Date: For Parliament Sitting on 16 October 2024

Name and Constituency of Member of Parliament

Mr Derrick Goh, MP, Nee Soon GRC
Mr Melvin Yong Yik Chye, MP, Radin MAS SMC 

Question:

To ask the Prime Minister and Minister for Finance (a) what is the Government’s assessment of the root causes of the rise in bankruptcies in the first half of 2024 amid an improving economic climate; (b) whether there is a cause for concern that bankruptcy has increased when the economy is supposedly improving; and (c) whether the Ministry can provide an update on the plans to further strengthen the measures for promoting financial prudence and counselling.   

To ask the Prime Minister and Minister for Finance in respect of the increase in the number of bankruptcies in the first half of 2024, what proportion of bankruptcies is due to credit card debts.

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 Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of MAS:

1. My response to this question will also address the other written PQ filed by Mr Derrick Goh for today's Sitting.

2. Not all bankruptcy applications result in bankruptcy orders as applications may be withdrawn for various reasons, such as if the debtor settles the debt or enters into a debt repayment plan with the creditors. The number of bankruptcy orders in the first half of 2024 has been stable compared to the same period in the last few years and remains below pre-COVID levels. The household debt situation in Singapore also remains stable. Non-performing loans (NPLs) are less than 1% of all loans to individuals extended by financial institutions as of Q2 2024. Credit card delinquency rates have also remained stable in the same period. Corporate NPLs have remained low at about 2% as of Q2 2024.

3. Slightly over two-fifths of bankruptcy orders were due to business failures in the first half of 2024. These debtors borrowed from a range of sources, including banks, credit card issuers, licensed moneylenders, and private individuals.

4. Borrowers who face debt repayment challenges can approach social service agencies such as Credit Counselling Singapore for help with debt management and restructuring, or to work out appropriate debt repayment plans. Those with unsecured debt with financial institutions may sign up for a Debt Consolidation Plan to restructure their debt. When a bankruptcy application is filed as a last resort, the Ministry of Law’s Official Assignee administers a Debt Repayment Scheme to help eligible debtors manage their debt and avoid bankruptcy.

5. It is also important to ensure that Singaporeans borrow prudently. To mitigate the risk of over-indebtedness, MAS requires financial institutions to implement a range of safeguards. For example, requirements on total debt servicing and loan-to-value ratios limit the size of property loans that a borrower can take on. For credit cards, borrowers are subject to minimum income requirements, credit and income checks, and an industry-wide borrowing limit. Our national financial education programme, MoneySense, educates the public on money management skills. These include advising consumers to spend within their means, borrow prudently, and manage credit card bills to avoid high interest charges.

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