BKPM Issued New Regulation on Guideline and Procedure of Investment Implementation Management

On November 13, 2020, the Investment Coordination Board (Badan Koordinasi Penanaman Modal or “BKPM”) issued the BKPM Regulation No. 6 of 2020 on the Guidelines and Procedures for Investment Implementation Control (the “BKPM Reg. 6/2020”) which replaces the BKPM Regulation No. 7 of 2018 on the same matter (the “BKPM Reg. 7/2018”).

The issuance of BKPM Reg. 6/2020 and the revocation of BKPM Reg. 7/2018 are done in order to conform investment implementation control with the previously issued BKPM Regulation No. 1 of 2020 dated April 1, 2020 on the Implementation Guidelines for the Implementation of Electronically Integrated Business Licensing.

The key provisions in the BKPM Reg. 6/2020 are as follows.

  • LKPM for Businesses with Investment Under Rp500 million

Previously, BKPM Reg. 7/2018 regulated that the Investment Activity Report (Laporan Kegiatan Penanaman Modal or “LKPM”) for businesses with investments of less than Rp500 million must be done in accordance with the regulations of the relevant authorized technical institutions.

BKPM Reg. 6/2020 clarifies this provision by requiring businesses with investments of Rp50 million to Rp 500 million to submit its LKPM every semester, at the latest by July 10 and January 10 each semester. The LKPM shall be submitted through the Online Single Submission (the “OSS”) System. Businesses with investment of less than Rp50 million are not required to submit LKPM.

  • LKPM for Businesses with Investment Over Rp500 million

For businesses with investment of more than Rp500 million (including for Foreign Investment (PMA) companies), the LKPM submission requirement under BKPM Reg. 6/2020 remains unchanged from BKPM 7/2018, i.e., the LKPM shall be submitted every quarter (every three months), at the latest by April 10, July 10, October 10, and January 10 each quarter. The LKPM shall be submitted through the OSS System.

  • Administrative Fine

BKPM Reg. 6/2020 introduces administrative fine as a type of administrative sanctions that can be imposed to business actors. Administrative fine shall be imposed to the business actors if it is found that there is any deviation in the implementation of the business licenses. The amount of the administrative fine shall be in accordance with the relevant laws and regulations.

Although administrative fine as an administrative sanction is already commonly applied in the relevant sectoral regulations, the provision of administrative fine in this BKPM Reg. 6/2020 enables the relevant government institutions to inform the business actors of the administrative fine through the OSS System.

  • New LKPM Forms

Annexes I and II of the BKPM Reg. 6/2020 set out new LKPM forms which shall now include the following:

  • LKPM form for business actors with investment of Rp50 million to Rp500 million;
  • LKPM form for business actors with investment of more than Rp 500 million that have not started commercial production; and
  • LKPM form for business actors with investment of more than Rp 500 million that are already in commercial production/operation stage.

We expect these forms to be integrated in the OSS System in accordance with the business actor’s investment and stage.

The forms set out in the Annex I and II of the BKPM Reg. 6/2020 are generally the same with the forms previously provided in the Annex I of BKPM Reg. 7/2018. Specifically for business actors with investment of more than Rp 500 million that have not started commercial production, the LKPM form now includes the following:

  • the completion of the project construction;
  • the start of commercial operation; and
  • the fulfillment of the commitments for the following:
    • Location Permit;
    • Environmental License;
    • Building Construction Permit;
    • Certificate of Worthiness (Sertifikat Laik Fungsi); and
    • Commercial Operational Licenses.

The following items are now no longer included in the LKPM forms under BKPM Reg. 6/2020:

  • realization of funding for the relevant investment;
  • the number manpower employed through a third party/sub-contractor; and

the list of newly received licenses and facilities.

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February 1, 2021

Please contact Alfa Dewi Setiawati at asetiawati@aksetlaw.com, N. Sekar Lestari at nlestari@aksetlaw.com, or Alfan Zakiyanto at azakiyanto@aksetlaw.com for further information.


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