KUALA LUMPUR: The plan to introduce the Cross-Border Insolvency Bill is a positive step forward in enhancing Malaysia’s legal and institutional frameworks for insolvency matters involving multiple jurisdictions, say experts.
They also said that such a Bill is crucial as Asean economies are increasingly interlinked through trade, investments and supply chains.
The Association of Banks in Malaysia (ABM) said strengthening efficiency in insolvency proceedings is key to improving transparency, especially where companies operate across borders and have assets in various countries.
It said the government’s alignment with internationally recognised standards, such as the model law of the United Nations Commission on International Trade Law (Uncitral) on cross-border insolvency, is a step that supports Malaysia’s standing in the regional and global financial community.
“Efforts that improve creditor protection and facilitate effective corporate rehabilitation efforts are crucial in supporting business continuity and investor confidence, especially in today’s interconnected economic landscape,” ABM said in an interview.
It also said clear and practical guidelines for the recognition and coordination of cross-border insolvency proceedings should be included in the Bill.
The association said the Bill also should promote effective judicial cooperation between Malaysia and foreign courts or representatives in insolvency matters.
UCSI University Malaysia associate professor for finance Dr Liew Chee Yoong said the proposed Bill reflects a broader commitment to modernising Malaysia’s insolvency laws by aligning them with international standards, such as Uncitral.
“By adopting its principles, Malaysia can promote greater legal certainty, streamline administrative procedures, and ensure the fair treatment of domestic and foreign creditors,” said Prof Liew, who is also a research fellow at the Centre for Market Education.
He warned that with the absence of a structured cross-border insolvency framework, the risk of legal fragmentation, asset loss, and delayed debt recovery becomes significant.
“This Bill, therefore, enhances regional financial stability by providing a consistent legal mechanism for creditors to recover their claims, irrespective of where the assets are located.”
Prof Liew noted that the proposed Bill is designed to support corporate rehabilitation efforts, and by recognising and integrating corporate rescue mechanisms.
He said it signals a shift from a liquidation-centric model to one that prioritises business continuity and restructuring.
“This shift not only preserves economic value and jobs but also bolsters investor confidence in Malaysia as a reliable and resilient business environment.
“Additionally, allowing provisional relief such as asset freezes or preservation orders before full recognition of foreign proceedings can protect assets from being dissipated during legal delays.
“Provisions should be included to mandate training programmes for judges, legal professionals and insolvency practitioners to ensure effective and consistent application of the new law,” he added.
Datuk Seri Azalina Othman Said had said local creditors of insolvent companies with assets within the Asean region may be able to recover their debts soon.
The Minister in the Prime Minister’s Department (Law and Institutional Reform) said this was among the measures that are being proposed under the Cross-Border Insolvency Bill to be tabled in Parliament this June.
