Malaysia announced yesterday that it would provide RM6.23 billion (S$2.1 billion) in financial aid for state-owned national land development agency Felda, as part of measures to revive the debt-ridden organisation.
This includes RM2 billion to ease debts owed to Felda by settlers, as well as RM730 million in grants for housing and living costs for settlers, confirming a Straits Times report that the troubled agency would be bailed out.
"Felda's debts rose 1,100 per cent from RM1.2 billion in 2007 to RM14.4 billion in 2017, while the value of its assets only increased by 107 per cent," Economic Affairs Minister Azmin Ali said in Parliament when tabling a White Paper on Felda, the Federal Land Development Authority.
The agency, which operates some of the world's largest oil palm plantations, also saw its profits plunge over the same period.
Meanwhile, Felda's cash balance fell from an average of RM2.5 billion between 2007 and 2011 to just RM400 million in 2017. As at May 9 last year, the date of the general election which resulted in a change of government, the agency's cash balance was RM35 million.
"Unfortunately, the Felda settlers are suffering because the previous government has stolen their money, so we have no choice but to overcome the difficulties of the Felda settlers," Prime Minister Mahathir Mohamad told a news conference yesterday.
The aid will benefit the 112,635 Malay families and their descendants on Felda estates, whose livelihoods depend on cultivating cash crops under the land development scheme.
Felda's financial woes began after a controversial RM10.5 billion listing of its commercial arm Felda Global Ventures Holdings (FGVH) in June 2012 on Bursa Malaysia, the largest in the world that year after Facebook's initial public offering.
The listing gave settlers a windfall of RM15,000 a family and they were offered an interest-free loan to take up FGVH shares. FGVH shares have since lost two-thirds of their value, leaving settlers with little to show for their investment.
A combination of lower palm oil prices, poor plantation management and financial mismanagement has been blamed for Felda's fortunes going south.
Datuk Seri Azmin said that former prime minister Najib Razak had used RM2.7 billion, part of the RM6 billion which Felda had earned from the listing, to shore up political support.
He said Felda also spent RM1.4 billion on "shady transactions", including overpriced purchases of several properties and hotels.
Another loss-making deal was Felda's purchase of a 37 per cent stake in Indonesian planter Eagle High Plantations Tbk for RM2.3 billion from the Rajawali Group, which is controlled by Najib's associate Peter Sondakh, now worth just RM500 million.
Mr Azmin said he has also filed a motion against Najib for breaking a Parliament embargo on the Felda White Paper by posting parts of it on his Facebook page on Tuesday.
In his post, Najib denied any wrongdoing and dismissed allegations that Felda incurred losses from the Eagle High purchase. "We have the facts on our side. Everything was done in an objective manner," he was quoted as saying by The Star on Tuesday night.
Yesterday Najib said on Facebook the RM2.7 billion allegedly used to obtain political support was given to settlers as bonuses and handouts.
Felda director-general Othman Omar lodged a police report on Tuesday saying that the price for Eagle High was deliberately inflated by almost 450 per cent to RM2.3 billion, and that the purchase was made on Najib's orders.
Nearly a quarter of Malaysia's parliamentary constituencies - 53 out of a total of 222 wards - contain plantations operated by Malay voters under the Felda scheme.
In the last general election, Najib's Barisan Nasional lost the support of 27 constituencies with Felda plantations - the rural Malay heartland that used to be strongholds of the former ruling coalition.
The new Pakatan Harapan administration has struggled to retain the crucial Malay vote since winning the May elections, suffering several losses in recent by-elections. Political analysts say this Felda bailout may prove to be an opportunity for it to win back support.