Malaysia will provide state-owned palm oil plantation agency Felda with the financial aid of 6.23 billion ringgit ($1.52 billion) following a government inquiry into the company whose losses and debt have soared over the past decade.
The agency’s total liabilities had risen 12-fold over 10 years, from 1.2 billion ringgit in 2007 to 14.4 billion ringgit in 2017, according to a white paper released to parliament on Wednesday that cited poor management and low integrity.
The report found that operational mismanagement, failure of investment management and low levels of integrity are the main sources that caused Felda’s poor cash flow and affected its developmental programme,” it said.
Felda, or the Federal Land Development Authority, will also restructure and delay some repayments of its borrowings, said the report, which follows two years of management crises and allegations of corruption under the previous government.
The report said Felda would restructure the principal payment of its debts as well as delay the repayment of its borrowings of 1.98 billion ringgit in 2019.
The remainder of its 9.3 billion ringgit borrowings will be repaid from 2020 to 2028.
Felda was created by Malaysia’s second prime minister in 1956 and aimed to resettle and employ the rural poor in the palm oil industry.
It grew to become the world’s largest state-run palm oil agency.
Its problems, however, have frustrated Malaysia’s 650,000 palm oil farmers, also known as settlers, as they have racked up debt on low incomes.
The settlers had been a key source of votes for the previous ruling coalition, which suffered a shock defeat in May last year.
The government said it has set aside about 2 billion ringgit to write off debt interest for settlers loans, among other measures to increase estate efficiencies and reduce operational costs.
Source: Voice of Nigeria