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.