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Jakarta Post

Low financial literacy leads to rampant fraud: Researcher

  • Anton Hermansyah
    Anton Hermansyah

    The Jakarta Post

Jakarta   /   Mon, August 29, 2016   /  08:57 pm
Low financial literacy leads to rampant fraud: Researcher National Police director of special economic crimes at Criminal Investigation Department (Bareskrim) Brig. Gen. Agung Setya listens to a complaint made by an investor of GTI Syariah on the sidelines of a Kontan-Financial Service Authority (OJK) discussion in Jakarta on Monday. (JP/Anton Hermansyah)

Low financial literacy, among all classes of people in Indonesia, is the main factor behind the success of investment scams in the country.

A researcher on illegal investments at Prasetiya Mulya University, Lukas Setia Atmaja, said investment and financial literacy was not always in line with educational background. He cited Yogyakarta Atma Jaya University, which lost Rp 16.6 billion (US$1.25 million) in the Antaboga Sekuritas case.

"Another worrying factor is the low financial literacy among women. They are the major victims [of investment fraud] as our traditional values direct men to hand over the family’s money to the control of their wives," Lukas said in a Kontan-Financial Services Authority (OJK) discussion in Jakarta on Monday.

He pointed to the MMM (Mavrodi Mondial Moneybox) Ponzi scheme. The investment scheme, which collapsed in 1994, reappeared again in 2015 and attracted many people to join following extensive advertising in newspapers and on TV.

The director for extraordinary economic crimes at National Police’s Criminal Investigation Department (Bareskrim), Brig. Gen. Agung Setya acknowledged that the low financial literacy rate had led to people joining Ponzi schemes in pursuit of excessive short-term profits.

“Even advanced investors who are supposed to have a better understanding of investments sometimes let themselves fall victim to illegal schemes as a result of greed,” he said. (ags)

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