PETALING JAYA: The Auditor-General’s Report 2/2025 found governance weaknesses in the implementation of leasing procurements for Felcra Berhad involving one oil palm plantation in Sandakan, Sabah, and three in Gua Musang, Kelantan, with acquisitions worth RM241.76mil from 2022 to 2024.
Felcra Berhad went ahead with the RM62.29mil procurement for one oil palm plantation, known as the Telupid estate, despite a feasibility study concluding that the land was not economically viable due to poor soil and uneven terrain.
The report also said that the non-executive director representing the Finance Ministry had disagreed with the acquisition, citing the feasibility study’s findings that the soil series and topography were only moderately suitable for development.
It also highlighted that another independent non-executive director believed that external consultants should have been appointed to provide a professional assessment of the proposed acquisition.
“The acquisition was nonetheless proceeded with, even though the feasibility report indicated that the Telupid estate was not economically viable,” said the report that was released yesterday.
The board of directors had agreed to defer the procurement and to issue a request for proposal to appoint external consultants to conduct a new feasibility study and cost-benefit analysis of the investment, the report said.
“The board member representing the Economy Ministry also expressed the view that management should obtain confirmation from the Finance Ministry regarding the investment approval procedures for Ministry of Finance Incorporated companies,” it said.
In response, Felcra Berhad said it estimated the Telupid estate’s yield for 2025 at 12 metric tonnes per hectare (mt/ha), with a projected gross profit of RM1.37mil.
Following the Environmental Impact Assessment (EIA) report approval, Felcra Berhad said it had implemented several plans to improve the viability of the estate and optimise palm oil production.
These included a phased replanting programme from 2025 to 2028, approved by the board on Feb 20, 2025, starting with 215ha under Phase 1.
Felcra Berhad also said it had taken steps to increase income and control expenditure to ensure the estate would generate profit following recovery efforts.
The AG report recommended Felcra improve its governance processes to ensure that all decisions related to plantation acquisitions are made collectively, align with previous resolutions and follow the company’s constitution, rules and regulations.
