State pawnshop firm facing cash shortage

State pawnshop firm facing cash shortage

JAKARTA (JP): The state-owned pawnshop company Perum Pegadaian
has revealed it is facing a cash shortage which has forced over
270,000 people in the Greater Jakarta area to wait for loans they
are due in exchange for pawned goods.

"We have no more cash and will only be able to issue new
credit if our customers first redeem their belongings," the head
of the company's Jakarta's office, Ketut Sethyon, told The
Jakarta Post on Tuesday.

The pawnshops receive an average of 100 people a day looking
for loans but between only 15 and 20 people looking to redeem
their pawned belongings, he said.

Worse still, he added quickly, most of those who pawned their
belongings have been unable to buy them back, leaving the
companies warehouses crammed to the gunnels with goods ranging
from cars to jewelry.

To compound these difficulties, auctions of property held by
the company are failing to attract potential buyers, most likely
as a result of the economic crisis, Ketut explained.

He revealed that 270,600 people, or 66 percent of the
company's customers so far this year, are still waiting for loans
they are entitled to in exchange for belongings which they have
already pawned.

The cash flow problem is the result of a sharp increase in the
number of people looking to pawn their belongings. So far this
year, 410,000 people have come looking for credit from Pegadaian,
compared to 350,000 for the whole of last year.

Ketut said his office, which also oversees pawnshops in
Bogor, Sukabumi and Banten in West Java, issued loans worth Rp
135 billion in the first eight months of this year. The figure
comes to 77 percent of the Rp 175 billion credit allocated to
pawnshops nationwide by the state Bank Rakyat Indonesia (BRI).

The credit provided to his office is similar to the amount
provided in previous years. But, he said, this sum was inadequate
in the face of the huge increase in demand recorded in recent
months.

"The cash shortage and the huge number of people who are
desperate to pawn their goods has meant that not all customers
have received cash at the same time as they handed over their
belongings. It totally depends on our day-to-day availability of
cash," he said.

Unlike in the old days, he said, pawnshops were no longer
popular only among the poor and more people from relatively
affluent backgrounds were also seeking to pawn their belongings.

In order to recuperate loans as quickly as possible, Perum
Pegadaian has temporarily decided to accept only luxury items,
particularly gold, cars and electronic goods.

He said pawnshop staff had seen a growing number of the poor
forced to pawn their belongings to buy food.

"They usually pawn things like clothes, plates, glasses and
other household items for Rp 20,000, which is the lowest loan
issued by our shops," Ketut added.

Last month, Pegadaian cut its maximum loan to Rp 2.5 million
from the previous level of Rp 20 million. Interest is charged at
between 1.5 percent and 3 percent every 15 days.

"It's for the sake of even distribution," Ketut said.

He said people usually pawned their belongings in exchange
for the lowest loans at the small Pegadaian shops in Jatinegara,
Senen, Kebayoran Baru and Salemba.

"However, these shops no longer accept "small" items, such as
clothes. But our shops in areas where people are living below the
poverty line, such as Tanah Abang in Central Jakarta, still
accept items such as plates and glasses," he said. (ind)