PETALING JAYA: Apart from a forensic audit, the Federal Land Development Authority (Felda) is undertaking a review of its role as the guardian of the settlers, following cashflow problems faced by the agency.
It is learnt that Felda has to go to the government to get financial resources to undertake programmes such as providing the settlers with short-term loans and infrastructure in its schemes.
“Felda’s main source of income was from FGV Holdings Bhd. But that has come down significantly. To compound the problem is Felda having debts of RM8bil,” said a source.
Towards this end, the review is to look into the role of Felda and decide once and for all how it is going to face the issues of settlers.
“The problems faced by Felda back then when it was set up were different than the issues now. The second-generation Felda settlers are more interested in opportunities outside the plantation sector,” said a source.
“The settlers do not harvest the fruits anymore. It is being done by foreign workers.”
Notably, when Felda was set up, its main role was to improve the socio-economic status of its settlers by providing opportunities focused on oil palm and rubber plantations.
Since 1994, the government has no longer been providing provisions for the Felda scheme. To generate income, Felda launched a cooperative, listed FGV and set up Felda Investment Corp (FIC), among others.
However, the returns from FGV was less than what Felda had expected, while FIC with RM5bil in investment has not produced the desired yields. Felda currently holds a 34% stake in FGV.
According to Felda’s website, its main role now is to provide adequate and modern facilities on the schemes, ensuring the next generation of explorers are educated to enhance their socio-economic status and quality of life, and ensuring the schemes can generate various economic activities as well as bridge the gap between the urban and small urban areas.
“Felda’s main role now is not as targeted and a review of it will also benefit its listed entity FGV,” a source said.
Last week, Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said he would be presenting a White Paper on Felda in the next parliamentary sitting that would lay out Felda’s situation and financial position, as well as its strategic rehabilitation plan.
The clean-up of Felda would be part of the new government’s pledge to improve governance and operations of state-linked entities.
Azmin said Felda was facing a critical cashflow problem, which was due to the legacy of weak corporate governance and irresponsible financial management by the previous management.
He pointed out that the main priority would be the restructuring of Felda’s loans of RM8.025bil.
Strengthening the agency’s cashflow position will likely include the disposal of non-strategic assets such as properties, both locally and abroad, as well as other non-performing businesses.
Additionally, the White Paper should also delve into the “transfer of land” of about 400,000ha by Felda to Felda Global Ventures Holdings Bhd (now renamed as FGV Holdings) to pave the way for the latter’s listing exercise back on June 28, 2012.
In recent years, Felda has increasingly been under the spotlight, owing to its involvement in a number of inexplicable deals.
Back in January this year, Felda had cooperated with an external forensic audit investigation carried out on a suspicious land title transfer of its Jalan Semarak land earmarked for the Kuala Lumpur Vertical City project.
It was reported on Dec 21, 2017 that Felda was at risk of losing its rights to strategic land along Jalan Semarak, estimated to be worth RM270mil, as a result of four allegedly dubious sale and purchase transactions.
Felda regained possession of the land in March this year after an extensive external forensic audit, which also involved the Kuala Lumpur Land and Mines Office and the City Hall.
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