Jakarta. Commission XI of the House of Representatives is planning to formally include a pawnshop draft in the docket of priority legislation, or Prolegnas, next year, following a rise of unregulated pawnshops in the country, officials said.

Fadel Muhammad, head of Commission XI, which oversees finance and banking matters, said the House would consider three law drafts (RUU) in the 2016 Prolegnas: a draft concerning pawnshops (pegadaian), one on the Financial System Safety Net (JPSK) and another on revenue stamps, also known as bea materai.

Separately, Firdaus Djaelani, supervisor for non-banking financial institutions at the Indonesian Financial Services Authority (OJK), said a Pegadaian law draft needed discussing in the House to anticipate the spread of illegal pawnshops in the country.

“There are many unregistered pawnshops and we need a law to bring order to the chaos,” Firdaus said.

Indonesians often use the services of a pawnshop as the sales process is relatively short and cash is immediately available.

“When people need money, they can place their motorcycles or gold at a pawnshop and they will get cash in 15 minutes,” Firdaus said.

Such practices have lead to many unregulated pawnshops, locally known as gadai tembok, or “pawnshop in the wall.”

The current 1969 Law on Pawnshops provides a monopoly to state-owned Pegadaian as the only legal and registered pawnshop in the country. The new law draft is expected to pave the way for private pawnbrokers to set up a business, as well as better supervise the sector.

InvestorDaily

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Jakarta. Federal International Finance, a unit of Indonesia’s biggest automotive distributor Astra International, plans to sell between Rp 2 trillion and Rp 3 trillion ($154.6 million-$232 million) worth of bonds within the next two months to help finance expansion, a FIF executive said Monday.

The upcoming bond sale is part of the financing firm’s larger plan to sell up to Rp 10 trillion worth of bonds through multiple sales.

FIF head of treasury and funding Jerry Fandy said the company will first observe market conditions before offering the bonds to investors.

“If the interest rate is promising, we will offer [bonds] again in the second half next year,” Jerry told Investor Daily.

In addition to raising capital through bond sales, FIF will also seek further funding from bank loans.

Last year, the company secured $335 million from foreign lenders. The cash reserve will be used to help fund its  automotive financing division, for which the company has set a target of Rp 28 trillion, up from Rp 26 trillion in 2014.

A majority of FIF’s business comes from the financing of motorcycle purchases, particularly Honda motorbikes sold by Astra Honda Motor, a 50-50 joint venture between Astra International and Honda Motor Company.

The company also aims to offer financing services to retailers.

“We will try to tap the retail market, because the prospects are hug,” said FIF president director Suhartono.

FIF has also drawn up plans to enter the interior design sector by collaborating with electronics companies and offering clients to chance to furnish their dwellings with various electronic devices.

Investor Daily

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