FILE PHOTO: A woman walks past a logo of Felda in Kuala Lumpur, Malaysia February 7, 2018. REUTERS/Lai Seng Sin/File Photo
April 9, 2019
KUALA LUMPUR (Reuters) – Malaysia’s state palm oil plantation agency, the Federal Land Development Authority, is seeking 6 billion ringgit ($1.5 billion) from the government to help turn itself around, Bloomberg reported on Tuesday.
The request will be included in a white paper on the company scheduled to be introduced in parliament on Wednesday, Bloomberg reported, citing a source. If approved, the funds would be paid out in stages, the report said.
Felda, as the state-owned company is known, has been struggling to pay down debt amid financial losses and corruption allegations.
The government of Mahathir Mohamad, who came to power last year after defeating Malaysia’s longtime ruling coalition, had vowed to look into Felda’s financial troubles and alleged graft.
Felda and Malaysia’s Ministry of Economic Affairs, which is preparing the white paper, did not respond to requests for comment on the Bloomberg report.
Finance Minister Lim Guan Eng told reporters on Tuesday the government had to support Felda as the previous government had caused “huge losses”. He did not elaborate.
Felda was set up to help palm oil farmers, who work for the agency, and also has a one-third stake in FGV Holdings Bhd, the world’s largest crude palm oil producer.
Palm oil farmers on Felda land have been grappling with rising costs of living and high debt due to insufficient income.
Felda has diversified in recent years into property, including hotels, both locally and overseas, but has been plagued by issues of poor management.
Last year, Felda said it would sell assets including property in London, restructure some loans, and try to boost cash flow to trim nearly $2 billion in debt.
A former Felda chairman was charged in December with breach of trust and receiving bribes over the purchase of a Malaysian hotel while he was in charge of Felda.
The Mahathir government has said it would investigate several “highly suspicious” deals done by the previous administration, including the $500 million acquisition of a non-controlling stake in Indonesia’s Eagle High Plantations. The deal had drawn criticism as it was seen as overpriced.
(Reporting by Emily Chow, with additional reporting by Rozanna Latiff; Editing by A. Ananthalakshmi and Tom Hogue)