Parents pay HK$1m for place in primary class

PUBLISHED : Sunday, 10 June, 2007, 12:00am
UPDATED : Sunday, 10 June, 2007, 12:00am

Alarm at record prices for international school debentures

Parents are paying record prices in a bid to secure places in Hong Kong international schools, with one couple pledging HK$1 million to win their daughter a seat in a Primary One class.

Other parents, and business leaders, warn debenture inflation is getting out of hand, and fear it will make it harder for the city to attract talented businesspeople - and their families.

Debentures are long-term debt instruments sold to parents and companies by schools to raise funds for building works.

Parents and employers buy debentures to jump the queue for school places. Some schools allow them to be sold on. Individual debentures are refunded when the child leaves the school. Corporate ones can be passed on to children of other employees.

Parents who do not expect their children to be at a school for the long term often pay annual levies instead.

One father desperate to get his daughter into Chinese International School in Braemar Hill recently bought a HK$1 million corporate debenture under a company name, according to a source. The girl has now been offered a place by the school, the source confirmed.

Headmaster Theodore Faunce said: 'The point of corporate debentures is certainly not to have it as a surreptitious way of buying yourself into the school and we certainly wouldn't support or tolerate that.'

Corporate debentures are meant to be bought by companies for use by employees. The school's business manager, Monica Vallor, declined to say whether it had approved the HK$1 million sale, nor whether the school had a waiting list.

She confirmed its corporate debentures were transferable and that the school must approve such sales.

The vendor pays the school 20 per cent of the debenture's face value out of their profit. The school's quoted price for corporate debentures was HK$600,000, Ms Vallor said.

Prices on the second-hand market have soared thanks to high demand fuelled by long waiting lists and a halt to new debenture issues at some schools.

One parent seeking a place at Canadian International School in Aberdeen said the school quoted him HK$390,000 for a debenture, though its own website says they cost HK$300,000.

'They didn't have any debentures,' he said. 'They were calling debenture applicants who had put in their applications last summer.'

Official prices have doubled within the past two years at German Swiss International School, which now charges HK$250,000, and at two schools which have replaced debentures with similar instruments.

The first big spurt in debenture prices came two years ago, when Hong Kong International School issued new ones worth HK$500,000, up 150 per cent on the old price.

Two other international schools have begun issuing debentures in the past two years, despite parental opposition.

The American Chamber of Commerce believes thousands of people could be on international-school waiting lists, and is studying the availability of places. Its president, Jack Maisano, has said the problem is deterring expatriates from coming to Hong Kong.

Dagmar Hartley, managing director of global supply-chain firm Speed to Market, got her two children into Canadian International three years ago without buying a debenture.

'The current prices seem very high and would be difficult for both parents and companies to reach,' she said.

A mother with a child at Chinese International School, who asked not to be named, said: 'This is a very dangerous trend. It pushes the average person further and further away from gaining entry and gives them fear of even applying.

'It is going to become like buying your debenture to your club. I think international schools should ban the resale of debentures before this trend gets completely out of hand.'

A spokeswoman for the Education and Manpower Bureau said it had no guidelines on the issue or use of debentures and was not minded to produce any.