SINGAPORE, March 20 — The glint of gold is apparent around Lucky Plaza, where a total of 39 jewellery shops span the Orchard Road mall’s seven storeys.

Some of these storefronts are emblazoned with signs stating “$0 down payment”, along with the word “hulugan” — or “instalment” in Tagalog, the Filipino language.

In these shops, Singapore’s foreign domestic workers (FDWs) can purchase gold jewellery through instalment plans, taking them home without paying a single cent upfront.

Except some do not take them home. They pawn them immediately at one of Lucky Plaza’s many pawn shops for instant cash.

According to FDWs that TODAY spoke to at the mall over several days, this is a widely known method of obtaining a much-needed “loan” without going through licensed or illegal moneylenders, which began in pre-Covid times.

While interviewees said that such instalment plans can be a boon for them due to their low wages, the downside is the prospect of being unable to pay off monies owed to these shops — which can charge customers high interest for this payment method.

A 49-year-old Filipino maid who bought a piece of gold jewellery, who wanted to be known only as Carlina, said that one store had added about S$100 (RM352.70) in interest per gram of gold.

For an item containing 3g of gold, a worker would pay S$300 on top of its price.

Cyndelene Miranda, a 48-year-old Filipino who has been working as a domestic helper in Singapore for 13 years, said that around three in 10 of her friends have struggled to pay back what they owe these jewellery shops in instalments.

When this happens, Miranda said it is not uncommon for them to buy another piece of jewellery — again on instalments — and pawn it in order to repay their original loan, thereby repeating the cycle of debt.

When asked why this practice of pawning gold that has not been fully paid for was a popular avenue for raising money, Ms Miranda said that domestic helpers in Singapore are often under pressure to provide for their families back home.

They also find it difficult to turn down their family members’ requests for money, she said, regardless of what the money is used for.

Aini, 48, an Indonesian domestic helper that has worked in Singapore for nine years, said that she recently pawned a piece of gold jewellery she had previously bought on instalments in order to pay for her family’s expenses in Bintan.

She asked that her real name not be published as she feared reprisal from her employer.

For her, the appeal of purchasing gold jewellery lies in the fact that she would get to safekeep an item of value, even wear it, and subsequently pawn the item if she needed money urgently.

Migrant workers’ rights group Transient Workers Count Too (TWC2) added that maids typically receive “no or little pay” during their initial months of work in Singapore as their salary goes towards paying off placement costs levied by employment agents.

“The financial stress that low-wage migrant workers in general are under may also cause them to act irrationally out of desperation,” they said.

Concerns of ‘exploitation’

One employer of a Filipino maid, a 49-year-old in the finance industry, found out last month that she had pawned a piece of gold jewellery for cash without completely repaying her instalments to the jewellery shop.

A pawn shop at Lucky Plaza had sent a letter to his address to inform the maid that her item would soon be forfeited if she did not repay her loan.

This was in line with how pawn shops operate — they typically offer a loan amount based on the value of the pawned item, and would subsequently keep and sell the item if the loan is not repaid.

However, the employer expressed concerns that jewellery businesses might be “exploiting” FDWs’ financial vulnerability by charging high interest rates on their products, capitalising on their lack of knowledge of the prevailing market rates.

He said his helper had “unknowingly” agreed to pay more than two times the market rate of gold for a piece of gold jewellery over three monthly instalments.

Additionally, when TODAY spoke to the sales staff at two shops in Lucky Plaza that offer instalment plans with zero upfront for gold jewellery, its staff said that their shops do not allow Singaporeans to pay by instalments.

The owner of one such store, which also sells mobile phones and handbags, said that this was because the instalment plans were meant only to help FDWs who had “very low” salaries.

“It’s for them to be able to afford a piece of gold. For them to pay cash, it’s quite difficult... When we do hulugan (instalment), it’s easier for them to take,” he said.

He added that he was aware of migrant workers who would buy gold jewellery from his store just to pawn them, but said that he would not sell to these customers, who often choose “heavyweight” items without bothering to try them.

Such customers are the “exception”, he said, noting that the majority of migrant workers do not have trouble paying their instalments — though he declined to give a figure.

In any case, targeting an “economically weaker class” of workers does not run afoul of the law, said lawyer Anil Balchandani of legal firm Red Lion Circle.

Balchandani noted that there is a maximum interest rate of 48 per cent per annum for moneylenders. The practice of these jewellery stores providing instalment payment plans, however, appears to be a form of hire-purchase agreement instead, where the balance of monies owed is spread out over a fixed period.

Lawyer Ronald JJ Wong of law firm Covenant Chambers added that it is possible such an arrangement constitutes unfair consumer practices under the Consumer Protection (Fair Trading) Act if a supplier knows that the consumer is not “reasonably able to understand the character, nature, language, or effect of the transaction”.

More open communication needed

In response to TODAY’s queries, the Centre for Domestic Employees (CDE) said it was “aware of the potential exploitation of financially vulnerable migrant domestic workers” and that it has “escalated the situation to the relevant authorities”.

The CDE also urged employers to keep a lookout for any signs of distress their FDWs may face, and remind them to err on the side of caution when engaging with financial service providers.

TWC2, the migrant workers’ rights group, said that FDWs can be particularly vulnerable and fall prey easily to “supposed deals that sound too good to be true to the rest of us”, as they might already be in debt upon arrival and lack financial literacy.

“As a society, we need to do better to protect the migrant worker population against exploitation,” they said.

“For migrant domestic workers, it starts at home through a culture of open communication and understanding, so that our helpers feel comfortable sharing their problems which we may potentially be able to help with before they resort to risky solutions.”

Agreeing, Miranda said she has heard numerous cases of her fellow Filipinos getting into moneylending troubles, and believes such open conversations can help, along with financial education.

She noted, however, that it can be hard for maids to have that conversation with their employers more than once, especially if it involves asking for a salary advance.

“I (would) feel shy or embarrassed to keep asking... if it happens a few times, I think for the employers it’s not nice too.”

Ultimately, she believes some individuals need to take responsibility if they willingly spend more than they earn, and make use of such practices without considering its consequences.

In those cases, she said, “they can only help themselves”. — TODAY