Dip in bankruptcies due to amendment of Act

PETALING JAYA: Had the Insolvency Act not been amended on Sept 20, 2020 to raise the bankruptcy threshold from RM50,000 to RM100,000, more Malaysians would have fallen into financial ruin, said Universiti Teknologi Mara (UiTM) senior economics lecturer Dr Mohamad Idham Md Razak.

He was commenting on statistics from the Insolvency Department that reported a total of 5,695 bankruptcy cases in 2022, which was a decrease from 6,554 recorded in 2021.

The bankruptcies were primarily caused by personal and business loans the individuals could not service. Also, nearly 70% (3,881) of those who were declared bankrupt had accumulated debts of between RM100,000 and RM499,000.

“Without the amendment to the Insolvency Act, the number of individuals filing for bankruptcy would have increased.

“Personal bankruptcies among working adults are mainly caused by economic factors such as the high cost of living, especially for housing and necessities, which put a strain on household budgets,” he said, adding that stagnant wages worsen the issue, making it challenging for individuals to keep up with expenses.