This paper examines the influences of Malaysia's Federation Land Development Authority (FELDA) scheme in fostering inclusive rural development. Based on the model of holistic inclusive development, the paper investigates the performance of FELDA from four perspectives: social development, industrialisation, modernisation and basic needs. The main findings of the study indicate that, to a large extent, the scheme has successfully stimulated both the social and economic development of the community. Nonetheless, establishing a strong trust, social cohesion and rapport between the public authorities and community remain the main challenges in determining the success of this state‐led agenda. Moreover, keeping traditional values in the modern system will be the key principle for the sustainability of the programme if plans are made to adopt the scheme in other regions.