News

Pawnshops on the rise

They handed out $5.5 billion in loans last year compared to $1.6 billion in 2007

Are there more pawnshops here now because of the casinos?

And is business booming in the industry because of the gambling industry?

A recent Bloomberg report has got people thinking if the mushrooming of pawnshops here is really related to the two casinos.

Yesterday, the US-based news outlet said that according to a report by DMG and Partners Securities, the number of pawnshops in Singapore increased from 114 in 2008 to 214 this year. According to Ministry of Law figures, there are 
217 valid pawnshops registered as of June 1.

Bloomberg also reported that government data showed that pawnshops here handed out $5.5 billion in loans last year.

This is more than three times the 2007 amount of $1.6 billion.

Mr Zainal Sapari, who is a member of the Government Parliamentary Committee for Social and Family Development, said this correlation could just be a public perception and there are no studies or surveys to verify it.

Said Mr Zainal, who is also an MP for Pasir Ris-Punggol GRC: "It is very difficult to say that this increase in pawnshop business is due to the casinos.

"This could be due to other matters such as people needing urgent cash because of unemployment, the rising cost of living and others."

Ms Yeah Lee Ching, executive director of local pawnshop chain ValueMax, which has 17 outlets islandwide, said pawnbroking is becoming more popular due to the ease of transaction, low interest rates and the rising cost of living in Singapore.

She said: "There is an increased acceptance of using pawnbroking as a convenient way of obtaining a quick, secure loan.

"At around 1 per cent, the interest rates are also very low."

Towkays looking for quick cash to keep their businesses running are just one of the factors fuelling the booming business for pawnshops here.

For instance, Ms Yeah has a regular customer - a diamond dealer in his 50s - who has visited Valuemax several times since last year.

So far, he has pawned about $500,000 worth of the precious gem.

Ms Yeah added that the man needed the cash to finance his business and eventually redeemed only about $300,000 worth of the diamonds.

But there is another reason for the increased business in pawnbroking.

LESS STIGMA

There is now less of a stigma attached to pawnshops, the spokesman for another local chain, MoneyMax, said.

Unlike before, there are now pawnshop chains which look more modern and appear more customer-friendly, she said.

MoneyMax has 36 outlets across the island. The spokesman added: "The rules of the game changed about five years ago.

"Now, people are more willing to enter pawnshops as we also sell jewellery at our outlets. People who come in also do so to buy jewellery and not just to pawn, so it is less embarrassing for them to be seen in a pawnshop."

While large pawnshop chains said that business has improved, the smaller ones are feeling the heat.

Madam Tan, who works at a Yishun pawnshop, said business has declined.

"There are many competitors now. Business is now worse after the price of gold fell in August and September last year.

"I congratulate the pawnshops that have seen an improvement in business."

The Bloomberg report, quoting the president of Singapore Pawnbrokers' Association, Mr Ivan Ho, reported that since the two casinos opened in 2010, about 20 per cent of the increase in pawnbroking activity is driven by clients raising money for gambling.

Mr Ho, who is also the owner of Heng Seng Pawnshop in Toa Payoh, was quoted as saying: "Pawnshops are the most-frequented automated teller machines for regular gamblers.

"They need capital and pawnshops offer them loans that are reasonably priced."

Dr Derek da Cunha told The New Paper yesterday that this is not a situation unique to Singapore.

"Some segment of mass market gamblers, having lost most, if not all, of their cash at the gaming tables, would explore various means to keep on gambling, often in an attempt to recoup their losses," said Dr da Cunha, who is the author of Singapore Places its Bets, a book on the socio-economic impact of the entry of the casinos here.  

He added: "Pawning gold jewellery and high-end watches is a straightforward way to do so. There is not much hassle in getting cash by pawning... the two items that local pawnshops would readily accept."