An economist has estimated that the actual number of people left bankrupt by the COVID-19 pandemic and the ensuing lockdown could be higher than the official figure of over 10,000 given by the government.
Speaking to Malaysiakini, Associate Professor Ahmed Razman Abdul Latiff, who is the manager of Business Development of Putra Business School (PBS), said this is due to the government's amendment to the minimum debt value to file a bankruptcy petition in August last year.
"The amendment to the minimum debt value to file a bankruptcy petition was increased from RM50,000 to RM100,000 under Section 5 of the Insolvency Act 1967.
"Therefore, the data only counted the number of bankrupt cases for debts exceeding RM100,000 after the amendment took effect, while those who were rendered bankrupt for being unable to pay debts below the new threshold value were not taken into account," he told the portal.
"We don't know how many people are unable to pay debts below RM50,000. If taken such cases into account, the real number (of bankruptcies) could be more than double the official figures," he added.
On Monday, Prime Minister Ismail Sabri Yaakob had said that a total of 10,317 people were declared bankrupt from March 2020 to July this year.
In the same period, a total of 1,246 businesses were also forced to close shop, he had revealed in a parliamentary written reply.
Razman further estimated that the number of bankrupts will continue to go up in the coming few months.
He cited the increase in the number of houses going on auction, which had gone up 30 per cent in the second quarter of this year, compared to the first quarter, as a sign that borrowers are unable to service their loans.
Official data also shows that 14,200 out of 58,795 people declared bankrupt between 2017 and June this year were youths aged below 34.
Photo source: Adobe Stock image
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