Bailout for FELDA prolongs Malaysian govt engagement in vote bank: Analyst

Bailout for FELDA prolongs Malaysian govt engagement in vote bank: Analyst

Azmin Ali
Malaysian Economic Affairs Minister Mohamed Azmin Ali tabling the white paper on FELDA at the parliament on Apr 10, 2019. (Photo: Facebook/Azmin Ali)

KUALA LUMPUR: The RM6.23 billion (US$1.5 billion) bailout for the Federal Land Development Authority (FELDA), a Malaysian state agency overseeing smallholders, is a prolonged engagement that goes against professionals’ views to eventually cutting the apron strings, an analyst observed. 

Khor Yu Leng, political economist at Segi Enam Advisors, said the political approach can differ from a farmer-centric model.

“The beneficiary needs to be defined. Is the voter the target, or a resilient independent rural household?” she said.

On Wednesday (Apr 10), Economic Affairs Minister Mohamed Azmin Ali tabled a white paper at the parliament to offer grants, loans and government guarantees to carry out various FELDA initiatives.

A new business model will be formulated for the government to manage the settlers’ land through a long-term rental arrangement, while crop diversification will be introduced to generate higher income. Settlers can also look forward to new technology on smart farming and precision agriculture.   

Among others, Mr Azmin announced that debts of RM2 billion owed by settlers (interests on cost of living allowance loan and harvest advance) will be written off, as the government looks into replacing these loans with a more flexible scheme. 

The construction of 4,794 housing units will also be completed by this year.

FILE PHOTO: A woman walks past a logo of Felda in Kuala Lumpur
The logo of Felda in seen in Kuala Lumpur, Feb 7, 2018. (Photo: Reuters/Lai Seng Sin)

Established in 1956, FELDA was the brainchild of Malaysia’s second prime minister, Abdul Razak Hussein. The state agency offered land to settlers to cultivate cash crops as a means to eradicate poverty.

From the first batch of 616 pioneer settlers in Lurah Bilut, Pahang, FELDA today has a total of 112,635 settlers in 317 schemes nationwide. Almost half of the settlements are located in Pahang - one of the two states still run by Barisan Nasional (BN).

Traditionally, FELDA settlements were BN strongholds. The trend however has changed in the last recent general election in 2018, where 19 of the 52 parliamentary seats with FELDA schemes fell to Pakatan Harapan (PH), the Star reported.

FELDA’s poor financial performance as a result of “corporate malfeasance” – in Mr Azmin’s words – came under public scrutiny after Pakatan Harapan (PH) took over the federal administration. The agency’s debt rose more than tenfold from RM1.2 billion in 2007 to RM14.4 billion to 2017, he revealed. 

Mr Azmin said FELDA’s financial performance deteriorated after the listing of its commercial arm Felda Global Ventures Holdings Bhd (FGV) - now renamed as FGV Holdings Bhd - in June 2012.

“Unfortunately, RM1.4 billion from the cash returns received by FELDA via the FGV listing was spent on very dubious investments involving shady transactions,” Mr Azmin said, adding that RM2.7 billion was spent to gain political support for the general election.

He announced that FELDA’s non-strategic assets would be disposed of to improve the agency’s cash flow.

Former prime minister Najib Razak, son of Abdul Razak, condemned the move on his Facebook, saying that PH was only smearing FELDA so that they could sell its assets. 

On Tuesday, FELDA lodged a police report against Najib for allegedly ordering the agency to invest in Indonesia’s PT Eagle High Plantations at an inflated price.

Commenting on the white paper, Ms Khor said the new FELDA model is not clearly articulated. Details such as implementation methods and expected income boosting effect were not spelled out clearly.  

She noted that politicians like to retain a tight control on FELDA, a handy vote bank that in the past generated more voters for BN and UMNO than regular villages.

“Najib’s trial (over power abuse and money laundering) has started and rural voters may ponder on his alleged luxury spending and more. This and pro-FELDA smallholder efforts in the white paper should help to boost sentiment for PH,” she noted.

But can this white paper help PH win votes in the next general election? 

“This might be challenging. They will need to get off the blocks quickly on this and have good stakeholder engagements to convince these savvy villagers,” she said.

While acknowledging that this is a perfect opportunity to address about half a million voters in FELDA settlements nationwide, Ms Khor hoped other rural villages would not be left behind. 

“They swung even more against BN and UMNO. At the end of the day, FELDA voters were on average still more loyal to UMNO-BN than those in nearby villages,” she said.

Felda Linggiu oil palm plantation
File photo of FELDA Linggiu oil palm plantation. (Photo: Wikipedia Commons) 

Meanwhile, FELDA settlers in general welcome any government efforts that will help lessen the burden of settlers. 

Mr Ow Yik Wah, a second-generation settler at Lurah Bilut, said the recent delay in the distribution of living allowance and the reduction of this allowance by RM50 per acre, among others, have caused much unhappiness among the settlers.

The weak crude palm oil prices have also affected the livelihood of the settlers. 

Mr Ow said the selling price of oil palm fruits went as low as about RM300 a tonne in recent months, against an average of about RM600 a tonne in the past.  

“You hear so many complaints among the settlers. We don’t know how the government does it, but it should focus on increasing exports and maintaining good bilateral ties," said the 62-year-old. 

“We were very disappointed. We do not care about politics. We just want whoever in-charge to set things straight and manage FELDA well. Make palm oil prices and FGV share price go up again."

Source: CNA/tx(rw)