MALAYSIA, which aims to become a “high-income status” nation by 2020, is seeing an increase in the number of young people grappling with higher debts than they can handle.

    Gen Ys who borrow for homes, cars and other items have contributed to heavy household burdens. Bad debts at Malaysia banks are still low, but there’s been a notable increase in the number of people under age 35 who have declared bankruptcy.

    To the extent that financial difficulties of young people reduce personal consumption, they are another problem for Malaysia’s economy on top of low commodity prices, a battered currency and a political crisis stemming from graft allegations involving Prime Minister Najib Razak, who denies wrongdoing.

    Growth of private consumption has been slowing, and if that continues, Malaysia’s growth rate could be hit.

    “Households are accumulating debt faster than their incomes are growing, which will likely lead to repayment difficulties when the credit cycle turns,” Standard & Poor’s wrote in an August report.

    According to S&P, Malaysia has the highest personal debt among 14 Asian economies, with the rate jumping to 88 percent of gross domestic product from around 60 percent in 2008.

    Malaysia’s Department of Insolvency says 5,547 individuals under age 35 were declared bankrupt last year, more than double the number in 2005, the first year for which it has published such data. Last year’s number under age 25 was 635, triple the year-earlier figure.

    In Malaysia, a person can be declared bankrupt if a creditor shows there’s on unpaid debt of at least 30,000 ringgit (US$7,116).

    Hafiz Adam, a vocational school graduate, thought the future looked bright when he took a bank loan of almost US$20,000 to start a Kuala Lumpur marketing business. But it didn’t last, and two years ago, age 26, he was declared bankrupt.(SD-Agencies)