You're Doing it Wrong: Debt Collection in Indonesia

Typically, our Friday Doing it Wrong post is lighthearted and fun, with us dutifully pointing out epic fails in The World’s ongoing battle against debt collectors. This is not one of those posts.

Instead, we’re noting how a country can get debt collection so terribly, terribly wrong. So wrong, in fact, that people on both sides of recovery are dying.

Indonesia, home to 240 million people and a $1 trillion economy, has seen two high-profile murder cases in less than a month that both center around debt collection.

In the first, a man was killed while in the custody of three debt collectors that were working for Citibank. The story has attracted international attention, prompting Indonesia’s central bank to ban Citi from using third party debt collectors and consider placing more restrictive rules on other banks and accounts receivable management professionals. The case is ongoing, with three arrests made so far and a multi-million dollar lawsuit already filed against Citi by the family of the victim.

This week, another disturbing story emerged from Indonesia. This time around, a debt collector was murdered – allegedly by members of the military – while attempting to collect a debt. Helmy Yohannes Manuputty, a 34 year-old debt collector, died Monday after a week in the hospital. Police say that he was trying to collect a debt owed by an army officer when the officer and at least one accomplice severely beat and tortured the man. This case is also ongoing.

In the aftermath of the Citi story, as previously noted, there have been many calls for increased regulation of debt collectors. And in this particular case, I can’t say I disagree with those calls.

Any financial system that sees murders on both sides of the ARM system in such a short span of time needs to be better regulated. I’m quite sure that Western financial firms – like Citi, of course – are self-regulating in Indonesia now. But it would help if the country would develop a legal structure where debt collection can be effective, productive, and above all, safe.