KUALA LUMPUR - Malaysia's land development agency Felda, which is struggling with a corruption scandal and an underperforming listed arm, is laying off or forcing deep pay cuts on dozens of workers at its welfare foundation.
The Federal Land Development Authority (Felda), announced on Wednesday (Nov 29) to the management of its welfare arm Yayasan Felda, that most of its 68 employees will be laid off by the end of the year, The Straits Times has learned.
The foundation's CEO is paid RM54,000 (S$17,700) a month - a huge salary for a small, non-profitmaking charity.
"It's to restructure Yayasan Felda in line with other equivalent foundations," Felda chairman Shahrir Samad said when reached by phone.
The foundation, which has an annual budget of RM10 million, manages Felda's colleges, a dialysis centre and charities for plantation settlers' and their families.
"We are not discontinuing Yayasan Felda but of course we need to restructure it," said Tan Sri Shahrir.
While the number of those losing their jobs might seem small, the drastic move reflects how Felda - a hallowed name among Malaysian Malays due to its history of alleviating poverty - needs to take painful steps to rebound from its current problems.
Felda's former chairman Isa Samad was removed by Prime Minister Najib Razak in January and is facing a corruption probe into millions of dollars allegedly spent on buying overseas and local hotels at inflated prices.
Tan Sri Isa was later replaced by former cabinet minister Shahrir.
Felda's listed Felda Global Ventures (FGV), specialising in palm oil production, has performed poorly on the stock exchange since its listing in 2012. This has led PM Najib to bail out thousands of the Malay Felda farmers who had borrowed money to buy FGV shares.
On Wednesday, a management-level source told The Straits Times that the foundation's 68 employees will either have their jobs terminated, opt for voluntary resignation or take a pay cut. An official letter is expected to be issued this week.
The cost-cutting measure includes revising salaries paid, which foundation chairman Manan Ismail has said were "too high".
"We need to reduce the expenditure for the foundation and concentrate on providing more benefits to the settlers," said Datuk Seri Manan told The Straits Times.
Mr Shahrir and Mr Manan said the foundation needs to keep to its financial capability.
"It's not a big foundation and yet we have a CEO who's paid RM54,000 a month. It has to be streamlined," said Mr Shahrir. "He doesn't realise he is overpaid. At RM54,000, I think is a bit too much".
Yayasan Felda receives RM10 million annually from Felda, is currently led by chief executive Datuk Emel Faizal Mohd Mokhtar, who was appointed to the role in 2011 by Mr Isa.
A new salary scheme will come into place next year, if any of the 24 permanent staff chooses to stay on the job. Those who decide to leave will receive severance.
Mr Manan says Felda is still determining how many staff is needed for the foundation to operate.
A Felda source told The Straits Times: "The unspecified amount for a pay cut would be an unreasonable sum. It just shows they don't want you there".
However Mr Manan says that final evaluation of severance and new salary numbers will only be decided mid-December, taking into account that "most staff are families of settlers".
As the world's third largest palm plantation operator, Felda also has under its wings over 112,000 Malay settlers. Together with their family members, they total over 1 million people - forming a large chunk of voters occupying 54 parliamentary seats.
Many of the settler's children are offered opportunity to pursue public tertiary education, but for those seeking vocational and soft skills, Felda offers that too via its welfare arm, Yayasan Felda.
The move to streamline one of Felda's long list of subsidiaries and initiatives comes right before a general election that must be held by August 2018 and next week's annual assembly for Malaysia's ruling party Umno, which relies much on Felda settlers' support.