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)