The Indonesian government is launching a scheme to help Indonesian domestic workers in Singapore with salaries during their first few months here. The scheme, known as People Business Credit for Indonesian Migrant Workers, will be managed by Bank Negara Indonesia (BNI) and overseen by the Coordinating Ministry for Economic Affairs in Indonesia, said Mr Fahmi Aris, the first secretary at the Indonesian Embassy in Singapore.

This was reported in the Straits Times on November 30, 2011. However, there were insufficient details in the newspaper story to understand how exactly the scheme would work.

Common practice in Singapore is to deduct placement costs from a domestic worker’s salary through most of her first working year, leaving her with virtually no nett pay. The Straits Times described the current situation:

Maids have to pay a placement fee when they come to Singapore. This averages $3,000 for Indonesians and includes fees for Indonesian recruiters, medical check-ups and processing of documents.

Maid agencies here can also charge a commission of up to two months of the maid’s pay as part of the placement fee.

Currently, employers here pay that placement fee to agencies here when the maid arrives. To recover that amount, they pay the maid only a small proportion of their salary – often $10 or $20 – for the first eight months or so, before the maids start getting their full pay.

Under the new scheme, maids will set up an account with BNI, which can pay the placement fee on their behalf first.

Mr Fahmi said this will do away with the local agents who used to facilitate the loan process, as well as their commission, thus reducing the placement fee amount.

The bank will stretch out the repayment period, so less of the maid’s salary needs to be deducted each month, leaving her with more money to spare.

— Straits Times, November 30, 2011. New bank scheme for Indonesian maids, by Amanda Tan.