http://newpaper.asia1.com.sg/news/story/0,4136,199820,00.html?
'Legalise loan sharks' like we legalise prostitutes here?
Grassroots volunteers say Govt should declare amnesty and regulate loanshark activities
By Ng Tze Yong
April 24, 2009
RADICAL: Long-time grassroots volunteers Mr Han (right) and Mr Ling (left) have radical ideas to counter the loan shark menace. TNP PICTURE: NG TZE YONG
AH LONG Pte Ltd was the tongue-in-cheek title of director Jack Neo's 2008 comedy.
But if these veteran grassroots volunteers have their way, legalised loan sharks would indeed be the way to go.
Between the two of them, Mr Francis Han and Mr Henry Ling have spent almost five decades as grassroots volunteers.
Their idea to counter the loan shark menace is a radical one.
'Declare a general amnesty, hand out licences, draw up regulations on how much they can lend,' said Mr Han, 62. 'Then come down hard on those who refuse to cooperate.'
The former chairman of the Kaki Bukit Community Centre Management Committee has seen a lot in his 37 years of grassroots volunteering.
He says of loan sharks: 'They help people on the spot, they don't check your background, they don't ask for a guarantor... It's fantastic. No one else can do what they do.'
Difficult
It may be a difficult idea to accept, but it may help, for a moment, to think of loan sharks as prostitutes.
The logic behind legalising prostitution in Singapore is that since it is going to exist anyway, legalising it makes it easier to manage.
Should loan sharking be treated the same way?
Loan sharks have been in the news lately, with the Government's recent suggestion to make it a criminal offence to borrow from loan sharks.
'The unintended consequence is that you empower the loan sharks,' said Mr Ling, 63, the director of a human resources firm, who was a volunteer for 10 years at the People's Association and currently helps out at Meet-the-People Sessions.
'It's like sweeping the problem under the carpet,' said Mr Han. 'The statistics will start to look good, but only because people will stop coming forward.
'If you introduce that law, Singapore's suicide rate will go up.'
Theirs is a concern echoed by forum writers to newspapers recently.
Several weighed in to voice their frustrations with the police and town councils over increasing incidents of loan shark harassment in their housing estates.
One also wrote in to oppose the proposed law, arguing it could lead to borrowers and loan sharks cooperating to evade the law.
The grassroots duo's idea is intriguing, but begs many questions. For one, why would loan sharks give up their lucrative business to stay on the right side of the law?
'Maybe it won't work,' conceded Mr Ling. 'But at least, we must give them a chance. There are people trapped in a vicious cycle, looking for a way out.'
Another question: How exactly would legalising Ah Longs work?
It's about creating more flexibility in the system, explained Mr Ling.
'Right now, someone who is poor and has poor credit ratings has no one to turn to except loan sharks.'
Loansharks typically charge exorbitant interest rates of up to 20 per cent.
He believes that the recent changes to the Moneylenders Act, which makes it easier for lower-income earners to get unsecured loans, are not enough.
Financial aid from the Government, while available, continue to have stringent criteria and take a long time to secure, he said.
Also, how different will a licensed loan shark be from any of the 172 legal moneylending firms already in Singapore?
'For many down-and-out folks, even borrowing from moneylenders is too difficult,' said Mr Ling.
Moneylenders usually ask to see clients' payslips and income tax records.
Some check for criminal records. Others don't entertain walk-in clients.
Cautious
'I don't have a lot of money to lend, so I only do business with clients recommended by my friends whom I've known for more than 20 years,' said Mr Manickam, 67, a partner of AR T Firm Moneylender.
Moneylenders can impose a maximum interest rate of 18 per cent for unsecured loans. It also varies from moneylender to moneylender and is negotiable.
With the recession, moneylenders have also become more cautious.
'We have to be strict because there are a lot of swindlers out there,' said Mr Tan Boon Wan, 70, a staff member of Chuan Hua Company, another moneylending firm.
