Are you delaying the establishment of a Foreign Investment Limited Liability Company (PT PMA) because of concerns about the requirement to provide IDR 10 billion in capital? You are not alone.
For many years, the “10 billion” figure has been perceived as a significant psychological barrier for medium scale foreign investors who plan to enter the Indonesian market.
There is encouraging news in 2026. With the implementation of Permeninves or BKPM Regulation No. 5 of 2025, the government has introduced a more flexible approach to capital structuring. Investors are no longer required to inject IDR 10 billion in cash at the beginning. The regulation clarifies that the minimum Issued and Paid Up Capital is IDR 2.5 billion.
However, the IDR 10 billion benchmark has not disappeared. It has instead taken the form of an Investment Value commitment. When these two terms are misunderstood, a PT PMA may still face administrative warnings or potential license suspension through LKPM reporting and OSS RBA monitoring procedures.
This article explains, from a strategic and compliance driven perspective, how to establish a Foreign Investment Limited Liability Company (PT PMA) using an initial Paid Up Capital of IDR 2.5 billion, while still fulfilling the investment commitment of more than IDR 10 billion in accordance with the applicable regulations.
BKPM Regulation 5 of 2025: What Has Actually Changed
This regulation revokes BKPM Regulation No. 4 of 2021 and revises the framework for capital requirements and investment realization for PT PMA entities.
Several key provisions are important to understand:
- Article 26 regulates the minimum investment value.
- The minimum Issued and Paid Up Capital is set at IDR 2,500,000,000.
- Several principles from the previous regime remain applicable, including the following.
- The Investment Value per KBLI must exceed IDR 10,000,000,000.
- Land and buildings are excluded from the calculation.
- The Investment Value functions as a long term investment commitment.
This distinction is often the primary source of misunderstanding in practice.
Many business owners and investors who rely on earlier practices still interpret the Investment Value as capital that must be fully deposited at the beginning of company establishment.
Under the updated regulatory framework, IDR 2.5 billion represents the minimum Paid Up Capital that must be injected upfront, while the Investment Value exceeding IDR 10 billion represents the total investment commitment that must be realized progressively.
Both concepts are different and cannot be treated as the same obligation.
Paid Up Capital and Investment Value: Two Different Concepts
This is the area where confusion most commonly occurs during the establishment of a Foreign Investment Limited Liability Company (PT PMA). Many investors assume that the Investment Value refers to funds that must immediately be transferred to the company’s bank account.
From a legal and regulatory standpoint, these two concepts serve different purposes.
Paid Up Capital as the Entry Requirement for PT PMA Establishment
Paid Up Capital refers to funds that are actually deposited into the company’s bank account and recorded in the deed of establishment, financial statements, and bank deposit records.
Under BKPM Regulation 5 of 2025, the minimum PT PMA Paid Up Capital requirement is IDR 2.5 billion.
This capital serves as initial operational funding, evidence of investment commitment, and a legal basis for the issuance of the NIB and validation of the company deed.
For many years, the IDR 10 billion benchmark was widely perceived as capital that must already exist at the beginning of the establishment process. As a result, many prospective investors assumed that the entire Investment Value must be prepared in cash from day one.
Investment Value as a Long Term Commitment
The Investment Value is not capital that must be deposited upfront. It represents the total capital expenditure and operational expenditure that will be incurred until the business reaches a commercially operational stage.
The regulation confirms that the Investment Value must exceed IDR 10 billion per KBLI.
Expenditure components that are generally included in the Investment Value calculation include:
- Acquisition of assets and equipment
- Office renovation and interior works
- Technology and software costs
- Legal and compliance expenses
- Employee salaries
- Consultancy and professional service fees
- Early stage operational expenditure
Items that are excluded from the calculation are land and buildings.
In practical terms:
IDR 2.5 billion is the starting point of the PT PMA Paid Up Capital, while IDR 10 billion is the final Investment Value commitment.
Investors are not required to fulfil the entire amount immediately. The government recognizes that modern business development progresses in stages, in line with project schedules and commercial milestones.
However, there is a critical implication associated with the initial Paid Up Capital that must be carefully understood.
The 12 Month Capital Lock Up Rule
This provision is still unfamiliar to many investors.
