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FEER: A Problem to Settle [FELDA]
By S. Jayasankaran
5/12/2001 1:51 am Wed
A Problem to Settle
The Federal Land Development Authority has settled hundreds of
thousands of landless Malays. Now it wants to make some money
By S. Jayasankaran/LURAH BILUT and KUALA LUMPUR
Issue cover-dated December 06, 2001
IN A COUNTRY THAT PRIDES itself on setting records, Malaysia's
Federal Land Development Authority claims an impressive
one--the world's biggest plantation owner and manager. It's a far
cry from the 1950s when it was set up to alleviate widespread
poverty. Today its ultimate aim is to create wealth for itself--though
it would never admit it.
Felda, as it's commonly known, was set up in 1958 and played a
vital role in helping secure political stability and economic growth
in the first two decades of independence from Britain by settling
hundreds of thousands of landless paupers--almost all of them
ethnic Malays--on vast areas of plantation hacked out of the
It stopped settling people in 1988 and the landless are no longer a
major problem. Indeed, in the rapidly industrializing Malaysia of the
1980s and 1990s many of the better-educated, more ambitious
second-generation settlers no longer wanted to work on the palm
oil and rubber plantations that Felda helped their parents set up.
Those that remain are being hit by low rubber and palm oil prices.
This poses a problem for Felda, which must reconcile its original
goal of poverty-reduction with its unstated mission to make
money--and it's been making a lot of that.
NICE LITTLE EARNER
With a turnover of 7.9 billion ringgit ($2.1 billion) last year, it
made a profit of 488 million ringgit. It is also the country's single
largest producer of palm oil and rubber. According to company figures,
it accounted last year for 22% of Malaysian exports of crude palm oil
and 10% of rubber production. Moreover it has ample cash reserves and
has paid off all its domestic and international debts.
Felda's merchandise is produced on settlers' land and on territory
it continues to open up for development. Indeed, the slightly more
than 100,000 settler families, or about half a million people, now
occupy just 55% of the 811,000 hectares developed and managed
That's not necessarily bad news for Felda. Primary Industries
Minister Lim Keng Yaik believes the authority's long-term future
lies in the consolidation of holdings under Felda management with
settlers, or their heirs, allowed shares in the new entity. "Ultimately,
the holdings should be combined and run estate-management
style," says Lim. "Settlers would participate as workers and
But first it must address the realities on the ground and consider the
political implications of any radical change.
Hassan Ali, a 75-year-old Muslim, was one of the original
beneficiaries of the government's land-development scheme. He's
too old to work now, but the former soldier in the British army came
to Lurah Bilut in central Malaysia's Pahang state in 1959 to take
part in Felda's first project. Today he's paid off his loan to Felda
and owns seven acres of rubber trees. Like other settlers, he sells
the latex to Felda.
Hassan's left with 350 ringgit a month after he's paid the hired help
who work his land. "I need very little," he says. "And my children
help me out." But he's resigned to the fact that his only son, who
works as a factory supervisor in the nearby town of Bentong, will
not return to farming. "He doesn't show any interest," he sighs. "So
he will probably be an absentee landlord. But that won't be my
problem, I suppose."
The pattern is being repeated all over. The average age of settlers
on Felda schemes is 60, and more than 60% of second-generation
settlers aren't interested in farming. The industrialization of
the past two decades has lured many away. But the dread of rural
poverty, as commodity prices sag, has also proven a strong deterrent.
It's this second problem that has forced Felda to advance
cautiously on the road toward collectivization. While it no longer
has to worry about settling the landless, it can't afford to ignore the
settler families that remain today.
"Thirty years ago, it was all right," says cabinet member Lim. "Not
now. Some, if not all, Felda settlers are living in poverty. Palm oil
settlers are a bit better off. The rest are languishing." Early this
year, when palm oil prices plummeted more than 60% from a peak
of more than 2,400 ringgit a tonne in 1998, the media reported
cases of children of Felda settlers skipping school because they
couldn't afford it.
It's not the first time commodity prices have fallen, but the
government knows it cannot afford to ignore the plight of the
settlers--some 95% are ethnic Malay and most used to be firm
supporters of the ruling United Malays National Organization. But,
since the downfall of former Deputy Prime Minister Anwar Ibrahim
in 1998 and the return of hard times, many have shifted their votes
to the Islamic Party, or Pas. "Felda settlers used to support Umno
completely," says a ruling party official. "Now many have
abandoned Umno for Pas."
Commodity-price fluctuations have always been a political issue,
with Umno and Pas lawmakers trying to present themselves as the
champions of the settlers. In the end, however, the agency has
always pitched in. Among the remedies this year: grants from
Felda, the writing-off of settler loans and increasing fertilizer and
That's why Felda's consolidation blueprint has been kept on the
back burner for almost three years. But Malaysia is unlikely to go
backwards--Felda will continue opening up new land that it
manages itself amid a diminishing pool of settlers, who will continue
to be helped out every time commodity prices drop. Thus,
consolidation will be possible in the distant future.
Meanwhile, resettlement has created thousands of small rural
businessmen and children of Felda settlers have gone on to
become educated professionals, swelling the ranks of Malaysia's
growing middle class.
Ayob Yahya, 75, one of the first settlers in Lurah Bilut, has no regrets. "Look around you," he smiles, waving his hands around the thriving community of schools, shops, restaurants, clinics and a mosque. When he first arrived from Penang, he had to walk more than six kilometres just to buy rice. Today his children have all moved on to better things, but he and his wife still tap their 500 rubber trees every morning. "I came here with nothing over 40 years ago," the former port worker says. "Now I have something I can call my own."