Licensed loan sharks, Mr Ling hopes, will be more flexible than moneylenders.
How will that work?
Loan sharks are able to give loans without asking for collateral because they are able to use the threat of intimidation.
If they can't use force, will loan sharks still be able to give loans so freely?
It boils down to what kind of 'intimidation' we're talking about, said Mr Han.
'Actually, there's only a small difference between a bank and a loan shark,' he said. 'If you default on a bank, the bank sticks up notices and takes away your stuff. Isn't that a form of harassment too?'
Irresponsible
But Mr James Sim, the president of the Financial Planning Association of Singapore, thinks it's irresponsible to propose that idea.
'At the end of the day, we have to ask ourselves: Will the quality of the loans be there? If not, will we end up with a sub-prime crisis of our own?' he said.
Mr Sim supports the Government's proposal to punish borrowers.
'It's like smoking. I have friends who gave up smoking because it's so difficult to find a place to smoke now,' he said.
'So similarly, if you make it tough enough for people to borrow from loan sharks, they will stop borrowing.'
But the key, he emphasised, is on what kind of punishment the Government wants to mete out.
Said Mr Sim: 'A jail term would be too harsh. It should be light, coupled with a lot of effort to rehabilitate them.
'It's the same thing we are doing for gambling and drug addicts now.'
Non-profit organisation Credit Counselling Singapore (CCS), on the other hand, opposes the Government's plan.
'Punishing borrowers may place loan sharks in a stronger position... It will be the poor and ignorant individuals who will suffer the brunt of this proposed legislation,' said Mr Kuo How Nam, the president of CCS, which works with debtors.
At the same time, he doubts that legalising loan sharks will work.
'Loan sharks, by their very definition, operate outside regulations... so as long as there are desperate individuals around, they will continue to exist,' said Mr Kuo.
Better alternatives, he believes, would be to teach financial literacy in schools and make it easier for the poor to obtain credit.
For Mr Sim, however, the solution is simple.
'We just have to learn how to live within our means,' he said.
'Legalise loan sharks' like we legalise prostitutes here?
Grassroots volunteers say Govt should declare amnesty and regulate loanshark activities
By Ng Tze Yong
April 24, 2009
RADICAL: Long-time grassroots volunteers Mr Han (right) and Mr Ling (left) have radical ideas to counter the loan shark menace. TNP PICTURE: NG TZE YONG
AH LONG Pte Ltd was the tongue-in-cheek title of director Jack Neo's 2008 comedy.
But if these veteran grassroots volunteers have their way, legalised loan sharks would indeed be the way to go.
Between the two of them, Mr Francis Han and Mr Henry Ling have spent almost five decades as grassroots volunteers.
Their idea to counter the loan shark menace is a radical one.
'Declare a general amnesty, hand out licences, draw up regulations on how much they can lend,' said Mr Han, 62. 'Then come down hard on those who refuse to cooperate.'
The former chairman of the Kaki Bukit Community Centre Management Committee has seen a lot in his 37 years of grassroots volunteering.
He says of loan sharks: 'They help people on the spot, they don't check your background, they don't ask for a guarantor... It's fantastic. No one else can do what they do.'
Difficult
It may be a difficult idea to accept, but it may help, for a moment, to think of loan sharks as prostitutes.
The logic behind legalising prostitution in Singapore is that since it is going to exist anyway, legalising it makes it easier to manage.
Should loan sharking be treated the same way?
Loan sharks have been in the news lately, with the Government's recent suggestion to make it a criminal offence to borrow from loan sharks.
'The unintended consequence is that you empower the loan sharks,' said Mr Ling, 63, the director of a human resources firm, who was a volunteer for 10 years at the People's Association and currently helps out at Meet-the-People Sessions.
'It's like sweeping the problem under the carpet,' said Mr Han. 'The statistics will start to look good, but only because people will stop coming forward.
'If you introduce that law, Singapore's suicide rate will go up.'
