The Indonesian government has recently introduced a new investment policy following the issuance of Government Regulation No. 28 of 2025 concerning the Implementation of Risk-Based Business Licensing. The technical provisions are further elaborated under Regulation of the Minister of Investment and Downstream Industry/Chairman of the Indonesia Investment Coordinating Board No. 5 of 2025 (“BKPM Regulation No. 5/2025”), which has been in effect since 2 October 2025.
Key Changes to Paid-Up Capital Requirements
Through the regulation, the Indonesian government introduces significant adjustments to the requirements for foreign investment companies (“PT PMA”), particularly concerning the minimum paid-up and issued capital. Previously, PT PMA were required to have a minimum paid-up capital of IDR10 billion (approximately USD600,000); however, under BKPM Regulation No. 5/2025, this minimum threshold has been reduced to IDR2.5 billion (approximately USD150,000). Nevertheless, it is essential to note that the requirement for a total investment value exceeding IDR10 billion—excluding land and building value—remains applicable.
Furthermore, the paid-up and issued capital may not be withdrawn from the company’s account for a minimum period of 12 (twelve) months from the date of payment, except for asset acquisition, building construction, and/or company operations. Any investors who fail to comply with this commitment may result in administrative sanctions, which may include:
- Written warnings;
- Temporary suspension of business activities;
- Administrative fines;
- Coercive enforcement measures;
- Revocation of licenses, certifications, or approvals; and/or
- Revocation of basic requirements or business licensing.
Licensing Simplifications
BKPM Regulation No. 5/2025 outlines several simplifications to the business licensing process, as summarized in the table below.
| Simplification of Procedures for Obtaining Business Licenses Without the Requirement to Issue Basic Requirements | If a business activity is carried out within a building or a commercial/service area that is jointly used, and the manager or operator of such building or area has already obtained the following permits:
The business actor may utilize the KKPR, PL, PBG, and SLF issued under the name of the manager or operator of the building/area to apply for a Business Identification Number (Nomor Induk Berusaha or “NIB”) and a Business License (Perizinan Berusaha). |
| Simplification of Business Licensing Without Spatial Utilization Conformity | For the following business activities:
A new KKPR is not required, provided that a KKPR and a land title have already been issued, the business activities are conducted within the same contiguous area, and are carried out by the same business actor. |
| Simplification of Basic Requirements for Supporting Business Activities | Supporting business activities may now serve as a source of income or generate profit for the business actor, whereas previously they were categorized as non-revenue-generating activities. Such supporting business activities must be included in the company’s deed of establishment or amendment thereof, and approvals must be obtained from the relevant institution. In addition, supporting business activities located within the same site as the main business activity may utilize the KKPR and PL already obtained for the main business activity, provided that such supporting activities are covered within the existing environmental documents. |
Extension of Investment Reporting Deadline
PT PMA is required to submit its Investment Activity Reports (LKPM) for each business activity. Under the new provisions, the reporting schedule for LKPM submission has been adjusted as follows:
- Quarter I: no later than 15 April of the current year;
- Quarter II: no later than 15 July of the current year;
- Quarter III: no later than 15 October of the current year; and
- Quarter IV: no later than 15 January of the following year.
The regulation marks a new chapter in Indonesia’s investment landscape, reflecting the government’s strategic move toward stronger control and oversight of investment activities. While the regulatory requirements for foreign investors have become more detailed, the government’s involvement has also grown more proactive.
It is interesting to see whether the new minimum paid-up capital requirements would result in foreign investors withdrawing their idle investment previously put in the PT PMA due to the old regulation.
For further information, please contact the authors:
Ferry F. Rajagukguk
Partner
Sagung Dewi Tarastya Y. P.
Associate
