Housewives, bosses turn to loan sharks during MCO
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PUBLIC-SERVICE bureaus of political parties are dealing with desperate appeals for help from those who turned to loan sharks to get by during the movement-control order (MCO).
Complainants come from all walks of life and are not limited to the unemployed, the heads of bureaus from MCA and DAP told The Malaysian Insight.
They include employers short of cash from zero earnings during the MCO while still paying overheads, and even housewives trying to help their husbands who have lost jobs or closed their businesses.
DAP Federal Territory public complaints bureau chief Yew Jia Haur said although his service centre was closed during the MCO, he and staff received at least one to two cases seeking help on a weekly basis.
The MCO to curb Covid-19 transmissions began on March 18 with a ban on all businesses from operating except for those in essential services.
Since May 4, conditions have been relaxed and most economic sectors can reopen but the damage has been done to many workers and business owners.
The relaxed conditions, called the conditional movement control order or CMCO, end on June 9.
Yew said the unemployed who turned to loan sharks simply needed money to survive, while bosses sought funds to pay their staff.
Housewives, meanwhile, were trying to maintain family expenses.
MCA public services and complaints department chief Michael Chong told The Malaysian Insight that his office received 10 requests in a week.
“Personally, I have received four to five calls for help,” he said.
The amount borrowed from loan sharks is usually less RM10,000, Chong said.
Unemployment in Malaysia hit 17.1% in March, which is attributed to the MCO, according to the Statistics Department in a recent labour market report.
The increase was from 521,300 jobless in March last year to 610,500 in the same month this year.
This puts the March unemployment rate at 3.9%, the highest since 1986 when it was 7.4%, said chief statistician Dr Mohd Uzir Mahidin.
Unemployment for the first three months of this year also increased to 3.5%, compared with 3.2% in the fourth quarter of 2019.
This is the highest rate recorded since the second quarter of 2017, involving 546,600 people, Uzir said.
Yew said borrowers find themselves in a fix when they’re unable to repay their debt and would turn to another loan shark to settle the first loan.
“I have one case of a housewife whose husband’s business has not made any income.
“Her problem now is that she has no way to repay the debt within the specified period. The first group of loan sharks introduced her to a second group of loan sharks, resulting in snowballing debt.
“She now owes tens of thousands of ringgit,” said Yew.
Pushing borrowers to repay by taking a loan from another shark is a common tactic, Yew added.
“Many people think that their debt will be a short-term one and that they can soon pay the money back, but it ends up becoming the start of a nightmare.”
And yet borrowers continue to seek other loan sharks because financing is easier and faster, with less requirements than if they are to go to a bank.
MCA’s Chong warns, however, that loan sharks charge fees or interest rates of between 10% and 20%.
“If you see loan sharks advertising online saying you can borrow as much as you want with no problems, don’t be fooled,” he said.
Even though most businesses are slowly resuming operations and people are cautiously returning to their workplaces under health and social-distancing rules, the Covid-19 pandemic’s effects will be long lasting.
The Malaysian Employers Federation has projected one million retrenchments, with the worst-hit sectors to be tourism, manufacturing and the micro-scale small and medium enterprises (SMEs). – May 19, 2020.