Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 29th of October 2014
Yesterday, I asked why the government was not going after private companies which had failed to service their government loans running into millions of ringgit. Today, I highlight the fact that even GLCs and government owned companies are not paying back their loans from the federal government.
Table 1: Arrears, Repayment due, Amount Repaid, Loan Write-off / Rescheduled and Outstanding Loans from the Federal Government to GLCs / Government Owned Companies (2012)
Source: National Audit Report 2012, Statement of Memorandum Account of Recoverable Loans 2012.
Table 1 above shows the list of government controlled companies which had outstanding repayment arrears in 2012 due to failure to service their loans from the federal government. The total arrears for these government controlled companies was RM1.3 billion at the end of 2012. They were supposed to pay RM640.4m in repayments in 2012 but only managed to pay RM221.98m (35%). At the end of 2012, these companies had outstanding federal loans totaling RM4.5b.
The companies which failed to adequately service their government loans include the Indah Water Konsortium (IWK) which failed to service a single sen of its RM165.58 million repayment in 2012 and had an outstanding loan of RM1.94 billion at the end of 2012 which has since increased to beyond RM2 billion. It includes a number of companies that registered profits in their latest company filings such as Cyberview, the master developer for Cyberjaya, with after-tax profits of RM4.7m in 2013; Malaysian Debt Ventures with after-tax profits of RM23.7m in 2013; Composites Technology Research Malaysia (CTRM) with after-tax profits of RM12m, in 2012.
The failure of these government owned companies raises two questions.
Firstly, why does the government lack the internal processes to ensure that these companies, especially those which are profitable, adequately service their government loans? Why do these companies seem like they are getting a ‘free pass’ while millions of other PTPTN borrowers are given far harsher treatment including the possibility of a credit blacklist? Why have inconsistent standards for people and companies which owe money to the federal government?
Secondly, for the companies which may have difficulty servicing their government loans because of poor cash flow, poor profitability and negative reserves, how much will the government continue to spend in order to ‘bail out’ these companies such as IWK which registered a loss of RM213m and had negative reserves of Rm1.2b with a share capital of only RM100m? Why is the government inconsistent in wanting to exert financial discipline on PTPTN borrowers while at the same time, it continues to bail out these government owned companies?