KUCHING: Analysts see the decision by the Sabah government to enforce Restricted Movement Control Order (RMCO) on Wilayah Sahabat following positive Covid-19 cases in the area to be a “negative development” for FGV Holdings Bhd (FGV).
FGV in a statement yesterday clarified that none of its employees in Wilayah Sahabat, Lahad Datu has tested positive for Covid-19.
It reaffirmed that the safety, health and wellbeing of its employees and workers are its utmost priority, and it will continue to be vigilant in its efforts to contain the spread of the Covid-19 pandemic.
“Since the outbreak, FGV had established a Covid-19 Task Force Committee and implemented a number of preventive measures across all of its operations,” it detailled in the statement.
“Amidst the latest announcement of Lahad Datu district as red zone area, FGV has taken several proactive measures in Wilayah Sahabat in line with the Health Ministry’s guidelines.
“All movements within FGV’s Wilayah Sahabat operations are strictly controlled and monitored. FGV is working closely with PDRM and has utilised FGV’s Auxiliary Police teams to ensure strict compliance with the state government’s movement control order.”
FGV’s Sahabat region has a total area of 115,432 hectares of plantation, comprising seven mills and 48 estates. FGV has voluntarily ceased the operations of five mills in the area
At two of the five mills, four employees are quarantined as persons under investigation. The other three mills have been closed as a precautionary measure due to their proximity to the affected Felda operations.
In a research note, AmInvestment Bank Bhd (AmInvestment Bank) reckoned that this development is negative for FGV as the group’s fresh fruit bunch (FFB) and crude palm oil (CPO) production will be affected by the suspension of all harvesting and milling activities in Sabah.
“Felda Sahabat makes up about 29 per cent of FGV’s total planted areas in Malaysia. In total, Sabah is estimated to account for 37.9 per cent of FGV’s planted areas of 339,385 hectares,” it said in a report.
It added that FGV’s estates in Sabah of 128,692 hectares make up 8.3 per cent of Sabah’s total planted areas of 1.5 million hectares.
“Assuming that FGV’s operations in the whole of Sabah are closed for two months, we estimate that this would affect six per cent of group FFB production,” it calculated. “Currently, we forecast that FGV’s FFB output would improve by three per cent in FY20F.”
FGV said it is giving full cooperation to the Health Ministry and has immediately advised its employees and their family members to undergo tests if they had been in close contact with any positive Covid-19 patients in the past 14 days particularly in Wilayah Sahabat.
FGV is fully committed to supporting the Sabah State Government’s efforts to contain the pandemic by adhering to “radical and robust guidelines and SOPs” at all of its estates and mills to ensure that the risks to the safety and health of all employees are minimised.