Many Jakartans look to pawnshops for quick cash

Many Jakartans look to pawnshops for quick cash

JAKARTA (JP): Many Jakartans have been pawning their
valuables, especially gold and other jewelry, for cash at state-
run pawnshops throughout the city due to the current prolonged
monetary turmoil, an official said yesterday.

Perum Pegadaian Pawn Company spokesman Nafwardi said most
people coming to the company's 23 pawnshops in the city were
anxious to pawn their gold which has shot up in value recently to
Rp 100,000 (US$12.5) per gram.

Based on Pegadaian data, the market price of one gram of gold
was only Rp 35,000 in August. But it skyrocketed to Rp 85,000
last month due to the rupiah plunge.

"The price of gold in the market has constantly increased
since August. That was probably why many customers pawned their
jewelry. Gold is like the dollar," Nafwardi said.

"And it hit a peak last week when the price reached Rp 100,000
per gram," he said.

Pegadaian said that it could not provide the same value for
gold as the market price because certain risks had to be
considered such as if the price of gold fluctuated.

"We really want to satisfy our customers. But we could not
possibly match the market price because most our loans mature in
four months. A lot can happen in four months. We couldn't afford
it if the price of gold fell."

Currently Pegadaian sets a pawn value of only Rp 38,500 per
gram of gold, far below the market price.

According to the head of Pegadaian's operation and marketing
division, Abidin Syah, the company could lend at two percent to
four percent over the gold pawning rate.

"If necessary, some Pegadaian companies can raise the price of
a gram of gold to 4 percent from the fixed pawn rate. That's the
best we can do right now."

He said because Pegadaian could provide easy and quick cash,
people no longer hesitated to come to its shops.

"Here they can deposit their belongings, including fancy and
expensive vehicles and diamonds," Abidin said.

Currently there are 224 cars being stored in Jakarta's
Pegadaian warehouses in Jatinegara and Senen in Central Jakarta,
ranging from 1994 Kijang vans to 1997 BMW and Mercedes Benz cars.

"A BMW sedan, for instance, is being priced at Rp 50 million
to Rp 60 million now," he said.

Pegadaian data shows that the number of its customers
throughout the country reached 5.1 million people last year.

In Jakarta alone, Pegadaian managed to surpass its revenue
target of Rp 2.1 trillion last year by Rp 4 billion.

When asked why most people pawning their valuables usually
deposited items such as gold and cars instead of electronic
products, bicycles or clothes, Abidin said that the latter items
depreciated in value too quickly.

"In Jakarta the four biggest Pegadaian shops are located in
Jatinegara, Senen, Kebayoran Baru and Salemba. In these shops,
pawn services for items such as clothes no longer exists.

"It's merely because some people here are relatively wealthy.
But you can see in the areas where people still live below the
poverty line that people are still pawning things such as plates
or glasses," he said.

The pawn rate for an electronic item had also dropped because
technology was changing constantly, causing market prices of
aging items to fall, he said.

"Therefore, we only give Rp 50,000 to Rp 100,000 for
electronic products such as LD or VCD players," Abidin added.

Hopefully, Pegadaian would remain available for people as one
of the choices to borrow money, he said, adding that customers
did not have to encounter complicated procedures like when they
had to borrow money from banks.

During the three weeks before Idul Fitri, the pawnshops in
Jatinegara in East Jakarta, Senen and Tanah Abang in Central
Jakarta, and Pasar Minggu in South Jakarta usually experienced
brisk business.

During the season, people often stood in line at the pawnshops
clutching precious objects or valuable documents to pawn,
sometimes worrying that Pegadaian would run out of cash.

"One thing is for sure, we have a lot of cash. We have
established a joint venture with state-owned Bank Rakyat
Indonesia (BRI) to guarantee that Pegadaian will have enough cash
for every customer," he added. (edt)