Credit card has made it easier for people to make themselves insolvents or even bankrupt. Malaysian, especially young consumers are just can't resist the lure of plastic. Over the past few years, personal debt has soared to a high level.
The household lending has expanded at an average rate of 14.3% yearly, according to BNM. Before we even think about loans and mortgages, the average Malaysian householder debts have also increased tremendously. So it should come as no surprise to anyone that personal bankruptcies are increasing.
Issues surrounding consumer debt is not new to the media in Malaysia. There have been reports of soaring bankruptcy rate; the blames on card issuers; the blames on Loan Sharks etc. The phenomenon is that it's easier to obtain credit then it has ever been and free credit cards have flooded the local market.
Politicians and policy makers, and consumers protection groups who feel that consumers need protection from easily went bankrupted. And the amendment of the Bankruptcy Act 1967 came into force on Oct'03 to amend one of its sections as - an increase in the minimum debt which enables a person to be declared bankrupt from RM10,000 to RM30,000. Also the establishment of the Credit Counselling and Debt Management Agency by BNM, who undertakes credit counseling and loan restructuring for individuals, is scheduled to commence operations in 2006.
What lies beneath the problems of bankruptcy? A common trait is that consumers are vulnerable to persuasive advertising and marketing campaigns promoting credit cards and luxury life styles, thus putting them at risk of accumulating more and more debts that would eventually become unmanageable. Actually the perpetrator is the government's policy to pocket more revenue from public spendings; since because of exports souring, the time has come to boost domestic demand, and one way to do that is to promote the use of credit card.
"Pleasure first, suffered later" is seemed a "debt culture" that has rooted into the minds of teenagers. Chasing after the 5C (car, card, condo, cash & club) and stylish personal image, is now being a Malaysian phenomenon. Although some of the 5C have become essentials but the question is to what degree do they pursue them? For example, some aspire for platinum card or BMW as a status symbol. "Enjoys first, pay later" is also one of the factors of "debt culture". For example, car purchasing without down payment and free interests.
Many young entrepreneurs are doing their live like doing "ah pong" pastry business (typically cooked by using several pots with fewer covers). They just have many debt's holes to be covered perpetually, and the rotating use of credit card and personal loan has become the vehicle of the coverage. At last these financial tools have become rolling bigger and bigger like a rolling snow leading to disaster.
School children are tended to have a "debt culture" behavior too. For example, they opt for new high end notebook rather than usable one. Stylish ma! a reason was given by a schooling child of my client: a 2nd handed P3 notebook bought by the father, produced grumbling about outdated, ineffective and unpresentable; a new expensive notebook paid by instalments later on brought to the child's joyfulness. Oh, the poor father!
Malaysia private consumption continued to drive domestic demand, contributing significantly to economic growth of 6.7% (Q4'04). And is expected to grow by 10.1% increment next year thanks to the people who are taking pleasure first and be suffered later.
Anyway, card holders must take pride in being a responsible credit card user and must make sure that you never overspended. You must avoid using cash-advance privileges to live well materially in advance.
The household lending has expanded at an average rate of 14.3% yearly, according to BNM. Before we even think about loans and mortgages, the average Malaysian householder debts have also increased tremendously. So it should come as no surprise to anyone that personal bankruptcies are increasing.
Issues surrounding consumer debt is not new to the media in Malaysia. There have been reports of soaring bankruptcy rate; the blames on card issuers; the blames on Loan Sharks etc. The phenomenon is that it's easier to obtain credit then it has ever been and free credit cards have flooded the local market.
Politicians and policy makers, and consumers protection groups who feel that consumers need protection from easily went bankrupted. And the amendment of the Bankruptcy Act 1967 came into force on Oct'03 to amend one of its sections as - an increase in the minimum debt which enables a person to be declared bankrupt from RM10,000 to RM30,000. Also the establishment of the Credit Counselling and Debt Management Agency by BNM, who undertakes credit counseling and loan restructuring for individuals, is scheduled to commence operations in 2006.
What lies beneath the problems of bankruptcy? A common trait is that consumers are vulnerable to persuasive advertising and marketing campaigns promoting credit cards and luxury life styles, thus putting them at risk of accumulating more and more debts that would eventually become unmanageable. Actually the perpetrator is the government's policy to pocket more revenue from public spendings; since because of exports souring, the time has come to boost domestic demand, and one way to do that is to promote the use of credit card.
"Pleasure first, suffered later" is seemed a "debt culture" that has rooted into the minds of teenagers. Chasing after the 5C (car, card, condo, cash & club) and stylish personal image, is now being a Malaysian phenomenon. Although some of the 5C have become essentials but the question is to what degree do they pursue them? For example, some aspire for platinum card or BMW as a status symbol. "Enjoys first, pay later" is also one of the factors of "debt culture". For example, car purchasing without down payment and free interests.
Many young entrepreneurs are doing their live like doing "ah pong" pastry business (typically cooked by using several pots with fewer covers). They just have many debt's holes to be covered perpetually, and the rotating use of credit card and personal loan has become the vehicle of the coverage. At last these financial tools have become rolling bigger and bigger like a rolling snow leading to disaster.
School children are tended to have a "debt culture" behavior too. For example, they opt for new high end notebook rather than usable one. Stylish ma! a reason was given by a schooling child of my client: a 2nd handed P3 notebook bought by the father, produced grumbling about outdated, ineffective and unpresentable; a new expensive notebook paid by instalments later on brought to the child's joyfulness. Oh, the poor father!
Malaysia private consumption continued to drive domestic demand, contributing significantly to economic growth of 6.7% (Q4'04). And is expected to grow by 10.1% increment next year thanks to the people who are taking pleasure first and be suffered later.
Anyway, card holders must take pride in being a responsible credit card user and must make sure that you never overspended. You must avoid using cash-advance privileges to live well materially in advance.
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