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)