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Auditor-General's Report: Felda must go back to its basics to overcome financial issues, says economist

KUALA LUMPUR: The Federal Land Development Authority (Felda) needs to restructure its current liabilities and business activities to refocus on its core responsibilities: overseeing the affairs of the settlers.

Economist Professor Emeritus Dr Barjoyai Bardai said Felda was facing a significant financial problem due to having an excessively large debt.

"Felda must embark on a large-scale recovery process to restructure its liabilities, currently amounting to RM8.6 billion.

"This has led to an increase in losses from RM545 million in 2021 to RM1.005 billion.

"The responsibility of Felda is to effectively manage the settlers, and if this is done well, there should be no need to accumulate debt. However, Felda is involved in numerous business activities, most of which are not profitable, posing a significant problem," he said.

The Universiti Tun Abdul Razak Graduate School of Business lecturer said business activities under Felda could be transferred to Felda Global, a business entity listed on the Bursa Saham Kuala Lumpur.

The 2022 Auditor General's Report revealed that Felda has incurred an increased net loss amounting to RM1.005 billion in 2022, as compared to RM545 million in 2021.

The report also said 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.

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

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