I was pleased to read that the government has announced that Indian nationals operating exorbitant “5-6” lending schemes can now be arrested without warrants for running illegal businesses.
All around the provinces, people from the Sub-Continent are well known for their predatory lending — preying on people who seldom have access to other forms of finance and taking advantage of a lack of financial literacy.
Although the interest rate in the 5-6 scheme is technically legal (after the repeal of the Usury Law and removal of interest rates ceilings) the majority are operating without business permits. Permits for operations of this nature cannot be obtained by foreign nationals in any case.
Justice Secretary Vitaliano Aguirre II said (here) that this makes the parasitic lenders liable for arrest without warrant, as a result of conducting business activities without appropriate compliance being observed.
The government is currently aggressively working on pushing for the implementation of a nationwide micro finance programme to remove the need for people to get drawn into 5-6 type schemes.
Personally I have seen so many of my neighbours fall victim to these lenders and end up in an endless cycle of debt which they are unable to escape. They have to watch livelihoods disappear before their very eyes, as people in turbans arrive at their stores and small businesses every morning demanding immediate payment.
These payments generally come from the operating expenses of small business, leaving business owners unable to replace stock and keep operating.
At least three businesses in the Barangay where I live have gone this way in the past 12 months. Stopping this, combined with the implementation of a government-backed micro finance scheme, has the potential to hugely alleviate poverty in the country. Which, as any observer can plainly see, is at the heart of all the problems that the Punisher President is attempting to resolve with violence.
Lack of access to capital is is something that really holds back the average Filipino, as is financial literacy.
It would be a wonderful thing to see educational initiatives put in place so people could learn how and when to appropriately use debt. The lack of any centralised credit reporting is also a problem.
Now we just need to wait and see how many of these loan sharks are actually arrested and (hopefully) deported, never to return.