Authors: Marcia Wibisono, SH, MH, LL.M, Isabella Vojnov, and Kezia Tatiana Lesilolo
In recent years Indonesia has offered considerable economic promise, supported by a vast domestic market, rich natural resources, and an expanding middle class. This has prompted the government to take steps to simplify the process of foreign direct investment /Penanaman Modal Asing (“PMA”) companies incorporation.
On 2 October 2025, the government of Indonesia enacted a new regulation, i.e., Minister of Investment and Down Streaming/Head of the Investment Coordinating Board No. 5 of 2025 on Guidelines and Procedures for Implementing Risk-Based Business Licensing and Investment Facilities through an Electronically Integrated Business Licensing System (online Single Submission) (“BKPM Reg. 5/2025”). This new regulation revokes Ministry of Investment and Coordinating Board Regulation No. 3, 4, and 5 of 2021.
BKPM Reg. 5/2025 has introduced several key changes that are expected to impact investors, one of which is the reduction of minimum paid-up and issued capital requirements for PMA companies.
Minimum Issued and Paid-up Capital
In reference to Article 26(10) of BKPM Reg. 5/2025, the minimum requirement for issued and paid-up capital for PMA companies has been lowered to at least IDR 2,500,000,000 per company, unless otherwise determined. This change is a significant reduction from the previous minimum requirement for issued and paid-up capital for PMA companies, i.e., IDR 10,000,000,000.
Lock-Up Requirement
The issued and paid-up capital must remain deposited within the company’s account for at least 12 months since the date of deposit and may only be used for essential operational expenses during that period. This can be done in the form of a commitment under a statement by the business actor when submitting a business license application through Online Single Submission (“OSS”) system. Failure to comply with this provision will lead to administrative sanction.
Minimum Investment Value
While the minimum paid up capital has been significantly lowered, it is important to note that the minimum investment value remains unchanged at IDR 10,000,000,000, excluding land and building for 5 (five) digits of business classification number/Klasifikasi Baku Lapangan Usaha Indonesia (“KBLI”), for each location, except for some business activities that are exempted from such stipulations.
Implications for Foreign Investors
The IDR 10,000,000,000 minimum capital threshold was previously seen as a substantial burden for foreign investors, particularly in sectors that are not capital-intensive. With this significant decrease in the entry threshold for foreign investors, these recent changes in legislation offer promising opportunities for increased foreign business in Indonesia. While this is a positive move overall, investors need to remain cautious when it comes to corporate compliance during this transition.
Furthermore, while the minimum capital requirement is now lower, it is important for investors to keep in mind that the former IDR 10,000,000,000 minimum investment plan requirement remains unchanged. The change clarifies that the paid-up capital threshold of IDR 2,500,000,000 applies to the company in general, while the IDR 10,000,000,000 investment plan threshold applies to each individual business field as defined by KBLI guidelines.
Conclusion
In general, the reduction of issued and paid- up capital requirement under BKPM Reg. 5/2025 to IDR 2,500,000,000 aligns with Indonesia’s broader push for investment, making it easier for foreign investors to enter the Indonesian market through lower initial financial commitment, even though the investment value remains unchanged. However, please note that such deposited issued and paid-up capital will be locked up within 12 months.
We believe that these lowered barriers offer a strategic time for foreign investors to enter or expand their presence in Indonesia, with our firm ready to assist clients navigating this new regulatory landscape.
