PETALING JAYA: The Finance Ministry collected just 5% of RM9.273bil in loan arrears last year, leaving billions unpaid with some outstanding for more than four decades, says the Auditor-General’s Report.
“Overall, the collection of loan arrears was low, with only RM0.465bil, or 5%, of the RM9.273bil in arrears from the previous year successfully collected in 2025,” it said.
As of Dec 31, 2025, total loan arrears stood at RM8.084bil, with RM5.024bil, or 62.1%, having been outstanding for more than six years.
The arrears involved 30 borrowers and 190 loans, with the outstanding amounts ranging from one to 45 years.
Of the total, RM517mil comprised arrears that were less than a year old, RM1.083bil were between one and three years old, RM1.461bil were between three and six years old, and RM5.024bil were more than six years old.
“The ineffective collection of loan arrears has necessitated loan restructuring as a recovery measure to help borrowers settle their repayments,” the report said.
However, new arrears amounting to RM16.15mil were recorded after loans had been restructured, with some having undergone restructuring up to five times.
The repayment periods for restructured loans were also extended by between 10 and 40 years.
As a result, the Auditor-General said the government lost the potential to recover outstanding principal balances amounting to RM127.33mil and forewent interest and late-payment interest revenue totalling RM450.99mil.
The Auditor-General recommended that the ministry strengthen its monitoring and enforcement mechanisms for loan repayments by ensuring prompt follow-up action or issuance of demand notices.
“Legal action should also be considered against borrowers who fail to comply with the agreements without reasonable justification.”
The report also called for stricter financial capacity analyses and risk assessments before approving new loans or restructuring existing ones to minimise the government’s exposure to losses.
It said the loan restructuring process should also be reviewed to ensure it genuinely helped restore borrowers’ cash flow and improve their ability to repay.
In response to the findings, the ministry said Keretapi Tanah Melayu Bhd had been asked to submit a comprehensive financial recovery plan.
It also said Indah Water Konsortium’s loan restructuring application was pending approval, while Syarikat Perumahan Negara Bhd had agreed to restructuring and legal action had been prepared against Equal Concept Sdn Bhd.
