PTPTN Loan: Who are the real beneficiaries?

According to the A-G’s Report, based on cash flow projections PTPTN will face a deficit of RM45.89 billion up to the end of the 11th Malaysia Plan in 2016. This raised questions on its continued financial sustainability which actually led to PAC to look into the matter. So far nothing concrete has come out from the PAC investigation since it was announced in November 2009 even though RM 24 bill has been disbursed to 1.3 mill students and the collection is less than 10%. To the politicians aggressive debt recovery may have political consequences and this actually contributes to poor debt recovery.

PTPTN problems started from Day 1 of its business since July 1997. It’s formation and financial assistance scheme was rushed into it to meet political objectives. Today, its house is in disarray. Their self made problem is caused by poor quality leadership which succumbed to political pressure. This led to poor IT infrastructure to manage their borrowers. Key personnel in PTPTN told me that they don’t really know accurately who has benefitted from the scheme and how much loan has been disbursed. Their collection database has serious quality issues.

Today the loan disbursement is no longer about helping students to pay their school fees. It is a source of sustainable income to many colleges. Students who enrolled into certain “preferred colleges” will get loans while those who enrolled in other colleges may not be so lucky in getting loans. For that reasons questions arose on who are the actual and eventual beneficiaries of the loan schemes.

I believe PTPTN would have better if its loan disbursement and collection was outsourced through the banks from inception. Maybe that is what PTPTN should do in 2012 and form a separate entity to manage all the bad debts. Clearly PTPTN needs to manage their current financial predicament. May be it is time we get a banker to head the organization.

courtesy of Rights2Write