On January 30, we were proud to co-host a ‘Debt and Lending Malpractices’ round table meeting with King & Wood Mallesons for civil society organisations and stakeholders, including HELP for Domestic Workers, PILNet, Fair Foundation, Justice Centre, Asian Migrants Credit Union, Lender Friend and Macquarie Foundation. At the meeting, we discussed recent trends of lending malpractices seen by front-line workers.
Sadly, a large majority of migrant domestic workers face debt-related issues, usually beginning at recruitment. According to a report by Seefar, 1 in 2 have to borrow money just to enable their recruitment. Enrich meets many women who do not actually know how much they owe until they arrive in Hong Kong. Very often they do not understand the terms of the loans they have signed (largely because the agreements are not in their language), or they are not given proper certified documentation.
In order to repay their recruitment debt and send immediate money home to support their families, many borrow more money and the cycle of indebtedness begins. Hundreds of unscrupulous loan agencies take advantage of vulnerable domestic workers and lend money at (legal) interest rates of up to 48% per annum with concession to raise interest rates up to 60% per annum for high-risk borrowers. In one recent financial counseling case seen at Enrich, a domestic worker owed HK$60,000 at the beginning of the year, made regular repayments every month, but still owed HK$72,000 by the end of the year due to interest rates.
At the round table, we discussed coordinated efforts amongst civil society to better educate migrant domestic workers as well as employers, and to collectively influence an ethical change in the lending industry. Enrich is committed to working with other front-line workers and stakeholders to build a better situation for Hong Kong’s 370,000 migrant domestic workers.