KUALA LUMPUR, April 20 — The expenditure of most ministries have been temporarily halted to channel funds to bailout Lembaga Tabung Haji (TH) and the Federal Land Development Authority (Felda), Defence Minister Mohamad Sabu said.
In a group interview with the media yesterday, the politician known as Mat Sabu said that a substantial part of his own ministry’s budget had to be diverted to save the two “Malay institutions”.
“It depends on need and most importantly, financial ability, because now a lot of our money is used to save the Malay institutions which have been destroyed: Tabung Haji and Felda,” he told the press.
“So the Pakatan Harapan government is being attacked by those saying that [the government] don’t care about the Bumiputera and Malay issues and all that. However, what happened now, is that RM24 billion is used to save these collapsed Malay institutions.”
Mohamad however stressed that the Defence Ministry is not alone in the matter, and that the situation is also the same at other ministries, which have to work around a limited funding, to save LTH and Felda.
He added that it was crucial to revive the said organisations, as failure to do so would gravely affect the national economy, and unleash an economic disaster.
On April 10, Economic Affairs Minister Datuk Seri Azmin Ali said that several assets under the Felda would be liquidated to improve the agency’s cash flow and strengthen its financial position.
He said the government has identified several potential non-strategic assets to be disposed of but stopped short of revealing the assets that may be sold off.
The government had tabled the Felda White Paper in Parliament early this month, outlining the problems faced by the state-owned palm oil giant, and its poor finances and spending.
The government will also be injecting a RM6.23 billion infusion in the form of loans and grants.
Meanwhile on TH, minister in charge of Islamic affairs Datuk Seri Mujahid Yusof Rawa had in December last year, disclosed that the Muslim pilgrim fund was in deficit, as liabilities exceeded assets by RM4.1 billion and had been paying dividends unlawfully.
The Tabung Haji Act 1995 prohibits the payment of dividends, or hibah as they are called in Islamic financial terms, if LTH is in deficit and has no distributable profits.
The government then created a special purpose vehicle (SPV) to acquire underperforming LTH properties and equities in exchange for RM10 billion in sukuk and RM9.9 billion in Islamic redeemable convertible preference shares (RCPS-i).
Last month, Mujahid told the Parliament that the government restored LTH’s financial health by transferring problematic assets to the SPV.
During the interview yesterday, Mohamad said that the government’s recent success in also slashing the construction cost of the East Coast Rail Link (ECRL) also would not help its finances, and it has to use more funds to save Felda and TH.
The Prime Minister’s Office on Friday announced that the construction cost for Phases 1 and 2 of the ECRL has now been now reduced to RM44 billion, a reduction of RM21.5 billion from its original cost of RM65.5 billion.
The mega project was initially suspended after PH defeated Barisan Nasional to win over Putrajaya, owing to its egregious cost.
“So we can save on the ECRL by cutting cost by RM21 billion, but the reduction does not help the government coffers much, because they are then forced to fork out RM24 billion to rescue Felda and Tabung Haji, because of money swindling,” Mohamad said in the interview attended by 14 media organisations.