Life and Debt : Predatory Lending in Singapore

I took an unannounced break from blogging for the past few weeks. Much of my writing energy was expended during GE2011 and I ended up busy with work the past few weeks. I will probably get going again once the Presidential Election gets going - it looks like a PAP endorsed candidate vs an independent candidate. The last time the people got to vote during the Presidential Elections, the PAP endorsed Ong Teng Cheong. While Ong Teng Cheong was highly respected, better known and campaigned much harder than the other candidate, he only garnered just over 58% of the votes. The other candidate received 41% of the votes hardly campaigned and voters were not even sure he wanted the job but voted for him anyway.  The result shows that people really did not want a president too closely associated with PAP govt in the 1993 elections. The PAP is a lot less popular today and I believe the independent candidate for the coming elections will put up a good fight - unless the Presidential Elections Committee has other ideas. I believe the head of a large coorperative who has to take care of diverse interests of all stake holders not just the bottomline of a company is eligible under the constitution. More on the presidential election later. Today's topic is predatory lending in Singapore.

Yesterday's New Paper had this headline news about 80 teens arrested for distributing flyers. These teenagers were recruited online and were offered temporary part time jobs to distribute flyers and name cards. They were handcuffed and taken to the police station. Based on The New Paper report, it is likely that most of them did not know they were doing anything illegal:

"More than 150,000 name cards and pamphlets advertising loan facilities, masquerading as legal loans and licensed moneylenders, were seized. Other items confiscated include two printing machines." -  News Report : [Link]

The parents of these kids had to pay a bail of $2000 to get them out of jail. I find it strange that the police used so much of their resources to catch these teenagers who were probably themselves ignorant deceived victims exploited by masterminds behind these schemes. I think it is hard for these teens to figure out they were doing something wrong handing out flyers for "esay loans", "fast cash" when these are almost ubiquitous in Singapore - you find them at bus stops, notice boards, lamp posts, in your mail box etc.

The irony is The New Paper that broke the story carry hundreds of these ads in their paper everyday.

Hundreds of listings offering fast and easy loans no different from the flyers the teenagers were distributing. I counted 10 full pages of such ads. I wonder if The New Paper checks every single one of them to ensure that they are legal. If not, shouldn't they be treated like the 80 teenagers who were arrested? Given its circulation and the number such ads it carries, The New Paper is helping to promote predatory lending which is extremely harmful to our society.

The growth in demand for these loans is a manfestation of thngs going wrong in our society. It could be gambling, poverty, low wages, or unemployment that makes people desperate enough to take up these loans. The lenders exploit the financial hardship of these people for profits and worsen their financial situation. In a number of countries, the govt proactively stepped in to regulate such loans by limiting the effective annual interest and the fees these lenders can charge. If nothing is done in Singapore, such activities and associated problems  to grow and fester. The New Paper used to have only one page of such ads. Now it has 10 full pages.  I believe the number of people getting exploited by scrupulous lenders is growitng.

If the people who are supposed to be doing their jobs do not watch these signs carefully and try to figure out the underlying problems faced by the people and allow these lenders and the banks to promote and expand their lending activities to exploit the financial situation of a large segment of our society, we will find our problems less solvable when they become big enough to be visible.