Felda's recovery measures to bring positive results in 2023 - Mustapa

The measures include the setting up of a task force to monitor the implementation and effectiveness of Felda's recovery plan to ensure the agency achieves the set key performance indicators, he said.

The task force chaired by Tan Sri Abdul Wahid Omar will strictly monitor the measures so they are implemented more effectively and smoothly, Mustapa said.

"This will ensure Felda will be as successful as other major plantation operators and be on a stronger footing to carry out its responsibility as an agency that champions the welfare of more than 100,000 settler families without relying on the government,” the minister said in the Dewan Rakyat today.

He was replying to a query from Datuk Ahmad Nazlan Idris (BN-Jerantut) who wanted to know the government's plan to resolve Felda's cash flow and corporate debt problems.

“Let us move forward in further strengthening Felda,” said Mustapa.

He said the recovery of Felda would not be complete simply through government action.

Hence, he said, Felda has been instructed to strengthen its management.

“In this regard, Felda's management has drafted the New Felda Model based on improved governance, better plantation operations, settlers’ welfare, education, research and development, and technology usage as well as ensuring Felda is more independent and sustainable," he said.

According to Mustapa, Felda has faced financial problems since 2013 with the deterioration in its profit before tax.

Among the reasons were the listing of FGV Holdings (previously known as Felda Global Ventures) in 2012 when Felda lost an important source of income as well as the weak palm prices.

To smoothen its daily operations and service commitment to settlers, Felda had to borrow; and its debts now stand at RM10.7 billion.

In September this year, Felda informed the government that it could not afford to repay some of its debts and faced liquidity problems totalling RM1.3 billion.

“As a result, the government has agreed to give a two-year moratorium to Felda for one of its debts and another institution gave Felda a six-month moratorium,” he said.

Mustapa said high settlers’ debts and low debt collection rate aggravated the situation and hurt Felda's financial position.

“To ensure Felda achieves financial strength and sustainability, the Cabinet on Oct 14 approved Felda's recovery plan,” he said.

Among the proposals approved were the issuance of government-guaranteed sukuk amounting toi RM9.9 billion, of which RM6.0 billion would be used to reduce Felda's debt burden and the rest to boost its core revenue through the acquisition of FGV's shares and termination of the land lease agreement.