Kuala Lumpur:Outstanding loan arrears owed to the federal government amounted to RM8.084 billion as of December 31, 2025, as stated by Deputy Finance Minister Liew Chin Tong.
According to BERNAMA News Agency, it was revealed that companies represented the largest group of borrowers at 62 percent, followed by state governments at 32 percent. These arrears primarily consisted of public basic infrastructure projects, which included clean water supply, sewerage, low-cost public housing, and public transport.
The arrears comprised RM5.709 billion in outstanding principal and RM2.375 billion in outstanding interest and late-payment interest. The arrears rate stood at 15.67 percent, a figure considered manageable and showing a decline compared to the average of 21 percent recorded between 2020 and 2022, as mentioned by Liew during the debate on the Auditor-General's Report in the Dewan Rakyat.
Liew emphasized that the government intends to enhance borrowers' repayment capacity through restructuring, based on evaluations of their financial capacity, current debt levels, and projected cash flows. This approach aims to ensure borrowers can fulfill their financial obligations by extending repayment periods, thereby not affecting service delivery.
He noted that loan write-offs would be contemplated under specific circumstances, particularly when all recovery efforts, including legal actions, have not yielded results. Only the loan interest would be considered for write-off, specifically for companies confirmed as insolvent by the Companies Commission of Malaysia, and after obtaining views from the Ministry of Finance's Legal Division.
Additionally, Liew highlighted the improvements in the existing loan assessment model, which now includes mandatory feasibility assessments before granting approval. Loan approvals would be aligned with actual repayment capacity, and if a borrower's capacity is limited, the remaining project financing might be provided in the form of a grant.
In another aspect, Liew disclosed that out of RM39.987 billion outstanding in Accounts Receivable (AR), RM23.145 billion, or 57.88 percent, involved cases under legal proceedings, deferments, and appeals. Meanwhile, RM16.842 billion, or 42.11 percent, were active cases under collection and installment arrangements, including audit and investigation cases.
This situation reflects that a significant portion of the AR is subject to legal proceedings or deferment. To manage and reduce the AR balance, the Inland Revenue Board has intensified efforts through repeated digital reminders, proactive calls, CP38 automation, early issuance of letters of demand, premises visits, and installment payment negotiations.
Liew also mentioned that enforcement measures for mature or recalcitrant cases, such as travel restrictions, registrar's caveats, and the appointment of agents, have been intensified according to each case's circumstances.