THE Covid-19 epidemic affected some business owners so severely that they turned to loan sharks in desperation for assistance. They must rue this decision as those who cannot pay back what they borrowed are now the target of these ruthless lenders.

Public complaints bureaus of several political parties told The Malaysian Insight that these business owners turned to loan sharks after running out of capital due to the continual lockdowns implemented by the government to curb the spread of Covid-19.
 
Those who borrowed from loan sharks were not limited to business owners; some individuals who have lost their source of income also turned to these illegal money-lenders.
 
Andy Liew Haw Ching, head of Gerakan’s public service and complaints bureau, said the majority of such borrowers who sought help from his party were women.
 
“They have one thing in common: they are all in the beauty industry such as owners of facial centres and hairstylists,” he said.
 
This sector was not allowed to operate during the on-and-off lockdowns since last year as they were not deemed essential. This led to a cash flow problem and the business owners turning to loan sharks, he said.
 
“The borrowers were not able to pay back their loans due to the high interest rates and the amount snowballed.”

 
So far, Liew said he has been approached by 10 people for help this year.
 
After meeting the loan sharks, he said some of them agreed to allow the borrowers to pay back only the loan amount while others continued to harass the borrowers.
 
Loan sharks often turn to humiliating methods to get the borrowers to pay.
 
A woman who turned to Liew for help was told to become a prostitute by the loan sharks.
 
“It’s not that the borrowers don’t want to pay back the money. They just never expected the epidemic to drag on for so long and that they would not be able to open for business.”
 
Liew said the loan sharks’ modus operandi was to look for targets online by pretending to be licensed money lenders, promising to approve a loan within 24 hours.
 
“Some are asked to pay an upfront fee before they can borrow. These groups use social media to target vulnerable people especially the elderly. Be vigilant and don’t fall for their trap,” he said.
 
Liew said if anyone is desperate for funds, they should borrow from the banks.
 
Between January and August this year, 683 police reports have been lodged against unlicensed moneylenders, Bukit Aman commercial crime investigation department director Mohd Kamarudin Md Din said.
 
He said the epidemic had caused many people to lose their jobs and source of income, forcing some to borrow money from loan sharks in desperation.
 
The reports involved loans amounting to RM2.92 million.
 
Exorbitant interest rates
 
Selangor DAPSY public complaints bureau head Darren Lee Wen Bin said many have started borrowing money from loan sharks online.
 
Lee said even if the initial borrowing was a small amount, exorbitant interest rates ensured that the final amount owed would be multiple times the initial sum.
 
“If the loan is not paid, the loan sharks will turn to destroying the borrower’s house or tossing red paint onto the gate, door, compound or car. Borrowers will also be attacked on social media until they pay up.”
 
Liew recounted a case where an individual borrowed RM30,000 but ended up paying RM40,000 in a short duration due to the high interest rate.
 
“The borrower refused to pay and was harassed by the loan shark. He lodged multiple police reports but was told there was nothing the police could do if it was just verbal intimidation.”
 
Meanwhile, See Foo Hoong, head of member welfare and public service bureau for the Kuala Lumpur Chinese Assembly Hall, said he had received seven requests from business owners in the last two months.
 
“A recent case that I dealt with involved a borrower who has a factory worth RM3 million and seven shops worth around RM1 million. When he fell into a financial crisis due to the epidemic, he borrowed from loan sharks. In the end, he owed them almost RM1 million.”
 
See said loan sharks have evolved and now clearly state the terms and agreements in a document, much like a legal one, to win the trust of borrowers.
 
“In the beginning, when payment is made on time, there will be no problem. But the loan sharks will then try to convince borrowers to take up more loans.”
 
He added that many borrowers are also deceived by the loan sharks as they cannot read documents in Chinese and English. – September 17, 2021.