Gadai And Paylater Trends Rise, Poverty Rates Are Predicted To Increase After Eid

Deputy Minister of Home Affairs Bima Arya Sugiarto visited Cikurubuk Market, Tasikmalaya City, West Java, Thursday (20/3/2025) to ensure the availability of foodstuffs ahead of Eid al-Fitr. (ANTARA/HO-Puspen Ministry of Home Affairs)

JAKARTA There has been an increasing trend of pawn activity during Ramadan and ahead of Eid al-Fitr. According to economists, this spike reflects people's weakening purchasing power.

Throughout Ramadan to the moment of Eid al-Fitr, people's needs have increased. However, due to sluggish economic conditions, people must pawn their valuables.

This can be seen from the increase in pawn transactions at PT Pegadaian during the month of Ramadan, especially in the early weeks, along with the increasing need for public funds ahead of Eid al-Fitr.

The increase in pawn activities has occurred at the Bengkulu Branch Pegadaian Office since before Ramadan 2025. Gold jewelry, motor vehicle documents, and electronic goods are among the most pawned by residents to meet household needs.

Head of the Bengkulu Branch Pegadaian Office Noveldi said his office had been crowded with residents since early January 2025.

The same thing was experienced by Pegadaian Regional Office (Kanwil) III Sumbagsel, which noted that the performance of OSL pawns from the beginning to the middle of Ramadan this year has increased by more than six percent year to date (ytd) and 30 percent year on year.

Director of Finance, Strategic Planning, and Risk Management of Pegadaian East Ferdian Satyagraha said, the realization of pawn transactions rose 11 percent compared to the usual month.

"We recorded a 11 percent spike in pawn transactions during Ramadan, especially in the early weeks. People generally access additional funds for Eid purposes," Ferdian said, citing Tempo.

In addition, the average amount of loans proposed by the public has also increased. Previously, the average loan in pawnshops ranged from IDR 5 million to IDR 6.5 million.

Center of Economic and Law Studies (CELIOS) economist Nailul Huda said, approaching Eid al-Fitr, there will indeed be demand for financing, either through pawning or buy now pay later (BNPL).

Huda explained that the financing was used for homecoming and traveling. However, for those who do not have enough costs, they choose to seek financing or debt.

"In the past, maybe you could owe it to neighbors or family. Now it's switched to pawning or BNPL," said Huda when contacted by VOI.

President Prabowo Subianto has instructed to disburse holiday allowances (THR) for state officials since Monday (17/3/2025). However, due to the sluggish domestic economic condition, the increase in pawns is considered not surprising.

"THR distributed is not enough, or yes, there is no THR because of layoffs and so on," the Huda added.

Similarly, Executive Director of the Institute for Development of Economics and Finance (INDEF) Esther Sri Astuti said, the trend of increasing pawn activity is not just a season habit that usually occurs every time before Eid.

This, said Esther, reflects people's weak purchasing power.

"If consumption during celebration does increase, that's natural. But people who have money will not pawn their goods," said Esther.

The surge in pawn trends among the public was due to the urge for primary needs that had to be met. To meet these basic needs, they pawned the existing valuables.

According to Esther, the existence of layoffs, aka layoffs, has recently occurred, is one of the causes of the pawn spike in the community. Another indication is deflation for five consecutive months that occurred in 2024.

In February 2025, Indonesia again experienced deflation which indicated that public consumption was back weak. Although in March inflation rose again due to the moment of Eid, Esther said the spike was still low.

In addition to the increasing pawn transactions, another thing that has been in the spotlight is the use of digital credit services which have also increased in recent months. If previously the paylater was used for the purchase of consumer goods such as clothing, it is currently used for basic needs such as electricity tokens.

"If the paylater has been used for primary needs, it is a signal that people's purchasing power is indeed weak," he said.

These two phenomena, the increase in pawns and use of Paylaters, should be a signal for the Indonesian economy after Eid. Esther also estimates that the poverty rate has the potential to increase after this celebration.

"The potential for an increase in poverty is there, because our middle class has fallen by around 9'10 million people. They are now vulnerable to falling poor," said Esther again.