Government recovers only RM465 million from loan arrears, prompting restructuring reforms

The Auditor General’s 2025 report reveals that the government managed to collect only RM465 million from loan arrears, with long-standing arrears exceeding six years amounting to RM5.02 billion. Restructuring measures have been applied multiple times, stretching repayment periods between 10 and 40 years, yet fresh arrears of RM16.15 million emerged after these adjustments. The audit highlights lost potential recoveries of RM127.33 million in principal and RM450.99 million in interest due to write-offs.

Recommendations include strengthening monitoring, issuing prompt demand notices, and considering legal action against borrowers who fail to meet agreements without justification. Further, the report urges stricter financial capacity assessments before approving new loans or restructurings to reduce exposure to loss.