Malaysia - Felcra I Project : Loan 2013 - Press Release - Conformed

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/114 June 18, 1981 WORLD BANK TO SUPPORT SMALLHOLDER LAND DEVELOPMENT IN MALAYSIA The World Bank announced today the approval of a $37 million loan to Malaysia for a project to help one of the country's federal land development agencies to carry out its smallholder land improvement schemes. The $139.1 million project is designed to finance the rehabilitation and "fringe" schemes of the Federal Land Consolidation and Rehabilitation Authority (FELCRA). FELCRA's rehabilitation schemes involve the redevelopment of unsuccessful block aliena- tion schemes which were previously assigned to groups of individuals for agricultural development. The so-called fringe schemes are designed to increase the land area avail- able to smallholders by opening up previously unexploited land near their villages and mak- ing it available to selected individuals. Both rehabilitation and fringe schemes are farmed as group operations under FELCRA management. The World Bank loan will help finance the development of about 64,000 acres of rubber and 20,000 acres of oil palm. About 112 miles of all-weather access roads will be built, and two palm oil mills will be constructed. Staff housing will be provided, as well as vehicles and equipment for the development and maintenance of the schemes. FELCRA's capacity to carry out this program will be strengthened through various organizational improvements, including the establishment of units for training and staff development, program development and evaluation, and of a training program for all staff. Consultant services will be financed for the design of project process- ing facilities, and technical assistance for the training and evaluation units, imple- mentation of a proposed management information and accounting system, diversification activities, evaluation of existing schemes, and preparation of future projects. About 12,000 low-income rural households will receive increased income from the project's land rehabilitation and development schemes. At full development, the project will generate 13,000 man-years of employment per year, and about $60 million per year in foreign exchange earnings from the production of rubber and oil palm. The World Bank loan is for 17 years, including four years of grace, and bears interest at 9.6% per annum. NOTE: Money figures are expressed in U.S. dollar equivalents. FORM NO. 1121 (5-76) 5-7)TECHN I CAL DATA PROJECT: FELCRA I COUNTRY: Malaysia TOTAL COST: $139.1 million BANK FINANCING: $37 million for 17 years, including four years of grace, with interest at 9.6% per annum OTHER FINANCING: Government of Malaysia, $102.1 million IMPLEMENTING ORGANIZATION: Federal Land Consolidation and Rehabilitation Authority MISC Building (FELCRA) Jalan Conlay P.O. Box 2254 Kuala Lumpur, Malaysia CABLE: FELCRA KUALA LUMPUR PROJECT DESCRIPTION: The project will finance the fringe and rehabilitation elements of FELCRA's program for the fourth plan period, extending to a total of about 84,000 acres. This will cover development of about 50 proposed fringe schemes, the rehabilitation of about 40 existing unassisted land development schemes, and the construction of two palm oil mills. Technical assistance will be supplied to FELCRA for the establishment of units for training and staff development, and program development and evaluation. FELCRA will also receive consultant services for diversification of crops, field management, management information systems, design of oil mills, and the preparation of future projects. PROCU.REMENT: Vehicles and equipment amounting to about $4 million will be . procured under international competitive bidding (ICB) in accordance with World Bank guidelines. A 15% preference margin, or the prevailing customs duty if lower, will be extended to local manufacturers of these items. Small items and urgent requirements, as well as agricultural materials will be procured by local competi- tive bidding in accordance with normal government procedures. Construction of oil palm mills will be open to ICB. Land development and other civil works will be procured under local procedures which permit foreign participation. CONSULTANTS: About 155 man-months of consultant services will be required in planning, training, development of management information systems, supervision of oil mill design, diversification activities, land tenure, and project preparation. ECONOMIC RATE OF RETURN: 18% ESTIMATED COMPLETION DATE: 1986 -0-