“The purpose of LKPM serve as means of conveying report on investment realization and communication between BKPM and business actors, including the PMA Company.”
Law Number 25 of 2017 on Capital Investment (“Investment Law”) has obliged all business actors to create an Investment Activity Report (“Laporan Kegiatan Penanaman Modal” or “LKPM”) and submitted to Indonesia Investment Coordinating Board (“Badan Koordinasi Penanaman Modal” or “BKPM”) in quarterly. The purpose of LKPM serves as means of conveying reports on investment realization and communication between BKPM and business actors, including the PMA Company.
Definition and Types of LKPM
Following Regulation of BKPM Number 5 of 2021 on Guidelines and Procedures for The Supervision of Risk-Based Business Licenses (“RB 5/2021”), LKPM is a report on investment realization’s development and problems faced by business actors which submitted periodically.
Nevertheless, LKPM has except the company that conducts business activity in the financial service, insurance, banking, and oil gas sector. Those business sectors had specific regulations on the periodic report under its authorized institution.
Furthermore, the submission is conducted through lkpmonline.bkpm.go.id with credentials obtain upon the business’s registration in Online Single Submission (“OSS”). The periodic of delivering the LKPM report, are as follows:
| Period | Date | |
| Quarter I | January – March | 1 – 10 April current year |
| Quarter II | April – June | 1 – 10 July current year |
| Quarter III | July – September | 1 – 10 October current year |
| Quarter IV | October – December | 1 – 10 January next year |
Moreover, RB 5/2021 and Guidelines of Online LKPM (issued by BKPM), has divided 2 (two) types of LKPM which consist of:
1. For a business activity that is not yet in commercial production (construction). A business actor is in the construction phase to prepare the business’s needs, for example, construction of building/factory, land purchase, purchase of machinery, and contractor cost.
2. For business activity in commercial production (production) which already conveys the readiness in commercial production/operation. A business actor is ready to sell products according to their production.
Contents of LKPM
There are several aspects that must be reported in LKPM and can be categorized according to its types which as follows:
| Construction | Production |
| 1. Investment realization 2. Employees’ condition during the reporting period 3. Machinery and equipment realization 4. Problems faced by a business actor (if any) | 1. Investment realization 2. Goods and supplies import realization 3. Employees’ condition during the reporting period 4. Problems faced by a business actor (if any) 5. Goods/service production 6. Company obligation |
Hereafter, the LKPM must be reported according to the registered business field at each project location.
Activity Report for Foreign Company Representative Office
According to RB 5/2021, the Foreign Company Representative Office (“Kantor Perwakilan Perusahaan Asing” or “KPPA”) must submit an activity report to BPKM every six [6] months, with report period at last on 10 July current year and 10 July next year. The activity report contains activity realization and information about employee conditions.
Sanctions
Administrative sanctions can be imposed on a business actor that does not deliver LKPM to BKPM in accordance with the periodic above. The administrative sanctions are as follow:
- First, Second, and Third warning letter if not deliver the LKPM for 2 (two) consecutive reporting period and/or do not report the LKPM for the first time without any additional investment realization for 4 (four) consecutive reporting period with 0 (zero) realization value;
- First and Last written caution;
- Temporary Suspension of Business Activity; and/or
- Revocation of Business License.
Author: Kristalia Andiani Puteri
Gaffar & Co., an Indonesian Boutique Law Firm specializing and focusing on commercial law areas e.g. Investment Regulatory & Corporate Secretarial.
For further queries and information, contact us:
+62 21 2271 5060 | info@gaffarcolaw.com | www.gaffarcolaw.com
