On 2 October 2025, Indonesia’s Investment Coordinating Board (Badan Koordinasi Penanaman Modal – BKPM) enacted Regulation No. 5 of 2025 (“New Regulation”), introducing key reforms to the country’s risk-based business licensing and investment facility regime through the Online Single Submission (“OSS”) system. The regulation represents a major step toward facilitating foreign investment, primarily through adjustments to the capital structure and minimum investment thresholds applicable to foreign investment limited liability companies (Perusahaan Modal Asing or “PMA”). These changes are designed to ease entry barriers for foreign investors while maintaining prudent regulatory oversight.
Under the previous regime, PMA companies were required to have a minimum paid-up capital of IDR10 billion. The New Regulation substantially reduces this requirement to a minimum of IDR2.5 billion in issued and paid-up capital. Meanwhile, the minimum total investment value remains at IDR10 billion, excluding land and buildings, for each 5-digit KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) code per project location. Sector-specific exemptions from this threshold continue to apply, reflecting BKPM’s commitment to accommodate industry-specific characteristics and investment dynamics.
For PMA companies operating in property development and management, the regulation introduces a 12-month lock-up period during which paid-up capital cannot be withdrawn, except for legitimate business purposes such as asset acquisition, construction, or operational expenditures. This measure seeks to ensure capital integrity and mitigate the risk of premature capital flight in capital-intensive sectors.
To ensure a smooth transition, the regulation provides transitional arrangements for PMA companies holding verified licences under the previous regime. These entities will continue to be governed by the earlier capital and investment requirements when amending or extending their existing licences, ensuring regulatory certainty and continuity during the shift to the updated framework.
Through these adjustments, BKPM reinforces Indonesia’s position as a more accessible and competitive investment destination in the region—balancing investor convenience with accountability and capital discipline.