KUALA LUMPUR, Oct 18 — The Federal Land Development Authority (Felda) intends to reclaim some 350,000 hectares of land that it has leased to FGV Holdings Berhad (FGV) as a means to shore up its financial position, Berita Harian reported today.
In an exclusive interview with the Malay daily, Felda chairman Datuk Seri Idris Jusoh said the matter has already been agreed upon by its board of directors and the company is currently awaiting the government’s directive before negotiations can begin with FGV.
Idris stated that the move is part of Felda’s transformation plan to introduce a new sustainable and competitive business model.
Idris further explained that Felda’s revenue from its plantation operations had fallen since FGV was listed on Bursa Malaysia in 2012, with the most recent profits of RM16.51 million recorded for the 2019 fiscal year.
That figure, he said, was vastly different from Felda’s highest recorded profits of RM1.85 billion in 2011.
“Before this, billions in profit were nothing new to Felda. In fact, in 2007, the revenue from plantation operations surpassed RM1 billion, except for 2009, which recorded RM854 million.
“After [FGV] was listed, it [Felda’s profits] began to fall drastically until we were short of funds. Felda became indebted to the banks and the debts have now reached RM10 billion,” he said to Berita Harian in the interview.
Idris said FGV was due to pay dividends from the land that it had leased from Felda at a rate of RM800 million per annum but only managed to pay RM250 million per annum.
“With the new business model, we believe that not only can we service our debts, but also generate revenue. As a start, we want to take back the 350,000 hectares of land leased to FGV,” he was quoted as saying.
In 2012, Felda leased 350,000 hectares of land to FGV through a land lease agreement (LLA) for 99 years, where the latter had committed to paying RM248 million a year to Felda.
Meanwhile, when contacted by Berita Harian, FGV stated that it will issue a formal response once it has reviewed Idris’ statement on the matter.
In developing a sustainable business model, Idris said Felda will be transformed into a supply chain company, not only limited to plantations.
“Our agenda is to equip Felda’s supply chain, from owning and operating plantations to operating processing factories and subsequently produce its own product.
“At the moment, Felda’s current business model is seen as not sustainable because we do not have a comprehensive supply chain and only focus on the plantation level,” he said.
Idris also explained that Felda is contemplating a sale of its non-core assets, such as its four London properties, including Grand Plaza Serviced Apartments and Park City Grand Plaza Kensington Hotel, as well as PT Eagle High Plantations Tbk as a means to restructure its finances.