Pawnbroking no longer a humble business

Pawnbroking no longer a humble business

By Imran Rusli

JAKARTA (JP): Pawnshops, once the solution for people in need of cash, have gained stature over the years. No longer are these lending establishments frequented by the poor alone. Jakarta's pawnshops are now attracting affluent people, if not the super rich.

Kisprijono, who runs of the East Jakarta branch of the state- owned Perum Pegadaian pawnshop in Jatinegara, told The Jakarta Post that his shop once took in a Mercedes Benz valued at Rp 50 million (US$21,673).

"Nowadays people mainly pawn their diamonds, even five-carat ones," he said.

Pawnshops are the busiest at Idul Fitri, the culmination of Ramadhan.

Soeparto, the spokesman for Perum Pegadaian, claimed that turnover increases 30 percent with the approach of Idul Fitri because people need cash.

"Psychological demands are pressing. People may still wear a smile when they aren't able to send their children to school, but they will be deeply embarrassed if they cannot celebrate the holiday properly," he told the Post.

Both Kisprijono and Arie Putra Benjamin, who runs the Kebayoran branch of Perum Pegadaian, confirmed this increase in business. Turnover rises from an average of Rp 1.04 billion to Rp 1.6 billion a month. At the moment, they have a turnover of 10 to 15 percent of their stock.

"But, it is increasing," said Kisprijono.

Some affluent customers pawn their valuables to keep them safe while they are away on holidays. The less fortunate, on the other hand, try to buy back their jewelry to wear on the big day.

"When the holiday is over they will return the valuables to the pawnshop," Kisprijono said.

People also pawn their belongings to utilize the money more efficiently and effectively, explained Arie Putra Benjamin.

Said Arie Putra Benjamin: "The credit provides them with several advantages all at once. First, their savings will stay intact. Second, their property is safe. Third, the money is put to good use when they take a trip to their hometowns. And last, and best, repurchases are payable in installments at extendible time limits against an interest rate of 1.25 percent every 15 days."

Three weeks before Idul Fitri, the government pawnshops in Jatinegara in East Jakarta, Senen and Tanah Abang in Central Jakarta, and Pasar Minggu in South Jakarta are assaulted by customers and brokers. The shops are a mixed bag of suppressed emotion. People stand clutching precious objects or valuable documents to be mortgaged.

Confusion, stress and impatience can be read on customers' faces. Although some people are relaxed enough to engage in conversation, the majority of the crowd watches the wall clock, fearing the arrival of noon and a further delay.

"We have served more than a thousand people since early morning," said Hamid, a security guard at the shop in Tanah Abang.

Pawnbroker Misrah, 60, admitted that Idul Fitri is usually lucky for her.

"Many customers get discouraged when they see the pushing and goings on at the counters. That's where I come in. I charge 10 to 20 percent for my service," said Misrah, an adroit broker who has worked in the Tanah Abang pawnshop for 20 years.

The Senen shop is the most packed, with customers spilling into the yard. With a seating capacity of 20, finding a seat is impossible.

In Jatinegara, where antique cloth is the specialty, customers are preyed on by buyers, like Sutinah, who usually go for the less affluent.

"I like to talk them into a straight sale instead of going through all the trouble of pawning," said 57-year-old Sutinah.

Five years ago Sutinah bought reams of batik cloth and jewelry from people short of cash.

"I pawned the lot for credit," said the grandmother who has been in the business for at least 15 years.

"The management, staff and security keep watch. They don't want us to operate in here. They say that we are taking advantage of the poor. But, what can I do? This is the only way I know to earn my bread," complained Sutinah.

Tambunan conducts a similar business at the Senen pawnshop. The gold trader admits that most of her customers are initially pawnshop customers.

"I usually buy up jewelry at half the price," she said without remorse.

Origin

Pawnshops were first introduced by the Dutch, the first shop being established in Sukabumi, West Java on April 1, 1901. The pawning business originated in Lombardi, Italy.

The Minangkabau people in West Sumatra, however, were familiar with the idea long before the Dutch introduced it here. The Minangkabau would mortgage their rice fields or coconut plantations, but because clan property cannot be sold, the land can't be confiscated even after the payback date expires.

According to Erwin Msi, the secretary of the anthropology department at Andalas University in Padang, West Sumatra, "The lender is entitled to the yields until the debt is settled."

"The mortgage can last for a very long period without yielding any interest. It is enough to adjust the assessment rate to the price of gold or top quality rice," the 33 year old said.

The Sukabumi shop soon became an important pillar in the life of the poor. Cloth, gold ornaments and typewriters were all often mortgaged, revealed Sjamsir Kadir, the managing director of Perum Pegadaian.

"Typewriters are generally mortgaged by students who are short of cash," he told the Post at his home in Slipi, West Jakarta.

He said people consider pawning their belongings better than selling or begging, and far better than borrowing and falling into the snares of a loan shark.

"Pawning allows them to buy back all their goods," says Sjamsir, who is a graduate of the University of Oregon in America.

Soeparto, Perum Pegadaian's public relations manager, insists pawnshops are safe.

"Collateral and pawnshops across Indonesia are insured by PT Asuransi Jasa Indonesia, the bona fide government insurance company," said Soeparto.

Perum Pegadaian has had to make claims several times, like when the storeroom of the Salemba branch in Jakarta was broken into in January 1992, and when the Masaran branch in Sragen, Central Java was robbed in October 1995.

"The indemnity amounted to 125 percent of the assessed value," said Soeparto.

Pawnshops continue to be popular because loans are issued without a waiting period.

Meli, a housewife with three children, who lives in Jagakarsa, South Jakarta told the Post, "It doesn't take 10 minutes to get cash. Terms are also easy. We can mortgage our belongings in all the pawnshops of Indonesia, just like the prevailing banking system."

A photocopy of the pawner's ID card and the authorization document is all it takes to buy back the goods, which helps people not known locally to use the system. A lost receipt is reportedly no problem either.

"Just report it to the police and the head of the pawnshop. They will issue a new receipt in no time without much fuss," claimed Meli, who had to go through the experience once.

The easy cash attracts a mix of customers to pawnshops, including small traders.

Ujang, a young rag trader in Pasar Ular in North Jakarta, said, "I prefer going to a pawn shop than having to go from one bank employee to another, and so on, for a loan." He was once able to borrow as much as Rp 5 million from a pawnshop.

Padmi, a widow and foodstall owner living in Kwitang in Central Jakarta, sees pawnshops as her life support.

"I get cash easily, even though I'm only pawning my mother's batik," she said.

The simplicity of the system naturally attracts crooks.

One incident was reported last August when a man attempted to mortgage stolen goods in a pawnshop in Pekanbaru, Riau.

According to pawnshop employee Errina Star, "The man left when asked for his ID card. He was still lucky in a way, because the police only inquired about the stolen goods a few days after his visit," she said.

Although pawn shops making money from the rich, they will never defer from their objective of providing the poor access to quick cash, Soeparto said.