Financial education can help protect domestic workers

Mr Koh Yee Boon suggested that the authorities stop moneylenders from providing loans to foreign domestic workers (Put a stop to maids borrowing from moneylenders; May 23).

An important alternative to addressing the problem is providing financial education to domestic workers so that they better understand the costs and risks of borrowing.

No matter how well regulated a financial system is, informal lenders will continue to operate. They prey on vulnerable borrowers who have no alternative source of funds and who fail to understand the true cost of such loans and how quickly costs can escalate.

Foreign domestic workers typically shoulder considerable financial responsibility for their families.

Pressure to send more money back home increases when unexpected financial needs arise.

Many come from poor rural backgrounds, with little understanding of interest rates and the full implications of taking loans.

When domestic workers appreciate how managing their money wisely and setting savings-and asset-building goals can move them and their families out of poverty, they change their financial behaviour.

They are also then armed with the knowledge and skills to protect themselves from predatory financial practices.

At Aidha, a charity that has been providing financial education to domestic workers for nearly 12 years and has witnessed transformative change among our students, we believe that the only lasting solution is to equip domestic workers to become smart financial decision-makers.

Jacqueline Therese Loh Tsi Jian (Ms)

Chief executive officer

Aidha

A version of this article appeared in the print edition of The Straits Times on May 28, 2018, with the headline 'Financial education can help protect domestic workers'. Print Edition | Subscribe