People have to practice greater financial responsibility and to learn within their means to reduce bankruptcy risk, said economic Tan Sri Ramon Navaratnam.

This rings true especially when Malaysians are generally faced with rising cost of living after the implementation of the Goods and Services Tax (GST).

“One cannot live on borrowed money unless it (the money) for essential things like housing and transport. People have to discard the ‘debt syndrome’ and practice greater financial responsibility.

"The government, on the other hand, has to practice greater fiscal responsibility.

“Bank Negara Malaysia (BNM) should make it more difficult for borrowers unless it is for investment purposes,” he said.

Ramon said people cannot blame things like the inflation and the newly-introduced GST, if they are financially-strapped and go bankrupt.

“Yes, these things are a factor, but you cannot put the entire blame on them. Cut your coat according to your clothes,” he said when contacted by Astro AWANI here, today.

Ramon was commenting on article published in the weekly paper for business and investment, The Edge today, citing that financial mismanagement is key cause of the general rise in bankruptcy cases in the country.

The article quoted the Malaysian Department of Insolvency (MdI) also cited that said that the problem has been magnified with the implementation of GST, early this month.

“The enforcement of GST will surely impact the financial expenditure of individuals, especially when there is no increase in their disposable income.

“Therefore, the public must remain alert to their financial burden and ensure that unnecessary costs are eliminated from their budget,” it said.

In a related graph from the Bankruptcy Division of MdI, it explained that the number of bankruptcy cases and household debt-to-GDP ratio has been increasing since 2011.

In 2011, the number of registered bankruptcy cases were 19,167 while in 2012 the number recorded were 19,575. In 2013, the number was 21,987 while last year, a total of 22,351 cases were filed.

Legal and dispute resolution manager, Santosh Kannan suggested the rising in number of individual bankruptcy threshold to RM100,000 from RM30,000 under the current Bankruptcy Act 1967, as bankruptcy can have an unjust impact on an individual, who may be a victim of circumstances.

MdI was quoted in the article saying that by doing so, it would only encourage consumers to get credit and the banks to grant more credit to consumers with faulty credit history before they can commence on a bankruptcy proceeding which will make it difficult for an individual to recover from his debt.