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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Navigating Indonesia’s business landscape can be complex, but you don’t have to do it alone. InCorp Indonesia (An Ascentium Company) offers reliable and professional company registration services to help you start and grow your business smoothly.
Why Choose InCorp?
- Comprehensive Support: End-to-end assistance from company registration to post-setup compliance, including LKPM reporting.
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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.
Verified by
Ales Cina
Consulting Manager at InCorp Indonesia
Aleš manages solution delivery at InCorp Indonesia, optimizing incorporation processes and client relationships. His experience in internal auditing, retail, and sales offers valuable global insights. Aleš, with a degree in Economics and Finance from the Czech Republic, helps clients navigate cross-border business challenges, focusing on cultural and legal insights.
Frequently Asked Questions
- Conduct a general shareholder meeting to approve the liquidation and the liquidator’s nomination
- Notify the Ministry of Law and Human Rights as well as the creditors of the liquidation and the distribution plan for the assets by newspaper notice
- All business licenses and tax numbers should be canceled or revoked; the tax office will conduct a tax audit to revoke the tax number
- Make sure creditors are paid and that any liquidation funds are distributed to shareholders (if any)
- Conduct a general meeting of shareholders to approve the liquidator’s discharge and acquittal
- Notify the Ministry of Law and Human Rights of the liquidation’s outcome. After receiving the notification, the Ministry of Law and Human Rights will deregister the company’s status as a legal entity and remove its name from the Company Registry
- Release the liquidation’s outcome in a newspaper
A limited liability corporation is required by Indonesian company law to have two or more shareholders, who may be either a legal entity or an individual. The foreign investor must find a second shareholder to own shares in the PMA firm for investments that are 100% open, which could be an affiliated party.
The procedures for (voluntarily) liquidation typically involve the following steps:
Completing the liquidation process can take around two years.
The government will check the minimum paid-up capital, IDR 10,000,000,000. Fulfilling this requirement is a must.
Foreign currency transfers to and from Indonesia are not subject to exchange controls, allowing investors to freely move funds. However, these transactions must be reported to Bank Indonesia. Moreover, there are reporting obligations concerning offshore assets and liabilities to ensure transparency in financial activities.
