Growing Concern As Bankruptcy Hits More Young Malaysians

By Cheong Car Men

Image Credits: The Malaysian Lawyer

SUBANG JAYA - There are approximately 5000 Malaysian youths under the age of 34 who have been declared bankrupt since 2020, according to a March 13th report by the New Straits Times. This shows a concerning trend of financial struggles among the youth population of Malaysia. They now make up nearly 15 percent of all bankruptcy cases recorded in the past five years, based on the latest data by the Malaysian Department of Insolvency.

“Many of them have taken on borrowing more than what they should have,” said Credit Counselling and Debt Management Agency (AKPK) Senior Financial Advisor, Habibah Abdullah.

Many young people are lacking financial literacy today and with the proliferation of Buy Now Pay Later (BNPL) schemes, this has led to them spending impulsively without thought. Malay Mail reports that personal loans account for almost 46 percent of youth bankruptcy cases. Many youths also take on car loans without fully considering their long-term ability to repay them. Additionally, easy access to credit cards has led some to rely on them for everyday expenses, which results in debts that immediately become unmanageable.

It is especially concerning that even youths who have started working still lack basic financial skills such as budgeting and managing credits. Peer pressure and social media influence further contribute to overspending as they feel the need to maintain a certain lifestyle to keep up with their friends. This includes purchasing trending but costly products such as Labubu blind boxes or idol photocards despite financial strains.

To avoid falling into bankruptcy, Head of Unit Enterprise Outreach AKPK, Sheetaljit Bains advised that it is very important to make a budget every month, so the budget is an estimation on what they are going to spend and to keep track of their cash flow.

Sheetaljit mentioned that youths need to engage and participate in programs such as financial literacy programs and continuous learning to avoid bankruptcy. At the same time, Credit Counselling and Debt Management Agency also offers financial education, personalized debt advisory services to help struggling youths regain control of their finances.

“As much as you may have that money with you, but if you don’t manage it properly, it’s not going to stay with you for long,” said Sheetaljit.

With more awareness and a better support system, Malaysian youths may be able to avoid the hardships of going bankrupt.