Introduction
Indonesia continues to refine its investment landscape to attract high-quality foreign capital while maintaining strong governance and compliance standards. In September 2025, Investment Coordinating Board (BKPM) issued Regulation No. 5 of 2025, introducing updated capital requirements for establishing and operating Foreign Investment Companies (Perseroan Terbatas Penanaman Modal Asing – PT PMA).
This regulation forms part of Indonesia’s ongoing enhancement of the Risk-Based Online Single Submission (OSS) framework — a centralized system designed to simplify business licensing while ensuring full transparency and traceability of foreign investments. Through BKPM 5/2025, the government aims to strengthen oversight of capital injection and encourage investors to commit real, verifiable funds into the Indonesian economy.
The new rule not only redefines the minimum paid-up capital and total project investment thresholds, but also introduces clearer guidelines for capital deposit retention, LKPM (Investment Activity Report) submissions, and administrative enforcement for non-compliance. These measures ensure that investment declarations are supported by tangible capital inflows and that companies operate within the country’s regulatory expectations.
Overall, updated capital requirements issued through BKPM 5/2025 represents a strategic effort by Indonesia to balance investment facilitation with accountability, reinforcing its position as one of Southeast Asia’s most transparent and investment-ready markets.
👉Related Service: Learn more about how to file the Quarterly Investment Report (LKPM).
1. Minimum Updated Capital Requirement (Article 26 Paragraph 10)
Under BKPM Regulation No. 5 of 2025, every Foreign Investment Company (Perseroan Terbatas Penanaman Modal Asing – PT PMA) must be incorporated as a limited liability company (PT) and adhere to updated capital requirements that strengthen the transparency and credibility of foreign investment in Indonesia.
The regulation stipulates that each PT PMA project must meet the following standards:
- Total Project Investment: A minimum of Rp 10 billion (excluding land and building value). This threshold ensures that only projects with sufficient economic capacity and long-term commitment qualify as legitimate foreign investments.
- Paid-Up and Issued Capital: At least Rp 2.5 billion (approximately USD 160,000) per company must be deposited and recorded as paid-up capital. This amount forms the base equity that supports the company’s operational and financial obligations.
- Deposit and Retention Requirement: The paid-up capital must be transferred into the company’s Indonesian bank account and maintained for at least 12 consecutive months from the date of deposit. During this period, the funds can only be used for approved operational expenses, construction, or asset acquisition as defined under the regulation.
This provision is designed to ensure real capital injection—not nominal declarations—into the Indonesian economy. By requiring traceable deposits and longer retention periods, the government aims to enhance investor accountability and prevent misuse of declared capital.
For foreign investors, these capital verification standards not only improve legal certainty but also strengthen corporate governance and financial credibility, which are essential for securing future licenses, permits, and banking facilities.
2. Capital Verification and Bank Retention Rules (Article 27)
The new updated capital requirements oblige companies to maintain their paid-up capital within a designated corporate bank account for a minimum of twelve months. Early withdrawal or misuse of funds before this period violates the company’s capital commitment and can trigger administrative sanctions.
Permitted Uses During the 12-Month Period
- Construction and asset purchases
- Office or operational expenses directly related to the registered business activity
- Capital equipment procurement for industrial or production use
Any transfer or withdrawal outside these categories is considered a breach of Article 27 (4).
3. Sanctions for Non-Compliance
If a company fails to deposit the capital properly or uses funds before the required period, BKPM may impose one or more of the following sanctions as per the updated capital requirements:
These measures strengthen the OSS System’s integrity by ensuring foreign capital commitments are transparent and verifiable.
4. Investment Activity Report (LKPM) Obligation (Article 5 Letter C)
In addition to updated capital requirements, every PMA is required to submit a regular Investment Activity Report (LKPM) via OSS. The report must detail:
- Capital realization and project progress
- Employment data and production output
- Business development plans
Submission frequency:
- Quarterly – for companies in construction or development phase
- Semi-annually – for operating companies
Failure to submit the Investment Activity Report (LKPM) on time or submission of false data may lead to administrative action — including written warnings, suspension, or business license revocation — as stipulated under Article 7(7) of BKPM Regulation No. 5 of 2025.
5. Strategic Implications for Foreign Investors
This regulation represents a balanced approach by the Indonesian government:
The minimum paid-up capital remains Rp 2.5 billion, making it feasible for SME-scale foreign investors.
Mandatory bank retention verifies actual capital inflow.
Transparent process under OSS encourages responsible FDI.
Indonesia is improving its FDI transparency and sustainability metrics.
Frequently Asked Questions (FAQ)
Rp 2.5 billion per company, excluding land and building costs.
At least 12 months after deposit, except for operational or asset purchase activities.
The company may receive a written warning, suspension, or license revocation by BKPM.
Yes — existing companies must ensure capital compliance and submit updated LKPM reports accordingly.
The Investment Activity Report (LKPM) is a mandatory compliance document that monitors real investment performance and capital use.
Key Takeaways for Businesses
✅ Minimum Paid-Up Capital: Rp 2.5 billion per PMA.
✅ Capital Retention: 12 months in company bank account.
✅ Minimum Total Investment: Rp 10 billion per project.
✅ Mandatory LKPM Reporting: Quarterly / Semi-Annual.
✅ Sanctions for Violation: Warning → Suspension → Revocation.
How MAM Corporate Solutions Can Support You
BKPM Regulation No. 5 of 2025 introduces clearer, more enforceable capital rules to strengthen foreign investment compliance in Indonesia. By ensuring genuine capital injection and transparent reporting, the government seeks to build a healthier and more sustainable investment environment.
Contact MAM Corporate Solutions today or fill in the form below for expert guidance on forming a PT PMA, meeting BKPM capital requirements, and navigating the OSS compliance process with confidence.
