Migrant Workers and E-Payments

  1. Mr Speaker Sir, I am in support of the bill. The payments landscape has changed considerably with the introduction of various types of payment services. The Payment Services Bill seeks to broaden the scope of regulated activities and allow for separate regulatory frameworks for major payment institutions and smaller players.
  2. Please allow me to highlight a significant area for consideration in the implementation of the said Bill and related regulations.
  3. According to a World Bank Report published in April 2018, migrant workers in Singapore sent a grand total of at least US$5.6billion in remittances to the top five remittance destination countries alone. These countries were China, Malaysia, India, Pakistan and Indonesia. [Source: World Bank Annual Remittances Data Report, April 2018. Top 5 destination countries: China (US$ 2,763 mn), Malaysia (US$ 1,051 mn), India (US$ 886 mn), Pakistan (US$ 528 mn) and Indonesia (US$ 380 mn)]
  4. Mr Speaker, I am sure we will all agree that US$5.6 billion — and that is the remittances only to five countries — makes our migrant workers a decidedly significant stakeholder in the payments landscape. It is therefore not just the right, but also smart thing to do for us to be intentional and inclusive of their banking and payment needs.
  5. The one million migrant workers on work permit rely on payment and remittance services to pay their existing debts and transfer money to their families. Yet current options to remit money are limited. Many work punishing hours with only Sundays off, which they then spend travelling long distances to queue for hours to perform remittances, rather than resting.
  6. While most of us have registered bank accounts with financial intermediaries that afford us an array of payment and e-banking options with financial technology, we must not forget the people who do not. Take for example Iris*, a domestic worker from Philippines. She does not have a bank account because: a) she remits all her money in cash, a total of$800-$1000), every month at Lucky Plaza to support her two sons in college and b) most banks have a prohibitive minimum balance, under which account holders have to pay Fall Below Service Fees. Without a bank account or a digital wallet, Iris is excluded from our financial e-transaction system. She is not alone, according to a report by KPMG, 75% of foreign domestic workers are paid in cash. [Source]
  7. In addition, remittance agencies charge $5 to $12 for every transaction. This chips away at the already low wages these workers receive. High remittance charges and the lack of remittance options also cause workers to turn to illegal means to remit their money, in addition to the need for money to reach their families urgently in times of emergency.
  8. Allow me to share the experience of Nayan*, a Bangladeshi, who did not resort to these illegal options when he encountered an emergency situation yet paid a hefty price nonetheless. Nayan’s mother suffered a stroke and needed to be admitted to a city hospital with better facilities. Unfortunately, this happened during a work day so he could not remit the money immediately until he completed his basic duty at 4.30pm before heading to a remittance centre in Farrer Park. The treatment was therefore delayed for his mother, creating implications for her chance of a full recovery. Further, Nayan had to forgo 5.5 hours of overtime work which resulted in loss of income for him.
  9. I am sure we will agree that what I just shared about Iris and Nayan can be called anything but effective. It is the elephant in the room in our quest towards building a Smart Nation, a cashless economy, and an inclusive society.
  10. Mr Speaker, heeding the call made earlier by Minister Ong to encourage greater adoption of e-payments, there is an urgent need for financial inclusion and greater adoption of e-payments for our migrant workers. Employers of S-Pass holders (earning $2200 and above per month) are required to pay their salaries through electronic means but this requirement is not extended to the one million employees who are Work Permit holders, a lower wage category. Work Permit holders can request for electronic payments from employers by law but many refrain from doing so for fear of job loss and repatriation. Yes, some may indeed prefer to receive cash but many whom I’ve spoken with do that because they don’t know any other trusted options, yet.
  11. Mandatory electronic payment of salaries by employers will automatically allow for one million migrant workers to be part of our financial system so they do not remain unbanked or underbanked as rapidly financial technology threatens to leave them behind. This gives them access to more payment and remittance options, lower or zero fees as well as the benefits of speed and security. As an illustration of my point, the POSB jolly app waives the fee — though it does state for a limited time only — for remittances made to India, indonesia, Bangladesh and the Philippines but requires employers to open bank accounts for wage payment.
  12. Sir, I mentioned earlier that understanding the needs of our migrant workers is not only the right thing to do, but also the smart thing to do. US$5.6billion is a significant opportunity for the FinTech sector to tap into for innovative products in e-payments.The Smart Nation question to ask is: how can we harness this Payment Services Bill to make this opportunity available to the thriving FinTech sector if the majority of these funds are unbanked or existing outside out of the e-payment system? Traditional financial institutions and newer players are collaborating to bring exciting new FinTech products and services to the market, $5.6billion in remittances by migrant workers is definitely one.
  13. We all know the fabled success of Grameen from Bangladesh in financial and social innovation for the unbanked and underbanked. Perhaps, if we include our migrant workers fully in our financial system, a FinTech equivalent of Grameen from Singapore might just be birthed!
  14. Mr. Speaker, it is easy to think of payment services as being merely transactional yet for the many thousand migrant workers like Iris and Nayan, sending money home — efficiently, reliably and affordably — is a very human activity for them. It connects migrant workers to their families, gives them a sense of purpose for their struggles and in some ways empowers them to have dreams and aspirations for a better life. It is therefore a responsibility and opportunity for us to include them in the implementation of this Bill with legislation and education. Afterall, we know that the way forward for us as a Smart Nation goes beyond just the best laws and latest payment technology — it’s how we stay human and inclusive.
  15. Sir, I hope to hear from the Minister on our financial inclusion strategies and implementation, including but not limited to our migrant workers. Mr Speaker, I support the bill.

*Names have been changed to protect the privacy of individuals

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Anthea Ong is a Nominated Member of Parliament. (A Nominated Member of Parliament (NMP) is a Member of the Parliament of Singapore who is appointed by the President. They are not affiliated to any political party and do not represent any constituency. There are currently nine NMPs in Parliament.)

The multi-sector perspective that comes from her ground immersion of 12 years in different capacities helps her translate single-sector issues and ideas across boundaries without alienating any particular community/group. As an entrepreneur and with many years in business leadership, it is innate in her to discuss social issues with the intent of finding solutions, or at least of exploring possibilities.

She champions mental health, diversity and inclusion — and volunteerism in Parliament.