The Laporan Kegiatan Penanaman Modal (LKPM), or Investment Activity Report, is a crucial requirement for businesses in Indonesia, including foreign companies, known as PMA (Penanaman Modal Asing). This reporting obligation, mandated by Law No. 25 of 2007 on Investment and BKPM Regulation No. 5 of 2021, ensures that all business entities, including foreign ones, provide regular updates on their investment activities. Compliance with LKPM reporting is essential to avoid administrative sanctions and ensure smooth business operations.
Also read: What is LKPM Reporting in Indonesia: Essential Guide
Is LKPM Reporting Mandatory for Foreign Companies?
Yes, foreign companies (PMA) operating in Indonesia are required to submit LKPM reports. This requirement ensures that the Indonesian government can monitor and support foreign investments effectively, addressing any issues that may arise and providing necessary facilitation.
Legal Basis for LKPM Reporting
The legal framework for LKPM reporting includes:
- Law No. 25 of 2007 on Investment: Article 15(c) outlines the requirement for investment activity reporting.
- BKPM Regulation No. 5 of 2021: Provides guidelines and procedures for risk-based business licensing supervision, including LKPM reporting.
Also read: PMA (Foreign Company) Taxation in Indonesia: Complete Guide
What Should Foreign Companies Report in LKPM?
Foreign companies must report the following in their LKPM:
- Investment Realization: Details on the actual investment made during the reporting period.
- Workforce Realization: Information on the number of employees and their roles.
- Production Realization: Data on goods or services produced, including export values if applicable.
- Partnership Obligations: Compliance with any required partnerships with local businesses.
- Challenges and Issues: Any problems encountered during the investment period that may require government intervention.
Also read; The Minimum Capital for Establishing PMA Company in Indonesia
Consequences of Not Submitting LKPM
Failure to submit the LKPM can lead to significant administrative sanctions, including:
- Written or Online Warnings: Initial notices to rectify the non-compliance.
- Restrictions on Business Activities: Limiting the scope of operations.
- Suspension of Business Activities: Temporary halt of business operations.
- Revocation of Business Permits: Permanent closure and revocation of investment permits.
Also read: PT vs PMA vs KPPA Indonesia, What’s the Differences?
Importance of Timely LKPM Reporting
Timely and accurate LKPM reporting is crucial for maintaining compliance and ensuring that foreign investments in Indonesia are monitored and supported effectively. This helps in identifying and resolving any challenges faced by foreign companies, thereby facilitating smoother business operations and fostering a positive investment climate in Indonesia.
Foreign companies (PMA) in Indonesia must comply with LKPM reporting requirements to ensure they meet legal obligations and avoid administrative sanctions. By understanding the reporting process and adhering to the guidelines, foreign companies can contribute to a transparent and well-regulated investment environment in Indonesia.
For further assistance with LKPM reporting services, InvestinAsia offers expert support to help streamline your business operations. Contact us now to learn more and get special offers.
Article reviewed by:
Tax Consultant of InvestinAsia
