You've heard stories like this before: A business owner thinks, "We didn't inject capital last quarter, so we don't need to file our report." That small oversight quickly escalates from a warning to a suspension, and ultimately, to a business license being revoked.
This happens all too often. Many assume "no progress" means "no reporting required," but that’s a costly mistake. For businesses operating in Indonesia, neglecting or delaying a mandatory Investment Activity Report (LKPM) can lead to severe penalties, including the potential closure of your business.
Yet, when handled correctly, the LKPM is more than just a compliance chore, it's a valuable asset. It proves your credibility to regulators and partners, can unlock government incentives, and positions your business for long-term growth.
Let's dive into what an LKPM is, why it matters, and how you can stay compliant.
What Is an LKPM?
An LKPM (Laporan Kegiatan Penanaman Modal) is a mandatory report that companies must submit to the Indonesian Investment Coordinating Board (BKPM). You file it through the Online Single Submission (OSS) system.
When you established your business (like a PT PMA or a local PT), you committed to a long-term investment plan with the Indonesian government. The LKPM is the government’s way of checking that your approved investment commitments are being realized. Think of it as a progress report: you promised to invest, and the government is checking to see if it’s happening.
Why Does LKPM Reporting Matter?
Reporting your LKPM isn’t optional, it's a legal requirement with significant business implications.
- It's the Law: Reporting is mandated by Indonesian Law No. 25 of 2007 on Investment and BKPM Regulation No. 5 of 2021. Non-compliance puts you in direct violation of these laws.
- It Shapes National Policy: The data from your report helps the government understand investment trends. This information directly influences Indonesia’s foreign direct investment (FDI) policy, including licensing reforms, tax incentives, and infrastructure development.
- It Builds Credibility: Filing your LKPM on time demonstrates your commitment to compliance. This builds trust with regulators, banks, and potential investors, which is crucial for future approvals and partnerships.
Who Must File and How Often?
All companies with a Nomor Induk Berusaha (NIB) from BKPM are required to file an LKPM. This includes both foreign-owned (PT PMA) and local limited liability companies (PT).
Even if your business isn’t fully operational, you must still report progress. This could include reporting on capital injected, permits secured, or any obstacles you're facing.
The required reporting frequency depends on your business scale:
Business Scale | Capital / Investment | Reporting Frequency |
Small | IDR 1B ≤ capital < IDR 5B | Every 6 months |
Medium & Large | Capital ≥ IDR 5B | Every 3 months |
Deadlines & Reporting Schedule
Staying on top of your deadlines is critical.
- Quarterly (for medium and large businesses):
- Q1 (Jan–Mar): Report by April 10th
- Q2 (Apr–Jun): Report by July 10th
- Q3 (Jul–Sep): Report by October 10th
- Q4 (Oct–Dec): Report by January 10th (of the next year)
- Semesterly (for small businesses):
- 1st Semester (Jan–Jun): Report by July 10th
- 2nd Semester (Jul–Dec): Report by January 10th (of the next year)
What Do You Report in an LKPM?
An LKPM provides a snapshot of your investment progress. It includes key information about:
Category | What You Report |
Project Identity | Your company name, NIB, business sector, and location. |
Investment Value | The amount of fixed and working capital you've realized. |
Use of Funds | A breakdown of where your capital has been spent (e.g., on land, buildings, machinery), |
Employment | The number of local and foreign workers you've hired. |
Activities/Progress | The current stage of your project (e.g., under construction, trial production, or fully operational). |
Obstacles/Delays | Any challenges or delays you've faced (e.g., with permits, land acquisition, or infrastructure). |
Sector-specific | Exports, production (if relevant). |
How to submit LKPM
Filing LKPM is not just an administrative task, it follows a clear process that ensures your business activity is recorded accurately.
- Company Submits LKPM → You report your investment realization and any obstacles (quarterly or semesterly).
- BKPM / OSS Collects Data → Submissions are centralized into the government’s system and categorized by sector and region.
- Compliance Confirmed → Your filing status is updated; non-compliance triggers warnings, suspensions, or potential license revocation.
The LKPM Work-Cycle: How Data Shapes Indonesia’s FDI Policy
Once submitted, your LKPM doesn’t just stay in the system, it becomes input for national policy.
- Government Analyzes Trends
→ Officials review which projects are progressing, which are delayed, and what problems are most frequent (permits, land, infrastructure, manpower).
- Policy Feedback Loop
→ If recurring issues appear, ministries act; streamlining permits, adjusting sectoral support, or prioritizing infrastructure.
- Policy Adjustment
→ The insights inform key updates such as:
- Tax holidays & investment incentives.
- Simplified OSS licensing procedures.
- Updates to the Positive Investment List.
- Regional infrastructure programs.
- Impact on Business Climate
→ The result is a smoother environment for future investment: faster permits, clearer rules, and stronger government support.
In short: today’s LKPM reporting drives tomorrow’s investment policy.
The Benefits of Filing Your LKPM
Beyond avoiding penalties, being compliant offers significant advantages:
✅ Proof of Compliance
It provides a documented record that your business is a reliable and compliant, investor, which can be crucial for securing new permits or approvals
✅ Access to Incentives
Many government incentives, such as tax holidays or import facilities, require consistent LKPM submission as a condition.
✅ Faster Government Response
By reporting issues like permit delays, you can get help from the government. They track these reported obstacles and may step in to help resolve them.
✅ Improved Credibility
Banks, investors, and business partners often review your compliance record to gauge your reliability.
The Risks of Non-Compliance
Failing to submit your report on time can lead to serious sanctions:
- Written warning from BKPM.
- Temporary suspension of business activities.
- Revocation of business licenses.
- Barriers to obtaining future permits.
Conclusion
LKPM is not just a formality, it’s a critical part of how Indonesia tracks and supports investment.
Submitting your report on time keeps you compliant with the law, strengthens your credibility with regulators and financial institutions, and can open doors to incentives that support growth. At the same time, the data you provide helps the government identify bottlenecks and improve the overall business climate. Failing to report, however, can quickly lead to warnings, suspensions, or even license revocation. In other words, staying on top of LKPM is about more than avoiding penalties, it’s about positioning your business for long-term growth and influence in Indonesia’s investment ecosystem.
Sources & References
Law No. 25 of 2007 on Investment – Government of Indonesia
InCorp Indonesia – LKPM Report in Indonesia: A Complete Guide (2024)
InvestinAsia – LKPM Report in Indonesia: Definition, Function, and Deadlines
Indoned Consulting – LKPM Indonesia Investment Reporting Guide
Permitindo – LKPM Submission in OSS System
OSS - Sistem Perizinan Berusaha Terintegrasi Secara Elektronik