PETALING JAYA: Economists are calling for the strengthening of administration and the creation of a special unit to manage the growing debt of National Higher Education Fund Corp, better known as PTPTN.
“The special unit can be akin to private debt collection operations but with a human face to reinforce the national obligations of the defaulters, especially those who have already found employment,” RAM Holdings Bhd chief economist Dr Yeah Kim Leng said.
AmResearch Sdn Bhd senior economist Manokaran Mottain agrees, saying that strict measures should be taken against defaulters, including banning them from leaving the country until they paid up their loans.
It is an open secret that government agency PTPTN is heading towards a whopping RM46bil deficit by 2020 because borrowers are just not paying what they owe.
At RM46bil, it would be about 6% of the country’s gross domestic product (GDP) or just slightly lower than last year’s budget deficit of RM50bil, according to Yeah.
“The amount is indeed staggering,” he said.
PTPTN loans are normally given out at relatively low interest rates of about 1% a year.
According to reports earlier this year, PTPTN had approved more than RM32bil in loans since its establishment in 1997. The repayment rate at the same time was only 50%.
“It complicates the budgetary position, especially for the education sector, and spotlights the need to focus on spending efficiency,” Yeah said.
He said the country could have financed many more students if the deficit had been lower.
To reduce the fiscal deficit in the coming years, the Government may have to cut back on the loans to match the repayment, thereby depriving deserving students of further education, he added.
“If the Government were to maintain the loan disbursement level, then the fiscal deficit will continue to be large while Government borrowings remain high,” Yeah said.
The economists’ comments came after the Auditor-General’s 2009 Report, which was presented in Parliament on Monday, once again highlighted the RM46bil figure.
This time around, the report also noted that PTPTN “mysteriously approved” loans totalling RM23.78mil to 16,013 students who did not apply for the facility.
Further checks showed that these students had not signed any agreement to return the loan advances.
Weak administration, lack of transparency and accountability as well as low priority accorded by the respective ministries were to be faulted for the current situation faced by PTPTN, the economists said.
“Examine social and economic costs and benefits of pursuing the defaulters with more resources as well as consider alternative approaches such as corporatising or privatising the management of the education loan fund,” Yeah said of some of the measures to plug the hole.
The country’s deficit rose to a 27-year high of 7.4% last year after subsidies, which included PTPN loans, ballooned to RM74bil.
The Government is targeting fiscal deficit to come in at 5.4% of GDP this year.
We're sorry, this article is unavailable at the moment. If you wish to read this article, kindly contact our Customer Service team at 1-300-88-7827. Thank you for your patience - we're bringing you a new and improved experience soon!
What do you think of this article?