“Business Actors must do the investment report in the construction/preparation and operational/commercial stages. In the construction stage, the company needs to report the real realization while running the business, including the expenditure in compliance with obtaining a business license and the problems it may face in the construction stage. Meanwhile, in the operational/commercial stages, there are no more realizations on the fixed capital unless the capital expenditure (capex).“
LKPM
Investment Activity Report “LKPM” as the name provides and as defined in the Regulation of the Investment Coordinating Board “BKPM” of the Republic of Indonesia Number 5 Year 2021 “Perka BKPM 5/2021”, is a report on the development of investment realization and issues faced by Business Actors that must be drawn up and submitted periodically. Submission of this report is one of the Business Actor’s obligations in doing investment and is part of the periodic reports that a Business Actor has to do. This periodic report is a part of the supervision subsystem, which as referred to in Article 8 of Perka BKPM 5/2021, is used as a means to implement the supervision of standards and/or obligations for implementing business activities and development of investment realization as well as provision of facilities, incentives and ease for investment, and/or partnership obligation.
Business Actors are mandated to submit an LKPM, with exempted on micro-scale business and certain sectors like upstream oil and gas, banking, non-bank financial institutions, and insurance businesses, as per Article 32 Paragraph 5 of Perka BKPM 5/2021. The submission process is conducted online through the OSS System and directed to various institutions such as BKPM, Provincial DPMPTSP, Regency/City DPMPTSP, KEK Administrators, or KPBPN Concession Boards based on their location and business scope.
Submission Timeframe
The frequency of mandatory submission of LKPM is contingent on their level of risk. Article 32 of Perka BKPM 5/2021 obliges small-scale businesses to submit a semester report, while medium and large-scale businesses are obligated to submit a quarterly report. The deadline for each submission has also been provided, which are as follows:
- For small-scale businesses:
- Semester 1 report by10 July of that relevant years
- Semester 2 report by 10 January of the subsequent year
- For medium and large-scale businesses:
- Quarter 1 report by 10 April of the relevant year
- Quarter 2 report by 10 July of the relevant year
- Quarter 3 report by 10 October of the relevant year
- Quarter 4 report by 10 January of the subsequent year
Stages in LKPM Reporting
There are two stages in LKPM reporting: the construction/preparation stage and the operational and/or commercial stage. The construction activities include land, facilities, human resource procurement, building construction, fulfilment of the business standard, and other activities that should be done before the operating and/or commercial stage, including pre-feasibility study or feasibility study and operational financing during the construction. Meanwhile, the LKPM in the operational and/or commercial stage reports that the company has started production or is operating commercially.
This differentiation is essential as the content of LKPM reports in these stages varies. Subsequently, once a company is ready, has started production, or is commercially operated, it must declare that it is prepared to, has already been produced, or is commercially operated. This declaration is done online through the OSS System.
Information in the construction stage includes company details, investment realization, use of labor, and issues faced. The same information is included in the production stage, with additional details on the production of goods/services, annual marketing activities, and company liabilities. In the production stage, there is no more realizations on the fixed capital unless the capital expenditure (capex), for instance the purchase of land, building, machines, and others.
Sanctions for Non-Compliance
Non-compliance with the stipulated obligations carries significant repercussions. In the event of failure to adhere to LKPM reporting requirements, businesses risk administrative sanctions, which may be in the form of written warnings, temporary suspension of business activities, and even the revocation of business licenses or business licenses to support business activities. These sanctions, designed to ensure regulatory adherence, may be progressively imposed. Thus, it highlights the importance for businesses to diligently fulfill their obligations in alignment with the laws and regulations delineated in Perka BKPM 5/2021.
Author: Felicia Cindy Hanubrata
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