5-6 BY INDIANS IN THE PHILIPPINES: GOOD FOR INDIANS....BAD FOR FILIPINOS

He's Indian, one of the ''bosses'' here in the Philippines. He's doing the 5-6 lending business.

 

 They are Filipino vendors in Caloocan, only in Caloocan City. Philippines has too many vendors all over its places: remote, urban, or metropolitan.

These vendors get or ask money from Indians to finance their small vending businesses. For every 5 peso borrowed by a Filipino vendor, 6 peso is being returned. So if 100PHP is borrowed by a Filipino vendor, it will be returned at 120PHP; for 1000PHP borrowed finances, 1200PHP is to be returned; for 2000PHP, 2,400PHP must be returned, and so on and so forth.

This is how Mari Kondo defines 5-6:

''Five-Six Moneylenders. So-called because of the manner in which they lend, five-six (5-6) moneylenders charge a nominal interest rate of 20 percent over an agreed period of time. A person who borrows 5 pesos from a 5-6 moneylender over a period of one week repays 6 pesos, including 1 peso interest. Neither Filipino nor Indian 5-6 moneylenders require collateral or documents from their borrowers. The success of a borrower’s business and loan repayment history provide a gauge of the borrower’s credibility.''

To know more about 5-6, please click the link below.

http://kyotoreview.cseas.kyoto-u.ac.jp/issue/issue3/article_298.html 

 This article says that 5-6 helps to develop the mirco-enterprises in the Philippines.

This is how wikipedia defines what micro-enterprise is...........

http://en.wikipedia.org/wiki/Micro-enterprise 

''A micro-enterprise (or microenterprise) is a type of small business, often registered, having five or fewer employees and requiring seed capital of not more than $35,000. ''

Street vendors in the Philippines aren't registered. They usually sell their products on cart or wagon.

 These vendors need to sell something on the streets in order to survive, to feed their families, to provide a living, and to give education to their children, IF they earn much in a day. They live on the streets, sleep on the sidewalks, and make money on the streets. They earn just a little from their goods. But they still have to pay the Indians within a certain period of time.

In my point of view, the Filipino vendors must not ask seed capital from the Indians.  They must save, so they can have their own seed capital. Filipinos don't realize the worst consequence that occurs whenever they borrow and borrow seed capital from the Indians or Filipino creditors. So what happens is even if they pay 6 pesos for every 5 pesos, or even if they pay their whole debt or 5-6 loan, a Filipino vendor still needs to borrow from that Indian again the next time she needs a seed capital. So history just repeats itself. Definitely, Filipinos won't get rich, or won't be able to get much through 5-6 financing. Filipinos  just bury themselves slowly in their own pit.