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The Discrimination at the Heart of Indonesia's Debt Collection Industry

Negative stereotypes about people from East Indonesia have driven a generation of young men into one of the country's most-reviled industries.

Ferry Lasatira has made it his business to know yours. He's been in the debt collection game since the '80s, which makes him a godfather of sorts to young men from Indonesia's under-developed eastern province of Maluku who arrive in the hectic capital with little more than a plan to make good in one of the most-expensive cities in the country.

Indonesia's is a diverse place, a nation of more than 300 different ethnic groups, but the debt collection industry is predominately a world of Moluccan and Ambonese migrants, people who suffer both discrimination because of their ethnicity and accolades for being seen as some of the strongest and bravest people in the country.


Watch: Inside Indonesia's Notorious Debt Collecting Industry: The Debtfathers

It's all based on the kinds of ethnic stereotypes that are remarkably common in Indonesia. People are often described in the context of some of the best and worst stereotypes about their ethnicities. Batak people are believed to be good lawyers. Papuans as good athletes. And Moluccans and Ambonese as having a look that a lot of people describe as "scary."

With few other jobs available in the legitimate business world, a lot of lower-income Moluccan and Ambonese migrants lean into this racism to turn these stereotypes to their favor. If the world think's they're brave, tough, and terrifying, then men like Ferry found a way to use those ideas to earn a good living.

“People give us these jobs because we look tough," Ferry told VICE. "How can we come up to someone to collect on their debts if we are afraid?"

Ferry, who is originally from Seram Barat on the far western edge of Maluku, told VICE that this idea that Moluccans are brave came from the Dutch colonial era. Moluccan and Ambonese soldiers were conscripted as professional soldiers by the Dutch, where they fought against the indigenous Indonesian armies battling for the country's independence. Stories about their legendary bravery in battle are still a source of pride for Ferry, who told VICE that it was his fearlessness that made debt collecting a natural fit.


There's a societal belief that men from Maluku represent an outsize percentage of the country's "underworld," a belief seemingly bolstered by stories of the violent exploits of gangsters like John Kei, of the Kei Islands, in Maluku, who rose to become a household name by the time he was charged with the premeditated murder of a Jakarta businessman.

“People tend to think that Maluku people are tough,” explained Nur Yusra, a sociologist from Padjadjaran University. "This is the image people have of Maluku people, and the banking industry makes use of that image, of that stereotype, to secure their interests.”

So debt collecting becomes a both a lifeline and an anchor for migrants from Maluku. The unsavory reputation of the industry only perpetuates these stereotypes regardless of how real they actually are. Meanwhile, the fact that the stereotypes exist means that for many men from Maluku, debt collection is both an ideal job and the only job available, Yusra explained.

The other half of this story is how Indonesia's banking system works. The country's financial institutions expanded rapidly under the New Order regime, often at a detriment to the country's overall financial security.

By the 1980s, the debt collection industry had established itself as a vital part of the nation's banking sector. At the time, the Suharto-era government was liberalizing the entire sector, opening the door to anyone with at least Rp 10 billion ($695,000 USD) in assets to open a privately-owned bank.


A decade later, in the mid-90s, there were 166 brick-and-mortar banks and more than 9,000 smaller, privately-owned lenders, most of which specialized in small loans. Before long, there was an estimated Rp 234 trillion ($16 billion USD) in outstanding loans floating around as the country quickly spiraled toward dysfunction during the Asian Financial Crisis.

At the time, the country's laws regulating debt, especially the collection of outstanding debts issued by private creditors, was still relatively unclear. Back in those dark days, debt collectors like Ferry would routinely use violence to get banks their money.

"Sometimes we used violence," he told VICE. "It depended on the situation. But we can’t do that anymore today."

A lack of regulations was one of the reasons behind the murkiness of the debt collection industry. There was little oversight to the industry of third-party debt collection. But in 2012, the central bank issued rules that meant to protect consumers from the violence of the debt collection industry. Those regulations bar debt collectors from using intimidation, either physical or verbal, to collect on their debts. They're also prohibited from embarrassing or harassing the debtors in public, although what this really means is often up to debate.

Those regulations came at a time when the debt collecting industry had, by all accounts, gone way too far. One year before the regulations went into effect, a debtor died in the basement of Citibank's Jakarta headquarters during what's been described as a "harsh interrogation," a term widely seen as a euphemism for torture. That death was seen as an indictment on the industry as a whole, creating an image problem that some working today say they still haven't overcome.


But while the regulations prevent debt collectors from resorting to violence, the fact that, to many, their sheer presence is intimidating, means that intimidation still plays a big part in what they do. Jemmy Tattoo, a thick-set debt collector who works for PT Laksana Cakrawala, told VICE that he has psychological tricks to convince stubborn debtors to pay up.

“We all have our own roles,” Jemmy told VICE. “Some do the talking. Some of us show some strength.”

Jemmy Tattoo

Jemmy runs a crew of that numbers in the hundreds and one of his tactics is to overwhelm a person by flooding the street outside their home address with men who sit there and wait them out. Most of the time, this tactic works.

Banks prefer to use debt collectors because it's far easier, and cheaper, to outsource the labor to a third party. Even in ideal situations, debt collection is a time intensive process, one that requires a knack for tracking people down, keeping your cool, and waiting for hours in the hot sun.

And without men like Ferry and Jemmy, the country's banking industry would collapse, said Ina Primiana, an economics expert at the Center of Reform on Economics (CORE).

“The debt collection industry is like a safety net for banks,” Ina told VICE. “At the end of the day, banks have to secure their assets.”

Ferry, for one, says that he is happy to exploit these stereotypes if it makes debtors pay up quicker. But just because people think he's some kind of hard-as-nails guy, doesn't mean his entire life is violence and fear.

“Just because people see us, see the way we are, they get scared right away,” Ferry told VICE. “But all of that is mere assumptions. If they get to know us personally, they would see we’re not always like we seem."