Parliamentary Replies
Published Date: 07 February 2024

Oral reply to Parliamentary Question on high levels of individual bankruptcy applications and increased corporate insolvencies

Date: For Parliament Sitting on 7 February 2024

Name and Constituency of Member of Parliament

Mr Yip Hon Weng, MP, Yio Chu Kang SMC

Question:

To ask the Prime Minister (a) in view of individual bankruptcy applications at an 18-year high and increased corporate insolvencies in 2023, whether this is a cause for concern to the Government; (b) whether the rise in insolvency is primarily due to struggles to service existing debts, or is it also driven by a higher risk appetite for new ventures; and (c) whether the Government is planning more services to address this issue, such as expanded debt counselling services or financial literacy programmes.

Answer by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, on behalf of Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Chairman of MAS:

1. It is important to put the latest bankruptcy statistics into perspective. Although bankruptcy applications in Singapore rose in 2023, not all applications resulted in bankruptcy orders. The actual bankruptcy orders were lower than the application numbers. The trend of bankruptcy orders has been largely stable over the recent years and it is also below pre-COVID levels. Likewise, while compulsory winding up applications picked up in 2023, the actual winding up numbers were much lower, and also below pre-COVID levels.  
 
2. Bankruptcy applications rose amid the challenging macroeconomic and financial environment for corporates and individuals in recent years. The higher global interest rates environment also caused domestic interest rates to rise sharply. Nevertheless, most corporates and households were able to weather the increases in borrowing costs and continued to service their loans. There has not been any significant uptick in banks’ non-performing loans for either households or corporates. MAS stress tests also show that most corporate and household borrowers have adequate buffers to manage shocks to income and financing costs. 

3. While the overall debt situation has remained manageable, I agree with Mr Yip that it is important to educate Singaporeans on financial literacy and to help distressed borrowers manage their debt and avoid bankruptcy. Our national financial education programme, MoneySense, actively educates the broader public on money management skills. These include advising consumers to not spend beyond their means, and reminding borrowers to prioritise paying off high interest debts (e.g., credit card bills) to avoid high interest charges.

4. Borrowers in distress can seek help from various avenues. They can approach Credit Counselling Singapore, which offers debt management guidance and helps individuals and businesses restructure debts or work out sustainable debt repayment plans. Those who have unsecured debts with financial institutions may sign up for a Debt Consolidation Plan, to restructure and consolidate their debts. When a bankruptcy application is filed, the Official Assignee administers a Debt Repayment Scheme to help eligible debtors whose debts do not exceed $150,000. These debtors can avoid bankruptcy by committing to the terms of a repayment plan with their creditor and repaying their debts over five years.

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