0 Calls for OJK to Regulate Pawn Industry

An official at the State-Owned Enterprise Ministry has called for the Financial Services Authority to regulate Indonesian pawnbrokers as currently there are no government agencies monitoring such businesses. Gatot Trihargo, acting deputy for services at the SOE Ministry, said in the past there was only one broker, Pegadaian. It was a general corporation, which depended heavily on the government for goods, services and its day-to-day operations. That structure gave the company a role as a regulator and meant the employees at Perum Pegadaian were civil servants. 

However, since Pegadaian changed its status, on April 1, into a limited-liability corporation it cannot be considered a regulator. The government will no longer be responsible for providing resources to the company, which will now follow the rules that govern limited-liability corporations. “Pegadaian wants pawning businesses to be regulated. We are delivering this message to the OJK [Financial Services Authority] because at the moment, pawning businesses are growing rapidly in the country,” said Gatot on Tuesday. 

Private institutions are taking advantage of opportunities to provide a pawn service to low income consumers who find it difficult to secure cash for immediate needs as banks and even Pegadaian are out of their reach. Pawn service outlets are mushrooming near electronic shopping centers in Jakarta such as in Cempaka Putih (Central Jakarta), Glodok and Mangga Dua (North Jakarta). The Jakarta Globe observed that in some of these businesses, consumers were not required to validate their home address, work place or bank accounts. 

Those who came to the outlets were usually only armed with their ID card and goods they wanted to offer as collateral. Items accepted included electronics, like mobile phones, laptops, televisions and, most commonly, gold. Several pawn companies are known to be dishonest. Some escape with the goods, causing customers to lose money. One way that brokers cheat their customers is by disputing the agreed deadlines or repayment of the loan. As a result the goods often go to auction without the client’s agreed consent. Gatut said that in the past Pegadaian once controlled 90 percent of the pawn business in the country. “But now, when these business are mushrooming, we need clear regulations.”

source : the jakarta globe