State pawnshop planning major business expansion this year
Urip Hudiono, The Jakarta Post, Jakarta
State-owned pawnshop company Perum Pegadaian plans to expand its business this year by accepting the pawning of shares in listed companies -- in addition to other belongings -- from its customers, a company official said.
Other corporate plans for the year, explained Pegadaian's director of finance Budhiyanto in a press conference on Wednesday, would include the establishment of its Islamic-based (sharia) rural credit agencies and a move into the land property business.
"We have decided to accept the pawning of stocks as we are seeing a market potential in it," Budhiyanto said. "Shareholders occasionally have the need for immediate funds through pawning too."
Although Pegadaian was still working out the details of the stock-pawn scheme and coordinating with related stock exchange authorities about it, the scheme would hopefully be available to its customers by the second half of this year, Budhiyanto said.
Budhiyanto further explained that Pegadaian would most likely accept the pawning of bluechip stocks only.
"We will only accept stocks which are prime and liquid, such as bluechip stocks or the top-ten most liquid stocks in the market," he said.
Funds lent to customers for the pawning of the stocks, meanwhile, will be limited to a maximum of 50 percent of the stocks' value.
"If the value of a stock happens to fall, say from Rp 10,000 to Rp 7,000, the customer who has received a loan worth Rp 5,000, will have to pawn more stocks until their total value is Rp 10,000 again," Budhiyanto said, adding that the tenure of the credit will also be short-term -- only three to four months.
Last year, Pegadaian accepted from its customers the pawning of 11 million items of various values, totaling more than Rp 9 trillion (US$1.06 billion), as well as Rp 8.9 trillion in short- term loans, giving it a profit of Rp 174 billion, up 18 percent from the previous year.
For 2004, the company expects to lend Rp 10.8 trillion in to customers, and obtain Rp 198 billion in profits. During this year's first two months alone, Pegadaian managed to cater Rp 2.4 trillion in credits, or 22 percent of its target for the whole year.
Concerning Pegadaian's plan to establish sharia rural credit agencies, Budhiyanto explained that it was in accordance with the company's efforts to grab a share in the emerging sharia financing market and its focus on providing loans for small enterprises.
"Funds for the initial operation of the credit agencies, as well as our other business expansion plans for this year, will be taken from the repayment of our state bonds worth Rp 200 billion, and from a loan of Rp 300 billion provided by Bank Mandiri and Bank BCA," he said.
Pegadaian cooperated last year with Bank Muamalat in converting 16 of its pawnshops into sharia stores. The company now has 40 sharia pawnshops, out of its total 785 across the country.
As for Pegadaian's move into the land property business, Budhiyanto said the company was aiming to eventually become a provider of home mortgages.
"But in the meantime, we will probably start off by offering mortgages for our property of kiosks and shophouses at the Harco Pasar Baru market in Central Jakarta," he said.