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How Bernas’ RM2b annual business was given to Shahidan by Dr M and Kuok’s exit from Malaysia
KUALA LUMPUR, Nov 29, 2024: The Coverage has reposted a Malaysia Today report on how former Umno minister Shahidan Kassim got Bernas’ RM2 billion annual business from former racist prime minister Dr Mahathir Mohamad (Dr M).
The move triggered Malaysia’s richest man, Perlis Plantations’ Robert Kuok, to exit his business-base from Malaysia.
The frustrated Kuok divested most of his businesses, including sugar and palm oil, and moved to China where he is today a super successful businessman.
It was a blessing in disguise for Kuok to be frustrated and forced out of businesses that he built to the Malays.
It was Malaysia’s huge loss as Kuok later invested some RM10 billion into setting up the biggest palm oil refineries in Indonesia and also turned his sugar business into global conglomerates.
Here is some background on Kuok and what Malaysia lost by its discriminatory racial business policies:
Robert Kuok Hock Nien, better known as Robert Kuok, (born 6 October 1923) is a Malaysian business magnate, investor and philanthropist based in Hong Kong since 1973. According to Forbes, his net worth is estimated at US$11.8 billion as of April 2023, making him the wealthiest Malaysian citizen and 96th wealthiest person in the world. As of April 2023, according to the Bloomberg Billionaires Index 2023, Kuok has an estimated net worth of US$17.7 billion, making him the 97th richest person in the world.
Although Kuok is a major figure in business circles in East and Southeast Asia, he has remained media shy and maintains a low public profile despite his massive business success and immense wealth, with most of his companies being privately held by him or his family members. Apart from presiding the ownership over a multitude of businesses spread across numerous industries in the Malaysian economic landscape, his companies have investments in many countries throughout Continental Asia.
His business interests (collectively known as the Kuok Group of Companies) range from sugarcane plantations (Perlis Plantations Bhd), sugar refineries, flour milling, animal feed, oil, mining, financial services, hotel (Shangri-La Hotels and Resorts), real estate (Kerry Properties), trading, freight shipping (Kerry Logistics) and publishing. The biggest source of wealth that has contributed to his private fortune is a stake in the Singaporean company Wilmar International, the world's largest listed palm oil trader company. For three months in 2018, Kuok was appointed to the Council of Eminent Persons as an advisor during Mahathir Mohamad’s second stint as prime minister. - Wikipedia
No News Is Bad News reproduces below The Coverage’s reposted bews and a report by TheEdge:
How Did Shahidan Kassim Get Bernas That Brings In RM2 Billion Per Annum From Tun M
29 November, 2024
On 12th November 2013, Anwar Ibrahim said the original intent to privatise Bernas was to ensure the fulfillment of the nation’s growing rice requirement through management of the National Stockpile and the Padi Price Subsidy Scheme. He also added that privatisation was introduced to ensure the bumiputera farmers, rice distributors and workers at Bernas benefit from the equity ownership.
Raja Petra Kamarudin
How the Shahidan clan acquired the Bernas cash cow
Lembaga Padi Negara or LPN was privatised about eight years ago (23 years ago now) into what is known today as Padiberas Nasional Berhad (Bernas). Though it is supposed to be a public company, Bernas is very much controlled by one family, that of the Menteri Besar of Perlis, Shahidan Kassim.
How did Shahidan get his hands on Malaysia’s rice monopoly that brings in a turnover of almost RM2 billion per annum and profits averaging about RM80 million per year? The story of Bernas is not a rags-to-riches story but one of richer-to-even-richer.
Shahidan, the well-known Umno gangster, was Mahathir’s hit-man whose job was to take out any and all threats to Mahathir
Shahidan was then the Member of Parliament for Arau, Perlis, the Chairman of Parliament’s Back Benchers Club (BBC), Chairman of FAMA, Chairman of Yayasan MARA, Director of MARA, and many more. The then Menteri Besar of Perlis was Dr Hamid Pawanteh who was slotted for ‘retirement’ due some ‘indiscretions’ that was threatening to blow up if he continued as Menteri Besar. Shahidan was identified as Dr Hamid’s successor.
Malaysian Prime Minister Dr Mahathir Mohamad summoned Shahidan and told him that he and Dr Hamid would have to switch jobs. Dr Hamid would be contesting the 1995 General Election on a Parliament seat while Shahidan would in turn take over his state seat. The reason being, Shahidan would have to take over as the next Menteri Besar of Perlis.
