KUALA LUMPUR, March 6 — The Auditor-General’s Report on the financial statements of federal agencies for the year 2022 revealed that the Federal Land Development Authority (Felda) has disclosed a net loss amounting to RM1.005 billion, marking a significant increase from the previous year’s RM0.545 billion loss.
According to the report, the financial woes extend to Felda’s outstanding loans from external institutions, reaching a total of RM8.659 billion as of December 31, 2022, compared to RM8.809 billion in 2021.
“At the Felda group level, the total outstanding balance of loans from external institutions (Federal Government and financial institutions) as of December 31, 2022, amounted to RM15.117 billion, compared to RM15.903 billion in 2021,” the report said.
As for the reliance on government grants, the report said that the remaining amount was RM0.808 billion as of December 31, 2022 which is a decline from the previous year’s figure of RM0.996 billion.
It further added that in the year 2022, Felda received a total grant of RM0.214 billion, which is a decrease from the previous year’s grant of RM0.342 billion.
“The reduction in government grants amounted to RM0.128 billion (a 37.4 per cent decrease), attributed to a cut in allocations received from the Ministry of Finance during the current fiscal year.
“The reduction in grants received by Felda adversely impacts operational sustainability, as Felda heavily depends on financial assistance from the federal government,” the report added.
The report also said the repayment obligation for loans stands at RM2.5 billion, encompassing the Tawarruq Financing Facility agreement established in 2017 between the subsidiary firm, FIC Properties Sdn Bhd (FICP), and Govco Holdings Berhad (GovCo), a company under Finance Ministry Incorporated.
The loan, it said, aimed to fund the purchase of a 37 per cent equity share in PT Eagle High Plantations Tbk, an Indonesian incorporated company.
Despite FICP issuing RM2.250 billion, the failure to repay prompted Felda to establish a 2017 agreement with GovCo, providing a corporate guarantee for the Tawarruq Financing Facility.
“Felda has to pay GovCo RM0.200 billion on April 11, 2023, and RM2.878 billion on April 11, 2024. However, the scheduled payment in 2024 exceeds the remaining funds held by the Felda, both in hand and in banks, as of December 31, 2022,” it said.
The report added Felda has a repayment commitment for the Tawarruq Financing Facility after GovCo approved a repayment restructuring plan on December 19, 2023, amounting to RM50 million per year for the first five years starting in 2024.
However, it said the remaining repayment balance of RM2.595 billion must be made according to the schedule over a 15-year period starting from 2029 as failure to meet the initial payment in 2024 will result in the cancellation and termination of the approved restructuring plan.
Additionally, a 50 per cent reduction in profits from the Tawarruq Financing Facility, totaling RM0.233 billion, depends on Felda ‘s adherence to the repayment schedule.
“As of December 31, 2022, Felda’s Cash and Cash Equivalents position amounted to RM0.808 billion.
“Felda holds significant commitments totaling RM1.561 billion, comprising liabilities for replanting amounting to RM0.753 billion and unspent federal government grants amounting to RM0.808 billion,” it said.
The report revealed that based on the current Cash and Cash Equivalents balance, Felda is unable to meet commitments amounting to RM0.753 billion.
Therefore, the Auditor-General’s report recommended that Felda establish a path to operate autonomously to ensure robust financial performance without ongoing dependence on external aid.
“Establish a clear direction to operate with strong financial performance without further relying on assistance and financial support from the federal government.
“Closely monitor the subsidiary companies’ operations and their financial performance to ensure sustainability and viability without reliance on the parent agency and to be able to provide appropriate returns to Felda,” the report said.
