Indonesian Trade Representative Office Reporting Rules: What You Need to Know About LKPM

Corporate Secretary Service Indonesia – For companies planning to establish an Indonesian trade representative office, understanding reporting obligations is critical. Many foreign investors ask whether KPPA (Foreign Company Representative Office) or KP3A (Foreign Trading Company Representative Office) must submit an Investment Activity Report, known as LKPM.

The answer lies in understanding their legal status and operational scope. If you are considering an Indonesian trade representative office, you need to know what is required and what is not.

What is LKPM?

LKPM, or Investment Activity Report, is a mandatory report for companies involved in investment activities. It documents business operations, operational updates, and the realization of investments. This reporting guarantees adherence to Indonesian law and assists regulators in monitoring the contributions of foreign investment to the national economy.

Law Number 25 of 2007 on Investment and BKPM Regulation Number 5 of 2021 on Risk-Based Business Licensing Supervision govern the report. In accordance with this regulation’s Article 32:

• Reports from small businesses must be submitted every six months.
• Every three months, medium-sized and large businesses are required to submit reports.

On-time LKPM submission promotes transparency, boosts investor confidence, and averts legal problems. For most PMA (Foreign Direct Investment) companies, it is a core compliance obligation.

Impact of LKPM on Companies

Filing LKPM has three main benefits:

• Investor trust and transparency: Investors can observe how their funds are handled and whether operations are carried out according to the original plan.
• Risk monitoring: Businesses are able to spot problems early and modify their plans.
• Observance: Adhering to Indonesian regulations helps avoid penalties and legal issues that could cause disruptions to business operations.

Does an Indonesian Trade Representative Office Need to Submit LKPM?

This is where many foreign companies get confused. KPPA and KP3A are not business entities that generate revenue. They function only as representative offices. Their roles are limited to coordination, supervision, and liaison work. They are not allowed to sign commercial contracts or conduct transactions that generate profit. Operational expenses, including salaries, come directly from the parent company abroad.

Read Also: Costs to Set Up Representative Office Indonesia: Full Guide for Foreign Companies

Because of this, KPPA and KP3A are not required to file LKPM reports. They do not report investment realization because they are not investment vehicles. Instead, they must submit a simpler document called the Activity Report.

Activity Report Requirements for KPPA and KP3A

The Activity Report covers non-commercial activities and staffing. It includes the realization of activities in Indonesia and the number of employees, both local and foreign. Based on Article 37 of BKPM Regulation 5/2021, the rules are:

• Semester 1 Activity Report: must be submitted by July 10 of the current year
• Semester 2 Activity Report: must be submitted by January 10 of the following year

This reporting is less complex than LKPM since it excludes financial investment data. The focus is only on operational updates and employee numbers.

Why Understanding the Difference Matters

If you are planning to open an Indonesian trade representative office, knowing these requirements prevents mistakes. Many foreign companies mistakenly prepare LKPM when they only need to file an Activity Report. Time is wasted and needless compliance risks are created by misreporting.

You can avoid fines and maintain your representative office’s good standing with Indonesian authorities by making obligations clear. This distinction is particularly crucial for foreign headquarters, which frequently demand that all subsidiaries and offices adhere to the same compliance requirements.

Important Takeaway

It is not necessary to submit LKPM reports through an Indonesian trade representative office, whether it be KPPA or KP3A. Instead, it must file an Activity Report twice a year with details on activities and staffing. This simpler reporting framework matches the non-commercial nature of representative offices.

If your goal is to expand into Indonesia without committing to full investment operations, setting up a representative office remains a strategic option. Just remember, while you avoid the LKPM requirement, you must stay on top of the Activity Report. By doing so, your Indonesian trade representative office stays compliant and supports your long-term market entry strategy.

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