However, much to Dr Mahathir’s surprise, Shahidan declined the Prime Minister’s ‘offer’. He told the Prime Minister he was not interested in the Perlis Menteri Besar’s job. He was more interested in getting rich and would rather do business.
And this was what Shahidan discussed with the Prime Minister as revealed by one of his business partners whose company Shahidan was the Chairman of.
“Why should I want to be the Menteri Besar of Perlis?” asked Shahidan Kassim when I met him just before the 1995 General Elections. “What has Perlis got?”
“At least if I am Menteri Besar of Kedah that is something. Kedah is big. There are a lot of business opportunities there. Perlis is so small, it has nothing!”
“And that is what I told the PM,” said Shahidan. “I told him I am not interested in being the Perlis MB. I want to do business.”
“The PM was taken aback,” added Shahidan. “He asked me what business I wanted to do and I told him I wanted to take over the privatisation of Bernas.”
“The PM was puzzled. He told me he has offered me the Perlis MB’s post and I reject the offer. Other people would jump at the chance.”
“I told him I am more interested in getting rich,” laughed Shahidan.
“The PM said he will think about it and get back to me later. A few days later the PM told me that he will agree to me taking over Bernas if I agree to become the MB.”
“I asked the PM, how is this possible? The PM replied to leave that to him. He will clear it with the Cabinet. He will explain to the Cabinet that the Bernas deal is part of the terms for me accepting the MB’s post.”
And that was how Shahidan ended up with control of the privatised Bernas.
FAC News spoke to one senior officer of LPN to get his side of the story on the wheeling and dealing of that one-time national rice board. This officer, on being told that LPN would be privatised, decided to throw in the towel and seek early retirement.
“Once I saw what they were going to do, I decided to quit,” explained the officer.
“I saw the move to privatise LPN as just one more move to make some people rich and I wanted nothing to do with it.”
“I spent practically my entire working life serving LPN. Our only mission in life was to serve the rice farmers and ensure that their welfare was well taken care of. But what they wanted to do to LPN is criminal. So I just left in disgust.”
“It’s not only what they wanted to do that was so wrong. It is also the people who were behind the whole exercise that was not right.”
“I personally know Shahidan so I know what type of person he is. He is just out to make money. And he was going to do so at the welfare of the rice farmers.”
“There are 160,000 rice farmers in Malaysia,” argued the retired LPN officer. “And most of them live in poverty.”
“For example, for the year 2000, an estimated 9% or almost 16,000 rice farmers have incomes below the poverty level.”
“The estimated annual average net income from rice cultivation in Peninsula Malaysia for that same year ranged from RM1,500, or RM125 per month, in areas like Telok Intan, Kelantan and Terengganu, to RM6,000, or RM500 per month, in advanced areas like MADA.”
“How does one support a family with that low income level?” asked the retired officer.
“It is time the truth is revealed and Malaysians are made aware of the exploitation the rice farmers are being subjected to.”
Despite government expenditures for infrastructure development and financial assistance through input subsidisation and price support policies, a high level of poverty still exists amongst rice farmers. The situation did not improve much since the eight years after the privatisation of LPN into Bernas. Under Bernas, the individual shareholders of the privatised entity are now making profits at the expense of several hundred thousands rice farmers, their families, and other public stakeholders.
For example, for the year 2001, Bernas made a RM128 million profit before tax. For the year 2000, it made RM83 million and, in 1999, RM117 million. In 2002, it made about RM60 million.
But who really benefits from this profit? The rice farmers? Of course not! Those who benefit from these hundreds of millions of Ringgit every year are the major shareholders of Bernas.
And who are these shareholders?
One of them is Budaya Generasi Sdn Bhd (BGSB), which owns 34% of Bernas. The single largest shareholder of BGSB is Permatang Jaya Sdn Bhd (PJSB), which has a 44% interest in BGSB or, effectively, 15% of Bernas.
And who are the shareholders of BGSB?
The shareholders of BGSB are Dohat Bin Shafie and his daughter Nur Daliza Binti Dohat. Dohat Bin Shafie is the brother-in-law of none other than Shahidan!
The point is, the Shahidan family of Perlis owns 15% of the privatised national rice entity which is of strategic importance to the country and which the government acknowledged in its National Agriculture Policy 3 (NAP3) to be the backbone of the food security policy of the country!
Then, Sebiro Holdings Sdn Bhd, another shareholder, owns 5.5% of BGSB. A prominent Director of the company is Megat Junid Bin Megat Ayob, the Prime Minister’s henchman.
