THE number of Malaysians seeking credit counselling has soared over the past decade.

According to the Economic Report 2016/17, some 460,031 Malaysians had used The Credit Counselling and Debt Management Agency’s (AKPK) counselling services as at end-July — the number is more than 10 times the mere 32,157 in 2007.

Out of these 460,031 individuals, 156,892 enrolled in AKPK’s Debt Management Programme (DMP), which is also a vast difference from the 8,172 individuals who enrolled in the DMP in 2007.

As at end-July this year, the main reasons for default, according to AKPK, were poor financial planning (50.8%), failure of or slowdown in business (15.2%), medical expenses (11.5%), loss of employment, retrenchment or death of a breadwinner (9.8%) and living beyond one’s means (9.6%).

The Economic Report 2016/17 states that 10,704 DMP participants had successfully completed the programme as at July 31. The success rate is expected to continue as more participants will benefit from the restructuring of their financial commitments.

AKPK’s consumer education programmes aim to nurture financially astute borrowers and at the same time promote a good payment and repayment culture.

The programme includes ad-hoc tailor-made talks and briefings to various targeted groups, personal financial management education, which mainly targets university students, and the POWER! Programme, which is designed to equip individuals with essential financial knowledge and ability to make responsible financial decisions.

AKPK is a wholly-owned subsidiary of Bank Negara Malaysia and was established in April 2006 as an avenue for individuals to seek advice and assistance in managing their finances and debts.

AKPK’s services, which include financial education and the prudent use of credit cards and basic money management skills, are free. The DMP assists borrowers to restructure their financial liabilities to help them meet their loan obligations and living expenses.

In most cases, the factors contributing to borrowers’ inability to repay their debts include poor financial planning, ignorance and a lack of financial discipline.

Financial difficulties could also be triggered by unanticipated events or a change in circumstances, such as health problems, the death of the breadwinner, loss of employment or business failure.

The Ministry of Finance notes in the Economic Report 2016/17 that AKPK is an important platform to enable the rakyat to enhance their knowledge of prudent financial management. Moving forward, it is important for people to be aware of the need to manage their finances wisely and prudently.

Meanwhile, the government needs to intensify efforts to enhance financial literacy, especially among the younger generation, to create a financially savvy society.

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