Posted by: Financial Sith Lord | June 14, 2011

Dilemma of a Malaysian – Revisited

Last year, I made a posting about lives of Malaysians in the state of bankruptcy. This post is an extension of that issue.

Under the Malaysian Law, you are declared a Bankrupt if you owe a person or an institution with an amount greater than RM40,000. Bankruptcy is like a 2-sided coin. On the positive side, it provides the bankrupt some protection from possible harassment from the creditors. Once you are declared a bankrupt, the creditors involved would have to cease from physically chasing the amount owed from you. They in turn would have to write it off in their accounting books.

The negative side of it, is that, you as a bankrupt, would no longer have the normal credit and banking privileges, for a specific time frame. In Malaysia, its 5 years. Its like you being punished for not being able to repay what you owe. Fine.. Off course, after 5 years, you can apply for a release from bankruptcy with the Insolvency Department of Malaysia, and mind you, its not an automated process!!.

But for debts amounting between RM1,000 to RM 39,999, you’ll not be classified as a bankrupt, but rather as ‘Blacklisted’. Now, being ‘Blacklisted’ is far worst than being a bankrupt!!. The more you owe, the more lenient the system treats you!!.. Being blacklisted under the Malaysian financial and credit system, is basically like being thrown into an eternal abyss of financial and social misery. You are better off dead!! The 5-year escape route is only applicable if you’re declared a bankrupt by the Insolvency Dept. Being blacklisted does not give you that leverage. There is simply no way out. It’s worst when your creditors files a bankruptcy against you in court (for amounts below RM40,000), and your name is picked up by the credit information systems (CTOS, CCRIS, FIS). After 3 years or so, they’ll write it off in their books, and just archive the records. 4 years after that, they are no longer obligated to keep the records (lapse of time under the Statutes of Limitations). So to save space, they’ll probably throw the files away. But the problem is that, under the Malaysian Financial and Credit database, you’re still blacklisted, and the only way out is to make full settlement with the banks.

With your name being blacklisted, its virtually impossible for you to get a job (if you’re unemployed) or make any form of career progression or advancements (if you’re employed).. The banks, realising this grey area, would then proceed to oppress you in hefty repayments, should you decide to make settlements with them. Once you start repaying, the interest starts ticking again. It’s an endless and viscous cycle that would ultimately and permanently destroy whatever chances of survival left for people that falls under this category.

As an expert in areas of investment and banking, the only probable solution that I see, which is viable and able to provide a second chance to these unlucky people of this category, is for the government or corporate sector to create a secondary or Islamic financial and credit database, that is totally different from the systems currently adopted and applied in almost all financial institutions in Malaysia. Since the government and Bank Negara are so excited and driven to spruce up the Islamic banking sector, it is the perfect avenue to implement such measure. The logic is that, the existing financial and credit database are derived and based on conventional banking methods, in which, under the Islamic Law, are classified as non-halal and un-Islamic. Thus, if an Islamic banking sector is created, how can it depend or use a database that is non-halal? It should be based on a database that possesses halal attributes and parameters.

This way, those Blacklisted under the conventional banking credit database, could get a second chance in life, and probably restore or repair their past mistakes (by being able to get or secure Islamic or Syariah based loans). Off course, this measure is also subject to abuse, by repeat offenders.. But most of the Blacklisted citizens are genuine cases, means that they’ve truly learnt their lessons and are now more prudent in their financial habits. For repeat offenders, if and when they get blacklisted (again!!) under the Islamic database, then the debt amount combined from both database would for sure carry them across the RM 40,000 threshold. Let them go through the 5-year punishment period.

By implementing this simple yet effective measure, the government can definitely expect a boost in local economy, and the market may experience a greater purchasing power, that would translate into better quality of living, and higher GDP Per Capita.. In line with the government’s efforts towards improving the quality of life and income for Malaysians..

So, to all Politicians and Lawmakers, the above is probably an answer to your voters and tax payer’s long time predicaments. We’ve suffered long enough, and we’ve been deprived of so many things, long enough. Get off your butt and start working. I’m not being paid a single cent for this solution, and some of you may emerge as champions due to this reforms. Go ahead and take the lime light. I don’t bloody care. Just implement the measure stated above and save these poor Malaysian souls..

What say you?



  1. Sounds like a perfect opportunity for the Malaysian IF industry to reach a new market, and politicians to do some good. If only people actually listened to good advice…

    • Hi there, yes if only people actually listened to good advice.. That is the only hope left, apart from packing our bags and migrating to another country. I believe by doing so, it would definitely prove the obstacles faced by TalentCorp’s CEO in getting Malaysians overseas to comeback here.

      We as bloggers can only continue to raise and bark this issue, with hope that one fine day, someone with power and influence may read and take the necessary action. This issue can’t go on forever. It must stop. I strongly believe that if the Oppositions are truly doing their jobs, this issue wouldn’t exist. All they are interested in now is to prove to everyone that CCTV is not relevant in Syariah Court, 1Malaysia is not working, this CM that MB must step down, etc..

      Politicians from both sides paints different pictures to us Malaysians. Yet what is the true picture here? One of them is this issue. I’m elated at least one person out of the 25 million Malaysians shares the same view and sees what I see. Thank you ‘New Asianist’.

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