PETALING JAYA: Financial education must be stepped up to enable youths to better manage their finances as they make up the highest number of bankrupts in the country, say consumer groups.
Federation of Malaysian Consumers Associations (Fomca) chief executive officer Saravanan Thambirajah said the bankruptcy rate among youth was rather a “worrying trend”.
“The government must identify the issues contributing to this especially among the young,” he said when contacted.
On what could be contributing to bankruptcies, he said among them were falling prey to scams, bad debts and poor management of finances.
Another reason, he said, was those running businesses at a loss during the Covid-19 pandemic and having to service their debt obligations.
Saravanan also said that there was a common misconception that financial problems were taboo, preventing many from seeking help or addressing the problem until they were in dire straits.
Acknowledging that several agencies, such as the Credit Counselling and Debt Management Agency (AKPK), were doing a good job in terms of financial education, he said there was still more that could be done.
He said financial literacy would allow people to make more informed decisions. Banks, too, have a role to play by informing people of their financial situation, staging interventions and even providing counselling.
Welcoming the bankruptcy relief for bankrupts aged 70 and above, he said the move would allow them to relook at their finances or travel.
Saravanan was commenting on Law and Institutional Reforms Minister Datuk Seri Azalina Othman Said’s revelation yesterday that as of December last year, 47,929 individuals were declared bankrupt, of whom 10,378 were aged below 34 years, while those aged between 35 and 44 accounted for 37.38%, or 17,917 people.
Agreeing that the lack of financial literacy was the reason for bankruptcy among youth, Consumers’ Association of Penang (CAP) education officer NV Subbarow said relief should not be given to those who had borrowed money.
“If we allow it then more people will borrow money and they prefer not to pay,” he said, adding that many did not see bankruptcy as a shameful or “ugly culture”.
The “modern culture” is such that it makes people, particularly the youth, more inclined towards spending rather than saving money.
“There are many people who have more than 10 credit cards. This practice must be stopped,” he said.
Banks must be more mindful when promoting their credit cards including through promotional activities in supermarkets, malls or shopping centres, he said.
