Establishing a conventional pawn service company as a foreign investment company in Bali, Indonesia, can be a lucrative business opportunity.
To navigate the process, it’s crucial to understand the specific requirements set by the Indonesian government, particularly KBLI Code 64921.
This code encompasses pawnbroking businesses that provide loans with collateral based on pawning laws and fiduciary guarantees, as well as offering valuable goods storage and appraisal services.
Additionally, conventional pawn shops under this code may engage in other activities that generate fee-based income, as long as they comply with the prevailing financial services sector regulations and obtain approval from the Financial Services Authority (OJK).
In this blog post, we will guide you through the essential steps to establish your conventional pawning business in Bali.
Overview
The business category covered by KBLI Code 64921 encompasses conventional pawnshop activities.
These activities include issuing loan money secured by pawn or fiduciary laws, offering safekeeping services for valuable goods, providing appraisal services, engaging in other non-pawn related activities that generate fee-based income, provided they comply with financial services regulations, and conducting any other business activities approved by the Financial Services Authority (OJK).
Legal Basis
The operations of conventional financing companies are regulated under Indonesian financial services law, primarily overseen by the OJK.
These regulations ensure that all financial activities are conducted in a controlled and secure manner, adhering to the standards set by the government to protect both the businesses and their clients.
Type of License
The type of business license required for operating under KBLI Code 64921 is a conventional business permit, specifically regulated and issued in compliance with the guidelines and approval from the Financial Services Authority (OJK).
Coverage of Service
The services provided under this business model include money lending against pawn and fiduciary guarantees, valuable goods deposit services, appraisal services, and other financial services that do not conflict with financial service regulations, with all activities needing the sanction of the Financial Services Authority.
Business Scale, Land Area, and Risk Level
The conventional pawn service under KBLI Code 64921 is categorized as a large-scale business, though there are no specific regulations governing the required land area for operation.
This lack of land area stipulation provides flexibility in setting up operations in various locations.
However, due to the financial nature of the services and the handling of valuable goods, the risk level associated with this business is considered high.
This high-risk classification necessitates robust security and financial management strategies to ensure the business operates within the scope of legal and regulatory frameworks.
Authorities Granting Licenses
The primary authority responsible for granting licenses and overseeing conventional pawn services under KBLI Code 64921 is the Financial Services Authority (OJK).
This body enforces the regulations and ensures compliance with the legal framework.
Requirements and Obligations for Business Licensing
Operators looking to establish a conventional pawn service must first obtain a Business Identification Number (NIB), which is issued through the Online Single Submission (OSS) system.
Following this, the application for the business license itself must be submitted to, and will be issued by, the Financial Services Authority (OJK), in accordance with the specific requirements they have set out.
In addition to securing the license, businesses are required to fulfill ongoing obligations dictated by the OJK, which are designed to ensure that operations remain compliant with the prevailing financial regulations.
The duration for meeting these licensing requirements and obligations is directly specified by the Financial Services Authority, underlining the need for compliance within designated time frames to avoid regulatory issues.
Frequently Asked Questions
- What type of business license is required for operating a conventional pawn service in Bali?
Operating a conventional pawn service in Bali requires a conventional business permit, which is regulated and issued by the Financial Services Authority (OJK) according to specific guidelines and approvals.
- Can conventional pawn services in Bali engage in activities other than pawning?
Yes, besides typical pawnbroking activities, these businesses can perform additional fee-based activities not directly related to pawning, provided these do not conflict with financial service regulations and have approval from the OJK.
- Who is the primary regulatory authority for pawn services under KBLI Code 64921?
The Financial Services Authority (OJK) is the main regulatory body responsible for licensing and overseeing conventional pawn services operating under KBLI Code 64921.
- What strategies should be implemented to manage the high-risk nature of the pawnbroking business?
Due to the high-risk nature of pawnbroking, it is crucial to implement robust security and financial management strategies, including comprehensive insurance, secure storage facilities, and meticulous financial tracking to protect both the business and its clients.
- What is the process for a foreign investor to start a conventional pawn service in Bali?
Foreign investors must follow the same procedure as local entities, which involves obtaining an NIB through the OSS system, applying for a business license from the OJK, and ensuring compliance with all regulatory obligations set by the OJK for pawnbroking under KBLI Code 64921.
