Investors give Felda the thumbs-up

KUALA LUMPUR: If the Federal Land Development Authority (Felda) uses its huge financial reserves to strengthen its assets, it will be a "wise and very good" move by the land development and rehabilitation agency, says Malaysia Investors' Association (MIA) president PHS Lim.

"The reserves can come down if it is being spent on expansion. If they acquire new assets, then we must understand their business sense and cannot be too criticial of them.

"Judging from past performance, they have done creditable things for Malaysia," he said,

Lim said Felda's whopping RM15.37 billion assets as at 2009 was very sizeable as the agency owned the world's largest oil palm plantations.

"If the reserves are used to enhance the assets, it's a good move as the lifespan of oil palm trees is very long, up to 20 years. An oil palm tree can grow up to 10 to 15 years before the yield declines," he said.

For the good of the industry, Lim said the people should appreciate Felda as it has been doing well in developing land schemes to eradicate abject poverty in its over 50-year history.

Its efficient administration has won the praise and admiration of foreign governments. They have sent their officials to learn how to develop land schemes the right way.

As such, one need not worry about Felda and should not criticise its financial performance as it has done very well, especially in the social aspects, he said.

Felda recently came under fire following a report in an opposition paper that the agency had incurred a deficit in its cash reserves.

Financial details

Responding to the report, Deputy Minister in the Prime Minister's Department Ahmad Maslan said Felda's RM4.08 billion cash reserves in 2004 dwindled to RM1.35 billion last year but its current and fixed assets had increased by RM6.2 billion from RM9.17 billion in 2004 to RM15.37 billion.

He said money from the reserves was spent for socio-economic projects including RM2 billion for replanting, RM603 million for house renovation loans for settlers, RM662 million for the new Menara Felda and RM253 million was allocated as special funds for poverty-eradication programmes in Sabah.

Meanwhile, it is learnt that Felda, being a statutory body, will compile its financial details and table a report in the Dewan Rakyat.

With a staff strength of 23,000 and 40,000 estate workers, Felda is the world's largest estate owner. It owned 340,000 hectares of plantations that generated RM1.1 billion net profit a year over the past six years.

Since its inception in 1956, Felda has created 225,270 settlers in 317 land schemes.

Meanwhile, Dr Yeah Kim Leng, chief economist from RAM Holdings said Felda should furnish the financial details to clear up the matter.

As for the depleting cash reserves, Yeah said the agency might be using the money for its investments to ensure better returns as the reserves should not be left lying idle.

-Bernama