JASIN, Jan 19 — Data from the Malaysian Insolvency Department (MDI) shows that Selangor has the highest bankruptcy rate in the country, with a significant proportion of cases involving civil servants, particularly teachers.
Its director-general Datuk Ishak Bakri said the pattern stems from substantial personal loan liabilities, reflecting that salaried employees are disproportionately vulnerable to insolvency.
This finding is supported by the department's state-level data and financial literacy outreach programmes.
"Individuals with fixed incomes, such as teachers, are often approved for loans more readily, yet they carry greater financial peril without prudent management," he said during the launch of an MDI financial literacy programme at Politeknik Merlimau Melaka today.
Ishak added that the very stability of their income, which enables borrowing, can lead to protracted financial difficulty when debt obligations spiral.
In a positive development, he said that 200,000 individuals were successfully discharged from bankruptcy last year, surpassing the government’s KPI (Key Performance Indicator) target.
Ishak outlined a fundamental shift in the national insolvency system, which now emphasises welfare and rehabilitation over punishment, in line with the government's second-chance policy.
"A 2023 amendment to the Insolvency Act empowers the director-general to grant a discharge without a court order, provided applicants meet specific criteria under this policy," he said.
Current eligibility includes individuals aged over 70, those in prolonged bankruptcy, and persons formally diagnosed with mental health conditions.
"Malaysia is a pioneer in recognising mental health as grounds for discharge. A confidential medical certification can lead to an immediate release," Ishak said.
Looking ahead, MDI plans to introduce new fast-track criteria for single mothers, victims of financial fraud, and micro-borrowers.
