In recent years, there’s been a sharp increase in the numbers of domestic helpers seeking loans from moneylenders.
The Straits Times reported last year that 12,000 helpers took out loans in 2017, a huge jump from the 1,500 who borrowed money in 2016. In the first half of 2018, that more than doubled again to 28,000. What’s going on?
There are two types of moneylenders in Singapore. Licensed moneylenders are registered and regulated by the Moneylenders Act. Unlicensed moneylenders, or loan sharks, are illegal in Singapore yet they still exist. There are reports of loan sharks actively trying to sell their services to helpers via social media, text messages and other methods.
Sheena Kanwar, Executive Director of the Humanitarian Organisation for Migration Economics (HOME), explains the financial vulnerabilities of domestic helpers. “They are often the primary financial providers, responsible for their families.” Emergencies, medical costs or natural disasters in their home country can bring a heavy financial burden, sometimes leaving a helper unable to pay her debts.
“There are cases where helpers will go to additional moneylenders to pay off a first loan,” Sheena says. “Moneylenders often charge very high interest. This leaves them in a desperate financial situation.”
Helpers who use unlicensed moneylenders can end up in serious trouble. Eddy Lam of maid agency 121 Personnel says, “While MOM (Ministry of Manpower) does not stop helpers from borrowing from licensed moneylenders, the Singapore Police Force specifically advises against borrowing from illegal loan sharks.”
If your helper does borrow from a licensed moneylender, she’ll need to give her residential address. However, this doesn’t mean that you are liable for the debt. As MOM States on its site: “A person may not be made a guarantor of a moneylending contract without their express consent.”
Sometimes, though, employers can unwittingly become involved. In one recent case, an employer was receiving late-night visits and phone calls from loan sharks even weeks after the helper had left the country, reports The Straits Times.
What if your helper is in debt to a loan shark, and the illegal moneylender harrasses you? MOM advises any employer threatened by a loan shark to immediately call the police and make a report. “MOM will repatriate work pass holders who borrow money from unlicensed moneylenders and debar them from working in Singapore,” notes Eddy.
Think your helper may be in financial distress? Approach the topic sensitively.
Debt can be uncomfortable to discuss. If she’s not open to talking (or you aren’t), pass her info from the following resources:
- ACMI regularly offers free talks aimed at educating foreign workers on moneylenders and common scams.
- Singapore Police Force has resources on how to avoid loan sharks, and some social services agencies that provide credit counselling.
- Aidha‘s financial literacy programme offers several modules on money management and loans.
- FAST has a Basic Financial Education short course, as does HOME.
By Karola Clark, April 2019
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