Bali Eye Private Investigation Agency

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Counterfeits Increasing

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What Do Businesses Need To Do

According to a report published by the International Trademark Association (INTA) and the International Chamber of Commerce, counterfeits are increasing. Also the economic value of counterfeiting and piracy globally is predicted to reach USD 2.3 trillion by 2022.

Anyone who has ever done any travelling, and particularly to the less developed and developing countries, can see first-hand that counterfeiting is a problem for many industries. No industry or country seem to be free from the threat. 

This is also true in Indonesia. The Indonesian Anti-Counterfeit Society (MIAP) offers some statistics on the market of counterfeit goods in Indonesia:

  • 3.8% drugs, 
  • 8.5% food and beverages, 
  • 12.6% cosmetics, 
  • 33.5% software, 
  • 37, 2% of leather goods, 
  • 38.9% clothing 
  • 49.4% of printer ink) 

It was the main cause for a loss of IDR 65.1 trillion in the national economy in 2014.

The United Nations Office on Drugs and Crime (UNODC) and The World Customs Organization estimates that 75% of counterfeit products entering the world market in 2010 were made in East Asia, generally in China. The cheap labour costs and the abundance of illegal workers make China the perfect choice of counterfeit goods producers.

In the past, products were placed on the general market and could be found in retail and traditional markets. However, now we have the digital era there has been a shift in the way sellers operate. Many counterfeit products are distributed through e-commerce and other online sales channels. In Indonesia one of the main e-commerce  channels that is notorious for distributing many counterfeit goods is Alibaba.

Last year, the United States Alibaba into its counterfeit goods watch list. Since then, Alibaba has claimed that their business has taken steps to combat counterfeiting in its seller network. One way has been to create a digital ledger system designed to track genuine products through the supply chain.

Counterfeiting Casualties

A consumer is said to be one of the victims of counterfeiting when they are unaware that the goods they buy are fake. The loss however is not confined to money – if the counterfeit goods that were bought are drugs or liquor, then there can also be a health threat (or even a threat to life as has been seen with counterfeit alcohol deaths in India and Indonesia).

There are also consumers who consciously buy counterfeit products as they are happy to get items that resemble the originals for a bargain price. However, many do not think that the counterfeit industry supports the violation of human labour and children’s rights. Dana Thomas, in her book “Deluxe: How Luxury Lost Its Luster” says that she witnessed how a child experiences violence and is forced to work to assemble a fake leather bag.

The list of victims does not however stop there. The original producers and brands are also of course deeply affected. The distribution of counterfeit goods will have a negative impact on the value associated with their brand. The circulation of fake branded products undermines the exclusivity and uniqueness of genuine branded products in the eyes of its consumers. It is little wonder that a worldwide brand such as Louis Vuitton is willing to allocate funds for brand protection efforts for up to € 15 million.

Brand Protection Efforts

It is almost impossible to completely eliminate the industry of counterfeit products and the black market. For manufacturers and brands, designing brand protection programmes is the only way to protect them from counterfeiting.

According to Kim Schneider, Avery Dennison’s Senior Director of Technology Solutions, brand protection is more of a counterfeit prevention effort, involving a multidisciplinary approach including supply chain management and science labelling.

The more elements involved in a brand protection strategy, the more difficult it will be to forge products. Manufacturers and brands can also work with third parties in implementing brand protection programmes in the supply chain. These include inspection and market surveys, trademark investigations, parallel trading investigations, and other related services.

In addition, it is important for manufacturers and brands to find the best way to communicate with their customers about product knowledge and other information related to the authenticity of the brand through its supply chain.


For more information on how IPIA, BEPIA or Business Due Diligence Indonesia can assist you with your brand protection efforts in Indonesia please contact us. 

Sources

http://kemenperin.go.id/artikel/9703/Kerugian-Akibat-Peredaran-Barang-Palsu-Capai-Rp-65-T

https://www.cnbc.com/id/38229835

https://www.voanews.com/a/global-trend-in-counterfeiting-and-piracy/3783360.html

https://www.forbes.com/sites/realspin/2015/06/25/as-louis-vuitton-knows-all-too-well-counterfeiting-is-a-costly-bargain/#3844f8af60d3

http://rbis.averydennison.com/en/home/about-us/industry-intelligence/how-to-protect-your-brand-from-counterfeit.html

Whistleblowing In Indonesia

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The risk of fraud is faced by all organizations regardless of size. Unfortunately, many of these threats are internal and come from dishonest people who were recruited by the company they are defrauding. In addition whistleblowing policies in procedures might be insufficient.

