DAP’s Ong Kian Ming says FGVH is potentially entering into a ‘high risk’ venture for its proposed stake in an Indonesian plantation. ― File pic

KUALA LUMPUR, June 17 — Felda Global Ventures Holding (FGVH) will not just pay a high price for its proposed stake in an Indonesian plantation but is potentially entering into a “high risk” venture, DAP’s Ong Kian Ming said today.

Citing a November report by US-based environmental risk analysts Chain Reaction Research, the Serdang MP pointed out that Rajawali Group’s takeover of Eagle High Plantations née BW Plantations earlier this year had been categorised as “high risk”.

FGVH is now proposing to buy a 37 per cent stake in Eagle High from the group controlled by Indonesian tycoon Peter Sondakh.

“Among the risks cited is that ‘for 70 per cent of its land bank, permits are not yet secured to start oil palm planting, and it is far from certain that they will be’ as well as serious concerns ‘in relation to peatland development, deforestation and encroachment in orang-utan impat’ which may affects it main customers who are committed to the ‘No Deforestation, No Peatland, No Exploitation’ policy,” Ong said citing from the report.

Chain Reaction Research pointed out in its report that 40 per cent of BW’s sales were to firms that have “No Deforestation, No Peatland, No Exploitation” policies.

Ong added that the report stated that other issues involving BW’s unplanted landbank were that it only had location permits while its application for plantation licences were still at preliminary states.

“The CCR report is further proof that FGV is overpaying for its 37 per cent stake in EHP and that FGV’s shareholders ― the FELDA settlers and the general public ― will end up paying for the mistakes of FGV’s management and board of directors,” Ong added.

FGVH on Friday announced that it will acquire 37 per cent of Eagle High for US$680 million (RM2.54 billion) or IDR775 per share during a time when the stock was trading at IDR450 on the Jakarta Stock Exchange.

Yesterday, Ong questioned FGVH’s rationale for paying nearly twice what the shares were worth.

FGVH fell to RM1.65 on Monday on the first day of trading since the firm announced that it will buy 37 per cent of Rajawali Group’s Eagle High Plantation for US$680 million in cash and stocks.

It also represents an over 60 per cent drop in value from the RM4.55 when Felda was first listed in 2012, in the biggest market listing of the year behind social network Facebook.

One analyst firm predicted that the conglomerate’s plunging share value and rapidly depleting reserves could put it at risk of losing its blue chip status, which could prompt a further exodus of investors.

The deal has come under criticism from business analysts and lawmakers alike, with the market similarly unreceptive.

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