Business is brisk for loan sharks at traditional markets
Leo Wahyudi S The Jakarta Post Jakarta
Some shun them, while others seek them. Loan-sharking is one of the oldest professions that still exists despite public criticism.
Many small-scale traders in traditional markets ask for cash loans from loan sharks no matter how high the interest payment is as they need the money to run their business.
Ibu Rub, a woman who sells spices in Palmerah market, Central Jakarta, has just borrowed Rp 1 million from a loan shark. The interest is 20 percent and payment must be made over 12 weeks. That means, she has to make weekly payments of Rp 100,000, for 12 weeks.
"I need the money to buy more spices to develop my business," she said. She said she did not mind paying high interest rates, as she was sure that she would be able to repay the loan.
"The more you sell, the more you get," she told The Jakarta Post last week.
During the interview, several vendors approached as they mistakenly thought that the Post reporter was offered loans. "Can I borrow some money? I need some cash now," one of them said.
Quick and simple procedures and interpersonal trust are the key to the business. No collateral is needed.
Some loan sharks collect the payment with the assistance of a vendor.
Asih, a trader from Sragen, Central Java, who helps a loan shark, said that in a day she collected more than Rp 1 million from her fellow traders.
She said that her commission for each credit transaction was between Rp 50,000 and Rp 100,000.
Asih herself also borrowed Rp 1.5 million from the loan shark.
"I should pay off a total of Rp 1.8 million within 12 weeks, or Rp 150,000 per week," said Asih, who had just paid her fifth installment.
According to Asih, traders usually borrow between Rp 500,000 and Rp 2.5 million. The interest varies. A loan shark may ask for 20 percent interest for 12 weeks or 60 days. In the weekly system, the money is returned in 12 weekly installments, while in the daily system, it should be paid in 60 daily installments.
But there are others who set higher interest rates.
Soleh, a traveling vendor, who operates from one market to another, said that earlier this year he borrowed Rp 500,000 from a loan shark in Jatinegara market, East Jakarta, as he was in dire need of cash.
"Within 40 days, I had to pay a total of Rp 700,000," said Soleh, who has been selling various kinds of stationary, tools and some household items for five years.
"I managed to settle the loan three months ago, and still got Rp 200,000 profit, but I will never ask for such a loan anymore. It's too much ...," he said.
In fact, there are also sad stories about vendors who have lost their business because of being unable to repay the loan.
"My sister fled to her hometown in Klaten, Central Java, due to a debt dispute with a loan shark," said Satinem, who sells vegetables, at Kebayoran Lama market.
She said that her sister failed to pay her debt, which had reached Rp 5 million.
Her sister has nothing left now in Klaten, and Satinem swore he would never deal with loan sharks.
Loan-sharking is outside police jurisdiction.
"In my opinion, for the law enforcers, there is no problem," said First Brig. Joko Praptono, who works at the Menteng Police subprecinct in Central Jakarta.
He underlined that the loan shark and the debtor commonly made a deal on the basis of trust.
As long as neither party complains about the deal, law enforcers will not interfere.
It becomes a problem if one breaks the agreement, Joko added.
A lawsuit may be filed against the other party under the civil code or the case may be reported to the police. Those who renege on their agreement may be charged with violating Article 378 of the Criminal Code on deception, which may carries a maximum four- year prison sentence.