AG's Report: Felda faces financial strain, records RM1.005 billion net loss in 2022

KUALA LUMPUR: The Federal Land Development Authority (Felda) has incurred an increased net loss amounting to RM1.005 billion in 2022, as compared to RM545 million in 2021.

The Auditor General's 2022 report revealed that the outstanding loans from external institutions for Felda amounted to RM8.659 billion, a slight decrease from RM8.809 billion in 2021.

It said Felda, in 2022 received a reduced grant of RM214 million as compared to RM342 million in 2021.

"The reduction in grants received by Felda affects its operational sustainability as Felda is highly dependent on financial assistance from the Federal government," the report stated.

It said the loan repayment commitment amounted to RM2.5 billion which includes the Tawarruq Financing Facility agreement entered into by the subsidiary company, FIC Properties Sdn Bhd (FICP), in 2017 with Govco Holdings Berhad (GovCo), a company under Finance Ministry Incorporated

"FICP failed to repay the loan causing Felda to enter into a new agreement with GovCo as corporate guarantor for the Tawarruq Financing Facility."

Meanwhile, the report revealed that Felda was unable to fulfil its commitments due to the deficit in Cash and Cash Equivalents.

"In 2022, the Cash and Cash Equivalents amounted to RM808 million. However, Felda has significant commitments totalling RM1.561 billion.

"Based on the existing balance of Cash and Cash Equivalent, Felda is unable to fulfil commitments amounting to RM753 million.

The Auditor General's report recommends that Felda chart a course to operate independently, ensuring strong financial performance without continual reliance on external assistance.

It advised: "Establish a clear direction to operate with strong financial performance without further relying on assistance and financial support from the Federal government.

"Closely monitor the subsidiary companies' operations and their financial performance to ensure sustainability and viability without reliance on the parent agency and to be able to provide appropriate returns to Felda," the report said.

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