I REFER to the letter “Case of being a bankrupt” (The Star, Sept 2) in which the writer alluded to the archaic nature of the bankruptcy laws in Malaysia.
Prime Minister Datuk Seri Najib Tun Razak acknowledged the need to reform our bankruptcy laws during his winding-up speech on the last day of the 2012 Umno General Assembly, where he said the Government would come up with new legislation because the current bankruptcy laws were too strict.
This promise was reiterated in October 2014 by Minister in the Prime Minister’s Department Nancy Shukri. But, to date, nothing has been done.
I’m not saying that people who are in debt should not be made accountable for their debts but there is a need to strike a balance between the need to hold bankrupts accountable and allowing them to have the opportunity to make a fresh start in their financial affairs after a reasonable period of time.
When a person becomes a bankrupt, the bankruptcy could be caused by several reasons, such as a failed business venture, providing another person a personal guarantee for loans, credit card debts, or inability to settle car loans or housing loans. Whatever the reason, there is no moral justification for depriving the person of a second chance for life.
What happens to a genuine businessman who is made bankrupt? Sometimes this can happen without any fault on his part. It could be due to a financial crisis such as what we encountered in 1997 or 2007.
Instead of cultivating his talent and ability, our system not only makes him bankrupt but also keeps him bankrupt till he drops dead. Such a person is permanently excluded from any kind of commercial life and social existence because he can no longer even take office in political parties, societies and NGOs.
Our politicians talk a lot about creating a culture of innovation and entrepreneurship but in reality there is no room to fail in this highly capitalistic environment.
In fact, many people in the prime of their lives who suffer this fate are excluded from helping Malaysia to progress.
The insolvency statistics indicate that more than 250,000 persons have been made bankrupt in the country. The more frightening statistic is that the majority of bankrupts are aged between 35 and 54 years. This is the prime age where entrepreneurs can make things happen but many of them are languishing as bankrupts.
Given the current economic turmoil, this number could easily hit half a million individuals in two years.
Malaysia’s bankruptcy laws are punitive and not in keeping with the rationale for such laws or the practice of developed nations (which we aspire to be).
In Australia, bankruptcies normally end after three years. In Canada, a debtor can file a consumer proposal as an alternative to bankruptcy.
This is a negotiated settlement to make monthly payments for a maximum of five years, then it’s over.
In England, bankruptcy usually does not last longer than one year. Singapore has just passed the Bankruptcy Amendment Bill wherein a first-time bankrupt can be discharged in three years. His name will also be removed from public records five years from the date of his discharge.
Our bankruptcy laws are old and not keeping up with the status of our country.
I urge our Prime Minister who promised change and a more equitable society to bring Malaysia out of financial feudalism and reform the bankruptcy system so that discharged bankrupts can have a second chance at living a life of dignity.
The current bankruptcy laws have a detrimental effect on the economy and society as a whole. Our lawmakers need to show the political will to change them now.
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