Yogyakarta's moneylenders rely on personal touch

By Tedy Novan and Angger Jati Wijaya

YOGYAKARTA (JP): Toting a small bag and bantering amiably with traders, the woman made her way through the clutter of the Bantul market.

She appeared to be a regular customer, but the bulky logbook under her arm gave her true identity away.

For as long as anyone can remember, moneylenders have been a vital part of the communal fabric of traditional markets. Nearly all small traders rely on their services when business is slow.

Heru Nugroho, a lecturer at the School of Sociopolitical Sciences of Gadjah Mada University, said traditional moneylenders played a unique role in stimulating the economy of markets, especially in rural areas, despite derogatory stereotypes of their activities.

In 1990, he conducted research on moneylenders operating in the market in Bantul. The results, contained in his thesis for Bielefeld University in Germany, show that traditional moneylenders are a reflection of the complete economic man, but who rely on a social approach in wooing their clients.

Their position in the community is full of contradictions. From sociological and cultural perspectives, they are derided as usurers, but they continue to flourish. The Moslem ulema community criticizes the activity as a sin, but many creditors go on the haj pilgrimage.

With a minimum 20 percent interest, creditors make profits. Yet, unlike banks, they use social or cultural rationalism, not economic-based arguments, to justify their activities.

They are also interested in their own public relations. In an attempt to eradicate the negative assumptions, they raise lending capital through social activities. The relationship between creditors and their customers hinges on the personal or community relationship, unlike the cold formality of banking procedures.

"If the customer is ill, he is given help," Heru said. "In their residential communities, traditional moneylenders have good social standing. Also, when they go on pilgrimage, I see they do so in the context of guarding their 'social capital'."

To many traders, moneylenders like Mrs. Wardoyo, a fixture at Bantul market for more than 10 years, are saviors.

"She is good. If we want to borrow money, we just tell her. There is no need for (fulfilling) various requirements," said Suparti, 41, a garment trader.

Parking attendant Jumairi, 29, vouched for her kindness. He said the 46-year-old helped him regularly, and often bought food and fruit for his family.

Despite the high interest, customers like the moneylending system. A loan of Rp 50,000, with interest of 2 percent per day, requires a total return of Rp 80,000 for one month. Bantul traders said payment is made on the interest only, until there is enough money to return the loan in full.

Mrs. Wardoyo, who knows all her customers well and has often visited their homes, said she became a moneylender to help out the less fortunate.

"Indeed, many people have a bad impression of my profession, but my aim is to help people. Is there any credit without conditions today?" the mother of three asked from her home in the Wojo neighborhood of Bantul.

"I extend a helping hand. Why are lenders called usurers?"

In Islam, riba, or lending with interest, is haram (prohibited), but Mrs. Wardoyo said her profession was different. Although the interest is high, transactions are based on mutual understanding. She said she was content that she never made demands upon others or hurt them.

Mrs. Wardoyo is one of four moneylenders in the Bantul market. Credits are not limited to cash. Mrs. Ngaisyah, 49, wife of a former legislator in Bantul, lends money and goods, from household to electronic equipment. The system is nearly the same as that of loans. She said it was important to form good relationships with the customers.

The mother of four, a resident of the Moslem neighborhood of Kauman, also does business from her house. Neighbor Sartono, 38, said the woman -- known locally as Ibu Haji after a pilgrimage to Mecca -- was a philanthropist who often contributed to community and religious activities.

But are the days of moneylenders numbered in the changing marketplace?

Heru Nugroho believes they will never disappear, despite the endeavors to eliminate them by non-governmental organizations or formal banks.

Banks here remain distant from customers because their system is complex, bureaucratic and ineffective.

Traditional moneylenders, as they use their social wiles to ingratiate themselves and win people's hearts, are just what the customers' need.