De facto law minister Rais Yatim said today that the number of companies that had been declared bankrupt this year increased by 526 cases to total 8,927 cases as of October 2001.

However, he said that this was an improvement from the previous year by 17 percent when 630 companies were declared bankrupt over the year of 1999.

When asked for the percentage of these companies that have been wounded up due to inability to service loans, or due to non-performing loans (NPL), the minister said that the breakdown is not currently available.

"The Ministry of Finance is responsible for this information and they would have to find out and verify the figures before revealing them to the public," said Rais, who is minister in the prime minister's department.

He clarified that the bankruptcy cases involved mainly construction companies due to the high risk nature of the business in dealing with slow receipts and large payments. This was especially true for those highly dependent on subcontractor services, he added.

Rise of insolvency

The minister added that the number of bankruptcy cases involving individuals was much higher at 95,237 cases as of October 2001.

However, he said should the individual be listed as bankrupt for more than five years, there are specific conditions in Act 33A that, if fulfilled, could exempt the person from that status.

"Currently, there are provisions for those who have signed on as guarantors for scholarship holders or for loans in a private capacity," said Rais.

However, he acknowledged that there are still inherent difficulties in determining eligibility due to the differences from one case to another.

When asked what are the measures undertaken by the government to check the rise in insolvency cases, Rais said that the Prime Minister's Department is currently re-evaluating the conditions for exemption to see how eligibility can be extended to those in small and medium-sized businesses.

"On the whole, the number of bankruptcies is high. We have to first carry out the proper socio-economic analyses to see if this could be due to a lack of proper guidance from the various ministries involved and then take steps to rectify these omissions," he said.