Malaysia's Best Service Pawnshop
Monday - Saturday, 8.30am - 5.30pm | Sunday, 8.30am - 3.30pm

History of Pawn Shop in Malaysia

Early History of Pawnbroking in Malaya

The history of pawnbroking in Malaysia started as early as the Malacca Sultanate. During that period, traders used pawnbroking to borrow money from a bank called "Tandjung." Tandjung provided low-interest loans to traders. The loans from Tandjung were essential for the traders as it helped them in their business and trade.


Pawnbroking, also known as "Pawn shop" in English, has become a common practice in the financial industry in Malaysia for several decades. Pawnbroking involves obtaining loans by offering assets as collateral. The term "pawn" comes from the Arabic word "rahn," which means "pledging an asset."


In 1948, the British Government passed the Pawnbrokers Ordinance to regulate pawnbroking activities in Malaya. Then, in 1972, the Malaysian government enacted the Pawnbrokers Act 1972, which empowered the government to control and regulate pawnbroking in Malaysia.

Early History after British colonization

After the British colonization in Malaysia, pawnbroking became increasingly popular. In 1880, a pawnbroking company called the "Loan and Trust Company" was registered in Penang. The company offered low-interest loan services to the public. In 1890, another pawnbroking company, the "Mortgage and Trust Company," was registered in Kuala Lumpur.


Since then, pawnbroking has grown in popularity, and pawnbroking companies have expanded throughout Malaysia. In 1967, the Malaysian government passed the Pawnbrokers Act to regulate pawnbroking activities in Malaysia. This act empowered the Ministry of Finance to issue pawnbroking licenses to companies and set the maximum interest rates that could be charged.


The Pawnbrokers Act was amended in 1982 and 1991 to enhance consumer protection and tighten the regulation of pawnbroking activities. In 2007, the Pawnbrokers Act 1959 and the Pawnbrokers (Amendment) Act 2007 replaced the previous act. This act gave the Ministry of Finance the authority to control and issue pawnbroking licenses to companies throughout Malaysia.

History of Pawnbroking until today

Today, pawnbroking has become increasingly popular in Malaysia, especially among those in need of immediate cash loans. Pawnbroking companies provide convenient and fast services with easy-to-meet requirements. Pawnbroking also serves as an alternative to bank loans, which often have strict requirements and lengthy processes.


Although pawnbroking has clear benefits, it also involves risks that need to be considered. Consumers must be cautious when taking out pawnbroking loans as they need to provide valuable assets as collateral. If they fail to repay the loan, their assets may be taken over by the pawnbroking company. Therefore, before taking out a pawnbroking loan, consumers need to carefully consider the risks and benefits involved.


Furthermore, the Malaysian government has taken steps to protect pawnbroking consumers from irresponsible pawnbroking companies. In 2017, the government launched the "Pawnbroking Consumer Guide" to help consumers understand their rights and responsibilities when borrowing from pawnbrokers. This guide provides information on loan terms, interest rates, and consumer rights when facing difficulties in loan repayment.


The Ministry of Finance has tightened the supervision of pawnbroking companies by conducting regular inspections to ensure compliance with the Pawnbrokers Act and established regulations. Pawnbroking companies that violate regulations can face legal action, including fines or revocation of business licenses.



In conclusion, pawnbroking has been a common practice in the financial industry in Malaysia since the time of the Malacca Sultanate. In the present day, pawnbroking has become increasingly popular among those in need of immediate cash loans. Therefore, it is important for consumers to understand the risks and benefits involved before taking out a pawnbroking loan. The Malaysian government has also taken measures to protect pawnbroking consumers from irresponsible pawnbroking companies by issuing the Pawnbroking Consumer Guide and tightening supervision of pawnbroking companies across Malaysia.

Click here to follow our Facebook Page and Instragram Page

Pawnzon Facebook

Pawnzon Instagram

Have you decided to “Pawn” or “Sell” your gold?

Interested in finding out how much you can earn with your gold “Pawn”, call us now at 03-7496 8788 / 03-7890 4132 or visit us at your nearest shop to get a FREE price evaluation! FREE!