According to a 2016 fraud survey conducted by the Association of Fraud Examiners (ACFE) Indonesia Chapter[1][2]  “fraud is a latent danger that threatens the world. The results of the Global Association of Certified Fraud Examiners (ACFE) research show that each year an average of 5% of the organization’s revenue is a victim of fraud”. The report states that corruption was by far the most common form of occupational fraud in Indonesia, occurring in 67% cases, followed by asset misappropriation (31%), and financial statement fraud (2%). ACFE went on to claim that the total loss caused by corruption can reach up to 10 billion Indonesian Rupiah.  The loss caused by asset misappropriation can go beyond 10 billion Indonesian Rupiah. 

The survey indicated that the most common fraud detection method was by means of a whistleblowing hotline with internal employees as the main reporting source. A whistleblower is a person who exposes secretive information or activity that is deemed illegal, unethical, or not correct within a private or public organization. The information of alleged wrongdoing can be classified in many ways: violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization such as an immediate supervisor. Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization such as the media, government, law enforcement, or those who are concerned. Whistleblowers, however, take the risk of facing stiff reprisal and retaliation from those who are accused or alleged of wrongdoing.

An organization that implements a whistleblowing system will promote a culture of transparency, honesty, and integrity. This culture will help the organization to detect and handle early signs of fraud. Some business industries which are more at risk of fraud, such as banking and financial services, as well as government and public administrations have enacted their own whistleblowing policies to provide a clear mechanism in handling reports and complaints.

The Indonesian law does not contain explicit provisions on whistleblowing, however, it provides protections for employees who have knowledge of criminal acts of the employer. Indonesian Employment Law No 13 of 2003 Article 169 stipulates that an employee may submit a request for termination of his/her employment in case the employer persuades and/or orders the worker/laborer to do a deed that is in conflict with laws and regulations. The terminating employee must be entitled to severance, reward, and compensation pay. Protections for whistleblowers (witnesses) are regulated in the Indonesian Witness and Victims Protection Law No. 13 of 2006.

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

[1] https://acfe-indonesia.or.id

[2] https://acfe-indonesia.or.id/wp-content/uploads/2017/07/SURVAI-FRAUD-INDONESIA-2016_Final.pdf

ISO 37001 Anti-Bribery

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ISO 37001 Anti-Bribery Management Systems

Anti-bribery steps are becoming an important company need. Corruption raises the cost of business, undermines public trust and hampers growth. It disproportionately affects the poor and vulnerable by diverting resources from essential public services such as health care, education, transportation and water sanitation. 

Bribery is one of the world’s most destructive and challenging issues. According to the Organisation for Economic Co-operation and Developmentthere are over US$ 1 trillion paid in bribes each year. The consequences are catastrophic, reducing quality of life, increasing poverty and eroding public trust.

Yet despite efforts on national and international levels to tackle bribery, it remains a significant issue. Recognizing this, ISO developed a new standard to help organizations fight bribery and promote an ethical business culture. It is designed to help an organization implement an anti-bribery management system, or enhance any existing controls. It helps to reduce the risk of bribery occurring and can demonstrate to stakeholders that an organisation has put in place internationally recognized good-practice anti-bribery controls.

ISO 37001 can be used by any organization, large or small, whether it be in the public, private or voluntary sector, and in any country. It is a flexible tool, which can be adapted according to the size and nature of the organization and the bribery risk it faces. 

What is an anti-bribery management system? 

An anti-bribery management system is designed to instil an anti-bribery culture within an organization and implement appropriate controls, which will in turn increase the chance of detecting bribery and reduce its incidence in the first place. ISO 37001, Anti-bribery management systems – Requirements with guidance for use, gives the requirements and guidance for establishing, implementing, maintaining and improving an anti-bribery management system. The system can be independent of, or integrated into, an overall management system. 

