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The Centre for Domestic Employees (CDE) welcomes the new comprehensive measures aimed to stem the increase in moneylending activities targeting foreigners (work pass holders), announced by the Ministry of Law (MinLaw) today.
CDE has always been concerned about the issue of moneylending activities among work pass holders, particularly within the community of foreign domestic workers (FDWs). Since 2016, we have received an increasing number of calls to our helpline from employers and FDWs seeking advice on situations where FDWs borrowed from licensed moneylenders (LMLs) and/or unlicensed moneylenders (UMLs). We have been paying attention to this issue and are working with the authorities on this topic.
In March 2019, CDE took part in a consultation exercise conducted by the CID Specialised Crime Division (Unlicensed Moneylending Strikeforce), sharing our case work experiences related to moneylending among FDWs with the authorities.
Following that, CDE together with a research group from NUS Chua Thian Poh Community Leadership Centre, and in consultation with the Credit Association of Singapore (CAS), completed in-depth interviews with 57 FDWs from different nationalities on moneylending activities.
From our findings, we noted that 63 per cent of the FDWs interviewed borrowed primarily for family emergencies back home. About 20 per cent borrowed to meet their lifestyle needs while 13 per cent became guarantors for their fellow FDW friends and landed in debt themselves when these friends became uncontactable.
CDE believe that the new measures announced today will further help control such borrowing situations. Disallowing FDWs to be loan guarantors for their fellow FDW friends is a good move to safeguard their interests. The reduction of the loan caps from $1,500 to $500 would stem the tide of borrowing, and the repayment for a smaller loan amount will also be more manageable for the FDWs.
We noted in our background research of the afore-mentioned in-depth interviews with FDWs, that some LMLs operate at areas with high concentration of FDWs (e.g shopping malls where large groups of FDWs from various nationalities tend to congregate). With the new restriction that prohibits LMLs from advertising to these vulnerable groups, there will be less temptations for FDWs to borrow money and we hope that in the long run, we will see less FDWs turning to LMLs.
To equip FDWs with financial literacy knowledge, CDE will continue to educate our FDWs on effective money management. In partnership with POSB, CDE has recently concluded the basic budgeting course for our fellow FDWs and more of such sessions will be organised throughout the year. FDWs who have attended found the course informative and useful to them. We will also tap on available resources such as the FDW Money Management Guide that the Ministry of Manpower has recently rolled out to guide FDWs in such matters.
CDE believes the support of employers in stemming the issue of FDWs borrowing money is important. The recently launched self-exclusion framework is one way in which employers can play an active role in educating their FDWs on measures available to exclude them from any future moneylending activities. This ensures that FDWs do not face moneylending debt in the future. We also urge employers to be more understanding of their FDWs in instances when they are faced with financial instability.
Employers and FDWs who need further advice on money management can call CDE at our 24-hour helpline 1800 2255 233.
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