The Loan Menace in Hong Kong

Jon Mariano  

You need 100K pesos? It's so easy if you're a Filipino domestic helper in Hong Kong. There are many lending companies who would gladly let you borrow that amount, even without collateral. What is needed is just a guarantee that you'll pay. That guarantee is a fresh contract (meaning you're going to receive 3,260 Hong Kong Dollars (HK$) a month in salary for the next 2 years).

These companies already know whether you're good for it or not because they have a shared centralized monitoring system on loans. So if you plan to borrow 100k(actually the maximum limit is 30k HKD which is equivalent to 200k pesos) in more than 1 lending company and run back home to the Philippines, you'll not be able to.

The interest rates are very good too (compared to the Philippine underground borrowing system). It is 3.2% per month; way below the normal 10% in informal lending practices back home, and way below the 20% of five-six operations.

My fellows OFWs here in Hong Kong, majority of whom work as domestic helpers, are the biggest borrowers. Some rack up loans up to 60,000 HKD. How? They ask friends or relatives to borrow for them when they reach the loan limit. Unfortunately, these loaned moneys are not put to good use most of the time.

Some use it to buy a piece of land, build a house, hospital bills, wedding of a sibling, school expenses, and new TV and sound system. You name it; it's been touched by Hong Kong OFW dollar. Take your pick, which ones are bad use of loaned money?

As you can see, once the money has left Hong Kong, it never goes back. The OFW here will depend on his/her 3,260 HKD monthly income to repay that loan.

Combine that with the bad practice of unrestricted power of employers to fire their helpers and the outcome is disaster for those caught with huge loans. Another factor that makes it worse is the Immigration rule that if you were fired, you only get two weeks to find a new employer. If not, then you go home without a clear prospect of coming back to work again. Even if you can find a new employer, you would still need to go back to the Philippines and wait for your visa to arrive. You can't wait for it here in Hong Kong. It means that you're dry; no income, while waiting. And with a huge outstanding debt with monthly bill from the lending companies to boot.

Borrowing in itself is fine, but when you don't know how to make good use of it, like many of the OFWs here in Hong Kong, the result is big profit for the lending companies, but financial ruin for the worker. Lost time, lost money, lost face. When she goes home, she's got nothing but heartache.

Other side effects are broken hearts (Boyfriend-Girlfriend loans), strained family relations (between family borrowing), and lost friendships (borrowing between friends). All of these happening because it's just too hard to repay debts while still sending money back home. It has helped some who were in need, but it has been a menace to many.

I have known many of them, and it's also heartbreaking to see broken dreams.

Article Source:

http://hkbigmind.blogspot.com/

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