Assalamualaikum wbt and a very good evening to our beautiful lecturer, Madam

Jeyahmahla and all my friends. Today I would like to present about bankruptcy in
Malaysia. First and foremost, I will explain about what is bankruptcy all about.
Bankruptcy is when there are some people who failed in their financial planning and
leaving them stuck with a high debt burden in order to satisfy personal desires and
needs. Bankruptcy is a legal process where the High Court announced a bankrupt
pursuant to an Adjudication Order against an individual, also known as a debtor, who
unable to settle his debts. A bankruptcy act can only be implemented after a default
period of six months. Furthermore, the debtor must inhabit in Malaysia at least one
year for bankruptcy petition. When an individual has declared bankruptcy, all the
assets owned will confer on the Director General of Insolvency (DGI) to sell in order
to repay the outstanding debts. In addition, the bankrupts have to comply with some
rules and regulations until their debts paid off. According to Bankruptcy Act 1967, a
Malaysian who declared bankruptcy has to give up all the assets and belongings.
Besides, the bankrupts are not permitted to open a bank account or travel abroad
without the approval of the Director General of Insolvency (DGI). The bankrupts are
not allowed to start any business nor be a part of any company’s management before
discharged from bankruptcy. Also, the bankrupt has to take out a certain percentage
of the monthly income for debts repayment.

Bankruptcy or better known as the bankrupt is not a new phenomenon in Malaysia.

Increase in the percentage of Malaysians who declare bankruptcy each year a growing
concern and this need to be taken seriously in order to achieve stability and economic
life of the country. According to The Star Online dated April 9, 2014 statistics released
by the Malaysia Department of Insolvency showed that nearly 22,000 individuals in
the country declared bankruptcy four years ago and it the highest number of cases.
Based on graph 1 the statistics issued by the Malaysia Department of Insolvency, a
total of 119,119 Malaysians who have declared bankruptcy from 2007 to 2013, the
percentage rate of bankruptcy is increasing every year and if this issue is not
addressed, then it will have a negative impact economic development and would
threaten the stability of life of Malaysians in the future.

Therefore, this problem becomes more serious as each debt is not managed properly
made and resulted in the individual finally recognized bankruptcy. Inability to pay car
loans is the major contributor to the statistics followed by personal loans and housing
loans. This is due to fact that those individuals who just started working unable to
commit for the large amount of monthly car installment. Bankruptcy is no longer a
taboo to the society. Lately, it is not unusual to be declared bankrupt before 30 years
old. The reckless spending and the “pressure” of having a luxurious lifestyle have been
identified as among the factors that trigger this problem. On the other hand, the
availability of the facilities provided by the financial institutions do not do any justice
for this problem.

Overall, in order to control bankruptcies, Central Bank of Malaysia (BNM) has set up
two agencies in April 2006, which known as the Malaysia Department of Insolvency
(MDI) and Credit Counselling and Debt Management Agency (AKPK). The mission of
Malaysia Department of Insolvency (MDI) is to facilitate and control bankruptcy
problems while AKPK is playing a role of providing financial information as well as debt
reschedule plan for individuals who are facing financial problems. Nowadays the
usage of credit card has no limitation. Limitation itself means that everyone can use it,
especially in the early age. People tend to use credit card to buy either good or
services that is to fulfill their satisfaction and somehow, they do not realize that usage
of credit card without limitation will lead them to bankruptcy. So here are the tips to
prevent us from bankrupt. Firstly, it is recommended to encourage individuals to use
the debit card rather than credit card to prevent the debt and bankruptcy. Besides
providing the credit education to the people as well as public can help them in
managing their money wisely and use the credit correctly to avoid debts. It can be
done through financial seminar, talk from professional person or forum. The credit
education can help one’s to manage their financial, debt and set up a better planning
for the future and it should begin as early as possible. That all from me, thank you.