Loan recovery needs a no-nonsense approach

I REFER to the report, “Dr M: Shame on all you defaulters” (The Star, Sept 21).

What the Prime Minister said is very true, although I think the problem applies not just to PTPTN 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 ago. First, we appointed a group of government servants who knew zip about finance and loan management to manage millions 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 do 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 ago, I said PTPTN loans were a populist universal entitlement for most students regardless of their financial status. Many students (and their parents too) took the loans because they are 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.”

Dr Mahathir talked about the virtue of “shame”, obligation, character, value and culture to pay off one’s debt. I agree, but I think it cannot happen overnight when the whole nation has witnessed stealing, 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 – name, MyKad number, income, permanent address and telephone number – with the National Higher Education Fund Corporation within a certain period, failing which their passport should be blacklisted again.

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

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

And just imagine, the RM36bil in unpaid loans to PTPTN are almost at the magnitude of 1MDB.