Sat, 06 Aug 1994

Putting debt problem right

No doubt to the relief of many, the virtually uncurbed heavy- handed operations of so-called debt collectors is about to end, at least in Jakarta.

As was made known earlier this week by Jakarta's military commander, Maj. Gen. A.M. Hendropriyono, all such illegal debt collecting services will be banned shortly because of the unrest which they are creating among the people.

For those who are unfamiliar with the situation, the kind of debt collectors, which the Jakarta military commander, who is also the chief of this city's Bakorstanasda -- the coordinating body responsible for order and stability in the Greater Jakarta area -- was referring to are unauthorized debt collectors. These people -- often with unsavory reputations -- operate without licenses and are employed by creditors to handle outstanding debts that are hard to collect.

As the Jakarta military commander explained, an end has to be put to such practices because the debt collecting tends to involve threats and violence that trouble many people.

To further reassure the public, Maj. Gen. Hendropriyono said that anyone in Jakarta, who is being threatened or otherwise harassed by debt collectors, can call the nearest Kodim military post for help. At present, he said, the Jakarta metropolitan police are preparing to actively support the drive.

The Jakarta daily newspaper Kompas reported on Thursday that at least five well-known debt collecting services of this kind are operating in Jakarta at present, employing dozens of toughs to intimidate people.

Clearly, the actions that will presumably be taken against such practices soon are meant to uphold lawfulness within the community and therefore deserve our fullest support. If any further comment is to be made it is perhaps to say that in order to support the campaign it may be worthwhile to look a little deeper into the problem, and its many aspects, and to ask ourselves why and how such practices could have come about in the first place.

Some of the debtors may well have had pressing reasons to borrow money and even more pressing reasons for being unable to pay back the funds. But the extent to which the practice of debt collecting has apparently expanded lends to the assumption that more and more people may be overspending and finding themselves unable to pay their debts.

The current trend toward materialism in our society is fanned by attractive commercial advertisements on television and in the printed media. These add fuel to the fires of consumerism spreading through a society that can often ill afford the extra expenditures. It should be remembered that although these advertisements are targeted at the elite and middle class, that others, not so well off, are being influenced into buying as well.

The situation is worsened by the fact that, as far as we can tell, nothing in the law at present forbids a lender, who may well not have a license to disburse funds, from delegating the job of collecting a difficult debt to another person or organization.

Perhaps it is now up to our legislators, together with the authorities concerned, to devise a law to regulate such lending practices in such a way that lawfulness is assured in the initial disbursement and in the collection. It may not be possible to prevent people from overspending, but much can be done to protect the unwary consumer from undue duress due to threats to their person over debts they have accrued.

On the other end of the scale, however, there are the legitimate interests of authorized creditors and businessmen to think of. Quite often, in business, especially in what is known as the informal sector of the economy -- among smaller-scale traders and businessmen -- most transactions are done on the basis of trust. In part, perhaps, this is because of ignorance of legal procedures, but in part it is certainly also because business on that scale is often difficult to secure if complicated procedures have to be followed. Surely, the interests of legitimate entrepreneurs are worth protecting.

It also may be worth noting in this context that the question of whether or not to revive an old ordinance known as the "hostage" ruling became the subject of debate among our experts and practitioners of law not to long ago. In principle, a debtor in default could be detained under this ruling as a means to pressure him into paying his debt.

Nothing further has since been heard of the issue and there seems to have been no follow up on the question. In any case we believe it is up to our law experts and legislators to find a fair solution to the problem.

In conclusion, what we want to say is only that while the principle of lawfulness is of primary importance in business as in any other kind of dealings, the lawful interests of all the sides involved should get our due attention.