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PETALING JAYA: Cabinet has received a proposal from the Federal Land Development Authority (Felda) to increase its basic income from plantations by terminating its land lease agreement (LLA) with FGV.
Other proposals aimed at bringing Felda back to negative figures by 2023 include restructuring the debts of the state palm oil agency and increasing the independence of the settlers, the minister of the Department (Economy ) from Prime Minister Mustapa Mohamed in a statement.
All three recommendations were based on the findings of a special working group led by Bursa Malaysia’s President Abdul Wahid Omar, which were presented during a cabinet meeting on October 14.
Mustapa also said that the cabinet approved Felda’s proposal to issue government-guaranteed sukuk worth RM9.9 billion to finance his restructuring plans.
Felda’s debt currently stands at RM10.6 billion, which was contracted to provide cash advances to settlers and for replanting purposes.
Aside from the lower-than-expected profit sharing 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 15% profit share for the 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 reclaim 351,000 hectares of land owned by Felda leased to FGV as part of its plans to return Felda to profitability.
