GOVERNMENT APPROVES TO GUARANTEE FELDA's ISSUANCE OF SUKUK WORTH RM9.9b

 Felda to terminate land lease agreement with FGV


The Cabinet has received a proposal from the Federal Land Development Authority (Felda) to increase its core income from plantation lands by terminating its land lease agreement (LLA) with FGV, reported FMT.

Among the other proposals meant to bring Felda back in the black by 2023 include restructuring the state-owned palm oil agency’s debts and increasing the independence of settlers, Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed said in a statement yesterday.

The three recommendations were based on the findings of a special task force led by Bursa Malaysia chairman Abdul Wahid Omar which were presented during a Cabinet meeting on 14 October 2020.

Mustapa also said the Cabinet has approved Felda’s proposal to issue government-guaranteed sukuk worth RM9.9 billion to finance its restructuring plans.

Felda's debt currently RM10.6 billion


Felda’s debt currently amounts to RM10.6 billion, which was incurred to provide cash advances to settlers and for replanting purposes.

Weaknesses in governance and financial management


Apart from the lower profit-sharing than expected under the LLA, Mustapa said weaknesses in governance and financial management had also contributed to Felda’s problems.

Under the LLA between Felda and FGV, Felda was to receive a payment of RM248 million per year and a profit share of 15% for lease of its commercial land for 99 years.

In an interview with Bernama earlier this month, Felda chairman Idris Jusoh said the agency intends to take back 351,000 hectares of Felda-owned land leased to FGV as part of its plans to return Felda to profitability.


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