Edition No. 1, January 2010

Pilot Program on Financial Literacyfor Indonesian Overseas Migrant Workers

and Their FamiliesOne of the problems facing migrant workers and their families is the lack of knowledge about formal financial products and services. They typically have limited access to information about available financial products, whether for sending remittances, saving, or investing their money once they have returned to Indonesia, as well as limited knowledge about financial management. Once the migrant workers have gone overseas, they often rely on their families who receive the remittances to manage the funds. Ultimately, due to limited knowledge and poor financial planning by migrant workers and their families, migrant workers’ incomes often fail to

significantly improve their welfare..

Objectives of the Financial Literacy Program

Financial literacy training is a way to provide knowledge and skills to manage limited income and achieve the migrant worker families’ financial goals. The Pilot Program on Financial Literacy for the Indonesian Overseas Migrant Workers and Their Families aims (i) to develop financial literacy training methods and materials adapted for the migrant workers and their families, (ii) to improve the knowledge of the migrant workers and their families regarding more affordable and safer financial services, and (iii) to increase the capacity of the migrant workers and their families to plan and manage their finances. Financial literacy is necessary so that the migrant workers’ incomes can significantly improve their families’ welfare.

Implementing Partners

The Pilot Program on Financial Literacy for the Indonesian Overseas Migrant Workers and Their Families started in January 2010 supported by the Malang District's Manpower and Transmigration Office and BNP2TKI. Fifty migrant workers and their

families participated in the first round of the pilot program. These migrant workers came from eight recruiting agencies (PPTKIS), which had agreed to support the program: PT Asri Cipta Tenaga Karya, PT Bina Mandiri, PT Berkat Sukses Makmur Sejahtera, PT Indonaker Mandiri, PT Mitra Harta Insani, PT Sriti Rukma Lestari, PT Surabaya Yudha, and PT Tritama Bina Karya. Initial preparation for the activities was

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also supported by PT Assanatama Karya Mandiri. Training was delivered by trainers from the Regional Economic Development Institute (REDI).

Training for Migrant Workers

The training for migrant workers was delivered twice at the BLK Wonojati, Singosari. Each training required two days, from 9 am to 5 pm. The first training was held on 11-12 January 2010, while the second was held on 14-15 January 2010, with a total of 26 participants. All of the participants were women who intended to work in the domestic sector in Hong Kong or Taiwan. Some had previously worked in Hong Kong, Taiwan, Saudi Arabia, Malaysia, or Singapore.

Training Materials for Migrant Workers

The training delivered six core materials: financial management, introduction to banking services, savings, debt management, remittance, and insurance. The delivery of the material used a participatory approach with discussions and experience-sharing, followed by games, case discussions, and exercises in filling in banking forms.

Training Benefits for Migrant Workers

Some of the participants had already done basic financial management, but not in a planned or detailed way. Most were aware of financial services, but had not optimized these services or selected them rationally. The training helped participants to better understand financial management methods and better access beneficial

financial services.

Challenges During the Training for Migrant Workers

The main challenge in the training was the varying levels of understanding and basic mathematical ability of the participants as the basis for financial management. This issue was addressed by providing more intensive assistance to certain participants during exercises. Another problem was that some participants could not be present over the two full days of training. Several participants had to drop out or only participated partially because they had to immediately go overseas or take care of various administrative requirements prior to departure overseas. All participants were expected to attend the full training in order to understand all the materials discussed, while also helping the research component of the pilot program.

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By participating in this training, I hope to understand how to save

my money for future benefit instead of disappointment. (Participant from Financial

Literacy Training for Migrant Worker)

Training for Migrant Workers’ Families

Training for migrant workers' families was also delivered twice at the BLK Wonojati. Given that the migrant workers' families

lived some distance from Wonojati, the first day’s training started at 1 pm and ran until 6 pm, and continued on the second day from 9.30 am until 12.30 pm with a total duration of 8 hours. The participants stayed at the BLK Wonojati during the training. The first training was held on 16-17 January 2010 and the second on 23-24 January 2010 with a total of 23

participants. Migrant workers' families who took part in the training included fathers, mothers, husbands, siblings, or other family members.

Training Materials for Migrant Workers’ Families

The training began with games to break the ice and help participants to focus. Six core materials were then covered: financial management, introduction to banking services, savings, debt management, receiving remittance, and insurance. Unlike the training for the migrant workers, this training is adapted to suit the perspective and needs of migrant workers' families. However, the training approach is still participative, combining games with case discussions and exercises in filling in banking forms.

Implementation of the Training for Migrant Workers’ Families

The training helped participants to realize that since their incomes are often smaller than their expenses, they need to manage their finances carefully to achieve their

goals. Many participants were not aware of formal financial services and, even if they were, almost no one had used such services. The participants asked various questions based on their experience and the training attempted to answer the difficulties faced by these families.

Participants’ Response and Challenges During the Training for Migrant Workers’ Families

The training generally received favorable responses from the participants, who felt that they gained significant understanding, although some parts of the training were deemed too difficult to follow. The main challenges in delivering the training were the limitations of some participants in reading, writing, counting, and absorbing the

Edition No. 1/January 2010

This training is great. I have been thinking a lot at home on howI can use my wife's income to build a house.

Now I know how to manage the money. (Participant from

Financial Literacy Training for Migrant Workers’

Families)

training materials. Thus the training required longer than scheduled for the trainers to thoroughly explain parts that were difficult to follow. Another problem was in identifying the migrant workers' family members who would actually receive and manage the remittances, as the training is aimed at these people. The team addressed this problem by interviewing each migrant worker candidate. There was also a problem concerning communicating with and mobilizing migrant workers' family members to join the training. The team of trainers, assisted by the recruiting agencies and the migrant workers, contacted each migrant worker's family and arranged for their transportation.

Supporting Materials

For each training, whether for migrant workers or their families, we gave out two books to each participant. The first book is entitled Financial Management: A Guide Book for the Indonesian Overseas Migrant Workers and Their Families (Mengelola Keuangan dengan Bijak: Buku Panduan bagi Tenaga Kerja Indonesia dan Keluarganya), which summarized the entire training materials in an easy-to-read comic. The second book is entitled My Financial Book (Buku Keuanganku), which can be used to note down financial goals, budgets, and balancing expenses as taught in the training. Meanwhile, the distributed brochures contained a number of tips related to the training materials.

Next Step

The Pilot Program on Financial Literacy for the Indonesian Overseas Migrant Workers and Their Families will continue until the targeted numbers of migrant workers and their families has been reached. The inputs received will be invaluable in improving the implementation of the program. The second round of this program will start in early February 2010. We hope to obtain the support and cooperation of all stakeholders so that the program can be well executed.

Edition No. 1/January 2010

Access to Finance Team Finance and Private Sector Development Unit

The World Bank

Edition No. 1/January 2010