Skills Development Fund Corporation funding should be restructured into conditional grants, says foundation

Yayasan Mahir Malaysia (YMM) has thrown its support behind a proposal by the Ministry of Human Resources (KESUMA) to reform the funding mechanism of the National Skills Development Corporation (PTPK). The proposed restructuring would shift PTPK financing from a loan-based system to conditional grants, a move YMM president Datuk P. Sri Ganes believes will yield better returns for both trainees and the country.

Under the proposed conditional grant structure, trainees could have their financing fully forgiven. This would be contingent upon them obtaining their certification and consistently making Employees Provident Fund (EPF) contributions for a full 12 months after completing their training. Ganes emphasized that this approach would ensure financial aid is directed towards individuals genuinely committed to acquiring new skills. He also suggested a phased implementation, prioritizing critical sectors such as green technology, electric vehicles, mechatronics, cybersecurity, and the care economy to manage fiscal exposure initially.

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The financing can only be claimed back if the trainee fails to complete the training, thus ensuring that aid is channeled to those who are truly committed to acquiring skills.

Sri Ganes clarified that the proposed restructuring would not necessitate additional government funds. The existing RM100 million allocation would continue to be disbursed, with the primary difference being the terms attached to the aid. He argued that the current PTPK eligibility criteria, which target households earning less than RM5,000 per month, are mismatched with a loan-based financing instrument. "We select individuals from low-income families who have limited ability to repay, yet at the same time, they are given financing in the form of debt," he stated, pointing out that the issue lies with the financing instrument itself, not the borrowers.

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We select individuals from low-income families who have limited ability to repay, yet at the same time, they are given financing in the form of debt.

Data from PTPK indicates that since its inception, it has disbursed approximately RM2.2 billion to over 400,000 trainees. However, persistent arrears have hampered loan recovery rates, preventing them from meeting targets. In response, YMM and the broader skills training provider community have expressed readiness to manage implementation controls. This includes setting fee ceilings based on National Occupational Skills Standard (NOSS) levels, disbursing funds according to attendance and assessment, and ensuring qualifications align with the Department of Skills Development (JPK) Star Rating.

Previously, Human Resources Minister Datuk Seri R Ramanan announced that KESUMA was consulting with relevant ministries on the PTPK funding reform proposal before presenting it to the Cabinet. The initiative aims to alleviate the financial burden on Technical and Vocational Education and Training (TVET) students post-graduation. The current system, while providing access to training, has created a debt burden for many low-income graduates, a problem YMM believes the conditional grant model can effectively address.

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The issue is not with the borrowers, but rather the financing instrument used.