Pegadaian sees robust demand ahead of Idul Fitri celebration

The Jakarta Post, Jakarta

State-owned pawn-shop operator Perum Pegadaian has set aside a total of Rp 500 billion (US$55 million), a rise of almost 70 percent from last year's Rp 300 billion, to prepare for rising demand ahead of Idul Fitri, a company official said Monday.

"In the run-up to Idul Fitri, we are seeing an increasing demand for our services in our 850 pawn shops across the country," public relations manager Irianto said as reported Monday by Antara.

He added that the demand for the firm's services was expected to be particularly high in the seven days both before and after Idul Fitri, an Islamic celebration to mark the end of Ramadhan.

According to Irianto, with the additional money the company expected to be able to provide loans of up to Rp 1.7 trillion, about 20 percent higher than the Rp 1.3 trillion disbursed in the average month.

He said that on a yearly basis, Pegadaian's loans increased from Rp 10 trillion in 2004 to Rp 13 trillion in 2005. This year, the firm expected to extend Rp 16 trillion in loans.

"Based on our experience, we estimate that the additional money will be sufficient to cover the extra demand. However, we are also ready to work with the banks should the increase in demand be higher that expected."

The country's top banks, including Bank Central Asia, Bank Rakyat Indonesia and Bank Negara Indonesia, have said they are willing to inject fresh funds into Pegadaian, should this be necessary, Irianto said.

Many Indonesians prefer to use Pegadaian's services to get quick cash. They just need to bring along their valuables, such as gold, electronic goods and cars, to the company's offices and then pawn them for cash based on an agreed value estimate.

The company charges interest on its loans.

"The process of getting cash only takes about 15 minutes, compared with days or even weeks in the banks. That's why people prefer our pawn shops," he said.

"Across Indonesia, about 80 percent of the items pawned consist of gold jewelry. But in Jakarta, this figure reaches 90 percent."

The company estimates that its net profit for this year will reach Rp 250 billion, a more than 30 percent increase over last year's Rp 186 billion.
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