If all else fails in recovering loans taken from National Higher Education Fund Corporation (PTPTN), the higher education ministry will seek to have the passports of defaulters impounded.

Minister Mustapa Mohamed issued this warning in winding-up the debate on PTPTN Bill in the Dewan Rakyat today, saying this is a necessary form of action.

"This is necessary as a solution of last resort, should the borrower defy letters and notices from the ministry," he explained.

Mustapa was responding to a point raised by both Zaid Ibrahim (BN-Kota Bharu, photo ) and Mahadzir Mohd Khir (BN-Sungai Petani) who argued that Section 22A of the bill is "cruel".

Before moves are made to seize the passport, however, borrowers must have been issued with several warnings.

This includes issuing a repayment letter six months after the borrower's graduation, three reminder letters, serving a letter of demand, listing the borrower on several credit retrieval agencies and finally pursuing legal action.

"It's important to withhold the passport after all these procedures (are activated) because this involves government funds. It cannot be equated with other type of loans from profit-based banking institutions," Mustapa said.

In acting, the ministry will use relevant provisions in any of three pieces of legislation - Inland Revenue Act 1967, Customs Act 1967 and Employees Provident Fund Act 1991.

Mustapa also answered a question from Wee Ka Siong (BN-Ayer Hitam) who wanted clarification on the total amount given out in loans to date.

As at March 31, responded Mustapa, PTPTN had approved 982,066 loans amounting to RM19.06 billion, but he revealed that only 30 percent of the graduates have repaid their loans.

"Another 438,775 graduates should have repaid RM1,381.6 million on instalment basis, but only RM425.26 million or 30.78 percent has been collected so far," he said.

PTPTN was set up in 1997 to provide loans to students in public and private higher learning institutions with a repayment period of up to 20 years.