It covers bribery in the public, private and not-for-profit sectors, including brib- ery by and against an organization or its staff, and bribes paid or received through or by a third party. The bribery can take place anywhere, be of any value and can involve financial or non-financial advan- tages or benefits. 

What benefits will it bring to my business or organization? 

ISO 37001 is designed to help your organization implement an anti-bribery management system or enhance the controls you currently have. It requires implementing a series of measures such as adopting an anti-bribery policy, appointing someone to oversee compliance with that policy, vetting and training employees, undertaking risk assessments on projects and business associates, implementing financial and commercial controls, and instituting reporting and investigation procedures. 

Implementing an anti-bribery management system requires leadership and input from top management, and the policy and programme must be communicated to all staff and external parties such as contractors, suppliers and joint- venture partners. 

In this way, it helps to reduce the risk of bribery occurring and can demonstrate to your management, employees, owners, funders, customers and other business associates that you have put in place internationally recognized good-practice anti-bribery controls. It can also provide evidence in the event of a criminal investigation that you have taken reasonable steps to prevent bribery. 

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

Sources

https://anticorruption-integrity.oecd.org

https://www.iso.org/iso-37001-anti-bribery-management.html

https://www.iso.org/files/live/sites/isoorg/files/store/en/PUB100396.pdf

Business Due Dilgence

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What is Business Due Diligence?

Business due diligence is basically a process of in-depth investigation completed by a business or outsource to a professional company such as Business Due Diligence Indonesia (BDDI). The research is carried out prior to starting an ongoing business or employment relationship or signing a contract. The aim of due diligence is to identify any potential problems, unexpected liabilities and basically mitigate any risks. 

Advantages of Engaging Business Due Diligence Indonesia

BDDI have a proven track record of due diligence in Indonesia. We also have a unique network of sources that offer intelligence that just can’t be found online or n books.

Conducting due diligence is a valuable and key risk management tool used for buyers and businesses alike. BDDI’s thorough due diligence investigations will allow clients to make informed decisions and avoid surprises at the end of a transaction. It could save you thousands and thousands of dollars.

Due diligence investigations empower buyers through making them aware.  

Conducting Due Diligence

There are different ‘levels’ of due diligence (‘hard’ and ‘soft’). BDDI offers the full range from record retrieval and adverse media research to the more time consuming deep source interviews, regulatory and litigation checks and site location verification visits. The scope of due diligence is dependent on the type of transaction, any perceived risks, and the client’s needs.

The most common transactions that call for due diligence include:

  • purchasing a business
  • mergers and acquisitions 
  • entering into a partnership
  • entering into a major contract

Buyers have the right to look at the records, assets, and operations for a business before committing to purchasing or entering into a partnership. The result of a due diligence exercise should be a complete story of the target company (or partner). This story can include a range of information within the scope of the research such as financial, commercial, operational, reputational and legal position of the target business or partner.

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

Employee Background Checks

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Many employers in Indonesia employee background checks through the assistance of a company such as Business Due Diligence Indonesia, as a well-respected Private Investigation firms Indonesia Private Investigation Agency and Bali Eye Private Investigation Agency.  

While a good CV and a job interview are big parts in the hiring decision, a background check is certainly an essential piece of work you should undergo as part of a recruitment checks. Business Due Diligence Indonesia and Indonesia Private Investigation Agency and Bali Eye Private Investigation Agency are able to verify vital information such as identity, CV, education and employment history, criminal activity, professional qualifications, and other records of potential candidate. 

Comprehensive Services

Different background check companies in Indonesia offer different range of services. Business Due Diligence Indonesia for example has comprehensive services covering all the main areas of concern. This will take the full burden off a recruiter’s shoulders. These extensive checks and verification include personal identity, criminal history, educational and professional qualifications, financial history and employee references. 

Service Price

For almost all businesses, cost will always be a factor. Cost will of course depend on the scope of the check. Often, there is a base price and then an additional fee for different elements. Business Due Diligence Indonesia is completely transparent in coverage elements at the base price, and then what the additional fees are if additional services are required. Business Due Diligence Indonesia offers quality screening to know about your potential hire. 

Indonesian Legal Compliance

Business Due Diligence Indonesia will let you know your legal responsibility and requirements on employment screenings to ensure adherence to Indonesia law  and regulations. 