The other four (public) shareholders of BGSB representing the interests of several hundred thousand rice farmers, farmers and fishermen, own the other 34% of BGSB or only 11% of Bernas. These four are:
Pertubuhan Peladang Kebangsaan (NAFAS)
Persatuan Nelayan Kebangsaan (NEKMAT)
Syarikat Perniagaan Peladang (MADA) Sdn. Bhd.
Syarikat Perniagaan Peladang (KADA) Sdn. Bhd.
Just for the record, Yayasan Pok Rafeah Berdaftar, is the 11th largest shareholder of Bernas. Yayasan Pok Rafeah funds the Pok Rafeah Chair at Institut Kefahaman Malaysia dan Antarabangsa (IKMAS) at UKM. And Pok Rafeah is the mother to Tun Daim Zainuddin, another Umno kingpin and one-time Finance Minister of Malaysia.
Source : Malaysia Today
Corporate: Robert Kuok’s Wilmar sets sights on Indonesian sugar market
By The Editor / TheEdge
11 Jul 2010, 06:30 pm
When Singapore-listed Wilmar International Ltd, which is linked to low-profile Malaysian tycoon Robert Kuok, announced a bid for an Australian-based sugar manufacturer, it naturally became a talking point here.
That’s because it was only last October that Kuok made an exit from his Malaysian sugar empire, parked under PPB Group Bhd. To the uninitiated, PPB is the single-largest shareholder in Wilmar, with an 18.34% stake.
One can only speculate why the country’s richest man, with an estimated net worth of US$12 billion (RM38.3 billion), sold the Malaysian sugar business in which he had been involved for some 40 years.
Today’s consumers are increasingly aware of how the choices they make may have an impact on the world they live in. Concerned about their health as well as the potential environmental and social consequences of their purchases, these advocates of change actively seek out food products that align with their values. This growing awareness has led to rising demand for sustainably produced palm oil.
It is reasonable to assume that “sugar king” Kuok received a fair price for his sugar assets, based on valuations as indicated in PPB’s filing to the exchange last October.
Perhaps the tycoon, with his reach and sprawling global business empire that includes hotels, palm oil and media, felt he could secure larger returns through a more lucrative sugar-related asset that has a more substantial international presence.
In a nutshell, PPB sold its sugar business to Felda Global Ventures Holdings Sdn Bhd (FGVH) for RM1.5 billion. The biggest asset was Malayan Sugar Manufacturing Co (MSM), which was transacted at RM1.22 billion. It was valued at a price-to-book (PB) ratio of 2.46 times based on the company’s net assets (NA) for FY2008 ended Dec 31.
In Australia, Wilmar is acquiring Sucrogen Ltd, the largest producer of raw and refined sugar in Australia and New Zealand, at about 2.5 times its net asset value (NAV) of A$696.5 million in FY2010 ended March 31. The significant difference is that Sucrogen gives Kuok a global reach; MSM’s operations were generally confined to Malaysia.
To recap, last Monday Wilmar announced plans to acquire the entire stake in Sucrogen from CSR Ltd in an all-cash deal worth A$1.75 billion (US$1.47 billion or RM4.9 billion), to be financed by internal funds and bank loans. Its offer topped a rival bid of A$1.65 billion by China-based Bright Food Group.
The purchase price comprises a A$1.35 billion equity value portion and Sucrogen’s debt obligations of A$403 million due to CSR, as at March 31. Under the share sale agreement, Wilmar is required to assume Sucrogen’s debt obligations between April 1 and the expected completion of the deal in September.
In US dollar terms, pro-forma estimates by Wilmar indicate that the purchase would add some US$33 million to its net profit, taking into account after-tax interest expense to finance the acquisition.
On a fully diluted earnings per share basis, Wilmar would see a 0.5 US cents or 1.8% increase, while net tangible assets per share would fall 10 US cents, or 9.3%, due to a goodwill premium paid on the acquisition.
Eyeing Indonesia
In its investment summary, Wilmar says it is well placed to expand into the sugar business via its established processing and merchandising infrastructure as well as distribution networks in countries with sugar-supply deficits such as Indonesia, where per capita consumption will continue to increase.
“Wilmar intends to build a significant sugar business, utilising its proven integrated agribusiness model to replicate its success in other agricommodities. The acquisition will jump-start this strategy. Wilmar aims to work with Sucrogen’s management to realise these synergies and pursue growth strategies in Asian markets,” it says in a statement to the Singapore Exchange.
