Subsidiaries under five federal agencies lost almost RM2bil in 2022

PETALING JAYA: Almost half of the 123 subsidiary companies under five federal agencies lost almost RM2bil in 2022, according to the Auditor-General’s Report on Federal Agencies 2022.

The five agencies were Employees Provident Fund (EPF), Armed Forces Fund Board (LTAT), Federal Land Development Authority (Felda), Retirement Fund Inc (KWAP) and Lembaga Tabung Haji (LTH).

These five federal agencies recorded the highest investment in subsidiaries totalling RM54.574bil. The report stated that only 66 of the 123 subsidiaries recorded profits in 2022, amounting to RM5.724bil, whereas 50 suffered losses of RM1.997bil.

There are a total of 53 federal agencies in Malaysia.

Also mentioned in the report was that 12 subsidiaries owned by Felda, LTH and EPF suffered losses for three consecutive years, from 2020 to 2022.

In 2022 alone, these 12 subsidiaries suffered losses totalling RM545.95mil.

“Seven of the 12 subsidiaries that operate locally suffered losses totalling RM418.96 mil.

“The remaining five subsidiaries operating overseas suffered losses totalling RM126.99mil,” it said.

These five overseas subsidiaries were located in the United Kingdom, Luxembourg and Singapore.

Overall, the report said the 53 federal agencies invested a total of RM56.128bil in 234 subsidiaries, of which 212 were active, while the remaining 22 were dormant.

Of the 212 active subsidiaries, the report noted that only 66 provided dividend returns of RM1.910bil.

“This indicates that federal agencies’ investments in subsidiaries have not yielded satisfactory returns,” said the report.

The report proposed several recommendations to improve the financial management of federal agencies.

“Review subsidiaries that are dormant, experiencing losses, or not providing adequate returns to avoid the burden of operational costs,” the report stated.

“Ensure loans taken are used to carry out the intended activities and are repaid according to the repayment schedule,” it stated.

The Auditor-General also recommended that the grants should be spent according to their intended purposes within the specified period.

Federal agencies should also refer to the relevant ministries about unutilised balances so it can be optimised for the benefit of the target group, it said.