Watch out! LKPM Deposit Defaulters, Business License Can be Repealed

27 October 2022
Watch out! LKPM Deposit Defaulters, Business License Can be Repealed

Watch out! LKPM Deposit Defaulters, Business License Can be Repealed

“The Investment Activity Report (LKPM) is one of the instruments for government supervision of business activities in Indonesia.”

One of the obligations of business actors as investors is to make reports on investment activities and submit them to the Capital Investment Coordinating Board (BKPM).

This mandate is stated in Law Number 25 of 2007 concerning Investment (Law Number 25 of 2007) and its amendments, including Law Number 11 of 2020 concerning Job Creation (Law Number 11 of 2020).

Furthermore, quoted from the official BKPM website, submission of LKPM by business actors is very important because it can provide an overview of the investment climate in Indonesia as a whole.

In addition, LKPM is also useful for stakeholders, both government and business actors to know:

  1. Growing business sector
  2. Obstacles being faced
  3. Policies that must be implemented to support the business climate in Indonesia

Regulations regarding LKPM in particular can be found in the Investment Coordinating Board Regulation Number 5 of 2021 concerning Guidelines and Procedures for Supervision of Risk-Based Business Licensing (BKPM Regulation Number 5 of 2021).

Definition and groups of business actors who are required to submit LKPM

According to BKPM Regulation Number 5 of 2021, the Investment Activity Report or commonly abbreviated as LKPM is a report on the progress of investment realization and problems faced by business actors that must be prepared and submitted periodically.

Every business actor is required to submit LKPM for each business field and/or location, especially for subtle, mediate, and large business actors.

However, there are several categories of business actors who are not required to submit LKPM, including (BKPM Regulation Number 5 of 2021):

  1. Micro entrepreneurs
  2. Upstream oil and gas business, banking, non-bank financial institutions, and insurance

Then, the LKPM is submitted by business actors for each level of risk regularly, with the provisions (BKPM Regulation Number 5 of 2021):

  1. For small business actors: every 6 months in 1 reporting year
  2. For medium and large businesses: every 3 months in 1 reporting year (quarterly)

Submission of LKPM by subtle business actors

The LKPM submission period for small business actors is detailed as follows (BKPM Regulation Number 5 of 2021):

  1. Semester I report: submitted no later than the 10th of July of the year concerned
  2. Second-semester report: submitted no later than the 10th of January of the following year

Furthermore, provisions related to the obligation to submit LKPM for the first time for small business actors include (BKPM Regulation Number 5 of 2021):

  1. For business actors whose risk-based business licenses are issued in the first 6 months of the semester, then:
    LKPM is first submitted in the semester by the issuance date of the risk-based business license.
  1. For business actors whose business licenses are risk-based, which are issued in the 7th month of the semester by the date of issuance of business licenses, then:
    LKPM is first submitted in the following semester period.

Submission of LKPM for Small Business Actors is carried out online through the Online Single Submission (OSS) system, with the format under Attachment XIII of the BKPM Regulation Number 5 of 2021, which generally contains:

  1. Company description
  2. Realization of investment/business investment
  3. Labor use
  4. Production/service and marketing
  5. Problems faced by the company

Submission of LKPM by mediate and substantial business actors

In contrast to LKPM for subtle businesses, the submission of LKPM for mediate and substantial businesses is still divided into two stages.

These are the stages that must be filled in by the obligations of mediate and substantial business actors to complete the following stages (BKPM Regulation Number 5 of 2021):

  1. LKPM construction/preparation stage: for business activities that are not yet in production and/or commercial operation
  2. LKPM operational and/or commercial stage: for business activities that are already producing and/or operating commercially

The two LKPMs above apply the following reporting period provisions:

  1. Quarter I report: submitted no later than April 10th of the year concerned
  2. Quarter II report: submitted no later than the 10th of July of the year concerned
  3. Quarter III report: submitted no later than the 10th of October of the year concerned
  4. Quarter IV report: submitted no later than the 10th of January of the following year.

Submission of LKPM for the construction/preparation stage

Meanwhile, data that must be completed as a form of submitting LKPM for medium and large businesses at the construction/preparation stage, among others (OSS Institution – Investment Coordinating Board, Guide to Investment Activity Reports (LKPM) Online Single Submission (OSS) Risk-Based Approach):

  1. Project data (just check it out)
  2. Investment realization data
  3. Changes in total accumulated value data (if needed)
  4. Labor realization data
  5. Data on problems faced by business actors
  6. Data on the officer in charge of LKPM from business actors
  7. Notification of Outward Investment (OI) Report (Especially for Domestic Business Actors)

If it has been confirmed that it is complete in filling out the required data, then the business actor can send it through the OSS system. Furthermore, verification will be carried out by the ministry/institution/regional government related to LKPM reporting in the construction/preparation stage.

If the verification results show a record of improvement from the verifier, then the business actor is obliged to correct it immediately and re-send the LKPM data for the construction/preparation stage.

Submission of LKPM for operational and/or commercial stages

Data that must be completed as a form of submitting LKPM for medium and large businesses at the operational/commercial stage, among others (OSS Institution – Investment Coordinating Board, Risk-Based Approach Online Single Submission (OSS) Investment Activity Report Guidelines):

  1. Project data (just check it out)
  2. Investment realization data
  3. Labor realization data
  4. Data on problems faced by business actors
  5. Production/marketing service data per year (for fourth-quarter reporting)
  6. Company liability data (for reporting quarter IV)
  7. Data on LKPM responsible officers from business actors and approve LKPM reporting statements
  8. Notification of outward investment (OI) reports (only for PMDN business actors)

Furthermore, business actors can send these data through the OSS system. Then, verification will be carried out by the ministry/institution/regional government related to the operational and/or commercial stage of LKPM reporting.

If the verification results show a record of improvement from the verifier, then the business actor is obliged to correct it immediately and resend the operational and/or commercial stage LKPM data.

Penalty

For business actors who are not routinely or absent from submitting LKPM, they may be subject to administrative sanctions in the form of (BKPM Regulation Number 5 of 2021):

  1. Written warning;
  2. Temporary suspension of business activities; and/or
  3. Revocation of business license

However, the imposition of sanctions is adjusted to the level of violations committed by each business actor, ranging from minor violations to serious violations.

 

The deadline for LKPM for the first semester and second quarter falls on next January. Do you still have trouble filling out the report? Please consult us, Prolegal!

Author: Faiz Azhanzi Yazid

Editor: Bidari Aufa Sinarizqi

Translator: Angelie Kartika Putri

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