Economic affairs minister is expected to table the much-anticipated white paper on Felda today at the Dewan Rakyat
by P PREM KUMAR / pic by MUHD AMIN NAHARUL
The government is expected to inject as much as RM6.2 billion into the Federal Land Development Authority (Felda), restructure its RM10 billion debts and improve its cash ow to revive the ailing government-owned entity.
These are some of the recommendations which could be included in a white paper on the land development authority which has been plagued with billions of losses due to poor investments and mismanagement, sources told The Malaysian Reserve.
Economic Affairs Minister Datuk Seri Mohamed Azmin Ali is expected to table the much-anticipated white paper on Felda today in the Dewan Rakyat.
The white paper is also expected to outline the short-and medium-term initiatives to recover Felda’s governance and overcome the critical cashflow problem which has impacted the livelihood of over 110,000 smallholders.
The result of an audit probe, initiated by the Pakatan Harapan government after it ousted Barisan Nasional (BN) in last year’s general election, is expected to feature predominantly in the report.
The financial probe will reveal the actual losses and financial irregularities at the state-owned land development authority. Felda would become second government-linked entity which requires a massive capital injection, after the RM19.9 billion asset-for-cash swap deal by Lembaga Tabung Haji.
Felda and its investment arm Felda Investment Corp Sdn Bhd’s (FIC) assets have taken a beating over the last few years, believed to have been halved due to poor investment decisions.
Reports previously suggested that Felda’s liabilities had ballooned to about RM14 billion, while debts jumped to around RM10 billion.
The new management at Felda had previously stated that selling its current assets would not be sufficient to repay its mounting debts.
Sources said the financial assistance would be in the form of grants and loans. The capital injection, if approved, would immediately remedy Felda’s cashflow troubles.
Azmin previously said the government would assist Felda in restructuring its massive debts with lenders. Among the options available include postponing and rescheduling the repayments. But it is not known whether lenders would agree to the proposals.
Felda’s severe cashflow problem has prevented the land authority to finance replanting initiatives, support smallholders and repay its debts.
The sources said a restructuring of Felda companies and investments will likely be proposed by the government including disposing of non-strategic assets and axing unproductive companies.
The white paper will likely reveal how Felda had spent the RM6 billion proceeds from the initial public offering of FGV Holdings Bhd in June 2012. One of the questionable investments is the RM2.2 billion acquisition for a 37% stake in PT Eagle High Plantations Tbk (EHP), owned by Indonesia’s Rajawali Group.
Felda DG Datuk Dr Othman Omar recently filed a police report over the deal sealed two years ago. The deal had drawn widespread criticisms over the valuation which was too high. The purchase of EHP was conducted through FIC Properties Sdn Bhd.
Legislators are expected to debate on the white paper and approve the plans to revive the agency.