Addressing the Felda Conundrum in Pakatan Harapan’s First White Paper

Abstract

Once the crown jewel of Malaysia’s rural development drive, the Federal Land Development Authority (Felda)’s settler schemes are now approaching an inflection point. Years of gross corporate mismanagement, depreciating farm assets, and indifferent commodity prices have strangled the organisation’s cash flow to the point where it claims it can no longer afford to pay its settlers, staff and contractors on time. To help stave off Felda’s apparent looming bankruptcy, Malaysia’s new Pakatan Harapan-dominated parliament is due to table a much-anticipated White Paper before mid-April 2019, proposing strategic solutions to Felda’s current malaise. Settler representatives hope that the federal authorities will generously favour Felda settlers, turn back the clock, write off a large amount of settler debt, and help the group reclaim key assets now under the purview of FGV Holdings Bhd (FGV). Post-GE14, the Pakatan-led government, however, is saddled with broader responsibilities that complicate responses to Felda’s current woes. These include obligations to FGV’s new management and institutional shareholders, which besides Felda and related agencies (who together hold 38.8 percent of FGV’s shares), extend to statutory Islamic investment fund Lembaga Tabung Haji (7.78 per cent), public sector pension fund Kumpulan Wang Persaraaan (Diperbadankan) (7.83 per cent) and the state governments of Pahang (5 percent) and Sabah (4.07 per cent). Some form of compromise between different sectoral interests is virtually guaranteed, and will involve federal funding in one form or another. Paradoxically, this tricky situation comes just when Pakatan is facing an unprecedented opportunity to win the hearts and minds of rural Malay voters; an opportunity that may not be on offer again for some time.