Billions in loans remain unpaid, some for decades

By the Editorial Team · Tuesday, October 6, 2026

The Finance Ministry collected just 5% of RM9.273 billion in outstanding government loan arrears last year, with most debts unpaid for over six years and restructuring efforts often extending repayment terms up to 40 years. The Auditor-General’s Report urges stronger enforcement, improved borrower assessments, and a review of restructuring processes to prevent further financial losses and ensure timely repayments.

The Finance Ministry collected only 5% of RM9.273 billion in outstanding loan arrears last year, according to the latest Auditor-General’s Report, leaving significant amounts unpaid, some for over 40 years. The report highlights persistent challenges in recovering government loan repayments, with arrears totalling RM8.084 billion as of December 31, 2025.

The outstanding loans involve 30 borrowers and 190 separate loans, with arrears spanning from one year to 45 years in duration. Of the total arrears, RM517 million are less than a year old, RM1.083 billion fall between one and three years old, RM1.461 billion range from three to six years, and RM5.024 billion have been outstanding for more than six years, representing over 62% of the total.

Efforts to collect these arrears have been largely ineffective, prompting the government to resort to loan restructuring as a recovery strategy. The report notes, however, that new arrears totalling RM16.15 million emerged even after restructuring, with some borrowers having undergone restructuring up to five times. These restructurings have extended repayment terms by between 10 and 40 years in certain cases.

The Auditor-General’s review estimates that the government has foregone potential recovery of RM127.33 million in principal amounts and RM450.99 million in foregone interest and late-payment charges due to delayed or non-payment.

To address these issues, the report calls on the Finance Ministry to enhance its monitoring and enforcement capabilities. This includes ensuring prompt follow-up actions such as issuing demand notices and considering legal action against borrowers who fail to meet their obligations without valid justification. It also emphasizes the need for stricter financial capacity assessments and risk evaluations prior to approving new loans or restructuring existing debts to reduce government exposure to losses.

Moreover, the report recommends a review of the loan restructuring process to verify that it effectively restores borrowers’ cash flow and enables timely repayments rather than prolonging indebtedness.

In response, the Finance Ministry confirmed that Keretapi Tanah Melayu Bhd has been asked to provide a detailed financial recovery plan. Meanwhile, Indah Water Konsortium’s application for loan restructuring is pending approval. For Syarikat Perumahan Negara Bhd, restructuring terms have been agreed upon, and legal action is being prepared against Equal Concept Sdn Bhd over unpaid loans.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.