24 Nov 2022
Business momentum builds up amid Singapore’s evolving debt landscape
The Asia Pacific region has witnessed a fragile and uneven recovery from the pandemic, with the resumption of pre-pandemic economic activities quickly dampened by an onslaught of tumultuous global events that inadvertently led to mounting inflationary pressures, interest rates, and supply chain disruptions.
With economic headwinds gathering pace, consumers and businesses are more likely to accumulate debt in the coming months which could lead to a rise in loan defaults. To maintain the delicate fabric of the financial ecosystem, debt-management firms like Collectius work with partners in the country to contribute to a well-functioning debt restructuring market that is key to economic stability.
Building up momentum
While we continue to keep a close eye on the economy, Collectius is seeing renewed momentum in the Singapore market where we have secured several deals in recent months.
Collectius recently acquired NPL portfolios from a leading super app in Southeast Asia, as part of a regional deal that covers five countries including Singapore.
We also secured a partnership with a broadband and mobile service provider to recover debt worth US$6.3 million from individual and corporate customers. And recently, Collectius CMS was onboarded as a managing agent for APAM where we will leverage on our technological capability to provide debt management and collection services to assist in the management of their bad debt.
Debt trends
While Singapore’s NPL ratio is generally lower than that of other countries in Southeast Asia, increased economic headwinds means that it would be more challenging for individuals and businesses to keep up with debt repayments.
In a recent article in the Straits Times, it was noted that debt management agencies are seeing greater demand for their services amid a rising trend that companies and individuals are starting to fall behind in their repayment. Collectius’ Deputy CEO Kian Foh Then was also quoted in the article as he spoke about borrowing trends in Singapore and the wider Southeast Asia region, noting that people are borrowing for various reasons from paying for daily expenses to buying luxury goods.
One avenue where consumers are increasingly accessing credit is through Buy Now Pay Later (BNPL) options. A recent survey by Mastercard showed that 43% of BNPL users in Singapore have used the payment option for expensive purchases, up 13% from 2021. Singapore recently issued a code of conduct which aims to protect BNPL consumers from over-indebtedness. For instance, customers will not be able to chalk up more than $2,000 in outstanding payments with a “buy now, pay later” (BNPL) provider, unless they pass an additional credit assessment which will consider details such as income and credit information shared across all BNPL providers.
This is certainly a positive move to provide some regulatory oversight to a growing segment and protects consumers from the risk of falling into excessive debt.
What is certainly apparent is that the fabric of the loan market in Singapore, and elsewhere, has changed. People today have more avenues to get credit on platforms such as buy-now-pay-later services, telcos or automotive companies offering direct financing to consumers, as well as the availability of peer-to-peer lending platforms. Compared to traditional sources such as banks and credit cards, borrowers also face lower penalties for defaulting on these loans.
Another significant development impacting the debt space in Singapore is the recent introduction of the Debt Collection Bill which seeks to regulate the conduct of debt collectors amid rising cases of unscrupulous collection practices here.
When passing the new bill in parliament, Minister of State for Home Affairs Sun Xueling said the number of police reports made against the conduct of debt collection businesses and debt collectors have remained high - averaging 367 reports annually from 2018 to 2021.
Under the new regime, all debt collection businesses, including their key appointment holders and the debt collectors, will be screened by the police and must be assessed to be ‘fit and proper before’ they are granted a licence or an approval.
Debt collection is a crucial economic activity that facilitates the fulfilment of financial obligations and ensures the stability of the financial ecosystem. We are proud to continually live out our slogan of the “Collectius way of Collection”, which is an ethical and uniquely customised approach to debt collection supported by the latest technology.
As the risk for loan defaults rises amid these uncertain times, we certainly welcome the move to regulate debt collection in Singapore to ensure that the highest code of conduct is upheld throughout the industry.
With economic headwinds gathering pace, consumers and businesses are more likely to accumulate debt in the coming months which could lead to a rise in loan defaults. To maintain the delicate fabric of the financial ecosystem, debt-management firms like Collectius work with partners in the country to contribute to a well-functioning debt restructuring market that is key to economic stability.
Building up momentum
While we continue to keep a close eye on the economy, Collectius is seeing renewed momentum in the Singapore market where we have secured several deals in recent months.
Collectius recently acquired NPL portfolios from a leading super app in Southeast Asia, as part of a regional deal that covers five countries including Singapore.
We also secured a partnership with a broadband and mobile service provider to recover debt worth US$6.3 million from individual and corporate customers. And recently, Collectius CMS was onboarded as a managing agent for APAM where we will leverage on our technological capability to provide debt management and collection services to assist in the management of their bad debt.
Debt trends
While Singapore’s NPL ratio is generally lower than that of other countries in Southeast Asia, increased economic headwinds means that it would be more challenging for individuals and businesses to keep up with debt repayments.
In a recent article in the Straits Times, it was noted that debt management agencies are seeing greater demand for their services amid a rising trend that companies and individuals are starting to fall behind in their repayment. Collectius’ Deputy CEO Kian Foh Then was also quoted in the article as he spoke about borrowing trends in Singapore and the wider Southeast Asia region, noting that people are borrowing for various reasons from paying for daily expenses to buying luxury goods.
One avenue where consumers are increasingly accessing credit is through Buy Now Pay Later (BNPL) options. A recent survey by Mastercard showed that 43% of BNPL users in Singapore have used the payment option for expensive purchases, up 13% from 2021. Singapore recently issued a code of conduct which aims to protect BNPL consumers from over-indebtedness. For instance, customers will not be able to chalk up more than $2,000 in outstanding payments with a “buy now, pay later” (BNPL) provider, unless they pass an additional credit assessment which will consider details such as income and credit information shared across all BNPL providers.
This is certainly a positive move to provide some regulatory oversight to a growing segment and protects consumers from the risk of falling into excessive debt.
What is certainly apparent is that the fabric of the loan market in Singapore, and elsewhere, has changed. People today have more avenues to get credit on platforms such as buy-now-pay-later services, telcos or automotive companies offering direct financing to consumers, as well as the availability of peer-to-peer lending platforms. Compared to traditional sources such as banks and credit cards, borrowers also face lower penalties for defaulting on these loans.
Another significant development impacting the debt space in Singapore is the recent introduction of the Debt Collection Bill which seeks to regulate the conduct of debt collectors amid rising cases of unscrupulous collection practices here.
When passing the new bill in parliament, Minister of State for Home Affairs Sun Xueling said the number of police reports made against the conduct of debt collection businesses and debt collectors have remained high - averaging 367 reports annually from 2018 to 2021.
Under the new regime, all debt collection businesses, including their key appointment holders and the debt collectors, will be screened by the police and must be assessed to be ‘fit and proper before’ they are granted a licence or an approval.
Debt collection is a crucial economic activity that facilitates the fulfilment of financial obligations and ensures the stability of the financial ecosystem. We are proud to continually live out our slogan of the “Collectius way of Collection”, which is an ethical and uniquely customised approach to debt collection supported by the latest technology.
As the risk for loan defaults rises amid these uncertain times, we certainly welcome the move to regulate debt collection in Singapore to ensure that the highest code of conduct is upheld throughout the industry.
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