Investment realization in LKPM refers to the actual funds or assets deployed by your company during a specific reporting period, not the total planned investment stated in your license. In Indonesia, this data must be submitted through the OSS and aligned with your NIB registration.
As investment consultants, we often see foreign companies confuse commitment with realization. The bottom line is simple: only real, executed capital expenditure within the reporting period counts.
Also read: What is LKPM Reporting in Indonesia: Definition, Legal Basis, OSS-RBA Process and Compliance Guide
Fixed Capital: Tangible Assets You Actually Acquire
Fixed capital includes all tangible investments acquired during the reporting quarter or semester.
This covers:
- Land acquisition and land preparation
- Building construction costs
- Machinery and production equipment
- Vehicles for business operations
- Furniture and office equipment
The calculation uses the initial acquisition cost. You do not deduct depreciation. If you purchase machinery this quarter, you report its full purchase value in that period.
This approach ensures consistency under the supervision of Ministry of Investment and BKPM.
Working Capital: Operational Funds Actually Spent
Working capital covers operational expenses incurred during the specific reporting period.
Common qualifying items include:
- Employee salaries
- Office rent
- Utilities
- Marketing expenses
- Raw materials
- Inventory for one production cycle
The key rule is this: only new realizations count. You cannot re-report expenses from previous quarters. The OSS system will automatically carry forward prior cumulative amounts.
If no new working capital is deployed in a period, you must provide an explanation, such as project delay or procurement timing.
Also read: Director Responsibilities for LKPM Reporting in Indonesia
Funding Breakdown: Where the Money Comes From
Investment realization must also disclose funding sources.
You must specify whether the realized amount comes from:
- Owner’s equity
- Reinvested profits
- Shareholder loans
- Third-party loans
This funding transparency ensures traceability between realized capital and the original NIB-based investment plan.
If your company operates multiple projects or locations, you must break down realization figures accordingly.
Also read: Common Mistakes in LKPM Reporting and How to Avoid Them
Construction vs Operational Stage Reporting
LKPM reporting is divided into two stages:
1. Construction or Preparation Stage
You focus on physical and capital progress before commercial operations begin.
2. Operational or Commercial Stage
You continue reporting investment realization but also add production and sales data.
Foreign companies with investment above IDR 500 million must submit reports quarterly via OSS using NIB credentials.
Understanding which stage you are in directly affects how your realization data is interpreted.
Also read: The Differences of Semi-Annual and Quarterly LKPM for Foreign Investors
How OSS Calculates Cumulative Investment
The process follows three structured steps:
- Separate fixed and working capital for the current period.
- Enter only new realization amounts in OSS.
- The system automatically adds them to previous submissions to form cumulative totals.
These totals are compared against your approved investment plan. Inconsistencies can trigger compliance review.
This is where many PMA companies face difficulty, especially when reconciling accounting records with regulatory reporting standards.
Why Accuracy Matters for Foreign Companies
Incorrect classification between fixed and working capital or failure to disclose funding sources can lead to compliance risks.
If you want to understand the regulatory consequences in detail, we recommend reading our guide on penalties and sanctions for late or incorrect LKPM reporting for foreign companies in Indonesia. It explains how administrative warnings can escalate if reporting errors persist.
For a broader understanding of LKPM obligations for PMA companies, our LKPM reporting for PMA in Indonesia guide provides a structured overview.
Common Challenges We See
Foreign investors often struggle with:
- Translating accounting data into LKPM categories
- Determining what qualifies as new realization
- Reconciling cumulative OSS figures
- Handling multi-location reporting
- Managing reporting during inactive periods
In our experience, clarity in classification reduces compliance risk significantly.
If you want to see how foreign investors practically handle these issues, our article on how InvestinAsia help foreign investors manage LKPM without hassle explains real operational approaches.
How We Support Your LKPM Compliance
At InvestinAsia, we assist foreign companies in structuring their investment realization properly before submission. We review your fixed capital allocation, validate working capital entries, and ensure funding breakdown aligns with your NIB data.
Our Indonesia LKPM Reporting Services are designed to help you avoid reporting errors, misclassification, and regulatory exposure while keeping your focus on business expansion.
If you are unsure whether your recent expenditures qualify as investment realization, consult with our team. We will help you align your reporting with OSS standards and Indonesian investment regulations.
Contact us now for FREE consultation and get a special offer!
FAQs
What is the difference between planned investment and realized investment in LKPM?
Planned investment is the total capital commitment stated in your license and NIB. Realized investment is the actual amount spent or deployed during a specific reporting period.
Does depreciation affect fixed capital reporting?
No. LKPM uses the initial acquisition cost. Depreciation is not deducted.
Can salary expenses be reported as investment realization?
Yes. Employee salaries count as working capital if they are newly incurred in the reporting period.
What if there is no new investment in a quarter?
You must still submit LKPM and provide an explanation in the OSS system.
Is funding source disclosure mandatory?
Yes. You must specify whether realization comes from equity, reinvested profits, or loans to ensure transparency and compliance.
