Investment reporting is crucial to operating a business in Indonesia. The Laporan Kegiatan Penanaman Modal (LKPM), or Investment Activity Report, is among the key requirements. This report is a crucial tool for ensuring transparency and monitoring the performance of investment activities nationwide.
How to properly submit one? This guide will walk you through the entire LKPM reporting process, from understanding its purpose and what needs to be reported to completing the necessary steps.
What is an LKPM report?
Laporan Kegiatan Penanaman Modal (LKPM) is a periodic investment activity report submitted by companies to Indonesia’s Investment Coordinating Board (BKPM). It monitors the progress of both domestic and foreign investments. The report includes capital realization, employment statistics, business challenges, and production milestones.
It applies to various business entities depending on their investment stage and plays a significant role in government monitoring. Submitting the LKPM is mandatory to promote accountability and operational transparency.
Legal Framework
The legal basis for LKPM reporting is established in:
- Law No. 25 of 2007 on Investment obligates investors to provide accurate, timely reports on their investment activities.
- BKPM Regulation No. 5 of 2021 outlines the procedures for submitting the LKPM report.
Why LKPM reporting is important
Why should your business take LKPM reporting seriously? Submitting accurate and timely LKPM reports offers several benefits, including:
Legal Compliance and Penalties Avoidance
Submitting LKPM on time ensures your business remains compliant with Indonesian investment regulations. It helps avoid administrative sanctions such as warnings, business suspensions, or license revocations.
Government Monitoring and Policy Making
The government utilizes LKPM data to monitor investment activities and inform more informed policy decisions. By providing this report, your business contributes to a broader economic development strategy.
Licensing and Incentive Support
Consistent LKPM submission is often needed when applying for additional licenses or government incentives. Companies with good compliance records are more likely to receive favorable consideration.
Monitor Business Progress
The LKPM report is a valuable internal tool for tracking business performance. Preparing it involves reviewing financial and operational data to identify strengths and areas for improvement.
What needs to be included in the LKPM report?
When preparing your LKPM report, it’s essential to provide accurate and complete information covering the following areas:
Investment Realization
- Total capital spent during the reporting period is broken down into fixed assets and working capital.
- Details of any additional funds or reinvestments.
Employment Data
- Number of Indonesian and foreign workers employed.
- Changes in workforce size or employment structure.
Project Progress
- Status of business activities: planning, construction, or operation.
- Key milestones, including production capacity, facility development, or service launch.
Production and Operational Activities
- Types and volume of products manufactured or services delivered.
- Operational performance indicators, if applicable.
Business Challenges
- Obstacles or delays encountered in investment implementation.
- Issues related to permits, logistics, labor, or external factors.
Supporting Information
- Updates on business licenses, shareholding changes, or investment plan modifications.
LKPM reporting deadlines
Businesses must submit LKPM reports periodically through the Online Single Submission (OSS) system. The period for submitting LKPM reports differs based on the business’s investment value.
Medium and Large-Scale Businesses
Companies with an investment value of above 5 billion must submit an LKPM every 3 months during a one-year reporting period (quarterly). The reporting periods are as follows:
| Quarter | Reporting Period | Deadline Submission |
| Q1 | Jan – Mar | April 10 |
| Q2 | Apr – Jun | July 10 |
| Q3 | Jul – Sep | October 10 |
| Q4 | Oct – Dec | January 10 (following year) |
Micro and Small-Scale Businesses
Companies with an investment value of under 5 billion shall submit the LKPM report every 6 months, with reporting periods such as follows:
| Semester | Reporting Period | Deadline Submission |
| First Semester | January – June | July 10 |
| Second Semester | July – December | January 10 (following year) |
Failure to comply with LKPM submission requirements can lead to penalties imposed by Indonesia’s BKPM that align with local investment laws. These may include written warnings, restrictions on business operations, or even the revocation of your business license.
Such consequences can harm your company’s reputation and cause delays in securing permits, approvals, and access to government incentives.
Common mistakes to avoid when submitting the LKPM report
Submitting your LKPM report may seem straightforward, but many businesses make mistakes that can result in delays, rejections, or penalties.
Below are the most common challenges to avoid:
Late Submission
One of the most common mistakes is submitting the LKPM report past the deadline. Delays can result in administrative sanctions or further scrutiny from the authorities.
Incomplete Information
Failing to provide complete details, such as total investment, employee data, or operational updates, can invalidate your LKPM submissions.
Inconsistent Data
Your LKPM data should align with your financial records and internal reports. Discrepancies can lead to questions from regulators and potential audits.
Incorrect Reporting Format
Using the wrong format or submitting the report using outdated templates can cause your LKPM to be rejected. BKPM has specific guidelines, and it’s essential to follow them closely.
Failure to Report Business Challenges
Some companies avoid reporting challenges or delays in their operations, assuming this might reflect poorly on them. However, BKPM expects transparency to help improve policy and mechanisms.
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Contact us today and start your business journey in Indonesia with our trusted assistance.
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What you'll get
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Disclaimer
The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.
We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.
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Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.
Frequently Asked Questions
According to the latest provision regarding Halal Product Assurance, halal certification for many consumer products in Indonesia that was previously voluntary has now been mandatory. Food and beverage products are the first Halal certified before 17 October 2024.
The Indonesian Halal bodies recognize some of the international halal certifications. Nevertheless, since there might be differences in the standards used by each certification body, it is still necessary to process Halal Certification in Indonesia.
Register the product with BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). The type of testing and document requirements depend on the type of product you want to register. Also, the time frame for registration could vary between 3 to 15 months.
Yes, you will receive an administrative penalty for delaying or not correctly and promptly filing the tax report. It is best to hire a local third party to handle your taxation matters in Indonesia, such as InCorp.
