Recently the Department of Insolvency announced the first quarter 2014 statistic where bankruptcies up 32% in 1Q on year-on-year basis, despite the GDP growth for the same period seems healthy at 6.2%.
For 1Q 2014, total 48% or 1,906 cases were due to default on Hire Purchase loans following by Housing Loans.
I think it was attributed to
1) The mentality of "enjoying new car" at low or no down-payment; and
2) Lack of financial discipline
For the fact that our Household debts to GDP ratio (86.8% in 2013) is now the 'highest' in Asia-Pacific (may be ex-Japan), the DOI will gets busier in next few years until the banks start to be more responsible when giving out loan.
Once BNM normalise the interest rate, i.e. to increase from current 3.0% to 3.5%, the bankruptcies cases will be on the rise next year due to heavier cost of borrowing and higher installment amount and slower economy (more people spend less and have less to spend).
Click here for year 2012 statistic report from the Department of Insolvency, out-dated.
Another interesting fact about being bankrupt.... I found out when accompanying a friend to discharge from bankruptcy, you have to pay few thousand not only lawyer to file paper to discharge yourself but also five figures 'admin' fee to Department of Insolvency.
1) The Edge, 19 May 2014
2) Department of Insolvency
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