KUALA LUMPUR: The beleaguered Federal Land Development Authority (Felda), which has been hit by massive losses in billions and liquidation of several subsidiary companies, is confident of returning to the black by the financial year 2022 through the implementation of a new business model.
Chairman Datuk Seri Idris Jusoh said following the presentation of a white paper on Felda in Parliament on April 10, 2019, a task force led by Tan Sri Abdul Wahid Omar was formed to look into ways to enhance its (the white paper) inadequacy to address various issues besetting the agency.
“We have now identified the way forward by understanding where we are now and the past, and had come up with a new business model to make the agency more sustainable, profitable and independent.
“The task force had also proposed financial restructuring, how management system can be improved, which include digitalisation of the financial system, changing the mindset of settlers, gearing them to achieve high income, as well as cost-cutting exercise,” he told Bernama.
On the new business model, Idris said Felda believed the right business model for the agency moving forward is to have a complete supply chain from farms, mills to downstream.
“Before FGV Holdings Bhd was listed on Bursa Malaysia, we already have our own mills, whereby Felda during that time registered profit amounting over RM1 billion, of which in 2011 it posted about RM1.85 billion in profit.
“However, after the listing of FGV Holdings Bhd in June 2012, Felda’s earnings obviously declined as the returns from FGV investment did not commensurate with what was expected from them,” he said.
FGV was listed on the main board of Bursa Malaysia on June 28, 2012 at RM4.45 a share, making it the world’s second largest initial public offering (IPO) after Facebook, raising about RM10.5 billion.
According to the white paper, Felda made a net profit of between RM200 million and RM1.1 billion annually between 2007 and 2011.
This was against a net loss of RM4.9 billion recorded by the troubled plantation giant in 2017.
Under the Land Lease Agreement (LLA) between Felda and FGV, Felda should receive a payment of RM248 million per year and profit share of 15 per cent for lease of its commercial land for a course of 99 years.
To achieve the goal of returning Felda to profitability, Idris said the agency clearly intends to take back 350,000 hectares of Felda-owned land leased to FGV under the LLA.
He said the wish had been discussed with the government and Felda was still awaiting the answer.
“When the LLA was entered into, there were conditions stating that Felda can take back the land at any time by giving them (FGV) 18 months’ land acquisition notice.
“We want to take back the land to re-empower Felda.
“The income derived from profits from Felda plantations before the listing exceeded RM1 billion, making a billion is no big deal… it can be made, however, the income dwindled since 2012 following FGV’s listing,” he said. – Bernama