Felda settlers’ RM8.3 bil loans to be waived: Muhyiddin

KUALA LUMPUR – The government has agreed in principle to dispose of Felda settlers’ loans amounting to RM8.3 billion in a bid to revive the 65-year-old organisation.

Prime Minister Tan Sri Muhyiddin Yassin said the disposal of the loans, which would be implemented through a conditional loan adjustment initiative, will reduce the loan burden of each settler by an average of 80%.

“The average loan repayment is expected to be reduced from around RM800 to RM1,000 to only RM250 to RM300 a month for oil palm settlers and as low as RM150 for rubber settlers, which is a very reasonable and affordable rate for them.” 

He said this in a pre-recorded speech broadcast live on television and online platforms in conjunction with the 2021 Felda Settlers’ Day celebration today.

Muhyiddin said the initiative is one of the three-pronged strategies – restart, revitalise and reform – to bring back the glory of Felda as the world’s leading plantation company and, eventually, to be listed among the world’s most successful companies, such as in the Fortune Global 500.

Armed with land bank totalling 832,000ha, Felda has the capability and huge potential to become the world’s top plantation group once more, he said.

“I realise that this is not easy to achieve. However, with its three-pronged strategy (restart, revitalise and reform) and the new management’s commitment as well as government support, it is not impossible to do,” the prime minister said in his pre-recorded speech for the virtual launch of the 2021 Felda Settlers’ Day today.

Muhyiddin said one issue that could hamper Felda’s efforts to rise again to be on a par with the world’s most renowned plantation companies is its debt issue, which must be resolved to facilitate the process to “restart” Felda.

Therefore, he said, the government has agreed to partially write off settlers’ loans totalling RM8.3 billion. 

He said this conditional write-off involves, among others, a partial adjustment of the replanting loan balance up to December 31, 2019, amounting to RM8 billion, which will benefit 92,441 settlers or 82% of the 112,638 settlers.

Apart from that, he said the partial adjustment of the balance of fertilizer loan arrears up to the same period amounting to RM168 million would involve 52,180 settlers and the full adjustment of the balance of the original development loan also for the same period amounting to RM56 million would involve 6,711 settlers.

It also involves a full adjustment of the loan balance of FGV Holdings Bhd shares up to July 7 worth RM78 million involving 38,043 settlers, he said.

To revitalise Felda so it will return to a strong footing, Muhyiddin said the government has also approved the issuance of government-guaranteed sukuk valued at RM9.9 billion to strengthen Felda’s business model.

According to him, part of the sukuk issuance is used to restructure loans with financial institutions as well as for the takeover of FGV Holdings Bhd.

Muhyiddin also expressed hope that the efforts taken by the government will be a starting point or a reset button for the settlers to be more enthusiastic and focused on doubling their production and income, thus enabling more prudent financial management.

“I really hope that with the new agreement signed by the settlers with Felda under this conditional adjustment initiative, the settlers will be more committed to fulfilling all the agreed terms so that they can jointly bear the responsibility of increasing productivity and ensuring the sustainability of Felda,” he said.

The prime minister also expressed confidence that the loan restructuring will allow Felda to refocus efforts on strengthening its core business.

“The cabinet’s approval of the proposal by the special task force (on Felda’s rehabilitation) previously will also enable Felda to increase its shareholding in FGV up to 81.3%.

“I am given to understand that this development will create a plantation synergy that could boost productivity and, hence, Felda group’s profits,” he said.

In addition, he said, the expansion of Felda’s participation in downstream industries that have a higher profit margin will enable Felda to achieve its target to return to profitability by 2023.

He noted that Felda has started to implement smart agriculture to manage 458,000ha of its and settlers’ farming land nationwide by using the precision agriculture concept, in line with the national agenda towards the Fourth Industrial Revolution.

With the cooperation of the Felda community, Muhyiddin said, the system can enhance plantation operations through the monitoring and collection of more detailed information as well as savings on operating costs of more than RM200 million within five years. – Bernama, July 7, 2021