Theirs is a concern echoed by forum writers to newspapers recently.
Several weighed in to voice their frustrations with the police and town councils over increasing incidents of loan shark harassment in their housing estates.
One also wrote in to oppose the proposed law, arguing it could lead to borrowers and loan sharks cooperating to evade the law.
The grassroots duo's idea is intriguing, but begs many questions. For one, why would loan sharks give up their lucrative business to stay on the right side of the law?
'Maybe it won't work,' conceded Mr Ling. 'But at least, we must give them a chance. There are people trapped in a vicious cycle, looking for a way out.'
Another question: How exactly would legalising Ah Longs work?
It's about creating more flexibility in the system, explained Mr Ling.
'Right now, someone who is poor and has poor credit ratings has no one to turn to except loan sharks.'
Loansharks typically charge exorbitant interest rates of up to 20 per cent.
He believes that the recent changes to the Moneylenders Act, which makes it easier for lower-income earners to get unsecured loans, are not enough.
Financial aid from the Government, while available, continue to have stringent criteria and take a long time to secure, he said.
Also, how different will a licensed loan shark be from any of the 172 legal moneylending firms already in Singapore?
'For many down-and-out folks, even borrowing from moneylenders is too difficult,' said Mr Ling.
Moneylenders usually ask to see clients' payslips and income tax records.
Some check for criminal records. Others don't entertain walk-in clients.
Cautious
'I don't have a lot of money to lend, so I only do business with clients recommended by my friends whom I've known for more than 20 years,' said Mr Manickam, 67, a partner of AR T Firm Moneylender.
Moneylenders can impose a maximum interest rate of 18 per cent for unsecured loans. It also varies from moneylender to moneylender and is negotiable.
With the recession, moneylenders have also become more cautious.
'We have to be strict because there are a lot of swindlers out there,' said Mr Tan Boon Wan, 70, a staff member of Chuan Hua Company, another moneylending firm.
Licensed loan sharks, Mr Ling hopes, will be more flexible than moneylenders.
How will that work?
Loan sharks are able to give loans without asking for collateral because they are able to use the threat of intimidation.
If they can't use force, will loan sharks still be able to give loans so freely?
It boils down to what kind of 'intimidation' we're talking about, said Mr Han.
'Actually, there's only a small difference between a bank and a loan shark,' he said. 'If you default on a bank, the bank sticks up notices and takes away your stuff. Isn't that a form of harassment too?'
Irresponsible
But Mr James Sim, the president of the Financial Planning Association of Singapore, thinks it's irresponsible to propose that idea.
'At the end of the day, we have to ask ourselves: Will the quality of the loans be there? If not, will we end up with a sub-prime crisis of our own?' he said.
Mr Sim supports the Government's proposal to punish borrowers.
'It's like smoking. I have friends who gave up smoking because it's so difficult to find a place to smoke now,' he said.
'So similarly, if you make it tough enough for people to borrow from loan sharks, they will stop borrowing.'
But the key, he emphasised, is on what kind of punishment the Government wants to mete out.
Said Mr Sim: 'A jail term would be too harsh. It should be light, coupled with a lot of effort to rehabilitate them.
'It's the same thing we are doing for gambling and drug addicts now.'
Non-profit organisation Credit Counselling Singapore (CCS), on the other hand, opposes the Government's plan.
'Punishing borrowers may place loan sharks in a stronger position... It will be the poor and ignorant individuals who will suffer the brunt of this proposed legislation,' said Mr Kuo How Nam, the president of CCS, which works with debtors.
At the same time, he doubts that legalising loan sharks will work.
'Loan sharks, by their very definition, operate outside regulations... so as long as there are desperate individuals around, they will continue to exist,' said Mr Kuo.
Better alternatives, he believes, would be to teach financial literacy in schools and make it easier for the poor to obtain credit.
For Mr Sim, however, the solution is simple.
'We just have to learn how to live within our means,' he said.