Under the 2025 regulatory framework, Paid Up Capital may not be withdrawn within the first 12 months, unless it is used for legitimate business operations of the PT PMA.
The lock up principle does not simply mean that funds must remain idle in the bank account. It requires that the funds are actually used to support business activities, that all expenditures are accountable and verifiable, and that the funds are not transferred back to shareholders in the form of personal loans.
Prohibited activities include:
- Withdrawing capital back to personal accounts
- Lending PT PMA capital to directors or shareholders
- Recording fictitious transactions to manipulate account balances
If, during an audit, the account balance is depleted and there is no valid documentation of business expenditure, potential consequences may include LKPM administrative warnings, suspension of licensing status within the OSS system, and revocation of the NIB.
This means that policy flexibility at the entry stage does not imply weaker supervision. The government now places greater emphasis on monitoring progressive investment realization.
How the Remaining IDR 7.5 Billion Commitment Is Fulfilled
A question frequently raised by investors is:
How the remaining IDR 7.5 billion investment commitment is fulfilled if only IDR 2.5 billion is injected as Paid Up Capital.
The answer lies in progressive investment realization reported through LKPM.
Each quarter, the company is required to report:
- Acquisition of working equipment and assets
- Office rental and operational expenditure
- Renovation and fit out activities
- Employee payroll
- Vendor and professional service contracts
- Technology and system expenditure
These expenditures are accumulated, verified, and recorded as part of the total Investment Value.
Over time, the cumulative realized value will increase until it exceeds IDR 10 billion.
Through this approach, the Investment Value is not required to be fulfilled in a single phase. It grows in line with the natural development of the business.
The essential requirements are legitimate and well documented expenditure, realistic project timelines, and consistent LKPM reporting. Within this framework, the OSS RBA system plays an increasingly strategic supervisory role.
The OSS RBA Self Declaration Commitment
During NIB registration, investors are required to submit a Declaration of Commitment to Fulfil the Investment Value.
Although it may appear administrative, this declaration functions as an investment commitment contract, a reference for evaluating realization progress, and an automated monitoring mechanism within the OSS system.
If, within a certain period, realization remains at zero, there is no business activity, and LKPM reports are not submitted, the OSS system may issue warnings, classify the PT PMA as inactive, and initiate clarification procedures.
At a subsequent stage, prolonged non compliance may result in license suspension or cancellation of the investment commitment.
For this reason, PT PMA planning today does not end at the establishment stage. Key priorities now include capital structure planning, investment realization scheduling, and governance of LKPM reporting. These aspects should be structured from the beginning, even before the deed is executed.
Summary of Key Insights
To support clearer understanding, several strategic points are important to highlight:
- Minimum PT PMA Paid Up Capital of IDR 2.5 billion must be available at the time of establishment.
- Paid Up Capital may not be withdrawn within the first 12 months unless used for legitimate business operations.
- The Investment Value must still exceed IDR 10 billion and is realized progressively.
- Fulfilment is recorded through operational and asset expenditure reported in quarterly LKPM submissions.
- The Investment Commitment Declaration in OSS is legally binding.
Through this framework, the government provides greater flexibility at the early stage while strengthening monitoring during the realization phase. For investors with a clear business roadmap, this structure is more sustainable and commercially realistic.
Need Support for Your PT PMA Paid Up Capital and Investment Compliance
The 2025 framework provides a lighter entry requirement but introduces stricter supervision, particularly during the capital lock up period and LKPM investment realization reporting.
Incorrect decisions in the early stage may result in licensing risks, OSS administrative warnings, and challenges during investment verification.
If you require professional guidance to ensure that your Foreign Investment Limited Liability Company (PT PMA) remains compliant with capital and investment obligations, XPND is ready to assist.
We provide support in:
- Aligning Paid Up Capital implementation with regulatory requirements
- Reviewing investment realization plans and reporting readiness
- LKPM reporting scenario preparation
- Documentation alignment for OSS RBA and NIB compliance
Consult your business plan with us. We will help ensure that your deed obtains legal validation, your NIB remains secure within the OSS RBA system, and your investment realization progresses in line with the applicable regulatory framework.
