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The missing link between Filipinos and 'investment schemes'

July 13, 2019 - Saturday 4:07 AM by Avon Sinajon

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P30 billion was lost in a pyramid “double your money” scheme named Legacy Group of Companies that ran in 2008 and collapsed the same year. Some 15,000 people in the Visayas and Mindanao were duped of a total of P12 billion in 2012 by Aman Futures. Performance Investment Products Corp. took P11 billion pesos in May 2015, in the guise of forex trading with guaranteed 10-15% return. Fast-forward April 2018, victims lost a total of P900 million in a fraudulent bitcoin trading scheme with 30% promised return for payout every 15 days.

In a relatively lower-middle income country such as the Philippines, the figures may seem tremendous. But there is no point in denying that scams happen.

The past months, everywhere I go, whoever I talk to, there never was a single day that I do not hear the word “pay-in” and “pay-out.” There is this atmosphere of thrill and excitement in every person I come across, the feeling of hope rooting from economic relief when talking about numbers they amass and anticipate. However, the tables have turned when different players came into play. The government, the technocrats in the finance industry, the investment founders, the investors, and in general, the public. Everyone has something in their defense. And while it is tempting to join in the hullabaloo of who and what is right and wrong, I chose to observe and ask why, after the many historical cases of almost the same scenario, some Filipinos are still susceptible to scams.

Soliciting ideas from people, I have come down to three major reasons. 

One, poor economic condition. In today’s society, the practical mindset would tell you that money equals survival. If there is a chance to acquire wealth without much needed effort over a short period of time, one does not need to be a genius to grab the opportunity. Because frankly, at the end of the day, what matters most to Filipinos is food on their table, decent shelter to live in, and enough means to meet the daily needs of the family, especially those who have children to raise. 

When you struggle financially, the legality, the business operations, the protection as an investor become out of the equation. As long as money is served, the word scam loses its meaning. While people are divided whether this reason is acceptable or not, it depends on which point of view you are coming from, your values, and how do you weight the consequences. What remains certain is, regardless of who does or does not make sense, scams feed from poverty. 

But even poverty is just a symptom. If Filipinos resort to get-rich-quick schemes because they struggle financially, in the beginning we ask ourselves, why do they struggle financially? Filipinos are vulnerable to scams because of the second reason: lack of financial education.

One general observation posits that since the beginning of primary years of education up to the tertiary level, financial education, which is nowadays a basic life skill, is underrated in the Philippines. Today, it is good to know that the government and private sector in the finance industry are working together to form an initiative in integrating this aspect, but there’s still a lot of work needed to do, especially mass support. 

It may be true that having a good financial education cannot make one become instantly rich, but it can save one’s hard-earned money from the risk of ignorance. Most of the people who are duped into ponzi schemes, aside from the poor, are surprisingly income-generating professionals. And while these groups of people simply have good intentions of growing their wealth, they become victims for their lack of understanding. You cannot blame them for being unprepared. But one thing again remains certain: scams do not just feed on poverty, they also feed on ignorance. 

Third, what makes Filipinos susceptible to the scam cycle is a distorted mindset towards money. Most of the successful people I know have told me that they were once bad decision-makers in finances. I guess what they were trying to say is that while money matters are a mixture of practical and knowledge bases, it all boil down to one’s mindset.

Filipinos typically have this mindset that in order to uplift oneself from a poor condition, all you need is money. It may be true to some extent, but it is not absolutely correct all the time. Setting themselves as an example, they proposed that constantly investing in one’s capabilities and personal growth pays you a good fortune in the long run, more than simply cashing out capital for uncalculated risks. This means that if a Filipino is empowered to grow a good mindset and develop his own potential to earn and manage wealth over time, he will not find the offer of “low risk, high return” acceptable. This is because the idea of “easy money” does not just tolerate an undisciplined mentality, it also cultivates a lazy culture in a society.

Some investment “schemes” may have been shut down, some may have yet to prove themselves to the authorities. Some may have benefitted for a while, some did not break even. But amidst all these noise, the fact is that scams remain a cycle in the Philippines.

We could punish people, but if we’re truly serious and sincere in breaking the pattern, we will not begin with blaming. We will begin by working together to find solutions to those three missing links.