Cooperatives with poor repayment records will be blocked from new government financing, with legal action to recover outstanding funds.
KUALA LUMPUR: Cooperatives with unsatisfactory loan repayment performance will be barred from receiving new government financing.
Deputy Minister of Entrepreneur and Cooperatives Development Datuk Mohamad Alamin said this measure aims to ensure public funds are managed with integrity and provide maximum benefit to members.
“Any outstanding financing payments will be recovered and appropriate legal action will be taken,” he told the Dewan Rakyat.
He was responding to a question from Roslan Hashim (PN-Kulim Bandar Baharu) on whether the ministry would stop financing repeatedly underperforming cooperatives.
Mohamad revealed that 66 cooperatives were approved for financing last year through the Malaysia Cooperative Societies Commission’s Revolving Capital Fund.
The total financing approved amounted to RM75.32 million.
A separate business development assistance grant totalling RM8.59 million also benefited 78 cooperatives.
This grant supported working capital needs and the purchase of business assets.
On factors behind cooperative failures, Mohamad cited a lack of common goals among members.
He also pointed to the appointment of unprofessional board members as a key issue.
These factors cause businesses to become unviable and remain overly conventional.
Management often lacks the creativity needed to explore new opportunities, he explained.
Some cooperatives are overly dependent on government assistance and incentives.
They fail to make serious efforts to expand their businesses independently.
