THE government has agreed to write off RM8.3 billion of the Felda settlers’ debts as part of a three-pronged strategy to restart, revitalise and reform the ailing Federal Land Development Authority. 

Prime Minister Muhyiddin Yassin, in addressing Felda’s 65th Settlers’ Day in a virtual gathering today, said the government has agreed in principle to Felda’s proposal to write off part of the settlers’ loans through conditional adjustments.

He said priority will be given to the early settlers whom he described as having “sacrificed sweat and tears to ensure the land development programme was successful”. 

He said the government has identified the debts that have long plagued the authority and the settlers as a hindrance to its vision of getting Felda back on a par with the world’s leading plantation companies. 

“This debt issue must be corrected first to facilitate the process of regeneration or ‘restart of’ Felda,” he said.

Muhyiddin said more than 92,000 settlers or 82% of the total 112,638 settlers will have their remaining replanting loans up to December 31, 2019 adjusted in the decision, 52,180 others will have their fertiliser loans up to the end of December 2019 similarly adjusted and 6,711 will have a full adjustment to the balance of their original development loan.

He said with this debt-restructuring initiative, the burden borne by the settlers will be reduced by an average of 80% per settler.

“The average loan repayment is expected to decrease from around RM800-RM1,000 to only RM250-RM300 per month for oil palm growers and as low as RM150 for rubber tappers,” he said.

“I hope that the government’s effort will be a starting point or ‘reset button’ for the settlers to become more enthusiastic and more focused in doubling their income.

“This will also enable their financial management to be more prudent and no longer burdensome.” 

To revitalise Felda “until it could stand strong again”, Muhyiddin said the government has also approved the issuance of a government-guaranteed sukuk of RM9.9 billion to improve Felda’s business model. 

Part of the sukuk issuance will be used to restructure its loans with the various financial institutions as well as to take over FGV Holdings Berhad (FGV). 

“I believe that with the restructuring of these loans, it will restore Felda’s focus on strengthening its core business,” said Muhyiddin. 

He also said the cabinet’s approval of a previous proposal has also enabled Felda to increase its stake in FGV by up to 81.3%. 

“I understand, this development will create a plantation synergy that will boost the productivity and profits of the Felda Group,” he said.

“In addition, the increase in Felda’s involvement in the downstream industry, which has a higher profit ratio, will enable Felda to achieve its target to return to profitability by 2023.” – July 7, 2021.