Examine before investing

The government, or in this case the Ministry of Industry and Trade, should draw up a bill on compulsory disclosure documents for businesses included in the patter of business opportunities, such as MLM, cooperation or yield-sharing, agencies, distribution/dealers, licensing and so forth.

For example, a company adopting the pattern of cooperation/yield-sharing, such as PT QSAR, should have been obligated to have a disclosure document, something like a business prospectus, which would have been distributed to prospective investors interested in cooperating with him at the earliest opportunity. After the prospective investor studied the contents of the prospectus and indicated that he was interested in investing, the cooperation agreement document would have been given so that he could study it for a minimum of two weeks.

This business prospectus would contain information about, among other things, the owners and the business experience of the professionals in the said company, how long the company has been doing business, the risks of business, corporate financial statements, the rights and obligations of the parties involved in the cooperation, the termination of the agreement and so forth. It is through this prospectus that prospective investors are expected to find out and study whether or not the company is bona fide as well as being worthy of investment.

I don't think it is hard to draw up a bill concerning the above. We can just study the law prevailing in the U.S. and then adjust it to the situation and conditions of our country. At the same time, the association of employers, the government and the foundation of the consumers' institute need to continue to "educate" capital owners so that they will be more careful and prudent when choosing investments.

At the same time, the association of employers, the government, foundations, consumers' institutions need to continue to educate the community (capital owners) so that they are really careful in choosing the right investment. In the franchise business, for example, the International Franchising Association (IFAS) always campaigns the motto "investigate before investing" to prospective investors wishing to get involved in the franchise business.

AMIR KARAMOY, Observer of Franchising and Multilevel Business, Jakarta