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Bad times spawn intimidating illegal moneylenders
When the Singapore police nailed four suspected members of a loan-sharking syndicate on July 21, they seized the usual paraphernalia: mobile phones and prepaid SIM cards and the time-honored tools of intimidation such as paint to be splashed on the doors of bad debtors and superglue to lock them inside their apartments.
But while loan sharks – or Ah Longs as they are known – have long been a ubiquitous presence on Singapore’s sprawling public housing estates, this gang is one of a growing number taking bully-boy tactics to the next level.
One of the members, according to the police, had been sending bullets to borrowers in an attempt to scare them into paying up. The syndicate, which police said was responsible for more than 600 harassment cases, were said to have also been terrorizing the wider community by starting fires outside the apartments of bad debtors.
Cynthia Phua, an MP from the ruling People’s Action Party, told local media in a recent interview that the level of harassment in her constituency in eastern Singapore has surged. “It is also more violent,” she said. “We are seeing things we did not see before, like petrol bombs and innocent neighbors being harassed.”
In a city-state that proudly boasts one of the lowest crime rates in Asia, such violence was once rare. But, worryingly for the government and the vast majority of the population who live in the public housing estates, it is becoming increasingly widespread as the economic crisis forces more people to turn to loan sharks.
Although overall crime fell slightly in the first half of the year, the number of reported cases of loan sharking and harassment more than doubled to 9,395, according to the Singapore Police Force. The number of people arrested for such offences doubled to 417, with a sharp rise in the number of young people getting involved in loan shark gangs. One in five of those arrested for loan sharking and intimidation was aged 19 or under, compared with just one in 10 in the first half of last year.
The police are particularly concerned about the increasing involvement of teenagers, acknowledging that it has become one of their “key crime concerns” this year.
While Singapore’s loan sharks rarely resort to the sort of extreme tactics practiced by their counterparts in Macau and Hong Kong – kidnapping and sometimes murder, or pouring petrol under the door of someone in arrears and lighting it – they are well-versed in the language of intimidation and fear. The Singapore Ah Longs spray graffiti on the walls of common areas identifying bad debtors, threaten their family members and vandalize their cars and apartments. Although they target the debtors and their families, they spread fear throughout the community, not least because the junior loan shark runners often go after the wrong people.
The government has blamed this crime wave on the deteriorating economic climate in which gross domestic product fell by 9.5 percent in the first quarter of 2009 and 3.5 percent in the second. The tough times for the loan sharks’ prey, the police say, are exacerbated by the fact that many of the younger debtors end up joining the syndicates as runners when they can’t afford to repay their loans. And the terms are steep, normally a usurious 40-50 percent per month if the luckless borrowers can meet the agreed payments, i.e., if they borrow S$800, they pay back $1,200 after five weeks. They are the lucky ones. Defaulters are met by a demand that the borrower pay the full amount as a penalty charge. The annual rate can thus easily top 1,000 percent.
Earlier this year, Wong Kan Seng, the minister for home affairs, said he was considering making it a criminal offense to borrow from unlicensed money-lenders. However, social workers and organizations that help victims of loan shark harassment are largely opposed to this approach, insisting that it would criminalize the desperate and the needy, who only borrow from Ah Longs because they have no other sources of credit, and drive the problem further underground.
“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.
Reverend Tan Lye Keng, who runs the One Hope Centre, a Christian organization that helps gambling addicts and loan shark victims, points out that most people only seek outside assistance when the intimidation and fear reaches a tipping point.
“Being chased by loan sharks is a very traumatic experience and many people come to us in a hopeless state, feeling they have no way out,” he says. “But we try to instill hope and let them see that they can have a future. The proposed legislation to criminalize borrowing from loan sharks may lead to more suicides and more people joining loan sharks gangs as a runner.”
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.
While some Singaporeans borrow from loans sharks to fund new businesses or tide them over in a tough month, many also get into debt because of gambling.
Around 90 percent of the harassment victims who seek help from the One Hope Centre are in trouble because of gambling debts. Reverend Tan has found that they key to resolving the problem is not fighting the loan sharks but negotiating with them on behalf of his clients in order agree on a mutually-acceptable repayment plan.
“Some are quite understanding and sympathetic because they feel they’re running a business, even if it’s illegal,” he says. “We’re not seeking to combat the loan sharks, but to provide hope amidst hopelessness and assistance to deal with gambling and loan-shark problems, enabling individuals and families to resume normal life.”
The Singapore Police Force declined to comment on the loan shark issue and the proposed new law, claiming that Asia Sentinel was “not an accredited publication in Singapore,” although the author is fully-accredited as a foreign correspondent by the government.