Report Accuracy

Not all information is accurate in employee background checks if the company you choose is not experienced. A background check report is not like a credit report as there is no specific way for you to detect the inaccuracy. Business Due Diligence Indonesia is reliable, experienced and is known for giving accurate reports.

Delivery Time

Employee background checks delivery time will vary depending on the scope of the investigation is. For a standard check, Business Due Diligence Indonesia generally takes about 5 working days.

Business Due Diligence Indonesia has a wide network of experts and extensive experience to discover the discrepancies between the candidates’ information provided and our background check results.

Get in touch with BDDI to know more about their background check services in Indonesia.

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

Buying a Business in Indonesia

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Due Diligence – buying a business in Indonesia

When buying business in Indonesia it is vital that the prospective business owner examine the business in detail. This process is known as due diligence. Due diligence is generally conducted after the buyer and seller have agreed in principle to a deal, but before a binding contract is signed.

Conducting due diligence is the best way for you to assess the value of a business and the risks associated with buying it. Due diligence gives you access to important and confidential information about a business, often within a time period specified in a letter of intent.

With this information you can assess the business’s reputation, political exposure, financial position and identify any other risks. This is an opportunity to have any questions answered  about the business. The due diligence process ensures that you get good value for a business. Done correctly, it can be the difference between buying a business that makes you money and buying a business that costs you money.

Due diligence can be performed with different partners such as a lawyer and accountant. IPIA can support you with this process but you can also engage a specialist such Business Due Diligence Indonesia (BDDI). IPIA or BDDI can play a crucial role in gathering information that is not normally in a company’s “books”. BDDI does this through media research (mainstream and fringe Indonesian press) and source interviews. We also examine other areas of concern such as corruption, any previous or on-going legal disputes, and other issues of reputation. 

These additional elements can play a critical role in your decision making process to add to the more common coverage such as review of finances, credit, meeting minutes, audit reports, existing contracts, intellectual and fixed assets etc.  

Warning signs for the buyer

When buying a business in Indonesia you should be cautious of sellers who:

  • have a negative history and reputation and have been involved in scandals, 
  • do not disclose important information (e.g. their reasons for selling, financial statements, licences and permits, staff contracts)
  • won’t agree to a trial period or enough time to conduct due diligence (you will need at least 30 days)
  • won’t introduce you to their suppliers, landlord or estate agent
  • are involved in legal proceedings
  • are keen to close the deal quickly
  • have a questionable credit record and history.

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

Brand Failures in Indonesia

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Why Did These Global Brands Fail in Indonesia

Indonesia has long been a magnet for international brands who plan to expand a global presence, but there have been some major brand failures in Indonesia. Although expansion can be successful, there are various factors a business must consider before they expanding to Indonesia. There have been some prominent examples of brands  that have failed to create a presence in Indonesia. Evidence would suggest that this failure boils down to ill-considered market strategies along with a tendency to generalise the diverse Indonesian market. 

Seven-Eleven (7-11)

7-11 is seen almost everywhere in Asia as the number one convenience store at least in Singapore and Thailand. However, even though there are no 7-11s in Indonesia this is not for want of trying. In Indonesia, 7-11 decided to target the youth and adopted the idea of being a place for the younger generation to hang out with free Wi-Fi.

It did attract a lot of youngsters, but most of them just bought inexpensive items and would just sit there and use the free Wi-Fi, without purchasing other goods. The sales suffered tremendously, and 7-11 was forced to withdraw from Indonesia

Nando’s

Nando’s once opened a store in a mall and soon after had the same fate as other major brands. Nando’s failed mostly because Indonesians preferred a chicken dining place that was more affordable. Let’s not forget that Indonesia is still a developing country. In addition Indonesia uses a vast range of spices in its recipes. Nando sauces options were not unique enough.

Walmart

Walmart used to have a store at Pluit Village – a shopping center located on Jl. Pluit Indah Raya, Pluit, Penjaringan, North Jakarta, Indonesia. The main reason for Walmart’s failure in Indonesia was that consumers took advantage of the 30-day return policy. As a result, sales were always low, and residents in Indonesia did not have high purchasing power like people in the USA.

