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