Pawnshop loans drop drastically

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)