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llegal investment and fund collection activities are growing in West Java, offering high profits to the people. However, those activities put participants at risk due to the lack of legal protection and poor financial literacy among the people, an official said.

The head of West Java’s Financial Services Authority (OJK), Joko Sarwono, said based on information collected from the public through an integrated consumer service scheme, the agency had identified 218 unauthorized investment offers and 44 others with improper licenses.

“They attract consumers by making use of public figures or religious figures and by offering high incentives,” Sarwono said after the establishment of a West Java provincial investment alert taskforce in Bandung on Wednesday.

In general, he said, the illegal activities usually offer unreasonably high profits and they are marketed online so that consumers cannot physically interact. The funds collected could also be reinvested into overseas projects. When there were underlying goods, the goods were priced unreasonably.

Providing an example, Sarwono said in Mavrodi Mondial Moneybox (MMM), each investor was promised their investment back in a period of time plus interest.

OJK declared MMM not to be a financial service institution running business activities in the financial sector. Its investment products as well were baseless. However, when it was declared illegal, some 35 million people had already joined the MMM scheme, creating potential losses of Rp 35 trillion (US$2.66 billion).

Other modus operandi include the one committed by Cakrabuana Sukses Indonesia, which offered gold mine consortiums. They offered a profit of five percent a month with a contract period of a year. The investments offered ranged between Rp 100 million and Rp 1 billion. Potential losses reached Rp 3.5 trillion.

Sarwono said the establishment of the provincial investment alert taskforce was to anticipate losses in the community due to illegal investment activities.

He expressed the hope that his signing of the joint commitment together with West Java Governor Ahmad Heryawan, West Java Police chief Insp. Gen. Bambang Waskito, the provincial prosecutor’s office head Setia Untung Ari Muladi and a representative from the Religious Ministry’s West Java office would prevent the movement of illegal investment activities in the province.

“Following the commitment, one or two or four officers from each of the institutions will become members of the taskforce,” Sarwono said.

Ahmad Heryawan warmly welcomed the taskforce, saying that illegal investment activities were not only rampant in urban areas but also in rural regions. The forms varied, ranging from cooperatives, multi-level marketing, mining investments, gold, insurance and haj and minor haj.

“People tend not to examine the legality of the institutions because many put ease, asset security assurance and guarantees to repurchase without lessening the value as taglines,” Heryawan said.

He also blamed the trend on the inability of the people to manage financial resources. Quoting a 2013 national survey on financial literacy, Heryawan said Indonesian people’s financial literacy was only 21.8 percent.