[ad_1]
KUALA LUMPUR, October 18 – The Federal Land Development Authority (Felda) intends to reclaim some 350,000 hectares of land that it has leased to FGV Holdings Berhad (FGV) as a means to shore up its financial position. Daily News reported today.
In an exclusive interview with the Malaysian daily, Felda chairman Datuk Seri Idris Jusoh said the matter has already been agreed upon by its board of directors and that the company is awaiting government directive before negotiations with FGV can begin. .
Idris stated that the move is part of Felda’s transformation plan to introduce a new sustainable and competitive business model.
Idris further explained that Felda’s revenue from its plantation operations had fallen since FGV was listed in Bursa Malaysia in 2012, with the most recent earnings of RM16.51 million recorded for fiscal year 2019.
That figure, he said, was very different from Felda’s highest recorded earnings of RM1.85 billion in 2011.
“Before this, billions in profits were nothing new to Felda. In fact, in 2007, income from plantation operations exceeded RM 1 billion, except for 2009, which recorded RM 854 million.
“Then [FGV] was on the list [Felda’s profits] It started to drop dramatically until we ran out of funds. Felda got into debt with the banks and the debts have now reached 10 billion ringgit, ”he told Daily News at the interview.
Idris said that FGV was required to pay dividends on the land it had leased from Felda at a rate of RM 800 million per year, but only managed to pay RM 250 million a year.
“With the new business model, we believe that we can not only service our debts, but also generate income. To begin with, we want to recover the 350,000 hectares of land leased to FGV, ”he said.
In 2012, Felda leased 350,000 hectares of land to FGV through a 99-year land lease (LLA), where the latter had agreed to pay RM248 million a year to Felda.
Meanwhile, when he was contacted by Daily News, FGV stated that it will issue a formal response once it has reviewed Idris’s statement on the matter.
By developing a sustainable business model, Idris said that Felda will transform itself into a supply chain company, not just limited to plantations.
“Our agenda is to equip Felda’s supply chain, from owning and operating plantations to operating processing factories and subsequently producing its own product.
“At the moment, Felda’s current business model is not considered sustainable because we don’t have a comprehensive supply chain and we only focus on the plantation level,” he said.
Idris also explained that Felda is contemplating the sale of its non-core assets, such as its four properties in London, including Grand Plaza Serviced Apartments and Park City Grand Plaza Kensington Hotel, as well as PT Eagle High Plantations Tbk as a means of restructuring its finances.
