KUALA LUMPUR: The Public Accounts Committee (PAC) has recommended that the Ministry of Rural and Regional Development intensify its oversight of subsidiaries of Felcra Bhd (Felcra) to align their operations with the organization's original objectives.
This is among the five recommendations suggested by the PAC for the government to consider after the debt owed by 14 Felcra subsidiaries reached more than RM1 billion as of April 2022.
PAC chairman Datuk Mas Ermieyati Samsudin said the ministry and Felcra should take greater responsibility and be strict in supervising their subsidiaries to generate profits and achieve their original goals.
"PAC was informed that Felcra and its subsidiaries' debt, amounting to RM1.532 billion, has been restructured and rescheduled for a period of 35 years by the government through Cabinet approval on Aug 11, 2021.
"Felcra also informed us that the restructured loan is now being repaid according to the set schedule, allowing it to continue its operations," she said.
PAC, she said, also found that the operating losses of these subsidiaries were the main contributing factor to Felcra's debt situation.
"This is clearly seen in the RM309.8 million owed by Felcra's estate joint ventures, while Felcra Properties had RM842.7 million in total debt.
"This situation led the government to provide a loan of RM544 million to Felcra for the development of a commercial project in Jalan Semarak, Kuala Lumpur, known as Semarak 20," she said.
Mas Ermieyati said the ministry must ensure Felcra and Felcra Properties develop a comprehensive strategy that includes sales and business opportunities for the Semarak 20 project.
This, she said, is to ensure that Felcra can repay its debt to the government and strengthen the company's financial position.
"The ministry and Felcra must also report the latest status related to Felcra's debt repayment to the government and the implementation of strategies for the Semarak 20 project to PAC every three months as a monitoring mechanism," she said.
She added Minister of Finance (Incorporated) (MoF Inc), Finance Ministry, the Rural and Regional Development Ministry and Felcra have been given two months to submit actions taken on the recommendations made by the PAC over the issue.
Earlier today, the PAC revealed that the debt owed by 14 Felcra subsidiaries has reached RM1.283 billion as of April 2022.
This disclosure marks significant financial challenges within the state-owned entity, which is wholly owned by the MOF Inc)and overseen by the Rural and Regional Development Ministry.
According to a report published on the PAC's website, two subsidiaries have been dissolved, while two inactive companies still owe the parent company RM9.75 million.
The report also noted that Felcra Livestock Sdn Bhd's debt has been written off due to its inactive status, whereas Felcra Food Industries Sdn Bhd, which was reactivated in October 2022, is now undergoing debt collection processes.