The COVID–19 pandemic that has hit Indonesia since March 2020 has hit various aspects of life so many people have lost their jobs. With various limitations, people struggle in many ways for their survival. Starting from opening their own business, selling valuables to applying for loans to financial institutions, and pawn services are one of them.
Based on data from the Financial Services Authority (OJK) as of May 2021, there are 101 pawn services companies that consisting of 1 government company and 100 private companies. This number increased by 17.65% from May 2020 (85 private companies and 1 government company). While referring to OJK data as of June 30, 2021, it recorded 75 private pawnshop companies that have been licensed and 26 conventional private pawnshop companies registered (in the process of permitting) from the OJK. The details are as follows.
In terms of financing distribution, private pawnshop companies recorded a value of IDR 54.83 trillion as of May 2021, an increase of 2.45% from May 2020 (IDR 53.52 trillion). Meanwhile, the total financing disbursed by the only government-owned pawnshop company, namely PT Pegadaian (Persero) as of May 2021 amounted to IDR 54.32 trillion, an increase of 2.36% from the May 2020 (IDR 53.07 trillion).
Meanwhile, the total assets of the pawning industry experienced fluctuations, where from March 2020 to December 2020 it increased by 5.5% from IDR 68.57 trillion to IDR 72.34 trillion. However, as of May 2021, the value decreased by 4.05% to IDR 69.41 trillion.
According to the Financial Service Authority (OJK), pawn services are more in demand by the public, especially the lower-middle segment and medium, small, and micro-enterprises (MSMEs). This is because pawn services have advantages in terms of standard service procedures that are fast, safe, and simple in providing financing to the public. Unlike banks which require a lot of required documents and long processes, in this sector if people have collateral that can be pledged, people can get loans.
In addition, the distribution of the number of pawnshops and a network of corporate service offices reaching remote areas greatly supports the growth of the industry during the economic crisis. This is because it can easily be found by people who live in areas that are from banks and other financial institutions which usually only exist in busy cities.