Report: Putrajaya eyeing RM3b rescue package for Felda

A worker collects palm oil fruit after being harvested at a plantation in Kampung Bukit Hijau, Kuala Selangor March 14, 2018. — Picture by Mukhriz Hazim
A worker collects palm oil fruit after being harvested at a plantation in Kampung Bukit Hijau, Kuala Selangor March 14, 2018. — Picture by Mukhriz Hazim

KUALA LUMPUR, March 29 — The federal government is considering a RM3 billion infusion for the Federal Land Agency (Felda) amid depressed global palm oil prices and a European Union campaign against the commodity.

According to sources who spoke to The Straits Times, the government could present a proposal for the initiative — the third such aid measure for a federal agency since the general election — to Parliament before the end of the current session next month.

Of the proposed sum, RM1 billion would go to Felda that has a RM2.8 billion shortfall for its activities in 2019 and 2020.

“The government will (also) pay off RM2 billion owed by settlers to Felda and allocate RM250 million to revive abandoned housing for their children.

“Many are unable to even service the interest,” the ST quoted one official source as saying.

Putrajaya may also need to issue fresh guarantees to support Felda in a possible debt restructuring for over RM13.8 billion due in coming years.

In 2012, former prime minister Datuk Seri Najib Razak initiated the controversial listing of Felda Global Ventures, the agency’s investment arm.

The move was meant to generate sustainable income for Felda and its settlers but FGV shares are now trading at a fraction of their initial public offering (IPO) value.

While the IPO had raised over RM6 billion, former Felda chairman Tan Sri Shahrir Samad had made the shocking revelation that RM4.3 billion was unaccounted for back in 2017.

Shahrir was later forced to walk back on his remarks by saying the RM4.3 billion was used for “various reasons”.

The ST report today asserted that Felda gave away most of the money raised as handouts ahead of the 2013 general election and squandered the rest on questionable investments.

FGVH booked a net loss of RM1.08 billion for the 2018 financial year from impairments and provisions.

Authorities have charged former Felda chairman Tan Sri Isa Samad over at least one such dubious venture, the purchase of a hotel in Kuching, Sarawak by Felda Investment Corporation (FIC).

Felda is in need of funds to replant existing oil palm crops whose yields are dwindling due to their advanced age.

The situation is exacerbated by low prevailing crude palm oil price hovering at just over RM2,000 per metric tonne.

Malaysia is also waging a publicity war against the European Union that will decide on a proposed ban of palm oil as a biofuel next month, which the EU claims is over the deforestation caused by oil palm cultivation. Malaysia contends that the real reason is trade protectionism.

At home, the Barisan Nasional (BN) that is now the federal Opposition is using the issue to attack the ruling Pakatan Harapan as not doing enough to support Felda settlers.

Felda schemes had been considered a bulwark of BN support up until the 14th general election.

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