Borrowing, brokering, lending: Inside the tangled web of maids and moneylenders
With the spike in the number of foreign domestic workers borrowing from licensed moneylenders, some have found a lucrative side income while others fall victim to debt. Talking Point investigates.
SINGAPORE: Six months ago, moneylenders showed up at Mr Yazid Sulaiman’s flat. His parents answered the door, as he was away on a trip, and were shocked when the moneylenders demanded payment.
“My parents had never borrowed from moneylenders before. So it was the first time in their lives where someone just knocked on the door and demanded payment,” recounted the former flight steward.
“They had a piece of A4-sized paper with a colour-printed picture, captured on CCTV, (of the) face of my maid.”
Alarmed to hear the news, he told his wife to settle the debt of S$1,814.
“I was worried about the safety of my daughter,” he explained. “If you have a helper under stress, she (may) neglect your daughter. I didn’t want that to happen.”
But the day after the debt was settled, his helper ran away.
Mr Yazid is not the only employer who has had to deal with the aftermath of a foreign domestic worker borrowing money indiscriminately. The number of helpers borrowing from licensed moneylenders in Singapore has spiked recently.
And the programme Talking Point discovers that some of these workers have also fallen victim to shady moneylending dealings, which are pushing them into a vicious cycle of debt. (Watch the episode here.)
In the first half of last year, 28,000 foreign domestic workers had borrowed from licensed moneylenders, which is more than double the 2017 figure and nearly 20 times the 1,500 in 2016.
READ: Maids could turn to loansharks if employers' consent needed to borrow money from licensed moneylenders: MOM
To find out how easy it is for helpers to borrow money and whether moneylenders actively prey on them, Talking Point enlisted the help of a Filipina actress to pretend to seek a loan from a popular licensed moneylender.
In the shop, she was told by a domestic helper in the queue that she would have to go through a broker – usually another helper – as the moneylenders would typically not entertain walk-in maid applicants.
Mr Billy Lee, the executive director of Blessed Grace Social Services, which helps domestic workers in debt to negotiate payment plans, said these brokers are “very familiar” to the moneylenders.
“If you go through the broker, then things can be worked out quicker … There’s a relationship between them,” he said.
In certain cases, the broker would accompany the domestic helper who doesn’t have the money to repay the loan.
One broker whom the undercover actress spoke to disclosed that for every loan she brings in, her commission is S$20.
It can be a lucrative income; the broker claimed that she can get about 15 customers on a typical Sunday, which works out at about S$1,200 a month – double the pay of most helpers.
If the undercover actress were to refer customers to her, the former would get S$10 per person.
Mr Lee said: “These brokers are very persuasive because they get a commission. So a lot of them (helpers) are swayed into borrowing from moneylenders, despite the fact that they might not be able to repay.”
20 PER CENT INTEREST
It is illegal for foreign domestic workers to moonlight as brokers, however, as they are not allowed to work for anyone except their employer.
To protect foreigners here and their employers from the effects of over-borrowing, a helper who earns less than S$10,000 annually can borrow only up to S$1,500 from all licensed moneylenders combined. Interest rates are also capped at four per cent.
READ: Loan caps for those borrowing from moneylenders to take effect end-November
Most helpers have been able to repay their loans to licensed moneylenders, the Ministry of Manpower told Talking Point.
But Mr Lee said the loan cap, which took effect in November, may give some helpers a false sense of security, so more end up taking out loans.
Some domestic workers are themselves lending money. On average, he counsels about five helpers a week who say their peers have lent them money – with a 20 per cent interest rate plus an upfront fee of 10 per cent.
One helper, who declined to be identified, said she would rather pay the exorbitant interest than visit licensed moneylenders, as she feels uncomfortable providing them with her work permit, passport and contract details as well as employer’s number and address.
She has borrowed hundreds of dollars from a fellow helper since last year, but is not worried that it is illegal or that there is no formal contract.
“This is (based on) trust. I’ve known (the lender) for quite some time,” she said.
I don’t worry about my safety. This is like our Filipino code.
The police, too, have observed that more foreign domestic workers are borrowing from unlicensed moneylenders (such as those helpers who charge interest).
Those who moonlight as brokers or act as unlicensed moneylenders face fines and jail terms, while those who borrow from unlicensed ones will be banned from future employment in Singapore.
LEFT WITH NO OTHER OPTION?
In the case of Mr Yazid’s helper, she had gone to three licensed moneylenders.
And he thinks she was afraid to ask him for money because her employment agency had advised helpers against borrowing from their employer, leaving them with moneylenders as the go-to option.
The reason some agencies do that, said Ms Flora Sha, a branch manager at employment agency United Channel, is that domestic workers already take out a loan in their respective countries before coming to Singapore.
Over the past two months, she had about eight cases of moneylenders calling to ask for helpers who had turned to them for financial help. And it does not help that domestic workers’ salaries here are “too low”, she agreed.
In Singapore, they are typically paid a minimum wage of S$450 to S$570 a month, while those in Taiwan and Hong Kong are paid about S$745 to S$780 respectively.
However, the Centre for Domestic Employees (CDE), which looks after the interests of domestic workers here, does not believe that there is a correlation between their salaries and their problems with moneylenders.
CDE executive director Shamsul Kamar cited the example of Hong Kong, which is grappling with the same issue, despite the higher pay there.
“The larger issue is about poor financial management and lifestyle choices,” he said. “They have friends and (face) peer pressure, where they go around getting the latest phones and all that. Sometimes they do overspend.”
Whether it is bad choices or easy access to credit, employers are at risk of carrying the can.
Mr Yazid’s alarming episode did not end when his helper left. Last month, he found a letter in his letterbox and realised that she even managed to borrow from a moneylender in Hong Kong.
That was when he quit his aircrew job of seven years. “I worry about my baby and also my family members,” he explained.
Watch this episode here. Talking Point airs on Channel 5 every Thursday at 9.30pm.