KUALA LUMPUR (June 26): Felcra Bhd’s 14 subsidiaries have racked up total debt of RM1.21 billion, dragging on the cash-strapped state-owned company, said the Public Accounts Committee (PAC).

The company is wholly owned by Minister of Finance Inc (MOF Inc) but supervised by the Ministry of Rural and Regional Development (KKDW). Of the total debt of RM1.21 billion as of April 2023, Felcra's estate joint ventures accounted for RM309.8 million, while Felcra Properties had total debt of RM842.7 million.

"This situation led the government to provide a loan of RM544 million to Felcra for the commercial development in Jalan Semarak, Kuala Lumpur dubbed Semarak20," the PAC report revealed.

The Cabinet has approved total debt of RM1.53 billion for Felcra and its subsidiaries to be restructured and rescheduled over a period of 35 years. Under the restructuring exercise, Felcra will begin repaying the debt in 2026, with monthly payments of RM4.6 million to the Ministry of Finance (MOF).

To address the financial issues, the PAC urged Felcra to review its structure and operations to align with its original goals and social responsibilities, ensuring the interests of participants and rural communities are protected.

The committee also called on the KKDW and Felcra to strictly regulate the company's subsidiaries to ensure profitability and goal achievement. Felcra should build its capacity before venturing beyond its core business, the PAC noted.

For the Semarak20 project, the PAC said the KKDW must ensure a comprehensive strategy for Felcra to ensure success, enabling debt repayment to the government and strengthening the company's financial position.

The PAC also instructed the KKDW and Felcra to report the latest debt payment status and Semarak20 project strategy implementation to the committee every three months for monitoring.

"The PAC will give two months to MOF Inc, the MOF, KKDW and Felcra to present their actions regarding the PAC's five recommendations," said committee chairperson Datuk Mas Ermieyati Samsudin at a news conference in Parliament.