Changes help debtors, young entrepreneurs

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YOUNG entrepreneurs and small-time debtors drawing a regular wage both stand to gain from the amendments to the Civil Law and Bankruptcy Bills passed by Parliament yesterday.

To help wage earners repay their loans, instead of being taken to court and made bankrupt, those with debts of up to $100,000 will be given up to five years to settle the debt.

Senior Minister of State for Law Ho Peng Kee said the debt repayment scheme seeks a ‘win-win outcome’ for not just debtors – who have a shot at avoiding the stigma of bankruptcy – but also creditors.

As the debtor gets to keep his job and part of his monthly income goes into paying off his debt, this means his creditors get no less than they would have if his assets had been seized as part of insolvency.

Under the Civil Law (Amendment) Bill, one can start and run a business from the age of 18 instead of 21, the age at which he is legally considered an adult. This is to promote enterprise and risk-taking among the young. With the change, a minor above age 18 can act as a director of companies, form companies or limited liability partnerships and enter into business contracts, including land leases not exceeding three years.

The change prompted Non-Constituency MP Sylvia Lim to revisit the old debate of whether the voting age could be similarly lowered from 21 to 18.

In his reply, Associate Professor Ho said the Government’s approach is not to have ‘a single threshold age for maturity’ for all activities. This is ‘pragmatic and sensible’ as ‘each activity calls for different considerations and its significance and impact vary’.

For example, a person can be charged as an adult in a criminal court when he turns 16, but needs to be ‘at least 18 before he can drive or buy an alcoholic drink or cigarettes’. ‘On the other hand, he must be 21 before he can marry without parental approval, donate a body organ (or) make an Advance Medical Directive or a will.’

Singapore takes elections very seriously and ‘there is need for a voter to have the necessary maturity’, he added. A 21-year-old would often be working or pursuing tertiary studies, which would put him in a better position than an 18-year-old to assess election candidates and the national issues at stake.

On the Bankruptcy (Amendment) Bill, Ms Ellen Lee (Sembawang GRC) urged the law to make it easier for bankrupts to travel overseas for work, while Ms Lim asked if the debt repayment scheme could be extended to cover sole proprietors and partners of small businesses.

Prof Ho clarified that last year, more than 90 per cent of bankrupts had their travel applications approved. The rest were rejected mainly because they could not provide documentary evidence of overseas employment.

In response to Ms Lim, he said that the point of considering only wage earners for the scheme is that they would have a regular stream of income that could last five years, whereas ‘if you’re in business, it will be difficult to ensure that’. The regular income would help assure creditors that they could be repaid on a monthly basis if they proceeded with the scheme.

clare@sph.com.sg