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Foreign domestic workers lament cuts in loan limits, as NGOs stress need for better financial literacy

SINGAPORE — She arrived at the licensed moneylender intending to take a loan, but Mary (not her real name) was told she was not eligible.

Foreign domestic workers lament cuts in loan limits, as NGOs stress need for better financial literacy
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SINGAPORE — She arrived at the licensed moneylender intending to take a loan, but Mary (not her real name) was told she was not eligible.

She had already taken a loan of S$600 from other moneylenders, exceeding the S$500 loan limit that was imposed by the Government last Monday (July 15) for foreigners with an annual income of less than S$10,000.

The foreign domestic helper earns S$800 a month and she needed to send back S$500 for her daughter’s college tuition fees in the Philippines, she told TODAY.

“I only have S$50 with me now. I didn’t expect like this,” said Mary.

Visibly distressed, she started crying while speaking with TODAY and then excused herself, saying “I need to find money, my daughter is waiting”.

Employers and non-government organisations TODAY spoke to said that foreign domestic workers have to learn how to manage their finances.

Some pointed out that the crux of these workers' borrowing problem is their inability to say no to their families' requests to send back more money.

The Ministry of Law (MinLaw) announced the new loan limits, as well as new restrictions on licensed moneylenders, last Monday, in a move to prevent foreign workers from overborrowing. 

It revealed statistics that showed how the number of foreigners borrowing from licensed moneylenders has risen sharply over the past three years.

In 2016, 7,500 foreigners borrowed from licensed moneylenders. The figure jumped more than seven-fold to 55,000 in 2018.

To address the increase, MinLaw first imposed a loan cap on low-income foreigners in November 2018, where those whose annual income is below S$10,000 can borrow up to S$1,500.

But the number remained high, with 53,000 having borrowed from licensed moneylenders in the first half of 2019.

Out of the 12 foreign helpers TODAY spoke to, nine had already busted the limit of S$500, most of them only learning about the new loan restrictions when they were denied more money by licensed moneylenders.

All of the foreign domestic workers TODAY approached agreed to speak on the condition that pseudonyms are used as they feared possible repercussions, including being fired, if their employers were to find out that they had borrowed money.


For Jane, who sends back S$600 of her S$800 monthly salary to the Philippines every month, the S$500 borrowing limit means her finances would be very tight.

“It’s not enough, especially me. I have four children. I got no husband so I carry all responsibility for all four children,” she said.

Elena from the Philippines felt that the cut was too drastic, believing that the maximum should be at least S$1,000.

Wendy, a caregiver from Myanmar, said loans from licensed moneylender are especially helpful to tide her over in between patients.

“I haven’t go to new patient house, haven’t get salary. But cannot stop right, family need to support,” she said.

In addition to sending back about S$400 to S$500 out of her S$700 salary every month, she sometimes sends back lump sums of about S$1,000 that she borrowed to pay for her mortgage in Myanmar, her daughter’s school fees and father’s medical fees.

The slash in loan limits would mean that her expenses and that of her family members in Myanmar would have to be reduced, she said.


Ms Nina Rotelo, 53, who has been teaching foreign workers financial literacy as a volunteer for migrant organisation Humanitarian Organisation for Migration Economics, said that these helpers need to learn how to say no to their family’s constant request for more money.

They also need to be taught how to manage their income, added Ms Rotelo, who has been a foreign domestic worker in Singapore for the past 23 years.

Instead of turning to other avenues to borrow money, Ms Rotelo said helpers need to explain to their families their difficulties, and that they need to live with the reduced amounts that will be sent back henceforth.

“The more you give your family, the more they ask. If don’t put limit, they will borrow how much they want until the helpers can’t pay,” she added.

At the heart of the problem is their inability to say no to their family back home.

“They think that the money they send back or things they spend for their loved ones will compensate for their absence,” she said.

“Migrants forgot about themselves. They only care about family.

“They don’t even save for themselves. Many go home (at the end of their working stint) without money.”

Pastor Billy Lee, the Executive Director of Blessed Grace Social Services, an organisation that helps foreign domestic workers with their loan repayments, said that the lowering of limits might lead some to turn to unlicensed moneylenders.

For those who need more than S$500, their only other legal avenue now is their employers, he added.

But several domestic workers said that requesting from employers is difficult as not all of them are willing to loan them money or give a salary advance.

Yet, employers TODAY spoke to said that they would offer help, to prevent their maids from turning to loan sharks.

Ms Connie Kong, 47, said that her helper had unwittingly borrowed from loan sharks before, causing her to receive threats and harassment from them.

“When I ask her, “Why don’t want borrow from me?” She said paiseh (shy),” said the human resources professional.

As for another employer, Ms Rose Awang, 57, she agrees that the lowering of loans is a right move as the amount one is allowed to borrow should commensurate with her wages.

“If you earn S$600, if you can borrow up to S$1,000, how can you pay back,” said the real estate professional.

More importantly, she believes that education needs to accompany these changes, as foreign domestic workers should be taught simple financial literacy such as budgeting.

Related topics

money lending licence Ministry of Law foreign domestic workers foreign workers

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