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Election Watch

Costly to scrap PTPTN

Source: Malay Mail
Date: 16 April 2012

It will burden govt coffers and taxpayers, say experts

Anti-PTPTN rally

OUR DEMANDS: Protesters making their stand known via their 'campsite sign' at Dataran Merdeka yesterday — Pic: Arif Kartono

PETALING JAYA: Scrapping the National Higher Education Fund Corporation (PTPTN) would burden and drag the country into further economic doldrums, say economists.

Although feasible, said RAM Ratings chief economist Yeah Kim Leng, the opposition proposal to abandon the federal student loan scheme would leave a huge hole in the economy.

“It is a sizeable amount to write off, given that it is equivalent to three per cent of GDP in 2011," he told The Malay Mail.

“It will be an additional burden on Petronas if it is mandated to cover the PTPTN costs over and above what it is already contributing to the government in terms of oil royalty, dividends and corporate tax."

Yeah said that using oil revenue to fund education would affect other societal economic development programmes.

“Even if the amount owed is funded by Petronas, government spending on other areas such as education, healthcare, infrastructure, rural development and social welfare would have to be cut correspondingly,” he said.

“It will be unfair to those who are repaying or have repaid the loans as well as to taxpayers who are the ultimate provider of the loan. There is also the loss of opportunities to fund more students.

“There are better alternatives to address the difficulties faced by borrowers, such as reducing the servicing amount, stretching the repayment period and repaying only when jobs are secured."

Wan Saiful Wan Jan, chief executive of the think-tank Institute of Democracy and Economic Affairs (Ideas), said the emphasis should be on improving the mechanism to recover loans from defaulters.

“Affordability is not the issue. PTPTN shouldn’t be scrapped because if you borrow money, you should pay," he said.

“I don’t think higher education should be free because education has never been free. If you don’t pay for your education, someone else will pay. Free higher education is populist argument and not based on facts,” he said.

Institute of Strategic and International Studies chief executive Datuk Mahani Zainal Abidin said the plan was economically unviable and would shrink government resources.

“Economically, it will be a heavy burden on the country because the outstanding costs for PTPTN is RM43 billion," she said.

"Even if you want to spread it out to three years, one year the budget is about RM200 million, so every year you have to wipe off RM10 billion which is 10 per cent. It is tough and this means the government has to cut expenditure."

Populist move that could alienate voters

POLITICAL analysts questioned Datuk Seri Anwar Ibrahim’s proposal to write off federal student loans, stressing the populist move was a political ploy for the impending national polls.

Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam told The Malay Mail that scrapping the National Higher Education Fund Corporation (PTPTN) was not “prudent, pragmatic or sustainable”.

“Why scrap the loans when the students should be in a position to pay?" asked the economist and former Transport Ministry secretary-general.

"It is a huge amount to be scrapped and it will have serious implications on the deficit budget. It also does not encourage fiscal discipline on part of the government and especially students who may be even more  deserving.

“Secondly, if you cancel the loans, what have we got for the future generations of students who may be even more deserving?”

Navaratnam said the public must understand that there was no “free lunch” and the country could not afford the cost in the long term.

“You can't fritter your resources away for temporary gain, particularly for election. We must have a long-term view of the country and not a short-term, narrow perspective," he said.

James Chin, head of the School of Social Sciences at Monash University, said Pakatan Rakyat might alienate voters that they were trying to woo with the populist announcement.

“Pakatan Rakyat feels it can gain votes from the Chinese community because people who benefitted (from PTPTN) are bumiputras," he said.

“But I think it is a bad idea because PTPTN has allowed many people, especially non-Malays, access to higher education. So the group that will suffer the most won’t be the Malays."

PKR strategy director Rafizi Ramli revealed that abolishing PTPTN was a party pledge and had not been discussed at Pakatan Rakyat (PR) level.

Political analyst Khoo Kay Peng questioned how PKR hoped to implement the policy without its component parties’ approval.

“They have to make up their mind. Is PKR saying that it is going to form the government on its own? How is it going to implement it without DAP and PAS?" he asked.

“We must first understand where is this money going to come from? What will be the source of the fund? The government has issued bonds to finance PTPTN and the government still have to pay the interests for the bonds even if PTPTN was cancelled."

Universiti Utara Malaysia School of International Studies dean Mohd Azizuddin Mohd Sani said PKR was willing to throw everything but the kitchen sink to win the next general election.

“I think it is politicising to attract young votes," he said.

"I am sure it is willing to give everything to get in power. BN can also come with populist policy but it has to be realistic. They cannot promise everything."

It's a political move, says deputy minister

THE new anti-PTPTN movement is a "political move", said Deputy Higher Education Minister Datuk Saifuddin Abdullah.

“I normally don’t say things like this, but this sounds political to me,” he said in reference to Pakatan Rakyat’s pledge to abolish PTPTN and provide free higher education if it forms the federal government.

“Why talk about PTPTN alone? There are other forms of loans and scholarships as well,” he asked.

Saifuddin was a vocal critic of the authorities’ handling of the Bersih 2.0 rally last year and warned that the government risked losing the people's support, but he has little sympathy for the anti-PTPTN movement.

“I’m not saying this is impossible. But we have to ask ourselves, are we prepared to pay higher taxes, if that is one of the costs of it? The government spends a lot on subsidies. Do we compromise on that?” he asked.

He said that attitude was the reason many PTPTN borrowers were blacklisted.

“It actually takes effort to get blacklisted by PTPTN. They send out letters to defaulters. If they do not reply, it takes a year before they are blacklisted,” he said.

“It’s not about free public universities, but it is about good local universities. We should focus on quality."

Hulu Selangor MP P. Kamalanathan said if Pakatan Rakyat wanted to implement the policy, it could have done so in Selangor first.

“They have been heading the state for four years. What have they done in Unisel (Selangor Industrial University) for instance?” he asked.

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