RM146m sturgeon farming enterprise of Felda.
Such developments provide scant comfort to Felda settlers, who for years have been served by a Pas-led NGO, Persatuan Anak-Anak Felda, which regularly raises issues of impropriety. Felda settlers themselves have regularly taken up court cases with the parent company for unfair losses of income.
Opposition leaders have been holding ceramahs attracting thousands of settlers recently, which is quite unusual, in Felda settlements towns like Jerantut and Maran in Pahang.
In this newsletter, I want to broach the question of how the Felda factor could affect the next general election, due to held by 2018 but widely speculated to be called earlier, sometime this year.
Two sorts of questions have been raised:
First, could the current economic woes and problems of Felda’s global flagship (FGV), as well as those of its parent, Felda, have an impact on how settlers will cast their vote in the next general election?
Second, if so, and also because of other significant political developments, has the Opposition a better chance of breaking the stranglehold of the ruling coalition in the 54 Felda constituencies in the coming election?
The Felda ‘vote bank’
It has long been held that Felda settlers with a total of some 1.2m voters represent something of a ‘vote bank’ for Umno and the BN.
But there has only been recent systematic analysis of Felda from such a perspective. I will draw on two important academic studies (Khor, 2015 and Maznah, 2015)*, which have demonstrated the vote-bank or ‘fixed deposit’ attributes of the Felda schemes for the ruling coalition, arguably for over the past six decades of electoral politics.
It is important to recognise that the Felda story is indeed an extraordinary one and that its success in the resettlement of 122,000 predominantly Malay families across Peninsular Malaysia and in Sabah is unprecedented as a model of land resettlement and reform in the Third World.
The smallholding scheme was begun by Tun Abdul Razak in 1956 and has continued to thrive till today, warts and all, and with the latest most significant development being its global venture.
The Felda settlers, who own about four hectares of land per family, have done well – not just surviving on the income from growing mostly oil palm (originally, rubber), and other ancillary secondary income made in the settlements. From time to time, they have also received bonuses from the government, particularly during election years or when elections are in the offing.
The FGV listing in 2012 conferred a bonanza of RM15,000 per family and allowed each settler to purchase 800 FGV shares with an interest-free loan. As the FGV shares have tumbled, settlers must be concerned that their investment has gone awry.
Generally, an average net income of RM2,500 per month would sustain a Felda settler and his or her family. But today there are rumblings that such an income cannot be maintained.
In short, to retain its Felda vote bank, Umno must constantly nurture and ensure that incomes remain reasonable and also that second-generation Felda issues such as housing are handled well and effectively.
It would appear that large-scale projects of ‘affordable housing’ of about RM90,000 for each home are far from suitable for second-generation settler families. Felda allows at least one child of a first-generation settler to build a house in the settlement compound.
There have been appeals to speed this up by such second-generation dwellers – and unhappiness about the lack of an adequate response from the government.
Felda seats are mostly located in rural constituencies – but a proportion of them are also in semi-urban areas. It is generally acknowledged that there are 54 Felda parliamentary constituencies located in Peninsular Malaysia, simply defined as those seats in which there are Felda settlements (Khor, 2015; Maznah, 2015).
In the 2013 general election, 258 ‘Felda voting districts’ were identified, all voting overwhelmingly in favour of the BN as follows:
|State||BN vote share in Felda voting districts (%)|
|Source: Khor, 2015, p. 106|
When aggregated this way, these are rather daunting figures for the Opposition. It does show nonetheless that settlers are almost always BN voters.
But when Felda districts are re-aggregated into the 54 constituencies, which include semi-urban and urban pockets of mixed voters, they may not seem so monolithic in terms of BN support.
The six to seven Felda seats on the Peninsula that the Opposition has been able to capture from time to time indicate that these Felda constituencies are not impenetrable. Some constituencies could be somewhat mixed ethnically and some are located in urban or semi-urban areas, which make them fair game for the Opposition.
Potential GE14 scenario
The good news for the Opposition is that there will be no increase in the number of Felda parliamentary seats for the next general election based on the new redelineation exercise.
The vast bulk of the peninsular parliamentary constituencies are in Pahang (12) and Johor (11), all won by the BN in 2013 except for Raub (won by DAP). It would be a tall order for the Opposition to win 23 Felda seats and wrest control of the federal government from the BN, which won 133 seats in the last election.
While this may not be realistic, one should note that in 2013, Pakatan Rakyat was able to chalk up several wins in Felda seats while losing some others won in 2008.
Three of these wins were in constituencies which had low percentages of Malays, viz. Raub in Pahang (50 per cent Malay); Kulai in Johor (33 per cent); Sungei Siput in Perak (33 per cent). Others won by Pas in Terengganu were typically large Malay-majority constituencies, viz. Kuala Nerus, Maran and Dungun.
Interestingly, in the 2008 general election, Pas managed to wrest two seats from Umno (Pendang andSik) and the PKR another two (Merbok and Kulim), all in Kedah, which indirectly helped the Opposition capture the state government.
