Malaysia's Defence Minister says defence spending diverted to bail out Tabung Haji, Felda

Malaysia's Defence Minister Mohamad Sabu said a major portion of his ministry's budget had to be diverted to save the two "Malay institutions". PHOTO: ST FILE

KUALA LUMPUR - Malaysia is putting its defence spending on the back-burner as the government is channelling more than RM20 billion (S$6.56 billion) to bail out two key Malay institutions, Defence Minister Mohamad Sabu said on Friday (April 19).

The Pakatan Harapan government is pumping money into Muslim pilgrimage fund Tabung Haji and landowners under the government's Felda scheme, after discovering financial discrepancies.

Mr Mohamad, in a media group interview, said a major portion of his ministry's budget had to be diverted to save the two "Malay institutions", Malay Mail online news quoted him as saying.

"It depends on need and most importantly, financial ability, because now a lot of our money is used to save the Malay institutions which have been destroyed: Tabung Haji and Felda," he said.

Media reports in November said the Malaysian government in announcing its Budget for 2019 allocated RM15.3 billion for the Defence Ministry, RM100 million less than the previous year.

"So the Pakatan Harapan (PH) government is being attacked by those saying that (the government) don't care about the Bumiputera and Malay issues and all that," he said. "However, what happened now, is that RM24 billion is used to save these collapsed Malay institutions."

Mr Mohamad was referring to the slip in support for PH by ethnic Malays in the months after the May general election last year, with complaints over cost of living and concerns over how the 11-month old government is handling issues on Malays and Islam.

The government had announced that RM26.2 billion were being channelled to rejunevate Tabung Haji and Felda.

The Mahathir Mohamad administration last December created a special purpose vehicle to take over property and equity assets of Tabung Haji bought for nearly RM20 billion that are now worth RM9 billion less.

This has left Tabung Haji, a giant organisation that helps Malaysian Muslims save to perform their pilgrimages in Mecca, with a clean slate to continue.

The SPV will nurse these impaired assets to enhance their values and possibly sell them off later.

Earlier this month (April), the government said it was injecting RM6.2 billion into the Federal Land Development Authority (Felda), to revive the agency, which owns a 33.6 per cent stake in listed FGV Holdings.

The cash injection will be used to repay Felda debts, improve operations, and with RM2.7 billion used to financially assist Malay settlers.

Most of the Felda land settlers are Malays with oil palm plantations on their holdings. They number more than 1.2 million voters and are spread across 53 of the country's 222 federal parliamentary wards.

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