Malaysia to require viability checks for all new federal loans
The Malaysian government will make viability assessments mandatory before approving any new federal loans, capping amounts to borrowers' repayment capacity.
Malaysia plans to introduce compulsory viability assessments for all future federal government loans, according to Deputy Finance Minister Liew Chin Tong. The new requirement aims to strengthen the loan assessment framework and prevent the buildup of arrears by limiting loan amounts to the borrower's actual repayment capacity. Where borrowers cannot meet repayment obligations, loan amounts will be capped and any additional project funding will be offered as grants.
Liew highlighted that only a small fraction of recoverable loans was collected in 2025, prompting the policy shift. He also noted that loan write-offs will be considered only after exhaustive recovery attempts, including legal action, and will apply solely to interest on insolvent companies. The proposal seeks to improve fiscal discipline and reduce future defaults.
Why it matters
The policy aims to curb loan defaults and improve fiscal management of Malaysia's federal lending.
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