Cabinet approves proposed issuance of RM9.9 billion Felda sukuk - Mustapa

KUALA LUMPUR: The cabinet has agreed to approve the proposed issuance of Felda sukuk worth RM9.9 billion with government guarantees for the company's recovery plan, said Minister in the Prime Minister's Department (Economy) Datuk Seri Mustapa Mohamed.

In a statement today, he said, the Cabinet also agreed to the proposal to restructure Felda's debt with financial institutions, besides increasing Felda's core income by terminating the Under-Lease Agreement (LLA).

Apart from that, Mustapa said, the recovery plan will also involve efforts to increase the independence of the settlers involved.

“FELDA's financial position is expected to record a positive trend starting in 2023 with the implementation of these initiatives. FELDA will return to its path as a respected and viable body.

“The solution to the issues faced by FELDA will not be complete without strengthening governance and efficiency in managing the farm. In this regard, the Board of Directors and the management of FELDA must be committed to improve management efficiency and improve governance, "he added.

Mustapa, who is also the Member of Parliament for Jeli, said the proposal was submitted in the Special Task Force Report for Felda Issues, which was tabled at the Cabinet meeting on October 14, 2020.

He said the Special Task Force, chaired by Tan Sri Abdul Wahid Omar and also accompanied by Felda Chairman Datuk Seri Idris Jusoh, had identified several critical issues regarding the company's finances.

“Among the main problems faced are the unsustainable capital structure and the high debt burden of RM10.6 billion.

"This situation is also due to the reduced source of income, especially the receipt of lease payments for 351,000 hectares of farmland and low profit sharing compared to expectations under the LLA," he added.

Apart from that, Mustapa said, the weakness of governance and financial management also contributed to the problems faced by Felda.

He added that the implementation of these rehabilitation proposals will be monitored in detail by a special monitoring committee that will report directly to the Prime Minister, Tan Sri Muhyiddin Yassin.