Indonesia is a country with enormous potential for investing. The country has a growing middle class and a large young population with increasing economic power. However, investing in Indonesia can be complicated, with Laporan Kegiatan Penanaman Modal (“LKPM”) being a crucial document for companies wanting to invest in the country.
What is LKPM?
LKPM is a report on investment activities that foreign and domestic companies need to register with Indonesia’s Investment Coordinating Board (“BKPM”). The report is an annual report that covers activities related to the previous year’s investment.
Why is LKPM Important for Investors?
LKPM serves as a monitoring tool that BKPM uses to ensure foreign and domestic companies are complying with Indonesian investment regulations. LKPM also provides data on the performance of the company and the investments in Indonesia. Investors need to ensure that their LKPM is accurate, timely, and compliant with regulations to avoid penalties or even expulsion from the country.
Article 15 letter c of Law No. 25/2007 on Capital Investment ("Law 25/2007") has stipulated that every investor is obliged to: make a report on investment activities and submit it to the Investment Coordinating Board;
Submission Period
LKPM submission is submitted by business actors for each business size periodically with the following provisions:
Small size company every 6 months in 1 reporting year; and
Medium and Large size company every 3 months (quarterly).
The obligation to submit LKPM applies to every line of business and/or location and is carried out online through the Online Single Submission ("OSS") system by referring to the Business Licensing data. The OSS system itself is an integrated electronic system managed and organized by the online single submission management and organizing agency for the implementation of Risk-Based Business Licensing.
Administrative Sanctions
The administrative sanctions given for failure to submit LKPM are:
Warning letter;
Temporary suspension of business activities;
Revocation of business license; or
Revocation of business license supporting business activities.
Investing in Indonesia can be a lucrative opportunity for foreign and domestic investors. However, investors need to comply with regulations and ensure that their LKPM is accurate and on time. The registration process with the BKPM can also take some time; however, it should not discourage investors as the potential returns are significant.
Conclusion
Investing in Indonesia demands substantial commitment from both foreign and domestic investors, but the potential returns make it well worth the effort. To ensure compliance with investment regulations, timely LKPM lodgment, and proper registration with relevant authorities, consider using our B-Assist service.
We offer a wide range of services to help foreign investors establish and expand their businesses in Indonesia. Our expertise enables us to navigate the complex legal and regulatory environment, simplifying the process of doing business in this burgeoning market. To learn more about our services, feel free to contact us via WhatsApp at (+62) 859-3323-1567 email us at contact@lglbee.com, or fill out the form on our contact page.
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