Petronas

Originally from Malaysia, this petrol company was actually quite successful in Indonesia at the start. However Indonesians stopped buying Malaysian products as a result of the Indonesia-Malaysia confrontation. The confrontation  was a violent conflict from 1963–66 that stemmed from Indonesia’s opposition to the creation of Malaysia, and led to the closedown of Petronas.

Ford, GM and Chrysler

Unlike Japanese car brands, these American automobile brands have not succeeded in Indonesia despite high expectations and an aggressive market strategy. These brands howver failed to appreciate that Indonesia has a relatively weak automobile market as compared with other Asian regions. Although they have tried to enter the market in Indonesia a few times their sales figures were always low and they have had to withdraw.

What Should a Business Avoid In Indonesia?

Indonesia is one of the most diverse countries in the world. Thee are massive differences between poor and rich people and their purchasing power, and targeting all the citizens at the same time is hampered by different religions, traditions and lifestyle.

Although Indonesian has made good growth in the past years, it still remains a developing country and should not be approached in the same way as developed nations. The minimum wage in Indonesia differs across regions, and the location of your business is thus a very strategic decision.

Indonesians will have a strong brand loyalty, and companies that somehow insult or do not comply with traditional values and culture will soon suffer from antagonism towards their products and services. Not to forget the powerful role of social media in Indonesia that can destroy your business or cause a drop in your sales within a few days. 

So, what should you not do when expanding to Indonesia?

  1. Remember that what worked elsewhere might not work in Indonesia
  2. Do not pick the biggest market but focus on its segments
  3. Never underestimate the impact of culture traditional values in Indonesia

Bali Eye Private Investigation Agency (BEPIA) along with our sister agency Indonesia Private Investigation Agency (IPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia. 

Book Preview: Internet Fraud

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Internet Fraud Casebook: The World Wide Web of Deceit was written by Joseph T. Wells and published in 2010, and some cases cover business due diligence issues covering internet fraud in Indonesia.

The book contains case studies on internet fraud written by real fraud examiners. The stories were hand-selected from hundreds of submissions and together form a comprehensive, enlightening and entertaining picture of the many types of internet fraud in varied industries throughout the world. Each case outlines how the fraud was engineered, how it was investigated, and how perpetrators were brought to justice.

There are a range of topics but one which caught the eye of BEPIA is story about an employee of a construction company based in Hongkong. The employee used the company’s name for his own interest and almost destroyed the company. 

The case starts when the head of operation of the company, Albert Watanabe, met Alex Gomez, who delivered a presentation in an international seminar. Albert was impressed with Alex’s presentation, and thought he perfectly matched the skills and experience that Albert urgently required for a position in the company. Basically  Albert recommended Albert for the director position in the office in Malaysia and received approval from Hong Kong with a pending background check.

For several months, Alex demonstrated a great skill at his work dealing with clients and employees. As he was doing so well Albert did not feel it was right to make such a talented person undergo a background check. Consequently Alex was hired permanently without a background check. 

Everything was going well until and employee found a possible mistake in Alex’s work. This in turn led the company to launch a confidential internal investigation, including computer forensics and Internet-based investigations.   It was revealed that Alex had defrauded the company. One of the incidents was that customers were invoiced through Alex’s Gmail account, but payments were received in the name of the company. At least 37 different individual customers had been handled by Alex in the previous 41 months, and he affixed a code “GMZ” (Gomez) before his customers’ names. Eventually it was found that names with the GMZ code did not appear in the company’s finances. Alex also emailed each GMZ client to make online payments by transferring to a particular bank account.  

This case highlights the need for thorough background and reference checks as one of the front defences against fraud. After Alex had defrauded the company it was found that he had previously been forced to resign from his previous employer because of a bribery case. Had Albert conducted a background check, it is almost certain he would not have hired Alex (and if he had for whatever reason then no doubt he would have been far more vigilant). For more than 10 years, Business Due Diligence Indonesia has been trusted by its numerous clients as a risk mitigation provider, and this includes background screening and reference checking. For more detailed information about how screenings can work for your company, please do not hesitate to contact us.    

Bale Eye Private Investigation Agency also has a sister company based in Jakarta. Please visit their website for more information – Indonesia Private Investigation Agency. For more focussed business due diligence work and analysis we would also refer you to Business Due Diligence Indonesia.