Complying with the rules is certainly one for the main factors of upholding a conducive and efficient climate of capital investment. In Indonesia, whether you are an individual or business entity running an investment company (“investors”), foreign or domestic, in making capital investments in Indonesia there are certain obligations and procedures that one must follow. One of which is stipulated in Article 15(c) of Law No.15 Law No.25, where every investor is obliged to make Capital Investment Activity Reports (Laporan Kegiatan Penanaman Modal or “LKPM”) and submit them to the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal or “BKPM”). LPKM by its definition, is reports regarding the development of investment realization and problems faced by investors which must be made and submitted periodically.1 For middle to upper companies for each business field and/or location, the LKPM consists of reports for business activities that have not yet produced commercial production and reports for business activities that are already in commercial production through the Online Single Submission System (“OSS”).2 Every investor is required to submit LKPM every 3 (three) months (quarterly) as follows:3
- The first quarter report is submitted no later than the latest, April 10th of that year concerned;
- The second quarter report is submitted no later than the latest, the 10th of July that year concerned;
- The third quarter report is submitted no later than the latest, the 10th of October that year concerned; and
- The fourth quarter report is submitted no later than the latest, January 10th of the following year.
As we enter January 2024, there is a need for a reminder that the fourth quarter report is due January 10th of this year, therefore investors must submit the LKPM report accordingly. There are 4 (four) main components that must be included in the LKPM report: Company Information, Realization of Capital Investment, Manpower Utilization, and Problems Facing the Company. As for further details regarding the format of the report, middle to upper companies can follow the current guidelines in Attachment IV of BKPM Regulation No.5 of 2021 on Guidelines and Procedures for Supervision of Risk-Based Business Licenses.
It is also worth reminding that there are consequences of sanctions should there be regulatory non-compliance from the company. Investors who do not submit LKPM during 2 (two) consecutive periods will be given the administrative sanction of a written notice imposed 3 (three) times in a row, where investors have the obligation to respond to the notice through OSS and are obliged to the requirements according to the regulations.4 In a situation where the investor does not respond to the third notice, the BKPM or other relevant authorities can conduct supervision as supporting data for a more moderate administrative sanction in stages ranging from a first and last written notice to Temporary Suspension of Business Activities.5
With the existence of LKPM, this report can become a communication medium for investors and policy-makers in government to always adapt and be informed regarding the existing conditions of companies' business activities.6 By submitting reports in a timely manner according to the period stated in the regulations, the realization of activities can be known with certainty and decisions and policies can be made on target in dealing with problems related to capital investments.7 With the hope through transparency and commitment, companies can support for better investment development in Indonesia.
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Author: Budhi Satya Makmur
1. Article 1 Paragraph 20 of BKPM Regulation No.5 of 2021 on Guidelines and Procedures for Supervision of Risk-Based Business Licenses
2. Article 32 Paragraph 7(a) BKPM Regulation No.5 of 2021
3. Article 32 Paragraph 7(b) BKPM Regulation No.5 of 2021
4. Article 56 Paragraph 1 and 3 BKPM Regulation No.5 of 2021
5. Article 57 Paragraph 2 BKPM Regulation No.5 of 2021
6. Fungsi Laporan Kegiatan Penanaman Modal. Dinas Tenaga Kerja, Penanaman Modal dan Pelayanan Terpadu Satu Pintu Kota Malang. (2022, March 11). https://disnakerpmptsp.malangkota.go.id/?p=11397