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On 2 October 2025, the Indonesian Ministry of Investment ("BKPM") issued Regulation No. 5 of 2025 ("BKPM Reg. 5/2025"), which introduces significant reform to Indonesia's investment framework and the Online Single Submission (OSS) system.
In this briefing note, we discuss the key changes in BKPM Reg. 5/2025, why they matter, and how they affect foreign businesses and investors.
Key changes
One of the most important changes in BKPM Reg. 5/2025 is a reduction of the minimum paid-up capital for foreign investment companies ("PT PMA") from IDR 10 billion to IDR 2.5 billion per business activity ("KBLI").
Although the investment value for PT PMA remains IDR 10 billion per KBLI, only IDR 2.5 billion now needs to be deposited as cash, which must remain in the company's bank account for 12 months unless used for capital expenditure or working capital.
The remaining IDR 7.5 billion may consist of qualifying assets and expenditures such as machinery, equipment, vehicles, and expenses incurred for feasibility studies, permits, construction and operations.
Business-activity consolidation is now allowed within related KBLI groups. For example, multiple wholesale, F&B, construction, or manufacturing KBLI may be consolidated under a single investment value instead of separate IDR 10 billion tranches.
Land and building costs can be counted toward the minimum investment for sectors such as property, accommodation, agriculture, plantation, farming, and aquaculture.
BKPM Reg. 5/2025 provides that the OSS system will reflect these rules and streamline licensing by 5 October 2025.
Why they matter
The long-criticised IDR 10 billion threshold (approximately USD 640,000) was a significant barrier for mid-sized enterprises, start-ups, and service sector entrants, many of whom had viable business models but lacked access to such large sums of capital at the outset.
By recognising tangible assets and project expenditures as valid equity contributions, BKPM Reg. 5/2025 reduces idle capital, allowing investors to deploy funds productively.
The addresses investor liquidity constraints, reform aligns Indonesia with regional norms, and enhances its competitiveness for foreign direct investment.
Impact on foreign businesses and investors
Overall, BKPM Reg. 5/2025 widens market access, lowers financial barriers, and is expected to stimulate new foreign direct investment and pilot-scale ventures across Indonesia.
Smaller foreign businesses, including those with Singapore holding structures or "capital-light" models, can now incorporate and operate legally in Indonesia without the heavy upfront cost previously required.
Existing PT PMAs may re-evaluate their capital structure and licensing scope to consolidate activities and optimise compliance.
Sectoral investors (property, agribusiness, EV charging, manufacturing) gain flexibility to pool projects or locations under a single investment plan.
BKPM Reg. 5/2025 also supports risk-based licensing, which allows for faster and clearer approvals under the revised OSS framework.
Companies planning new or expanded investments in Indonesia should review their corporate structure and capital allocation in light of these reforms.
How we can help
Withers, together with our Indonesian associated firm Karna Partnership, offer tailored legal solutions for clients planning to invest and do business in Indonesia amidst these regulatory changes. In particular, we advise on:
- investments into Indonesia under BKPM Reg. 5/2025, including via Singapore and other offshore holding structures;
- licensing applications, renewals, and investment reporting via the OSS, particularly during the system transition;
- consolidation of business activities under BKPM Reg. 5/2025; and
- the inclusion of land and building costs in minimum investment calculations for eligible sectors such as property development and agriculture.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
