FELDA will raise RM9.9 billion in government-backed sukuk to implement a recovery plan for the debt-laden land development agency, Minister in the Prime Minister’s Department Mustapa Mohamed said.

The cabinet has approved the sukuk issuance for the recovery plan, which is expected to help improve Felda’s financial position starting 2023, Mustapa, who oversees the economic portfolio, said in a statement.

“The cabinet has approved the proposed issuance of sukuk by Felda worth RM9.9 billion backed by government guarantee to implement the Felda recovery plan submitted.

“Felda’s financial position is expected to record a positive trend starting in 2023 with the (plan’s) implementation,” he said.

A report by a special task force assigned to address Felda’s problems was presented to the cabinet on October 14, Mustapa added.

Among the suggestions are debt restructuring with financial institutions and increasing the self-reliance and independence of settlers, whose function has largely been to supply fresh fruit bunches to palm oil mills under FGV Holdings Bhd.

Related to increasing settlers’ self-reliance is the termination of Felda’s land lease agreement (LLA) with FGV Holdings, which the cabinet has also approved, Mustapa said.

The LLA, signed in November 2011, has FGV providing service, technical, support and planting materials, while settlers supply its mills with FFB.

The special task force to resolve Felda’s problems was chaired by Abdul Wahid Omar. Felda chairman Idris Jusoh was also a member of the task force.

Mustapa said the task force’s work was a continuation of the findings and recommendations in the White Paper on Felda that was presented to Parliament on April 10, last year.

“Among major problems identified by the task force are Felda’s unsustainable capital structure and the high debt burden of RM10.6 billion.

“This situation is due to the declining source of income, especially the receipt of lease payments for 351,000ha of farmland and low profit sharing below expectations under the LLA. 

“Weaknesses in governance and financial management also contributed to Felda’s problems,” Mustapa said, adding that these would also be corrected. – October 28, 2020.