PUBLIC funds will have to cover the RM1 billion incentives for Felda settlers announced by the Najib administration, as the statutory body has posted massive losses, a lawmaker said.

Pandan MP Rafizi Ramli said Felda’s 2015 accounts, which were submitted to the Dewan Rakyat in April, showed that the Felda Group posted a loss of RM1.112 billion in 2015. 

The accounts, pages of which Rafizi provided, showed that the Felda group has been posting losses of more than RM1 billion since 2013, a year after it listed Felda Global Ventures Holdings (FGVH) on the stock exchange.

Meanwhile, ANAK, a group representing second-generation settlers, said the Barisan Nasional government would need to fund those incentives any way it could as the 100,000 Felda families are a crucial vote bank.

Part of the money for those incentives will likely come from selling off Felda assets, such as shares the group has in the banking sector, said ANAK chairman Mazlan Aliman.

Prime Minister Najib Razak announced in July six incentives for Felda settlers and their family members that were meant to ease their financial burden.

The package includes a special RM5,000 payout at the end of August for 94,956 families totalling RM474.78 million and various schemes to write off settlers’ debts.

The latter consists of a debt write-off of RM5,000 for each settler who opts to replant with Felda. About RM519 million have been earmarked for this scheme.

Also, an RM300 million grant has been provided to write off loans that settlers took to replant their holdings.

The Malaysian Insight visit to settlements in June found that planters were saddled with debts of around RM100,000 that were taken to replant their holdings.

These incentives were announced in July even after Felda’s latest 2015 income statement showed that the group recorded a RM1.12 billion loss. The group lost RM1.670 billion in 2013 and RM1.109 billion in 2014.

“If Felda were to sell the stake it owns in FGVH, it would record an additional loss of RM5.16 billion,” Rafizi told The Malaysian Insight.

“If the government does not continue propping up Felda with either additional public funds or giving government guarantees, it could go bankrupt.”

Given Felda’s current financial standing, public funds would have to be used to pay for the six incentives that Najib announced in July.

“It cannot come from just Felda itself. The public and even settlers themselves have to pay for them one way or another.”

This could be in the form of a higher goods and services tax (GST) rate some time in the future, Rafizi said.

Although two of the incentives involve writing-off settlers’ debt, the money to do so would still have to come from somewhere else.

“These debts have to be paid, one way or another. If Felda just writes off an average of RM20,000 in debts for 100,000 settler families and does not show how it’s going to pay for it, it will be recorded as a RM2 billion loss in its 2018 income statement.”

It that were to occur, it would further worsen Felda’s financial standing, Rafizi said.

Deputy Minister Razali Ibrahim, who oversees Felda-related matters did not return calls and text requests for comment.

ANAK’s Mazlan said, in the past, such aid has helped the BN administration win elections. Thus, it would find a way to pay for those six incentives.

“Whenever BN announced aid and incentives for settlers in previous elections, they would usually get 80% of the settler vote. So, they need to make sure they can deliver these incentives.”

The 100,000 Felda families and their second-generation children total about one million individuals. Felda settlements are spread out over 54 parliamentary and state seats in the peninsula.

Mazlan, however, believes that this time around, the package of incentives would not be enough to win over all Felda family members.

This is since presently, 70% of all Felda votes are from the sons and daughters of the original settlers, and this generation has been critical of the administration’s Felda policies.

“These voters live outside the settlements in the Klang Valley, Johor Baru and Kuantan. But they go back to their settlements to visit their parents and to vote,” said Mazlan, a son of a Felda settler from Bukit Ramun, Kulai, Johor.

“The second generation is more aware of the problems in the settlements and are more critical of the government compared with their parents. They will not be so easily swayed.” – September 13, 2017.