KUALA LUMPUR (Reuters) - Prime Minister Najib Razak gave cash handouts and offered debt waivers on Sunday to Malaysian palm oil farmers, a key voter base for the scandal-hit leader who is preparing to seek re-election.

Addressing tens of thousands of farmers and small landowners in the administrative capital Putrajaya, south of Kuala Lumpur, Najib said 94,956 eligible families will be given 5,000 ringgit each - costing the government 475 million ringgit ($111 million).

Additional funds amounting to over 950 million ringgit ($222 million) would be used to erase the debts of the farmers who are all linked to state plantation company Federal Land Development Authority (Felda), and are often called Felda settlers.

A portion of loans taken to buy shares in Felda Global Ventures (FGV), a listed unit of Felda, will also be waived, Najib said.


"Putrajaya would not have existed without the Felda settlers," Najib said in his speech to the settlers, state news agency Bernama reported.

"The presence of more than 25,000 settlers in the celebration reflects the support of Felda settlers for the government in which they are the hard core supporters of the government in the land schemes."

Felda settlers, who are ethnic Malay, are the majority voters in at least 54 of the 222 parliamentary seats.

They have been a solid vote bank for Najib's ruling coalition as urban Malays have poured into the opposition camp in recent years, alienated by a series of political scandals.

Najib's coalition lost the popular vote in the last general election in 2013, but still won a majority of seats.

Getting settlers' votes in the upcoming polls is critical for Najib's party, which has been accused of graft and mismanagement at a state-linked firm.

State fund 1Malaysia Development Berhad (1MDB), founded by Najib, is being investigated in at least six countries for money laundering.

A management crisis at FGV has also frustrated settlers, who are already disappointed by the near 70 percent plunge in the company's shares. Many of them had taken loans to buy shares in FGV following its $3 billion listing in 2012.

Malaysia's anti-corruption agency is investigating officials at FGV, with the FELDA chairman himself raising questions about what happened to the IPO proceeds.

Najib is expected to call an election earlier than the scheduled time of mid-2018, as he may want to take advantage of an economic recovery and a currently fractured opposition.

(Reporting by Joseph Sipalan, writing by Praveen Menon; editing by Elaine Hardcastle)

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