ASEAN KEY DESTINATIONS
Microfinancing helps the poor
Everything can be turned into money in Jakarta. This includes unbankable people, or those that banks regard as poor people who do not earn enough to qualify for loans, such as street vendors or low-wage clerical workers.
Some small financing firms in Jakarta, however, see a gold mine in this demographic.
Mauluddin "Udin" Isya is a case in point. The 40-year-old security guard who works at a residential complex in Ciputat, South Jakarta, earns less than Rp 1 million (US$109) per month, putting him below the radar for large retail banks.
These lenders would reflexively categorize Udin as unbankable, with the belief that lending him money would be a bad investment decision.
However, there are some firms who think otherwise and that investing in people such as Udin can be good business.
That includes BFI Finance, a small financing firm targeting middle- to low-income people.
People with a low income can apply for loans at BFI by pawning their vehicle ownership documents for around Rp 3 million to Rp 5 million depending on the age of the vehicles.
Udin pawned his 2007 Yamaha motorcycle for Rp 5 million a year ago. He needed the money for his wife, who planned to open a food stall.
"I have almost paid off my debt. In October, I plan to get another loan," he told The Jakarta Post.
This kind of excitement means something for Budi D. Munthe, a manager at BFI.
"These people are proving to be quite prospective. They have their own methods to ensure they keep paying," Budi said.
BFI is an established company that has been operating a vehicle-financing business since 1982.
It went public in 1992 and opened a new retail lending division seven years ago. However, the retail division now contributes more than 80 percent to the company, Budi said.
A number of large banks are also attempting to get a finger in the micro banking services pie.
The 2008 crisis that has resulted in notable casualties among giant companies around the world and has ushered in a new era for micro banking to be a source of revenue for banks.
With only a few big firms interested in raising new loans, the banks then turn to small companies and individuals to keep their businesses rolling. The banks usually issue small loans of between Rp 10 million and Rp 50 million.
As business prospects become increasingly promising, a number of independent financing firms have started to sprout in Jakarta, offering the same service. Companies such as Pusaka Dana in Ciputat or Triprima Finance in Cirendue, South Jakarta, are typical of the trend.
The firms are well known to people in their areas as places where people can get loans.
"It only takes three days to get a loan," said Hariyanto, 26, who pawned his motorcycle registration to Pusaka Dana and received a Rp 4 million loan.
He said he preferred going to Pusaka Dana rather than pawnshops because he did not have to give his motorbike for collateral, only the documents, while pawnshops usually took the collateral before giving money.