Pawnshop loans drop drastically

JAKARTA (JP): Monthly loans issued by the city's 23 state-run pawnshops dropped last month by 11.76 percent to Rp 30 billion (US$3.16 million), the first such plunge in many years.

City Pawnshop Office spokesman Soeparto told The Jakarta Post that the significant post-Idul Fitri holiday drop was amazing.

"Normally, we lend a great amount of money after the Idul Fitri holiday because there are crowds of people flocking pawnshops to ask for cash to start businesses or fund their daily living after they had spent most of their money during the holiday," he said.

The sluggish demand for pawnshop loans last month is being put down to many people no longer having belongings to mortgage as security for loans in the current economic turmoil.

"This weak condition could lasted the whole year," Soeparto predicted.

January's significant plunge was the first drop since the rupiah began to collapse in July.

"In December, for instance, we distributed loans totaling around Rp 34 billion," Soeparto said.

He said many pawnshop clients did not dare borrow money from banks because many of the latter were also ailing on account of the uncertain fluctuation of the rupiah which has caused the current financial difficulties and prices of basic goods to soar.

In addition to loan requests declining, pawnshops are also facing another problem: huge stocks of goods which have yet to be claimed back by their owners, Soeparto said.

Among the granted items are 18 luxury cars, such as Mercedes Benz, BMW and Nissan, he said.

"Like many of the other items, the cars are still in our East Jakarta office and are ready to be auctioned," he said, giving no further explanation.

The luxury cars belonged to people who desperate for cash, he explained.

Soeparto also said that his office had at least 80.25 kilograms of gold and about Rp 3 billion in various currencies which were all collected recently by the government in the nationwide Love Rupiah campaign.

He said his office kept the gold and the cash briefly before transferring it to Bank Indonesia, the central bank. (emf)