Government cautioned against standing guarantor to loans

  • Nation
  • Monday, 15 Sep 2003

AUDITOR-GENERAL Datuk Dr Hadenan Abdul Jalil has cautioned the Government against standing guarantor to loans taken by companies in his report. 

“The failure to repay the loan within the stipulated period will expose the Government to high risks. 

“This is proven last year when the Government had to bear a government-guaranteed loan of a company amounting to RM1.5bil,” he said in the Auditor-General's Report 2002. 

The report said the Government had stood guarantor to loans totalling RM50.5bil as of last year and that the Treasury should exercise caution in providing such guarantees. 

Out of the RM50.5bil, 95% were loans taken by Pengurusan Danaharta Nasional, KL International Airport, Khazanah Nasional, Prasarana Sdn Bhd, Bank Pembangunan dan Infrakstruktur Malaysia, Tenaga Nasional, Permodalan Nasional, Silterra Malaysia and Bank Industri. 

The report also noted that 16 companies, including nine owned by the Government, had loan arrears totalling almost RM3bil as of end of last year. 

“Ninety percent of that amount involved Perwaja Terengganu, Equal Concept Sdn Bhd and United Engineers (M) Bhd,” the report said. 

As such, the Treasury had stated that the loans for Equal Concept and United Engineers would be rescheduled while a study was being done on Perwaja Terengganu, the report said. 

Multimedia Development Corporation Sdn Bhd and Puncak Niaga (M) Sdn Bhd had not made repayment last year as their loans were being rescheduled, the report said. 

UDA Holdings Sdn Bhd's loan arrears would be offset with the Menara Jati building, while Sukom 98 Bhd had yet to settle its loan arrears due to an unresolved court case. 

The report said the Treasury was studying the financial capacity of KTM Berhad, JKP Sdn Bhd, SME Ordinance Sdn Bhd and Warisan Jengka (M) Holdings Sdn Bhd. 

It also said 39 ministries and government departments had yet to collect some RM8bil in arrears due to them as of last year. 

“Out of that amount, about RM295mil are arrears of more than three years,” the report said.  

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