How to Avoid Fraud in Investment by Using Legal Tools

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By:

Team of Hukumindo

Previously, the www.hukumindo.com platform has talk about "How to Execute Power of Attorney From Abroad to Indonesia Territory?", "How to Open a Police Report in Indonesia?", "What Is the Difference Between Fraud and Embezzlement Under Indonesian Law?", "What's The Difference Between Police Report and Public Complaint?", and "What Language Must Be Used In The Agreement In Indonesia?", "Who's Legally Represents The Company In Indonesia?", read also "Some Legal Aspects of Export-Import According to Indonesian Law". And on this occasion we will discuss about 'How to Avoid Fraud in Investment by Using Legal Tools'.

Indonesia as One of The Investment Destination For Foreign Investors

Indonesia is a very appropriate investment destination for foreign investors, because Indonesia has enormous potential to earn profits. Don't hesitate to invest in a country famous for its tourist destinations such as Bali, Jogjakarta, and Lombok.[1]

The main factor that becomes one of the important factors for foreign investors to look at Indonesia is the natural resource factor. Indonesia has abundant natural resources, ranging from petroleum resources, mining resources, and natural gas sources. Indonesia is also the largest archipelago country which is one of the highlights in the world because it has a very strategic location.[2]

Indonesia's population and workforce are dominated by productive age who are more skilled and ready to work. In addition, Indonesia's Economic and Investment Climate is also quite good, Indonesia has survived the global economic crisis or the world economy. Indonesia continues to create security and a healthy economic and investment climate. For now, Indonesia has even been appointed as one of the drivers of the economy in the Asian region. Indonesia's political stability is also relatively good, Indonesia is a country that continues to rise to become a stable country since the reform in the field of politics since 1998. Indonesia also continues to improve its democratic system to have a government that is always healthy and also conducive or safe.[3]

Indonesia is also one of the countries that has an active role in building bilateral and international relations. The most important thing is that Indonesia is the only country in Southeast Asia that is active in the group of G-20 countries. This is because Indonesia always strives and plays a role for and in conveying the interests of developing countries in the world.[4]

These things are very profitable for you foreign investors to invest in Indonesia. Many factors can be obtained, of course, for investors who invest in Indonesia, because Indonesia is a country that is rich, safe, and stable. So there are many interesting and profitable factors when foreign investors invest in Indonesia.[5]

Keeping Expectations in Investing

Indonesia is currently an investor-friendly country, but sometimes in practice there are things that do not match with the expectations. In practice, not everything is easy, but efforts in the right direction must always be maintained. In practice, investing in Indonesia can get into legal trouble if you are not careful. 

One of the most common criminal acts is fraud, Its happen also in Indonesia. As we know that fraud is regulated in Article 378 of the Criminal Code ('KUHP'). This criminal act often occurs within the scope of investment or in the business world as general. In this article, the author does not intend to analyze fraud as a legal study, but tries to prevent the occurrence of this crime in the scope of investment in general by using legal tools.

Crime is prevented by using legal tools, that's more or less what it means with this article. By doing early mitigation to prevent fraud in investment, it is hoped that expectations in investment will be maintain. The legal instrument referred to here is Legal Due Diligence (LDD). As additional information, actually legal due diligence can not only be used to detect criminal acts such as fraud, but can also be used to detect and prevent other criminal acts such as money laundering, or see the feasibility of a company that you are about to buy, as well as an early warning when you want to buy valuable assets such as land in the jurisdiction of Indonesia. 

When you intend to invest with a proper value in Indonesia, the author strongly recommends conducting due diligence first as a tool to detect losses due to various crimes that may later arise. By hiring an attorney to do due diligence on the transaction you are about to make, you will avoid serious losses in the future, which you will certainly regret deeply. 

Legal Due Diligence

Definition, legal due diligence (LDD) is a careful examination activity carried out by a legal consultant on a company or object to obtain material information or facts in order to find a description of the condition of a company or object of a transaction.[6]

Legal Due Diligence as an activity to assess legal risks that may arise. The risk in question is closely related to the transaction to be carried out by the parties. In simple terms, due diligence focuses on identifying risks that are usually not revealed. This process can help reduce risk, help make informed decisions, see more opportunities, and better manage situations.[7]

The purpose of Legal Due Diligence is broadly intended to assist in finding as many facts or information related to the transaction as possible before the transaction is executed, including information on the strengths and weaknesses as well as potential problems of the company or object being examined.[8] And if you intend to conduct legal due diligence for your save transaction, or perhaps you have any difficulties with this topic, contact us, feel free in 24 hours, we will be glad to help you.

*) For further information please contact:

Mahmud Kusuma Advocate

Law Office

Jakarta - Indonesia.

E-mail: mahmudkusuma22@gmail.com

_________________

References:

1. "Understanding 5 Steps Foreign Direct Investment In Indonesia", Hukumindo.com., Diakses pada tanggal 20 Januari 2022, https://www.hukumindo.com/2021/08/understanding-5-steps-foreign-direct.html

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. "Pengertian Legal Due Diligence", www.hukumonline.com., Diakses pada tanggal 20 Januari 2022, https://www.hukumonline.com/berita/a/pengertian-legal-due-diligence-lt61827f645aa0c/

7. Ibid.

8. "Legal Due Diligence", www.justitiatraining.co.id., Diakses pada tanggal 20 Januari 2022, https://www.justitiatraining.co.id/program/program-profesional-training/legal-due-diligence/