The MCA and the MIC have each retained their Felda seats: the former, Tanjong Malim (53 per cent Malay) in Perak, and the latter, Cameron Highlands (34 per per cent Malay) in Pahang. Ethnicity obviously plays a pivotal role in why certain Felda seats fall to the Opposition or the BN.
But it would seem that urbanisation is equally important as a determinant of voter choice as proven by the DAP’s Teo Nie Ching, who took Kulai by storm in 2013, arguably one of the most urbanised Felda areas.
There is much speculation now that with the Mahathir faction firmly in charge in Bersatu, the Opposition could well capture Kedah again and that Felda seats would be key.
In this newsletter, I am only examining the federal seats but should these seats fall to the Opposition (as in 2008), the implications are obvious for the capture of state power as well since each federal seat contains two or more state seats.
In 2008, Pas took Pendang and Sik, predominantly Malay and rural seats. These seats could well be targeted again in GE14. PKR won two somewhat mixed seats in 2008, namely Merbok (65 per cent Malay) and Kulim Bandar Baharu (68 per cent Malay), and these could also be targeted again.
If one examined Pahang, the state is undoubtedly a bastion of the BN because of Felda constituencies. It should be noted that the Felda scheme moved some 9,200 out-of-state settlers into Pahang in the Jengka Triangle Scheme in the 1960s and 1970s ,and these settlers and their children have become loyal BN supporters.
As noted earlier, an MIC candidate has held firmly on to the Cameron Highlands seat in past elections although G Palanivel only won by a 462-vote margin in 2013.
In the same state, Pas took the more urban Termerloh seat with Nasurudin Hassan defeating Umno’s Saifuddin Abdullah by 1,070 votes. Another seat won by the Opposition was the urbanised Raub by the DAP’s Mohd Arif Sabri. These same constituencies could be targeted again with Saifuddin Abdullah (now in PKR), suitably poised to contest his old seat if Pas should concede.
The surprises could well come in Johor, which is in fact a very ethnically ‘mixed’ state, among the urbanised in Malaysia, somewhat like Selangor. Of the 11 Felda seats identified by Maznah (2015, p. 135), eight of them are ethnically mixed:
Kulai (33% Malay, 56% Chinese, 10% Indian)
Segamat (44% Malay, 46% Chinese, 10% Indian)
Tebrau (47% Malay, 38% Chinese, 13% Indian)
Sekijang (56% Malay, 39% Chinese, 5% Indian)
Simpang Renggam (57% Malay, 33% Chinese, 9% Indian)
Sembrong (58% Malay, 31% Chinese, 9% Indian)
Bera (59% Malay, 32% Chinese)
Pagoh (64% Malay, 31% Chinese, 4% Indian)
Note: Only the three major ethnic groups are included
As already noted, the DAP took Kulai through Teo Nie Ching, and this will likely remain as Opposition terrain.
The PKR’s Chua Chui Meng lost a close contest in Segamat to his MIC opponent by 1,217 votes. Another narrow PKR loss was registered against the MCA in Tebrau.
Sekijang saw a comfortable win by Umno against the PKR; Simpang Renggam saw a Gerakan victory, and Umno’s Hishammuddin Hussein Onn easily retained Sembrong. Umno’s Muhyiddin Yassin, now leader of Bersatu, won Pagoh easily.
If these same seats were contested again under the new Opposition alliance, along with others identified above, one may well see some interesting results. One could again extrapolate that federal seats gained for the Opposition would translate into many more state seats.
Shift in Felda votes?
The Felda constituencies offer new opportunities for the Opposition owing to Felda’s economic problems, the increasing level of settlers’ grievances, the potential lack of largess to fund BN campaigns and its money politics.
These problems are not new, but the new fragmentation of the Malay leadership could also be a factor that adversely affects Umno’s capacity to address these issues.
In GE14, barring three-corner fights, it could be speculated that Felda seats located in Kedah and Johor, given Umno’s latest fragmentation, could well see some positive if not surprising results for the Opposition. This assumes that an electoral pact would hold between Pakatan Harapan, Bersatu and Pas and other Opposition parties ensuring one-on-one contests.
The presence of Bersatu, particularly in the next election, representing new Malay factions in the Opposition, could prove to be of great value in renewing forays into Felda areas.
For the reasons mentioned earlier – such as the persistent problems faced by Felda settlers, the financial woes besetting FGV, and the ineffectiveness in addressing the settlers’ declining income and their indebtedness – one may see a shift in Felda votes to the Opposition and arguably at least the recapture of one state government.
The imponderable remains one of whether the presently divided and bickering Opposition forces can come together for a common cause.
Co-editor, Aliran newsletter
14 February 2017
- Khor Yu Leng, “The Political Economy of Felda Seats: Umno’s Malay Rural Fortress in GE13” and Maznah Mohamad, “Fragmented but Captured: Malay Voters and the Felda Factor in GE13” in Coalitions in Collision: Malaysia’s 13th General Elections (ISEAS & SIRD: 2015), eds. J. Saravanamuttu, Lee Hock Guan and Mohamed Nawab.