PAC urges Felcra to reconsider 30,000ha land bank target

2026-03-03 - 11:14

The Public Accounts Committee found that Felcra’s board of directors had approved the acquisition of four new oil palm estates solely based on internal studies. KUALA LUMPUR: The Public Accounts Committee (PAC) has recommended the Federal Land Consolidation and Rehabilitation Authority (Felcra) revise its target for acquiring a total land bank of 30,000ha to a more realistic level. PAC chairman Mas Ermieyati Samsudin said any acquisition should consider Felcra’s financial capacity, a clear acquisition plan, and assurance of adequate funding sources to avoid jeopardising the company’s financial sustainability in meeting long-term operating costs. “Although the Felcra group’s financial position remains strong, with consistent net profits recorded between 2021 and 2024, the 30,000ha land bank acquisition target under Transformation Plan 2.0 by 2025 has achieved only 13% or 4,016.89ha. “This failure to secure a sufficient land bank raises concerns over the company’s long-term ability to cover operating costs and maintain competitiveness,” she said in a statement. Mas Ermieyati said the PAC, which acts as Parliament’s financial watchdog, also found that Felcra’s board of directors had approved the acquisition of four new oil palm estates out of 33 proposals to meet the 30,000ha target. The purchase of the four estates was fully financed using Felcra’s funds. The PAC also found that the board of directors approved the acquisition of the four oil palm estates based solely on internal studies, without external due diligence. “Governance weaknesses highlighted in the 2023 Auditor-General’s Report Series 2 on the plantation purchases included the rushed signing of agreements – between seven and 12 days after board approval – as well as irregular meeting records,” Mas Ermieyati said. Mas Ermieyati added that Felcra’s strategy of acquiring and rehabilitating lower-performing, lower-cost plantations exposed the company to the risk of a lengthy period to recover its original investment, as actual yields from the acquired estates differed significantly from initial projections. “As a result, the return-on-investment period had to be extended to between 11 and 22 years. “Despite issues relating to yields and targets not being met as planned, the performance of the four acquired oil palm estates has now begun to improve,” she said. The PAC also put forward nine recommendations to strengthen governance, improve procurement discipline, and ensure that future expansion aligned with Felcra’s financial capacity. “The rural and regional development ministry must also expand its regulatory and monitoring scope to cover governance and decisions relating to strategic asset acquisitions – including those financed using the company’s funds – and not be limited to projects under development allocations,” said Mas Ermieyati. She also said the finance ministry and the rural and regional development ministry must strengthen the composition of the board of directors by appointing external members with diverse expertise to enhance Felcra’s governance. Felcra is fully owned by the Minister of Finance Incorporated and falls under the supervision of the rural and regional development ministry.