Analysts say despite the marginal value accretion to Wilmar, the acquisition is expected to be rich in potential synergy.
TA Securities Holdings analyst James Ratnam says, “We have always maintained a positive view on Wilmar’s expansion into the sugar business and, therefore, despite the pricey acquisition at 2.5 times NAV of Sucrogen, we believe the deal fits well into the group’s expansion strategy.”
He says Sucrogen could help Wilmar expand its market share in Indonesia by virtue of the geographical proximity between Australia and Indonesia, while Sucrogen will also be able to capitalise on Wilmar’s extensive marketing and distribution network.
It is no secret that Wilmar is eyeing the Indonesian market.
Wilmar chairman and CEO Kuok Khoon Hong had told The Edge Singapore recently that the company’s main emphasis now is to build a world-class sugar operation in Indonesia, which has a high sugar deficit of 41% and ample land. The other attraction is that sugar prices in Indonesia are higher than international rates.
Sucrogen’s seven mills have a combined annual production capacity of 2.1 million tonnes of raw sugar, while its 75% interest in two sugar-refining joint ventures — Sugar Australia and New Zealand Sugar Co — gives it heft in Australia and New Zealand. The remaining 25% of the JV is owned by Australia-based Mackay Sugar Ltd.
Sucrogen, whose flagship brands include CSR in Australia and Chelsea in New Zealand, also generates by-products like molasses, used to produce ethanol. It also generates electricity from cogeneration operations at its sugar mills. The firm is Australia’s biggest renewable biomass energy generator with a capacity of 171mw.
OSK Research analyst Alvin Tai is “highly positive” on the acquisition, as it shows that Wilmar is moving into sugar faster than expected. “This latest acquisition proves that Wilmar is well on its way to becoming a dominant global sugar player and will significantly raise the possibility of the injection of Robert Kuok’s sugar business into Wilmar. We understand that Robert Kuok owns some 200,000ha of sugar cane plantations in Indonesia.”
Estimates by OSK indicate that the acquisition will increase Wilmar’s FY2011 net profit by about 5%, assuming Sucrogen repeats is FY2009 performance. Pending further details, the research house, which reiterated its “buy” call for Wilmar shares, is keeping its estimates unchanged.
Tai says the price for Sucrogen is not final, as Wilmar will still have to shoulder Sucrogen’s debts. The potential impact on Wilmar’s balance sheet is not a major concern, according to Tai, by virtue of the company’s sizeable gross cash position of US$5.85 billion. However, the purchase is expected to raise its net gearing from 43.7% to 56.7%.
Sale of Malaysian assets
PPB made news when it disposed of its sugar-related assets in Malaysia to FGVH, a wholly owned investment holding arm of the Federal Land Development Authority, in four separate deals.
Aside from the sale of MSM, PPB also disposed of its 50% stake in Kilang Gula Felda Perlis Sdn Bhd (KGFP) for RM26.31 million and its 5,797ha sugar cane plantation in Chuping, Perlis for RM45 million. Meanwhile, its 49% associate Grenfell Holdings Sdn Bhd disposed of 59.29 million shares, or 20%, in Tradewinds (M) Bhd to FGVH for RM207.53 million, or RM3.50 a share. Tradewinds runs two sugar refineries in Malaysia — in Shah Alam, Selangor and Kuala Nerang, Kedah — with a combined daily capacity of 2,300 tonnes. The transactions were completed in January.
The RM1.22 billion MSM transaction translated into a price-to-earnings ratio (PER) of 9.78 times and PB ratio of 2.46 times based on the company’s NA and profit after taxation (PAT) for FY2008 ended Dec 31. Based on PPB’s cost of investment in MSM of RM50.79 million between 1976 and 1999, it made a RM1.17 billion gain at company level from the sale.
Meanwhile, KGFP’s NA and PAT in FY2008 indicated that the 50% stake disposal was transacted at a PER of 22.58 times and PB ratio of 1.34 times.
Robert Kuok’s business acumen needs no further elaboration. Going forward, it will be interesting to see how Wilmar’s sugar expansion fits into the tycoon’s vast global business empire.
As for PPB, the sale of its Malaysian interests may not have left much of a dent in its control of the sugar business, as it now rides on Wilmar and its ambitions in Indonesia and her 230 million population. — With additional reporting from Cindy Yeap of The Edge Singapore
This article appeared in Corporate page of The Edge Malaysia, Issue 814, July 12-18, 2010
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