Has anyone been surrounded by a swarm of bees?
At first, the buzzing sound comes suddenly. In a very short time, it surrounds you from every direction. You try to move slowly away while watching carefully. If somehow you escape the swarm without a sting, then a great sense of relief fills your heart.
Not many people have been in that situation, but almost everyone in Indonesia’s big cities has been in traffic encircled by motorcycles. Some that have been through both would testify that the two experiences have many similarities.
The sting of motorcycles hurt too. Of 6,387 traffic accidents in Jakarta from January to November this year, 94.8 percent were motorcycle-related incidents.
The proportion has risen from 93 percent of 8,059 traffic incidents in 2010. The Jakarta Police chief has stated that motorcycle accidents waste life and increase anxiety in society.
The year 2010 witnessed a 25.8 percent rise in motorcycle sales to 7.4 million. Sales from January to September 2011 reached 6.2 million units, projected to pass a total of 8 million for this year. About three-quarters of sales were in Greater Jakarta.
In total, from 2008 to September 2011, Indonesian roads have had to endure an additional 28.6 million new motorcycles. The chairman of the Indonesian Motorcycle Industry Association, Gunadi Sindhuwinata, is optimistic that Indonesian people will buy 10 million motorcycles in 2013.
Let’s first look at the supply side.
The CEO of Federal International Finance (FIF) explained that usually financing companies such as FIF provide 10 percent funding while the rest is covered by a bank. The interest charged is between 19-26 percent annually. Peak sales are at Ramadhan since many people want to have a new vehicle during Idul Fitri.
Banks with funds on deposit could choose to lend to entrepreneurs seeking to expand their business. To do so prudently and strategically, especially in the manufacturing sector, would increase Indonesia’s long-run productive capacity and growth.
But conducting thorough due diligence and credit analysis is tedious, costly and time-consuming.
Thus, it is very alluring for banks to channel more of their credit to the consumer side especially automotive loans. If a debtor fails to pay, then the bank can simply seize the vehicle, mostly without returning payments already made, and re-sell to other willing buyers. Heads I win, tails you lose.
Game theory, a sub-branch of economics that won John Nash a Nobel prize, has described the situation as a prisoner dilemma where every party takes decisions that benefit their self-interest but the overall impact is negative.
From the demand side, Indonesia’s rising middle class has stronger purchasing powers.
In the past, they were still in the lower-middle or even low-income category that had little choice but to use notoriously unreliable public buses in all of their varieties. You never knew when they would
show up, making it hard to schedule trips.
The only way to ensure arrival on time at the office was to leave very early from home and pray hard in uncomfortable seats.
Thus, when the rising middle class has a sufficient income stream to buy a motorcycle on credit extended by banks, they grasp it enthusiastically. If father, mother and kid make the motorcycle trip
together, they even save money compared to using public buses.
People who live near railway lines have a better option, as the journey is much shorter and the schedule is much less erratic with 10- to 15-minute intermittent delays still acceptable.
The increasing frequency of air-conditioned trains makes them even more interesting to middle classes that can not afford to arrive at the office all sweaty. But train coverage in Greater Jakarta is still very limited.
Part of the reason motorcycles are much faster than cars is that traffic laws are somehow applied more leniently to motorcyclists. Try to drive a car through red traffic lights or drive against the flow and you can be sure that a cop is soon on your trail. We see motorcycles do that every day while the police stand around.
The attack of the motorcycle swarm is a big worry, but it is not too late to prevent.
The first measure would be to make public transportation more attractive to the public. Although the Jakarta government actively promotes a yet-to-be built subway, the Lebak Bulus-Kota track is still too limited to make a significant impact on millions of Jakarta’s commuters.
If the government can spend lavishly to build new and elevated roads in Jakarta, then it also could build new train tracks to cover more areas. Trains do not have to wait for traffic lights, cost less than subways and reduce road congestion. The Transjakarta Busway is another means of transportation that also needs to increase its frequency and to put air con in the bus stops to woo commuters.
Some busway and train stations need to be strategically designed with large car parking areas so commuters can come by car from their homes and continue their journeys by public transportation where they could arrive faster and cheaper in a comfortable manner.
Bank Indonesia needs to implement more stringent criteria for motorcycle credit and get banks to channel more of their deposits to productive loans that promote Indonesian companies. Lastly, let’s impose heavy penalties on law-breaking motorcyclists and enforce road rules consistently.
Then maybe our love affair with the motorcycle could be ended for good. Like some affairs, it’s not meant to be permanent.
The writer is a lecturer at the School of Economics, the University of Indonesia, and senior economist at INDEF.
