Fraudulent Investments Cause IDR 139.67 Trillion in Losses, Indonesian Migrant Workers Most Vulnerable

Between 2017 and 2023, fraudulent investments have cost Indonesians a staggering IDR 139.67 trillion. Authorities report daily complaints from victims of investment scams, with over 1,218 illegal investment entities blocked as of early 2024.

Indonesian migrant workers (PMI) are the most vulnerable group. Hudiyanto, Chairman of the Secretariat Task Force for the Eradication of Illegal Financial Activities at OJK, stated that migrant workers are primary targets due to their significant earnings from years of hard labor.

Lack of financial literacy has made it easier for fraudsters to deceive victims. Unfortunately, the government is still struggling to track down and apprehend these criminals.

Weak Law Enforcement Despite Existing Regulations

Izzudin Al Farras, Head of the Center for Digital Economy and SMEs at INDEF, pointed out the weak enforcement of laws as a major reason why fraudulent investments persist. He questioned the effectiveness of regulatory agencies and law enforcement in tackling these scams.

"Authorities must simplify the reporting process for fraudulent investments, possibly by introducing a one-stop reporting system," Izzudin told CNN Indonesia on Tuesday (25/2).

Regulations governing illegal investments are already in place, including the Capital Market Law, Banking Law, Criminal Code (KUHP), and Consumer Protection Law. However, their implementation remains a challenge.

Izzudin emphasized the need for a firm government commitment to investigating and prosecuting fraudulent investment cases. "People need responsive law enforcement to ensure these perpetrators face real consequences," he added.

Low Financial Literacy, Weak Digital Security

Beyond weak law enforcement, low financial literacy has provided opportunities for scammers. Nailul Huda, Director of Economics at the Center of Economic and Law Studies (Celios), highlighted the vulnerability of Indonesia’s digital security.

Huda believes the government is aware of the public’s low awareness of investment fraud but lacks an effective strategy to curb misinformation.

"Scam investment promotions are still rampant on social media and even accessible via messaging apps. The government lacks the proper tools to stop their spread," he explained.

He also criticized the leniency of legal verdicts, stating that many fraudsters continue to operate freely. "Meanwhile, fake investment advertisements keep multiplying, even appearing in content creators' videos," he said.

Comprehensive Measures Needed to Combat Fraudulent Investments

Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (Core) Indonesia, stressed the need for comprehensive measures to combat fraudulent investments.

He identified two main causes: low financial literacy and gaps in digital security. To address these, he recommended enhanced financial education and stronger regulatory enforcement.

"In addition to education, digital security systems and investment regulations must be strengthened to detect and prevent fraudulent schemes," he suggested.

Strict Sanctions Needed, Influencers Must Be Held Accountable

Digital economy expert Heru Sutadi argued that even legal investments often harm consumers due to lax regulatory oversight. He cited cases like Investree and eFishery as evidence of poor financial supervision.

"In Investree’s case, revoking its license wasn’t enough. The company’s executives and organization should be held accountable for the losses," he stated.

Heru also criticized influencers who promote fraudulent investments, suggesting they should face legal consequences.

"The government must take a proactive role in preventing fraudulent investments before they claim more victims, rather than responding only after the damage is done," he concluded.

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