FILING OF INVESTMENT ACTIVITY REPORT

Category: Compliance Services
Written by Yeni on 23/06/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

An investment activity report is an investor/entrepreneur’s obligation when they do business activity in Indonesia. This is one of the regulations of business establishment in Indonesia aiming to ease the Indonesia Investment Coordinating Board (BKPM) in monitoring the developments of investment realization.

In 2020, recorded in the Ease of Doing Business Index (EODB), Indonesia was 73rd ranking in the world with the most business-friendly regulations. As a result, business opportunities in Indonesia increases significantly compared to several last years. To increase foreign investment, the Indonesian Government attempt to improve the services and the governance in each priority indicator.

WHAT IS AN INVESTMENT ACTIVITY REPORT?

An investment activity report called LKPM is a report – related to the development of investment realization and the challenging of the business – which is created and submitted periodically. According to UU No. 25 of 2007, Point 15, describes that investors have to create a report statement about investment activity and submit it to Indonesia Investment Coordinating Board (BKPM), Investment and One-Stop Integrated Service Office (DPMPTSP) province, and DPMPTSP districts/cities.

In addition, LKPM consists of two phases (construction phase and operation phase) that are generated based on investment realization. LKPM construction/preparation stage for business activities that have not yet been produced and/or operated commercially; and LKPM operational and/or commercial stage for business activities that are already producing and/or operating commercially.

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WHO NEEDS TO SUBMIT THE INVESTMENT ACTIVITY REPORT IN INDONESIA?

Based on Indonesia Investment Coordinating Board (BKPM) Regulations No. 5 Of 2021 about Guidelines And Procedures For Monitoring Risk-Based Business Licensing, entrepreneurs/companies are required to submit the investment activity report for each business field and/or location. All companies should apply to create a business license and get a business license number (NIB) to generate the investment activity report. When they have a business license, they are allowed to do their business activity in Indonesia.

Additionally, a business that originates from either domestic investment or foreign investment must report LKPM quarterly or for a half-year term. LKPM should be submitted online using the Online Single Submission System (OSS). If there is a business that does not report LKPM according to the reporting period, BKPM will follow up by sending a memo.

Moreover, those who need to submit the investment activity report are all companies, except:

  1. Company with investment value under IDR 500 million;
  2. Company in financial services, insurance, banking, oil, and gas sector;
  3. A company that has Principle Permit (IP), Investment Registration (PI), and/or Business License that are no longer active or have expired.

Businesses are categorized into five groups:

  1. Micro and Small Enterprises (UMK) :

    Businesses owned by Indonesian citizens (WNI), both individuals and business entities, with a maximum business capital of IDR 5 billion, excluding land and buildings for business premises. Following UU No. 11 of 2020 concerning Job Creation, those with capital below IDR 1 billion is considered as micro enterprise and those with capital between IDR 1-5 billion is considered as small enterprise.

  2. Medium Enterprises:

    Businesses owned by Indonesian citizens (WNI), both individuals and business entities, with a business capital of more than IDR 5 billion up to a maximum of IDR 10 billion, excluding land and buildings where the business is located.

  3. Big Enterprises:

    Businesses owned by Indonesian Citizens (WNI), Business Entities owned by Foreign Investment (PMA), or Domestic Investment (PMDN) with a business capital of more than IDR 10 billion excluding land and buildings for business.

  4. Representative Office:

    An individual who is an Indonesian or foreign citizen, or a business entity that is a representative of business actors from abroad with the approval of the establishment of an office in the territory of Indonesia.

  5. Overseas Business Entity (BULN):

    A foreign business entity established outside the territory of Indonesia and conducting business and/or activities in certain fields.

WHEN TO SUBMIT AN INVESTMENT ACTIVITY REPORT?

  1. Small Enterprises:

    Small enterprises have to submit LKPM every 6 (six) months.
    • 1st report is submitted on 1 -10 July;
    • 2nd report is submitted on 1 - 10 January of the following year.

    Small enterprises should submit LKPM for the first time, with the following conditions:
    • Risk-Based Business Licensing issued in the first 6 (six) months of the semester (January - June) should submit LKPM for the first time in the semester following the issuance date of the Risk-Based Business Licensing; or
    • Risk-Based Business Licensing issued in the seventh month of the semester period (July) which corresponds to the issuance date of the Business Licensing, should submit LKPM for the first time in the following semester period.

  2. Medium & Big Enterprises:

    Medium & big enterprises have to submit LKPM every 3 (three) months (quarterly)
    • 1st quarter report is submitted on 1 - 10 April;
    • 2nd quarter report is submitted on 1 -10 July;
    • 3rd quarter report is submitted on 1 - 10 October;
    • 4th quarter report is submitted on 1 - 10 January of the following year

    Medium & big enterprises should submit LKPM for the first time, with the following conditions:
    • Risk-Based Business Licensing issued in the first 3 (three) months of the quarterly period (January - March) should submit LKPM for the first time in the quarterly period following the issuance date of the Risk-Based Business Licensing; or
    • Risk-Based Business Licensing issued in the fourth month of the quarterly period (April) following the issuance date of the Risk-Based Business Licensing, should submit LKPM for the first time in the following quarterly period.

BENEFIT OF SUBMITTING INVESTMENT ACTIVITY REPORT

Aside from submitting investment realization reports, LKPM also functions as communication between BKPM and entrepreneurs/companies. The company can convey the problems faced by the business activities in the column “Problems Faced by the Company.” If deemed necessary, BKPM will follow up and facilitate company problems submitted through LKPM.

HOW CAN WE HELP?

Putranto Alliance aims to help clients increase their business value, improve time efficiency, and mitigate risk while in compliance with the prevailing regulations. Our professionals make it easier for local and foreign investors to succeed in executing their business plans. We can help you establish your new business, ensure you are compliant, prepare your human resources, manage your property, grow and protect your business, and if necessary, arrange for the sale or closure of your business.

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