How THP lost millions on Sarawak land deals

By Heliana Hashim

Source: www.theedgemarkets.com

Najib Razak in his statement claimed that TH Plantations Bhd (THP) had never lost business deals during his tenure as Prime Minister. He also claimed that the fresh fruit bunch (FFB) could produce 52,040 tonnes of assets in Sibu and Bintulu. Najib’s claims could not be further from the truth.

Below we break down step-by-step of what actually happened with THP and the Sarawak Land Deals

  1. Acquisitions of Bumi Suria Ventures Sdn Bhd (BSV) and Maju Warisan Mas Sdn Bhd (MWM) in Oct 2012.
  2. THP recorded a loss before tax of RM678.11 million for the financial year ended Dec 31,2018, due to RM446.83 million in impairments the group had to undertake on its plantation assets.
  3. For the nine months ended Sept 30, 2019, THP impaired RM53.6 million on its property, plant and equipment.
  4. There was a substantial difference between the declared total plantable area of the plantations and the actual areas surveyed by THP; missing 1,258ha land area.
  5. The misrepresentation in the actual total plantable area had led to higher projections by THP for FFB production, which were not met between 2014 and 2018.
  6. In August 2012, CH William Talhar & Wong valued the land at RM360 million and it was verified by THP at the time. However, an independent valuation by Khong & Jaafar of the same land in Jan 2019 valued the plantations at RM183.9 million: which was RM176 million or 48.9% less than the original valuation.
  7. THP’s investment committee ordered another independent valuation of the land but no second independent valuation was commissioned by THP.
  8. THP had signed a quarry supply agreement (QSA) and a supplemental agreement under terms that did not necessarily benefit the group.
  9. At first, BSV which owns quarry in Sibu granted exclusive rights to extract, remove and sell the quarry products back to BSV and other parties for 20 years to a subsidiary of one of the vendors.
  10. The quarry products were to be purchased by THP at RM25 per tonne and the vendor’s subsidiary was required to pay RM1.5 million per year in rent to BSV for the quarry during the tenure of the agreement based on the QSA. In addition, the royalty payments to the Sarawak government also were to be borne by the contractor.
  11. However, this were deferred via a letter dated April 1, 2015, whereby the price of the quarry products to be purchased by BSV was reduced to RM17.5 per tonne while the company waived the yearly rental and the royalties to the state government were also to be borne by BSV.
  12. And the final price rate for quarry residue is only RM13 per tonne when the supplemental agreement was signed.

Therefore, TH has embarked on a rationalisation plan to revive its financial performance through the divestment of its assets to reduce borrowings and improve operational efficiency. This clearly shows that the PH government is determined to fulfill their election pledges including swift action in the matter of high-profile cases, including issues related to TH.

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