Felda director-general Datuk Othman Omar said restructuring of the debts is necessary and stressed that settlers need a mechanism which will see them relying less on government handouts. — Reuters pic

KUALA LUMPUR, Feb 25 — Government handouts made many settlers too dependent on Federal Land Development Authority (Felda) loans, causing its debt to stack up and disrupt cash flow, New Straits Times reported today.

Settlers’ loans, mostly for replanting or housing, take up majority of Felda’s RM8 billion debt. The agency’s new director-general, Datuk Othman Omar, was quoted as saying that Felda turned into a “mini-bank” for settlers when palm oil or rubber income dipped.

Because they have no alternative revenue source, settlers took up so much debt from the loans.

“We want to restructure these debts,” he said in an interview with the English daily.

“What Felda settlers need is a hand up from the government, not constant handouts in the form of loans that shackles them into being indebted for generations.”

Felda is now relying on government assistance to fund its operations and help settlers.

Othman said restructuring of the debts is necessary and stressed that settlers need a mechanism which will see them relying less on government handouts.

Last year, Felda paid RM1.2 billion in loan interest and installment and it is expected to increase to RM1.9 billion for 2019.

To date, the amount of debt that is mutually agreed between Felda and settlers stands at RM5.5 billion, with an additional RM2 billion that has yet to be finalised, Othman said.

Othman said towards the end of 2018, Felda received approval for a RM577 million soft loan from Finance Ministry.

For the months of November and December 2018, RM77 million in loan were extended to the settlers’ as cost of living allowance.

“We are now waiting for the remaining RM500 million loan from Finance Ministry, for 2019,” he added.