In the news: Felda in reply to the AG’s Report released yesterday, said they are working with the government as part of their recovery plan. — FAIHAN GHANI/ The Star
Reports by MARTIN CARVALHO, WANI MUTHIAH, TEH ATHIRA YUSOF, SYAZWANI HASNIZAM and HO JIA WEN
PETALING JAYA: The Federal Land Development Authority (Felda) incurred a nett loss of RM1.005bil in 2022, up 84.4% versus a RM545mil loss in 2021, revealed the Auditor-General’s 2022 report.
In the report released yesterday, the Auditor-General highlighted that Felda is unable to fulfil its commitments of RM753mil due to the deficits in cash and cash equivalents.
As of Dec 31, 2022, Felda’s loan commitment amounted to RM1.561bil compared to its cash balance of RM808mil.
In an immediate reply published in the report, Felda said it was dependent on the government to operate.
“Felda has formed a task force with the Prime Minister’s Department as part of Felda’s recovery plan.
“The government has agreed to inject RM1bil in the span of seven years to settle the sukuk debts and government guarantee revolving credit (GGRC) loan as part of the recovery plan,” it said in a reply dated Dec 5, 2023.
The report also revealed that Felda owes RM8.659bil in outstanding loans from external institutions which were used for the agency’s loan restructuring from 2018 to 2022.
Out of the total outstanding loan amount, RM7.973bil was obtained from financial institutions while the remaining RM686mil was borrowed from the Federal Government.
Felda’s financial burden includes a repayment commitment of RM2.5bil from Tawarruq Financing Facility agreement inked in 2016 between Felda’s subsidiary, FIC Properties (FCIP) with GovCo Holdings Bhd (GovCo), a company under the Minister of Finance (Incorporated).
It was revealed that the loan was used to finance the acquisition of 37% in PT Eagle High Plantations Tbk, a company incorporated in Indonesia.
“However, FCIP failed to repay the loan, leading Felda to enter into a new agreement with GovCo as a corporate guarantee for the Tawarruq Financing Facility,” it stated.
Following the agreement, Felda is now required to repay GovCo in two instalments. The government agency had settled an amount of RM200mil on April 11, 2023, with the remaining debt of RM2.878bil due on April 11 this year.
It has also undertaken a debt restructuring exercise for the repayment of the commitment on Dec 18, 2023, in which GovCo allowed Felda to repay RM50mil per year for the first five years starting 2024.
“The remaining amount of RM2.595bil has to be repaid according to the schedule over a period of 15 years starting 2029,” it added.
Additionally, the report stated that Felda received a reduced grant in 2022 of RM214mil compared to RM342mil in 2021.
The government grant dropped by RM128mil, or 37.4%, attributable to the reduction of allocation by the Finance Ministry in the current year.
“The reduction in grants received by Felda affects its operational sustainability as it heavily relies on financial aid from the Federal Government,” the report stated.
In light of this, the Auditor-General’s 2022 report recommended that Felda have a clearer strategy in order to carry on with operations while maintaining a stronger financial position and avoiding the need for external assistance.
The report advised Felda to keep a close eye on the operations and financial performance of its subsidiaries to ensure their sustainability and viability, while remaining independent of their parent company and being able to give good returns to Felda.
