Loan sharks make profits in traditional markets
Loan sharks make profits in 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. Her commission for each credit
transaction was between Rp 50,000 and Rp 100,000.
Asih herself also borrowed Rp 1.5 million.
"I should pay off a total of Rp 1.8 million within 12 weeks,
or Rp 150,000 per week," she said.
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. Within 40 days,
he had to pay a total of Rp 700,000.
"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.
First Brig. Joko Praptono, who works at the Menteng Police
subprecinct in Central Jakarta, said 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.