Pawned!

In our line of business, and I assume just like in other line of business in Indonesia, our clients usually have duration of payments ranging from 1 week - 2 months.

Well, one of our smaller client showed up today to pay his debt. We teased him a bit for being late with the payment. We stopped immediately though after he informed us that he paid us using the money he got from the pawnshop. He used his motorbike as the collateral.

Apparently, his wife had to go to the hospital for 5 days and he had to pay 2.5 millions for the hospital bill. This completely affected his financial situation. You see, he has no savings. I bet most of the lower class people in Indonesia don't have any savings for the rainy days.

How much is the interest?, I asked. It's 50.000 per month per 1 million borrowed. That's 5 percent per month and 60% per year, assuming it's not using the compound interest system, and gosh, I really hope not.

The current interest rate in Indonesia is, if I'm not mistaken, 8.75% per year. Banks don't touch micro loan though, and I'm sure the complicated bureaucracy doesn't motivate the small loaners. I believe most lower class people either go to pawnshop or loan sharks for their cash needs. If they're lucky, they have a wealthy enough relative to go to. Hopefully, the relative won't be too greedy and charge them with high interest.

We lend money for our employees with no interest. Most of them would borrow money when it is time to renew the contract of their house, to pay for the school admission, to pay the hospital bill for their parents, the list goes on and on. They always break even or run negative with their balance book, never a surplus.

Aside from the civil employees, I don't think there is any retirement plan in Indonesia. Not for the lower class for sure. I think they would work until they die, or they would hope that their children would be able to support them at the old age. Is that why they have many children even if they are not economically well off?

How many times do I see a husband, a wife, and their 2 children traveling on one motorbike? Sometimes it's even 3 children. What would happen if their children grow bigger and they still can't afford a car? How would they go for leisure? Could they afford to pay their school tuition? Could they afford college? I heard education costs a fortune nowadays.

What a life.