User Blog
February 9, 2012
by Emma Kwee

Leasing Culture: from Cars to Sunglasses

By: Emma Kwee

Malls are the playground for most Indonesians. families, teenagers and couples spend their free time increasingly indoors (window) shopping, lounging around at foodcourts or loitering around at arcade halls. It’s not just window shopping though these days.

Those who have visited Indonesia recently will probably have noticed the shiny, spanking brand new wagonpark that cruises the cities’ congested thoroughfares. Small Japanese hatchbacks overtake imported 5-door Mercedes Benz, while bajaj (the traditional three wheeled taxi) seem to have become a rare sight.

What has happened? Have Indonesians suddenly all become rich?

Well, yes, the rise of a middle class and overall increase in welfare have certainly propelled some Indonesians into the higher echeleons of society. But these facts tend to obscure the coming into existence of another development: the emergence of a lease culture.

The large majority of the sparkly vehicles that drive around the country, are in fact leased. Most motorcycles as well. Leasing comes at a price though, as interest rates reach up to 10%. Depending on the price of the car, a 20% down payment is the start of years of monthly installments.

Suddenly, new high quality products have become available to the masses. Indonesians happily sign up for it, eager to walk in step with the rest of the world. The average downpayment for a motorcycle is a mere 300.000 Rp., a small hurdle on the way to mobility.

Leasing can however also spiral into ‘gali lobang tutup lobang’ (digging a hole to close a hole). People stop shopping with their mind on what’s in their wallet. With house, car, motorcycle and phone on the installment plan, the monthly bills stack up.

Some people see leasing as a valid alternative to renting. Friends of mine have leased and sold 3 motorcycles this past year. When strapped for cash, they sell off one of their motorcycles, only to walk into the Honda store again the next day, to lease a new one. They claim the cost of renting a motorcycle would be equal to leasing one. The difference is you can sell your leased motorcycle after you’ve paid it off.

It’s not just cars and motorcycles that are available on the installment plan.

Back to the mall, where we find ourselves in an optical store. Calvin Klein, Dolce & Gabana and Ray Ban’s line the walls. A pair of big rimmed black Tod’s (apparently a big brand from the Italy) has caught my mother in law’s eyes. She twirls and poses in front of a mirror. Looking like a mix between Imelda Marcos and an Italian gangster wife, she compares prices like a pro. 2.8 million, 3.9 million, 1.9 million, not really prices you’d ever expect to pay for a pair of sunglasses in Indonesia.

Luckily, there is the installment plan. That said, the debit card is swiped, the contract signed and the Tod’s wrapped and bagged. We are off to another mall, in our shiny, grey Honda Jazz.

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