Tough measures needed on PTPTN loan repayment

Debtors have the responsibility to repay their PTPTN loans.

I refer to the news report today, “I’m ashamed but they’re not, Dr M says on PTPTN debtors”.

What was said is very true, but I think the problem applies not just to PTPTN (National Higher Education Fund Corporation) debtors, but also many other Malaysians. We generally like to delay paying whatever we owe. Finding an excuse would be our first line of defence.

Unpaid loans to PTPTN were a disaster in the making years back. First, we appointed a group of government servants who knew nothing about finance and loan management to manage billions of ringgit in student loans. Many of them did not even know how to keep the records straight.

If the records are topsy-turvy, how would they know who had taken the loans and who had repaid? How do we pursue the debtors when our records are not even up to date? When banks give loans, do they face problems like what PTPTN is facing?

Some time back, I said PTPTN loans were a populist universal entitlement for most students, regardless of their financial status. Many students (and their parents, really) took the loans because they were cheap and available, treating them like additional income.

When records and recovery measures are ineffective and slow, it is natural for many to delay and find excuses. There is a saying — overdue debts are usually potential bad debts.

Prime Minister Dr Mahathir Mohamad talked about the virtue of “shame”, obligation, character, value and culture to pay off one’s debts. I agree, but I think it cannot happen overnight when the whole nation has witnessed stealing, siphoning, corruption and kleptocracy of the worst form during the past one decade.

We need a tough and professional approach to deal with delinquents. All PTPTN debtors must be asked to come forward to update their records with PTPTN — name, IC number, income, permanent address and telephone number — within a certain timeframe, failing which their passport will be blacklisted again.

Once this is done, PTPTN can work out a repayment schedule with each debtor, after taking into consideration all relevant and extenuating factors. The idea is they must pay back, no matter how small the instalment each month.

It is time to leave the populist and political considerations aside. Loan recovery needs a no-nonsense business-like approach. If they do not pay, there are consequences attached to it. This is the best approach before we reach “character, culture and value enlightenment”.

Just imagine, RM36 billion of unpaid loans to PTPTN is almost the magnitude of 1MDB.

TK Chua is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.