Rising Bankruptcy Among Public Servants Sparks Concern Over Financial Management

According to the Director-General of the Malaysian Department of Insolvency (MdI), Datuk M. Bakri Abd Majid, between 10 to 13 percent of new bankruptcy cases from 2021 until now involve public servants. This is worrying because the numbers have been rising each year, even though overall bankruptcy cases in the country are decreasing.

In 2020, 12 percent of bankruptcies involved public servants, followed by 10 percent in 2021, 11 percent in 2022, and 13 percent in 2023. So far this year, the figure has increased to 14 percent. This shows that many public servants are struggling to manage their finances, which affects not only them and their families but also the entire public service system.

For public servants who are declared bankrupt, disciplinary action can be taken, which could hurt their chances for promotions, salary increases, bonuses, and other financial benefits. In some cases, some public servants even choose to declare bankruptcy themselves to escape long-term debt pressure.

M. Bakri suggests that department heads should monitor the debt levels of their staff and encourage financial management programs as a preventive measure. If they fail to do so, corruption and misuse of power within the department could become more common.

He also raised concerns about some lenders offering harmful loans to public servants after the recent salary adjustment under the new Public Service Remuneration System (SSPA). This could damage their financial stability even more if not handled carefully, as stated in awani.