pic by TMR FILE
THE government is providing a two-year moratorium for Federal Land Development Authority’s (Felda) debts after the agency faced a liquidity problem of RM1.3 billion in September.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed (picture) told the Dewan Rakyat that Felda will also receive a six-month moratorium from another financial institution for a separate debt.
“Felda began to face financial problems in 2013 where its income before the tax deteriorated due to, among other things, the FGV Holdings Bhd’s listing on Bursa Malaysia in 2012.
“To ensure its daily operations and service commitment to the settlers are running smoothly, Felda had made a loan and now bears a high RM10.7 billion debt.
“In September, Felda had informed the government that it cannot afford to repay some of its debts and had liquidity problems of RM1.3 billion,” he said yesterday.
Mustapa was responding to a query by Datuk Ahmad Nazlan Idris (Barisan Nasional [BN]-Jerantut) on the government’s plan to restore Felda’s cashflow and manage its corporate debt.
The high settlers’ debt and its low collection rate worsened the state of Felda’s debts and affected the agency’s financial position, he said.
He added that the recovery measures that had been executed are expected to stabilise Felda’s financial positions by 2023.
“To ensure Felda achieves financial sustainability, the Cabinet has approved Felda’s rehabilitation plan on Oct 14, 2020.
“Among the recommendations approved is the guaranteed sukuk issuance by the government amounting to RM9.9 billion, of which RM6 billion will be used to reduce the debt burden and the remaining to increase core income through the acquisition of FGV’s shareholding, as well as execution termination of the land lease agreement,” the minister said.
In a separate query, Mustapa said the US Customs and Border Protection (CBP) could not disclose the details of the allegations against FGV in a meeting conducted between the two parties.
He said FGV has sought clarifications on the allegations from CBP through a conference call on Oct 8, 2020.
“CBP could not disclose information found and it did not disclose the results of its investigation, which include the nature of the misconduct and the location of the incidents,” he replied.
He was responding to a query by Datuk Seri Shahidan Kassim (BN-Arau) on the action taken by the government in response to the US allegation that FGV is using forced labour for the manufacturing of palm oil products.
However, CBP has informed the planter that it will consider lifting the Withhold Release Order imposed on FGV and revoke the import ban, Mustapa said.
“FGV is in talks with several independent firms to find the best options in conducting future audits for FGV.
“FGV has also taken steps to improve its foreign labour recruitment system and establishing a working standard to safeguard the welfare of its employees, which is in line with human rights,” he added.
In September, the US placed a restriction on FGV’s products on the allegations of forced and child labour, including other misconduct relating to an unsafe working environment, in its manufacturing processes.