KUALA LUMPUR (June 28): Prime Minister Datuk Seri Anwar Ibrahim has signed an agreement involving a government guarantee for Federal Land Development Authority (Felda) to restructure the agency's loans through the issuance of sukuk and revolving credit, in an effort to restore the agency's finances and enable it to continue to waive some RM8.3 billion worth of settlers' loans.
 
"This government guarantee is expected to stabilise Felda's financial position as well as ensure a more sustainable business model so that it continues to be viable for settlers and the new generation of Felda," said Anwar, who is also the finance minister, in a statement issued by the Finance Ministry on Wednesday (June 28).

According to the ministry, a large part of this Felda loan restructuring will involve a reduction of Felda's debt principal with financial institutions by RM7.9 billion.

The move will also reduce Felda's financial cost against interest rates imposed and enable Felda to cancel 80% of the settler's debt amounting to RM8.3 billion that was implemented in 2021, it said.

This means that the waiver of the settler's debts, which Putrajaya previously announced in February this year it had halted due to Felda's cash flow problems, would continue.

At the time, Minister in the Prime Minister's Department (Law and Institutional Reform) Datuk Azalina Othman had informed Parliament via a written reply that the government would not be able to carry on writing off Felda settler's loans any longer as it had made a huge impact on Felda's cash flow. The waiver of the Felda settler's loans was first announced in July 2021 by Tan Sri Muhyiddin Yassin.

Azalina had also said that collections for loan repayments must continue as it was a source of income for Felda to ensure its sustainability, and that the collections were expected to make up 10.8% of Felda's total 2023 revenue.

Meanwhile, Putrajaya said it has improved the governance of channelling funds to Felda as a government statutory agency by appointing AmanahRaya Trustees as the "trustee of account transactions to ensure Felda's transformation is on the right track, and that it meets the needs of accountability and integrity".

It also noted that the government had previously agreed to provide a guarantee to Felda in 2019 to enable the agency to implement its recovery plan, under a transformation programme that started in 2020, for a period of five years. 

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