Pawnshop business pays big as holiday nears

Tony Hotland, The Jakarta Post, Jakarta

Jati, 40, is waiting for her turn to redeem her pawned gold ring at Jatinegara pawnshop, East Jakarta. She initially received Rp 125,000 (US$14.71) for the ring, but she must redeem it for Rp 148,000.

"Well, I already have the money to buy it back, so why should I wait any longer? Besides, I don't want to forget that I pawned my ring here," Jati told The Jakarta Post recently.

She had pawned one of her rings in July to pay for her six- year-old son's school admission fee.

In another corner of the room, Suti, 57, had just redeemed her seven-gram gold ring.

"I had to buy it back for Rp 374,000. I reclaimed the ring because I wanted it back, not in some pawnshop somewhere," she said.

Two weeks before the Idul Fitri holiday, pawnshops are usually packed with people both pawning and redeeming belongings that were used as collateral for loans.

However, the current trend shows that the shops are swarming mostly with people reclaiming their pawned treasures, rather than those seeking a loan.

Manager of Jatinegara pawnshop Tulus Widodo said these days, the shop saw more cash from people redeeming goods than from interest on loans.

"I think it's because people want to use their pawned cars or wear their jewelry during Idul Fitri. Jewelry is a part of holiday fashion," he said.

"For example, today we spent Rp 220 million in loans, but received Rp 270 million from people redeeming their goods."

Jewelry is the most frequently pawned item, making up almost 90 percent of pawned goods.

Sofyan, manager of Kebayoran Baru pawnshop in South Jakarta, expressed a similar view.

"Although there's no significant difference between regular months and the holiday season in terms of the number of transactions, there have been more people paying back their loans than those pawning items," he said.

He also thought the trend was due to people wanting to show off their jewelry when meeting people during holiday celebrations.

The higher number of people redeeming their goods from the pawnshops cannot be seen as an indication of a better economic condition, however, since the amount of loans made by pawnshops during normal months is astronomical.

"We usually loan between Rp 5.2 billion to Rp 5.6 billion per month, with 100 to 200 items pawned each day. The loans are mostly used for business or capital," Sofyan said.

Tulus said the Jatinegara pawnshop saw around Rp 4 billion go out as loans monthly, and about 5,000 items pawned as collateral.

He also said the number of customers coming to pawn items usually rose again several days after the festivities.