Singapore's Loan Sharking Problem

"Most of the people who turn to loan sharks are from low-income families and they usually borrow small amounts like S$200 or S$300," explains Ravi Philemon, a voluntary social worker and the executive director of a charity for the mentally-disabled. "You shouldn't criminalize people who have no choice but to turn to the loan sharks to buy food and clothes for their families."

Philemon argues that if the law is brought in it will stop victims of loan shark harassment from going to the police for fear that they themselves will be arrested. "This would reduce the number of people reporting loan shark harassment to the police but would not solve the basic problem," he adds.

Philemon believes that the root cause of the problem is a lack of sources of unsecured credit for less well-off Singaporeans. He cites the case of one family that wanted to set up a food stall and had no other alternative than to borrow from a loan shark. When their business faced cash-flow problems, they defaulted on their repayments and the amount they owed spiraled from S$20,000 to S$90,000. They were eventually forced to sell their flat earlier this year and now live in a tent in Sembawang Park, on the northern coast of Singapore.

"We need to make loans available to lower-income families and if the banks won't lend at the moment then the government should," he argues.

As reported in the Asia Sentinel: Singapore's Loan Sharking Problem