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Friday, April 15, 2005

Loan sharks 

It seems that the Ministry of Home Affairs has told the police to get tough on loan sharks.

At an annual Police Workplan Seminar yesterday, Home Affairs Minister Wong Kan Seng was reported by The Straits Times to have said that the police “are about to get tough” with loan sharks and have been told to “critically review” loan shark syndicates.

The Straits Times report also quoted Subhas Anandan, the president of the Association of Criminal Lawyers, as saying that the law should go after borrowers too.

“Without demand, loan sharks cannot exist. By borrowing from them, people are abetting the loan sharks in committing the offence. There’re some real opportunists who take advantage of loan sharks by borrowing and not paying, forcing the loan sharks to get back at them. Then they call the police,” he said.

He also had another idea: “Liberalise the industry, so they have a legal way of earning.”
If borrowers commit a crime, the police may be justified in going after them. Otherwise, Subhas Anandan’s suggestion cuts rather close to victim-blaming.

On his suggestion to liberalise the industry, we have to be careful here. Lending — indeed, finance as a whole — has long been a tightly-regulated industry, and for good reasons. Imprudent borrowing and lending can lead to serious negative social and economic consequences. And people are also often not good at handling money matters. There is also a good reason why the casino proposal is so controversial.

If we want to help loan sharks go legitimate, by all means, but there is no reason they must continue lending money. There are other ways to earn a living.

Creating more job opportunities in the economy is one obvious approach. Of course, this is easier said than done. In addition, the people involved in loan shark activities often don’t fit in well in large organisations. So another approach would be to make it easy for them to start their own businesses.

These measures, of course, are all already part of the government agenda, and I have blogged on them frequently before. We just need to build on them.

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