Federal Land Development Authority (Felda) director-general Datuk Dr Othman Omar said a restructuring of these debts is necessary, and stressed that the settlers need a mechanism which will see them relying less on government handouts. NSTP/EIZAIRI SHAMSUDIN
(Stock image for illustration purposes) “To date, the amount of debt that is mutually agreed between Felda and settlers stands at RM5.5 billion. Then, there is another RM2 billion that has yet to be finalised” NSTP/MOHAMAD SHAHRIL BADRI SAALI

KUALA LUMPUR: Federal Land Development Authority (Felda) director-general Datuk Dr Othman Omar has made it his mission to find ways to ease settlers’ debts and maximise the potentials of Felda's landholding.

The debt reduction, he said, will be done in a way that benefits the settlers in the long run.

“Felda is shouldering settlers’ debts because it is like a mini-bank extending loans whereby repayments are in the form of oil palm fruits and rubber latex sales.

He said Felda is not structured to operate as a bank. The huge settlers’ debt put a strain on Felda’s current tight cash flow. Most of the RM8 billion Felda loan is actually settlers’ loan.

“It is not part of Felda's statutory obligation under the Act to provide replanting of oil palms and rubber, housing and other settlers’ loan.

“It was something Felda can afford when we had RM1.2 to RM1.8 billion revenue annually from our plantation land. This was prior to leasing the estates to FGV in 2012, when it debut on Bursa Malaysia,” he added.

Last year, Othman revealed Felda paid RM1.2 billion in loan interest and installment. “It’s going to be RM1.9 billion for 2019. We are basically working for the bank. We had no choice but to request help from the government.

“Towards the end of 2018 we received approval for a RM577 million soft loan from Finance Ministry. For the months of November and December 2018, RM77 million in loan were extended to the settlers’ as “elaun sara hidup.”

“We are now waiting for the remaining RM500 million loan from Finance Ministry, for 2019,” Othman said.

“To date, the amount of debt that is mutually agreed between Felda and settlers stands at RM5.5 billion. Then, there is another RM2 billion that has yet to be finalised,” he told the New Straits Times Press.

He said a restructuring of these debts is necessary, and stressed that the settlers need a mechanism which will see them relying less on government handouts.

“We want to restructure these debts. What Felda settlers need is a hand up from the government, not constant handouts, in the form of loans, that shackles them into being indebted for generations,” he said.

“I can only share with you information that are already made public. The rest you will have to wait for the White Paper to be tabled in Parliament next month,” he added.

Othman, who was appointed to this role since October 2018, succeeded Datuk Abd Ghani Mohd Ali.

A civil engineer by training, Othman had previously served as general manager of Selangor State Development Corp or Perbadanan Kerajaan Negeri Selangor (PKNS) for five years until his contract expired in January 2014.

He then helmed Oxley Malaysia Sdn Bhd (a subsidiary of Singapore-listed Oxley Ltd) as group chief executive officer.

Under Othman’s watch, PKNS implemented a full open tender system for property development in 2010, which resulted in substantial savings for the Selangor government.

He also initiated a restructuring and transformation programme, which resulted in PKNS achieving debt-free status and surplus cash.