Govt to control multilevel marketing
Govt to control multilevel marketing
JAKARTA (JP): The Ministry of Industry and Trade has issued a
a decree to regulate multilevel marketing businesses and to
protect the public from fraud, a top official of the ministry
said on Monday.
Director general of domestic trade Teddy at the ministry,
Setiadi, said that the decree was aimed at creating a clean
atmosphere in the multilevel industry and to prevent fraud.
The new regulation requires multilevel marketing companies to
apply for a special permit to do their businesses aside from the
common permits necessary for all corporations.
The so-called Multilevel Marketing Business Permit will be
only issued to companies that have secured operating licenses as
limited liability companies.
Under the decree, the companies should also register their
products or services with the ministry and the products and the
services should comply with the standards of quality set by the
government.
The multilevel marketing companies should also have a
marketing program that is clear, transparent and rational, and
they should provide opportunities for their sales people to
profit.
Teddy said the mushrooming of multilevel marketing businesses
and the frequent cases of frauds in the industry have helped
quicken the issuance of the decree.
Penalties for operating against the permit range from warning
letters to permit withdrawals.
Chairman of the Indonesian Direct Selling Association (APLI)
-- which groups the country's multilevel marketing companies --
Helmy Attamimi, said of an estimated 200 multilevel marketing
companies in the country, about 30 were doing "dirty" businesses.
He said the fraudulent companies focused on collecting funds
from the public with dirty marketing tricks instead of making
money by boosting marketing.
One case of fraudulence was performed by PT Banyumas Mulia
Abadi in July last year.
The company's founder M. Yusuf and his wife Sakinah allegedly
embezzled trillions of rupiah in funds received from customers.
Teddy said that Banyumas' operating license had been suspended
and the company promised to settle its debts to its customers by
the end of next month.
"If the company has not settled its debts by the deadline, we
will revoke its license," he said.
Banyumas which trades in textiles was founded in Medan, North
Sumatra in June 1997, and had since opened branches in Bandung,
West Java; Surabaya, East Java and Jakarta. It offered members a
90 percent return on a minimum initial investment of Rp 2 million
within 25 days.
Police closed down the company's offices in July, last year,
and former customers has since been trying to recover their
money.
APLI currently has 39 company members with some 1.4 million
sales people. It said its members made Rp 790 billion in sales in
1999.
"APLI will help uphold the new decree by selecting and
screening its members carefully," Helmy said.(10)