Companies owe govt the most in loan arrears, followed by state govts

 Deputy finance minister Liew Chin Tong says total outstanding loan arrears amounted to RM8.08 billion as of Dec 31, 2025.

Deputy finance minister Liew Chin Tong said the arrears mainly involve loans for basic public infrastructure projects, including clean water supply, sewerage, low-cost public housing, and public transport. (Bernama pic)

PETALING JAYA:

Outstanding loan arrears due to the federal government totalled RM8.08 billion as of Dec 31, 2025, said deputy finance minister Liew Chin Tong.

Liew said companies made up the largest share of borrowers at 62%, followed by state governments at 32%.

The arrears mainly involved loans for basic public infrastructure projects, including clean water supply, sewerage, low-cost public housing, and public transport, he told the Dewan Rakyat when winding up his ministry’s debate on the Auditor-General’s Report 2/2026 today.

“The arrears comprise RM5.709 billion in outstanding principal and RM2.375 billion in outstanding interest and late-payment interest.

“The arrears rate stood at 15.67%. This rate is manageable and has declined from the average of 21% recorded between 2020 and 2022.”

Liew said the government would continue to strengthen borrowers’ repayment capacity, particularly through restructuring based on assessments of their financial capacity, current debt levels and projected cash flows, Bernama reported.

“This is to ensure borrowers can meet their financial obligations by reducing their repayment commitments through extended repayment periods, without affecting service delivery to the people,” he said.

He said that loan write-offs would be considered based on several criteria, particularly after all loan recovery efforts, including legal action against borrowers, had failed to yield results for the government.

“Only loan interest will be considered for a write-off, and only for companies confirmed to be insolvent based on reports from the Companies Commission of Malaysia, after obtaining the views of the finance ministry’s legal division,” he said.

Liew said the loan assessment model had been enhanced with a mandatory feasibility assessment before loan approvals were granted.

“Loan approvals will be limited according to actual repayment capacity. If a borrower’s capacity is limited, the remaining project financing will be proposed as a grant,” he said. - FMT