KUALA LUMPUR, Oct 7 — Outstanding loan arrears owed to the federal government totalled RM8.084 billion as of December 31, 2025, said Deputy Finance Minister Liew Chin Tong.
He said companies accounted for the largest share of borrowers at 62 per cent, followed by state governments at 32 per cent.
The arrears mainly comprised public basic infrastructure projects involving clean water supply, sewerage, low-cost public housing and public transport.
“The amount comprises RM5.709 billion in outstanding principal and RM2.375 billion in outstanding interest and late-payment interest.
“The arrears rate stood at 15.67 per cent. This amount is manageable and has declined compared with the average of 21 per cent recorded between 2020 and 2022,” Liew said when winding up the debate on the Auditor-General’s Report in the Dewan Rakyat today.
He said the government will continue to strengthen borrowers’ repayment capacity, particularly through restructuring based on assessments of their financial capacity, current debt levels and projected cash flows.
“This is to ensure borrowers can meet their financial obligations by reducing their repayment commitments through an extension of the repayment period, without affecting service delivery to the people,” he said.
Liew added that loan write-offs would be considered based on several criteria, particularly after all loan recovery efforts, including legal action against borrowers, failed to yield results for the government.
“Only the loan interest will be considered for write-off, and only companies confirmed to be insolvent based on reports by the Companies Commission of Malaysia and after obtaining the views of the Finance Ministry’s Legal Division,” he said.
Liew said the loan assessment model has been enhanced by introducing a mandatory feasibility assessment before any approval is granted.
“Loan approvals will be limited according to actual repayment capacity. If a borrower’s capacity is limited, the remaining project financing is proposed to be channelled in the form of a grant,” he said.
In another development, Liew said of the RM39.987 billion outstanding in Accounts Receivable (AR), RM23.145 billion, or 57.88 per cent, involve cases under legal proceedings, deferment and appeal, while RM16.842 billion, or 42.11 per cent, comprise active cases under collection and instalment arrangements, including audit and investigation cases.
“This position shows that a large portion of the AR is subject to legal proceedings or deferment.
“To control and reduce the AR balance, the Inland Revenue Board (LHDN) has stepped up the management of current and outstanding revenue through repeated digital reminders, proactive calls, automation of CP38, early issuance of letters of demand, premises visits and instalment payment negotiations,” he said.
Liew also said enforcement measures for mature or recalcitrant cases, such as travel restrictions, registrar’s caveats and the appointment of agents, had been intensified according to the circumstances of each case.
