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Imprudence must be blacklisted

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If we think it is too heavy-handed to blacklist PTPTN loan defaulters, we must think of another way to admonish imprudent and excessive spending, says Nicholas Chan.


After much furore, it seems that our government has finally backed down (again) on another of its plans, that is the linking of PTPTN loan defaulters to the Central Credit Reference Information System (CCRIS).

The move will certainly be welcomed by a lot of the youths, the opposition and even those within the government, especially Youth Minister Khairy Jamaluddin, who has been leading Umno Youth’s opposition to the plan. The reason given was simple; it will be like adding charcoal to fire to our youths since higher education does not come free, it is unfair to “penalise” the students for this mandatory debt to most.

Although a fresh graduate’s plight on employment and making ends meet in the face of the escalating cost of living is a story too often told and has to be addressed swiftly and effectively, I always felt that we should look at the proposal more rationally and with more breadth and less emotions.

It is obvious that this proposal to blacklist PTPTN defaulters could be linked back to Bank Negara’s previous moves in capping the tenure of housing and personal loan to 35 and 10 years respectively and in banning pre-approved loans. These strategic manoeuvres are attempts to control our towering household debt, which stands at 82.9 per cent of GDP (as of March 2013), a levels that is arguably dangerous for Malaysia, which has a government continuously running on a fiscal deficit, as well as people who are stuck in a middle-income trap with little disposable income.

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It is comprehensible if this move to blacklist loan defaulters is designed to instil better credit control for the banks and to act as a deterrent against more imprudent spending. The act of blacklisting might be heavy handed but in times of impending crisis like this, made ominous by Fitch’s downgrading of our credit outlook to negative, a sense of urgency and financial prudence must be conveyed to our people.

We must exercise better financial planning and try better to stray away from a life beyond our means and loans beyond our sustainability. We simply can’t risk telling our youths that your loans don’t matters any more. We should not even have given them the false hope that their loans would be written off in the first place!

The idea that the PTPTN is entirely a government-imposed cost of education is a twisted and incomplete understanding of the issue. Much of the PTPTN money is used to cover the student’s living costs, including rental, food, and transport and, for some, their cell phones and laptops. Those were never fully subsidised goods by the government; so how is it justified if the money spent on such things is to be waived off by the government? Who is going to bear those costs?

With our very low starting pay even for university undergraduates (hence most of them aren’t even liable for income tax), revenues from taxation simply don’t cut it. Writing off the PTPTN loans, which as of June 2013 amounted to RM50bn in approved loans will be a burden to our coffers and ultimately, it will be a debt everyone has to bear.

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The government and the people are not insular from the way each handles their own money. In fact, we are inextricably linked. A downgrade of our credit outlook also reflects a downgrade of our personal credit futures. If we think it is too heavy-handed to blacklist PTPTN loan defaulters, we must think of another way to blacklist or at least admonish imprudent and excessive spending by the people.

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