The Online Citizen A Community of Singaporeans 
A set of measures to stem the increase in moneylending activities targeting work pass holders were launched by the Ministry of Law on Monday (15 July), including restrictions on the supply of loans by licensed moneylenders (LMLs) to foreigners, a reduction of the aggregate loan cap for low-income foreigners, as well as new restrictions on LMLs’ lending and advertising practices.
The ministry noted that new measures are complemented by education and outreach efforts by the Ministry of Manpower (MOM) and the Police, and enforcement efforts against unlicensed moneylenders.
According to the ministry, the measures are necessary to address the rising number of foreigners borrowing from licensed moneylenders (LMLs), which has risen sharply over the past three years and has remained high. Overall, there were 53,000 foreign borrowers who took up loans from licensed moneylenders in the first half of 2019, compared to 55,000 borrowers in 2018, 19,000 borrowers in 2017, and 7,500 borrowers in 2016.
In addition, the self-exclusion framework which was announced in October 2018, will take effect from today.
In October 2018, MinLaw and MOM announced plans to extend the aggregate loan caps and the self-exclusion framework for borrowing from licensed moneylenders to foreigners residing in Singapore, as well as administrative penalties on work pass holders who borrow from unlicensed moneylenders.
These measures seek to address the increase in the number of foreigners borrowing from both licensed and unlicensed moneylenders in Singapore while we continued to monitor the situation.
The government has implemented the aggregate loan caps since 30 November 2018, and the administrative penalties on those who borrow from unlicensed moneylenders since February 2019.
While these measures have slowed the growth in the number of foreign borrowers, the overall number of foreign borrowers remained high.
The government was also observed that some licensed moneylenders have been actively targeting work pass holders through shopfront advertisements and readily extending loans to these borrowers over the past year.
There has also been an increase in work pass holders acting as guarantors for one another to facilitate access to loans. Guarantors become liable for the debt if borrowers default on the loan. The number of work pass holders acting as guarantors surged from about 50 in 2016, to about 6,000 in 2018. Some work pass holders were also found acting as “brokers” to facilitate loan applications by fellow work pass holders, in exchange for a token sum from the borrower.
MinLaw stated that it will tighten the restrictions on licensed moneylenders lending to foreigners in Singapore, which include caps on the supply of unsecured loans to foreigners, reducing the aggregate loan cap for low-income foreigners, to reduce the risk of over-indebtedness, disallowing licensed moneylenders from accepting foreigners as guarantors, prohibiting advertising targeted at vulnerable groups, no loans to be facilitated or brokered by unauthorised third parties, and no cross-referral of borrowers between licensed moneylenders.
The ministry stated that these measures will be implemented with immediate effect from 16 Jul 2019, with the exception of the caps on supply which will come into effect on 15 Aug 2019 in order to give the industry sufficient notice to make the necessary system and process changes.
However, the ministry noted that borrowers with existing loans can continue to approach their moneylenders to negotiate debt repayment terms if they face difficulty repaying their loans. They will also be allowed to restructure their existing debt through a debt consolidation loan facilitated through a voluntary welfare organisation (VWO).
Work pass holders who face difficulties may also approach existing support channels such as the VWOs, the Migrant Workers’ Centre, or the Centre for Domestic Employees, for advice and assistance.
Meanwhile, MinLaw noted that MOM will continue reaching out to and educating work pass holders on how they may manage their finances to reduce the need for borrowing and to approach their employers and NGOs/VWOs for advice and help if they have genuine needs.
For example, MOM recently produced a new money management booklet for foreign workers and a video to further raise awareness on the issues of borrowing. For FDWs in particular, MOM will also educate them and their employers of the new measures through the Settling-in-Programme and the Employer Orientation Programme respectively, and work with employment agencies and employers to inform FDWs of the implications of borrowing from unlicensed moneylenders.
To address the issue of foreigners turning to unlicensed moneylenders, the Police will step up their enforcement actions against unlicensed moneylending syndicates. Work pass holders who borrow from unlicensed moneylenders will also be debarred from employment in Singapore.
The ministry said that the self-exclusion facility will also be available to the public from Monday. Singapore Citizens, Permanent Residents (PRs) and foreigners residing in Singapore can apply for self-exclusion via the Moneylenders Credit Bureau (MLCB), using SingPass.
Foreigners who do not have a SingPass account can ask a third party with SingPass to submit the request on their behalf. The application fee is $3 for applicants who submit their applications using their own SingPass account, and $5 who submit their applications through a third party. More details on the application process for self-exclusion can be found at the MLCB website.