Multilevel marketing firms need regulating: Official

JAKARTA (JP): Director General of Domestic Trade Teddy Setiadi acknowledged on Friday the need to issue a special regulation to control rapid development of multi-level marketing businesses in the country.

"As yet we have no specific, official regulation on multi- level marketing. It's a pity, because we badly need such a regulation to manage mushrooming multi-level marketing businesses here," he said.

Teddy told Antara news agency that Indonesia was "several steps behind" other members of the Association of Southeast Asian Nations (ASEAN), which had implemented such regulations to control growing multi-level trading.

Neighboring countries, including Malaysia, established a specific regulation on multi-level marketing -- the direct sales act -- several years ago, he said.

Teddy was addressing media questions on cases involving companies working under multi-level marketing systems and alleged instances of customer exploitation.

He acknowledged that under the existing regulations, companies adopting the multi-level marketing system were not required to have special licenses to operate. "They only need to obtain a License for the Operation of Trading Businesses (SIUP), just as other companies working in retail businesses do.

"It is therefore difficult under the existing law to impose any penalties on errant multi-level companies, because they have obtained the SIUP to back up their operation. We can only impose a penalty if they have no license to operate."

Based on his office's study, most multi-level marketing companies in the country only sold "dreams" to their customers with the promise of big bonuses.

"It is illogical that with only some deposits made to the companies they could obtain a huge income, or goods, in such a short time. It's merely selling dreams," he said.(gis)