Dewan Rakyat passes amendments to Insolvency Act, bankruptcy threshold now RM100k from RM50k previously

KUALA LUMUR: The Dewan Rakyat passed amendments to the Insolvency Act to increase the bankruptcy threshold from RM50,000 to RM100,000.

The Insolvency (Amendment) Bill 2020 was passed with a simple voice vote in the House.

Minister in the Prime Minister's Department Datuk Takiyuddin Hassan said the bankruptcy threshold was increased as a responsive move by the government following current issues related to insolvency.

Earlier when tabling the Bill for its second reading, Takiyuddin said four amendments have been done since 1976 to raise the threshold from RM1,000 then to RM50,000 in 2017.

He said raising the bankruptcy threshold over the years had allowed debtors to avoid being declared as bankrupts.

Based on statistics, he said there were 18,227 declared bankrupt in 2017. However he said raising the threshold in 2017 saw cases drop to 16,482 in 2018.

"In 2019, there were 12,051 cases.

"This clearly shows that raising the bankruptcy threshold reduces the number of individuals being declared as bankrupts by 34% between 2017 and 2019," he said in his ministerial reply on Tuesday (Aug 25).

As of June this year, Takiyuddin said there were 4,151 bankrupts declared.

Among the positive effects of increasing the threshold include strengthening the economy while allowing individuals to better manage their finances during these uncertain times brought by Covid-19 pandemic.