Dozens of Hong Kong domestic helpers learn to break cycle of debt through financial literacy course
Year-long pilot programme provided migrant workers with vital information on investing and financial planning, as many in the city continue to fall victim to scams and high-interest loans
Living hand to mouth on a domestic helper’s wage with three sons to put through college, the concept of “making her money work for her”, instead of the other way around, was not on Margie Valverde’s mind.
Especially since she was trapped in a vicious cycle of debt, upon arriving in the city 15 years ago.
“When I came to Hong Kong, I had a lot of pressure with money,” the 51-year-old said. “I borrowed a lot of money; I owed a lot of money.”
But she also thought to herself that she could not stay in Hong Kong forever because her family was back in the Philippines.
So Valverde forced herself to save and learn the ropes of investing and financial management. Last year, she took part in a year-long financial literacy course by Enrich, a charity focused on empowering migrant workers, and multinational accounting firm KPMG, to expand her knowledge.
And she now estimates that in two years, she will have saved enough to invest in a property project with her sons that will provide her with a positive income stream long into her retirement.
Valverde was among 79 women who graduated on Sunday from the pilot programme, that Enrich and KPMG are looking into making permanent.
Launched in October 2017, it provided participants with impartial and balanced information on investing and financial planning to domestic workers. Topics included understanding of basics such as risk, savings, return and liquidity, compound interest, financial products and microfinance.
The idea is to teach them how to invest to make “money work for them” rather than the other way around.
Hong Kong has about 380,000 foreign domestic workers, mostly from the Philippines and Indonesia. Their minimum wage is HK$4,520 a month.
For most of the 17 years Indonesian domestic helper Ros spent in Hong Kong, the concept of personal finance was non-existent.
Money was sent back to family members in Indonesia whenever they asked. She put six of her 10 siblings through school and university. Anything left was blown on shopping for clothes. Nothing was saved or invested.
That changed when she learned about the power of investing, before undertaking the course. She put some money into sovereign bonds and mutual funds. After learning about investments at the Enrich course, she studied and bought shares in an environmental technology company.
“It has changed my mindset about short-term and long-term investment,” she said.
Ros, 37, plans to return home to south Sulawesi in two years. She will cash in her investment earnings to build a palm oil plantation and pig farm.
Most foreign domestic workers in Hong Kong have very low financial literacy rates and were vulnerable to financial exploitation, Enrich executive director Lucinda Pike said.
“Hence the investment scams, hence the Ponzi schemes and people preying upon them with high-interest loans,” she said.
“Without emergency savings put aside, it’s hard for domestic workers to access other forms of credit when they need it – no credit cards, no formal loans – they must go to loan agencies to take out money at very high rates.”
Moneylenders in Hong Kong can legally charge migrant workers up to 60 per cent interest a year on loans. Over 90 to 97 per cent of domestic workers in Hong Kong are in some level of debt.
Just six per cent return home feeling they’ve saved enough, another 2016 study by Farsight, an international social enterprise, found.
Elaine Wong, a manager at KPMG and a volunteer trainer, said many domestic helpers did not grasp the concept of compound interest and the snowball effect of investments.
There were two common types of financial issues: “Younger domestic workers come to Hong Kong with a lot of debt. Older ones have been in Hong Kong for a while but have no savings because they give it all to their family and have nothing for their retirement,” Wong said.