Auctioning promises great business prospects<\/p>\n
JAKARTA (JP): Auctioning in Indonesia has tremendous business
\npotential for the private sector to tap especially now that the
\ngovernment allows privately owned auction houses.<\/p>\n
Chairman of the State Receivership Agency, Adolf Warouw, told
\njournalists here that public demands for auctioning have grown
\ntremendously.<\/p>\n
\"The public demand for the auctioning of various goods,
\nproperty and other fixed assets is already high. However, we
\ncould accommodate such requests in the past because of a number
\nof constraints,\" Warouw said after attending the announcement of
\nthe January deregulation package here on Friday.<\/p>\n
Under the new package, the government allows private sector
\ncompanies to establish auction houses. Previously setting up of
\nauction houses was the prerogative of the state auction office.<\/p>\n
The ruling on auction houses stipulates that private investors
\nmay establish an auction house with a minimum paid-up capital of
\nRp 1 billion (US$433,087 million).<\/p>\n
When asked, Warouw hinted that 100-percent foreign ownership
\nof a private auction house is possible as long as it is
\nincorporated in Indonesia in the form of either a limited
\nliability firm or cooperative.<\/p>\n
I Nyoman Moena, chairman of the supervisory board of the
\nNational Private Banks Association, said over the weekend that
\nonce a private auction house is established, many banks can be
\nexpected to ask its help to liquidate assets related to bad debts
\nthrough auctioning.<\/p>\n
\"From helping recover bad debts alone, you have tremendous
\nbusiness prospects,\" Moena told The Jakarta Post on Saturday.<\/p>\n
The bad debts at the country's commercial banks, recorded by
\nBank Indonesia (the central bank) up to last November, stood at
\nRp 10.4 trillion (US$4.5 billion), of which Rp 7.3 trillion was
\nregistered by state-owned banks.<\/p>\n
The new ruling on action houses, however, stipulates that
\nstate assets may not be liquidated through private auction
\nhouses. They must go to the state auction office.<\/p>\n
Private banks, wishing to quickly liquidate assets accrued
\nfrom delinquent debtors, previously had to resort to had to
\nlengthy court proceedings because they could not use the services
\nof the state auction office.<\/p>\n
Alternative<\/p>\n
\"Now, they have an alternative other than the court -- that is
\nthrough private auction houses,\" Moena said.<\/p>\n
He suggested that courts transfer their authority to liquidate
\ncertain debtors' assets to independent auction houses to reduce
\npublic cynicism about the process of liquidation.<\/p>\n
To ensure the independence of auction houses, domestic
\nauctioneers will first have to improve their quality and create
\ntheir own business ethics, Moena said.<\/p>\n
Indonesia has not established code of conduct for auctioneers
\nas this profession is relatively new here. A number of private
\nauctioneers, mostly foreigners, have been operating in the
\ncountry, mostly dealing with works of art.<\/p>\n
A number of local firms, which occasionally conduct auctions
\nfor a number of their products, had encouraged the government to
\npermit the opening of auction houses by the private sector on the
\ngrounds that the demand has long existed.<\/p>\n
Warouw forecasted that private auction houses will be booming
\nin the future as they can offer cheaper rates to customers than
\nthe state auction office. He noted that the government imposes
\nrelatively low auction fees on private action houses.<\/p>\n
Under the new ruling, private auction houses are required to
\nsubmit 1.45 percent of the hammer prices of quick assets and 2.15
\npercent of fixed assets to the state coffers, in addition to
\nincome taxes.<\/p>\n
Warouw noted that auction houses must be responsible for any
\ngoods auctioned. Therefore, they must first evaluate the goods to
\nbe auctioned in terms of their legality, quality and price.<\/p>\n
He explained that his office will supervise the operation of
\nprivate auction houses through their official reports, as well as
\non site supervision. (rid)<\/p>",
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