Foreign Investor Know-How: Make Sure You Don’t Get Your Investment Activity Report Wrong or Submit It Too Late
Any foreign investor to Indonesia must submit an annual investment activity report, detailing all relevant updates regarding its investment in Indonesia subsequent to the initial investment. [1] This report needs to be filed on a quarterly basis with the Indonesian Investment Coordinating Board (Badan Koordinasi Penanaman Modal – BKPM) and is called “Investment Activity Report” ( Laporan Kegiatan Penanaman Modal – LKPM). In the LKPM, every investor must provide an update on the initial investment and the problems the investor faces.
LKPM Reporting Procedures
Investment Law, BKPM Regulation No. 7 of 2018 concerning Guidelines and Procedures of Control on the Implementation of Investment sets out every investor’s obligation to submit the LKPM on a quarterly basis. The following dates are relevant:
- Not later than 10th April for Q1 of the relevant year;
- Not later than 10th of July for Q2 of the relevant year;
- Not later than 10th October for Q3 of the relevant year; and
- Not later than 10th of January for Q4 of the previous vear.
The LKPM must be submitted through the Electronic Information and Investment License Service System (“SPIPISE”). [2]
Failure to Submit the LKPM
Many organizations are currently struggling with their operations in Indonesia as a result of the Coronavirus pandemic. Please note that despite the various measures taken by the government in your home country as well as the Indonesian government, the requirement to submit the quarterly report remains unchanged.
Failure to submit the LKPM on time leads to administrative sanctions. This includes written or online warnings, in more severe instances restrictions on business activities and, in the most severe instances, the freezing of the business activities and/or Investment Facilities [3] , or an entire revocation of relevant licenses for business activities. [4]
How Schinder Law Firm Can Assist You
Schinder Law Firm among others specializes in Foreign Direct Investment. Our team of lawyers has extensive experience all matters related to Foreign Direct Investment in Indonesia.
As such, we regularly assist our clients in the compilation and/or submission of the LKPM. We are also there for our clients when they miss the relevant time limit, as a very current case shows: a client recently reached out to us after having missed the time limit to submit
its LKPM for Q1 of 2020 (which was 10th April 2020). Because the client contacted us right away, we could swiftly get in touch with the authorities. As a result of our intervention, the client – who had previously missed deadlines – still got away with a warning only.
In case your company was late to submit its investment activity report for Q1, we highly recommend retaining professional help. The relatively low costs of assisting you with “rectifying” such earlier failure usually greatly outweigh the risk of facing restrictions.
[1] Art. 15 letter (c) Investment Law
[2] Art. 7 letter (c) BKPM Regulation No. 7/2018
[3] Art. 1 number 26 BKPM Regulation No. 7/2018 has defined Investment Facilities as any form of fiscal and non-fiscal incentives as well as ease of investment services, in accordance with the provisions of laws and regulation.
[4] Art. 32 sect. 1 BKPM Regulation No.7/2018
About the author:
A qualified Indonesian advocate. Budhi specialises in litigation, arbitration and other contentious matters. Budhi has extensive experience in representing numerous domestic and multi-national companies before the Indonesian National Board of Arbitration (BANI) and the Indonesian courts.
