Govt to pump in RM6bil in stages to fix Felda

KUALA LUMPUR: Felda is to receive slightly more than RM6bil in stages from the government as it restructures its operations and strengthens governance in order to improve the fortunes of the agency and settlers.

It is understood that in the White Paper, Felda will get that sum of money from the government in the form of grants, loans and guarantees in order to resolve the immediate needs of the agency and establish a viable direction for the company and settlers.

A sum of around RM2.4bil will be in loans to restructure Felda’s loans and RM2.1bil will be a grant to clear the settlers’ interest for loans over the next 15 years.

More than RM200mil will be used to complete housing needs for second-generation Felda settlers and close to RM500mil will be paid to help with living costs and future income.

Felda will also be branching out to cash crops to improve its earnings and that of settlers, and to make the transition to the planting of cash crops, around RM1bil will be given to settlers to make their changeover to new cash crops.

The financial performance of Felda has been on a downward slide ever since its floated FGV Holdings Bhd in June 2012 on Bursa Malaysia. Losses mounted and its debt grew to a level where intervention by the government became essential.

Felda had been dragged down too by questionable investments, especially in hotels by its investment arm Felda Investment Corp Sdn Bhd (FIC), with criticism being raised over discrepancies in valuation.

It was reported that FIC’s purchase of a four-star hotel in Kensington, London, in December 2014 for RM330mil was allegedly three times the actual price of the property.

FIC had also purchased Merdeka Palace Hotel and Suites in Kuching for RM160mil, which allegedly was some RM50mil above market value.

Former Felda chairman Tan Sri Mohd Isa Abdul Samad has claimed trial to criminal breach of trust and nine counts of bribery involving more than RM3mil over the purchase of the hotel in Kuching.