KUALA LUMPUR: There should be more flexibility in conditional discharges offered to those who have been declared bankrupt, says Tan Sri Muhyiddin Yassin (PN-Pagoh).
In his debate speech on amendments to the Insolvency Act 1967 in the Dewan Rakyat on Wednesday (May 24), he said certain conditions could be put in place to allow them to return to their lives without being burdened.
“Being (declared) bankrupt is a form of punishment, not a repayment scheme.
“When an individual has served their ‘punishment’ for a certain period, with good behaviour, then their discharge from bankruptcy should be expedited and simplified, regardless of the amount of the general debt filed,” he said.
The former prime minister noted that during his administration, the Covid-19 Act raised the bankruptcy threshold to RM100,000 from RM50,000.
“This strategic measure was to help Malaysians avoid bankruptcy during the pandemic," he said.
Muhyiddin said special attention should be paid to the efforts in helping people rebuild their economic status after being discharged from bankruptcy.
“Will the government come up with specific plans for bankruptcy cases involving debts exceeding RM50,000, given that only around 130,000 or 50% of 260,000 bankrupts are eligible to get relief?
“This is important so that the status of being bankrupt does not remain for the rest of their lives, but becomes 'fuel' for this group to contribute to the economy.
“Among the measures is reviewing the bankruptcy relief process for Malaysians working abroad, (as it) may take a long time to get a court order before applying for permission from the Immigration Department,” he said.
Muhyiddin also questioned the effectiveness of the regulation of credit providers and non-bank credit services such as the Buy Now, Pay Later (BNPL) services to protect consumers, especially among the youth, so that they do not get entangled in debt.
This was because the Consumer Credit Act has yet to be tabled, he added.
He said based on the household debt rate in Malaysia, which is increasing from RM1.27 trillion to RM1.34 trillion, BNPL could worsen the problem if there is no thorough intervention from the government.
“This is because BNPL's services, which are mostly related to the ecommerce platform, charge a high interest rate if the monthly instalment is late.
“In fact, the charge or interest rate of BNPL can also be said to be higher than the charge rate for credit cards.
“If viewed from a macro perspective, BNPL can have an impact on the household debt rate compared to the Gross Domestic Product (GDP) which is high at 89 % compared to 2021,” he said.
The second reading of the Insolvency Act was on Tuesday (May 23),with the debate session on the amendment resuming Wednesday.
