Ferrari Sales Soar in Indonesia
7.4.01

The following article, written by Joe Leahy, appeared in the Financial Times of 7 April:

For some people, the sale of a luxury item as extravagant as a Ferrari in a country as impoverished as Indonesia might seem crass.

However, Indradjit Sardjono, managing director of Citra Langgeng Otomotif, the first company to distribute Ferraris in Indonesia, thinks of himself as a modern day Robin Hood. Each of his cars incurs taxes that add up to 200 per cent to the wholesale price, contributing much-needed cash to the government's depleted coffers.

"If you remember that Robin Hood takes money from the rich and gives to the poor, well that's what we do through our taxes. It's just up to the people to make sure the money gets from the government to them," Mr Sardjono says.

The opening of the Ferrari showroom in downtown Jakarta last month demonstrates a little-known fact about Indonesia. Despite three years of economic and political turmoil, south-east Asia's largest and most resource-rich country still has its share of millionaires. Some of these are the former heads of bankrupt conglomerates who have managed to stash their billions away offshore. Others are exporters who have taken advantage of the depreciation of Indonesia's currency, the rupiah, to sell minerals or goods such as palm oil or timber on offshore markets. Indeed, Indonesia's gross domestic product grew 5 per cent last year as rising export income fuelled a boom in domestic consumption.

Car sales have nearly tripled, with sales of luxury cars such as BMW rising by nearly five times. "When a country is as resource-rich as Indonesia, there's still plenty of money to be made from either fishing, chopping down trees or digging holes," says Song Seng Wun, regional economist with GK Goh Securities in Singapore.

Of the 10 Ferraris and 10 Maseratis allocated to Mr Sardjono's showroom this year, four Ferraris and two Maseratis have already been sold. Each of the Ferrari 360 Modena F1s, a model based on Formula One racing cars, sells for nearly $400,000, about twice what they cost in the US, while each Maserati 3200 GT Auto costs $180,000. Indonesia's per capita income is about $700.

Mr Sardjono says his customers are mostly exporters or the heads of consumer goods companies, such as cigarette tycoons. He says he rarely sees the old guard of bankrupt businessmen associated with the regime of former president Suharto, who fell from power in 1998. "Rarely do the heads of the old conglomerates come to see us - they would be embarrassed because they owe the government a lot of money."

Jakarta's pot-holed roads are more appropriate for 4WDs than the slick Modena. But Mr Sardjono says many people buy his cars simply as "works of art" to show off in their homes.

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