PT PMA Minimum Capital 2026: BKPM Regulation No. 5 of 2025 Complete Update

The headline is widely known by now. Indonesia’s minimum paid-up capital requirement for a Foreign Investment Company (Perseroan Terbatas Penanaman Modal Asing or PT PMA) dropped from IDR 10 billion to IDR 2.5 billion in October 2025. What is less well understood is everything else that changed alongside it.

Minister of Investment and Downstream Industry Regulation (Peraturan Menteri Investasi dan Hilirisasi or Permen Invest) No. 5 of 2025, commonly referred to as BKPM Regulation No. 5 of 2025, is not a single-issue regulation. It is a comprehensive consolidation of three separate regulations from 2021, covering business licensing procedures, implementation guidelines, and supervision mechanisms. The capital reduction is the most visible change, but the regulation also introduced a mandatory 12-month capital lock-up, new KBLI rules for supporting business activities, clarified location-based investment thresholds for specific sectors, revised Investment Activity Report (Laporan Kegiatan Penanaman Modal or LKPM) deadlines, and a settled position on when subsidiaries of PT PMA entities must themselves convert to PT PMA status.

For investors planning a PT PMA setup in 2026, and for existing PT PMA entities evaluating whether to restructure their capital, understanding the full scope of the regulation, not just the headline number, is what determines whether the change works in your favor or creates unintended compliance exposure.

What BKPM Regulation No. 5 of 2025 Actually Is

Before getting into the specific provisions, it helps to understand what this regulation replaced. BKPM Regulation No. 5 of 2025, effective 2 October 2025, consolidates and replaces three previous regulations: BKPM Regulation No. 3 of 2021 on the Integrated Risk-Based Business Licensing System, BKPM Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing and Investment Facilities, and BKPM Regulation No. 5 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Supervision.

The consolidation matters because it means investors and legal counsel can no longer rely on advice based on the 2021 framework without verifying what has changed. Many provisions carried over unchanged, but the ones that did change are material. The fact that three regulations have been merged into one means the cross-referencing that characterized compliance under the 2021 system is no longer necessary.

The regulation was issued by the Ministry of Investment and Downstream Industry (Kementerian Investasi dan Hilirisasi), the successor to the Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM). All references to BKPM in this article should be understood as referring to that ministry.

Change 1: PT PMA Minimum Capital Reduced to IDR 2.5 Billion

The core change in Article 26(10) of BKPM Regulation No. 5 of 2025 is the reduction of the minimum paid-up capital (modal disetor) requirement for a PT PMA from IDR 10 billion to IDR 2.5 billion per company, unless otherwise provided by other laws and regulations. That final qualifier is important and addressed separately below.

The minimum overall investment value for a PT PMA has been retained at more than IDR 10 billion per five-digit Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or KBLI) code per project location, excluding land and buildings, with exceptions for wholesale trades, food and beverage, construction services, and certain industries that produce various products in one production line.

The distinction between paid-up capital and total investment value is the single most common source of confusion around this regulation. They are separate requirements with separate purposes.

Paid-up capital (modal disetor) is the amount deposited into the company’s bank account at or shortly after incorporation. Under BKPM Regulation No. 5 of 2025, this minimum is IDR 2.5 billion. A capital declaration letter is accepted during the registration process, with the actual bank deposit following after the company is formally established.

Total investment value (nilai investasi) is the aggregate investment the company commits to making in its business activities over time, tracked and reported through quarterly LKPM submissions to BKPM. The remaining IDR 7.5 billion beyond the paid-up capital may consist of qualifying assets and expenditures such as machinery, equipment, vehicles, and expenses incurred for feasibility studies, permits, construction, and operations.

This decoupling is the substantive policy change. Under the previous framework, the IDR 10 billion paid-up capital requirement effectively meant investors needed to commit a large sum of cash into the company at the outset, regardless of their actual operational timeline. Under the new framework, investors need to commit to a project of IDR 10 billion or more, but only deposit IDR 2.5 billion upfront as paid-up capital. The rest can be realized progressively per the business plan.

Change 2: The 12-Month Capital Lock-Up

The capital reduction comes with a new restriction that is as consequential as the reduction itself. Although the minimum paid-up capital has been reduced to IDR 2.5 billion, such capital may not be transferred out of the company’s bank account for at least 12 months from the placement date, unless it is used for purchasing assets, construction, and operational costs. This commitment is made through a self-declaration submitted when companies apply for their license through the OSS system.

This provision exists to prevent investors from treating the paid-up capital as a temporary deposit to satisfy incorporation requirements and then withdrawing it immediately after. The policy intention is that the minimum capital should support the business during its first year of operations.

What this means in practice: investors and their treasury teams need to plan for the IDR 2.5 billion to remain in the company’s account for a full year. Uses of funds during that period must be documented as falling within the permitted exceptions: asset purchases, construction costs, or operational expenditure. Distributions, loans to shareholders, or transfers to related parties do not qualify.

For investors incorporating a PT PMA with a lean initial operational footprint, this constraint may be more limiting than the capital amount itself. A company that incorporates, completes its licensing, and then waits for its first commercial contracts may find that the IDR 2.5 billion sits largely unused for the first twelve months. Planning for this, including how the funds will be deployed within the permitted categories, should be part of the pre-incorporation discussion with your incorporation partner.

Change 3: The Investor KITAS Threshold Is Unaffected

This is the most consistently missed implication of the capital reduction and one that directly affects individual foreign investors.

The reduction in PT PMA paid-up capital from IDR 10 billion to IDR 2.5 billion does not affect the immigration threshold for an Investor Temporary Stay Permit (Kartu Izin Tinggal Terbatas or KITAS). The Investor KITAS threshold, which is individual shareholding of IDR 10 billion, is governed by the Directorate General of Immigration (Direktorat Jenderal Imigrasi) under a separate regulatory framework and is entirely unaffected by BKPM Regulation No. 5 of 2025.

For companies established before the new regulation, it is possible to reduce the paid-up capital from IDR 10 billion to IDR 2.5 billion. However, having an Investor KITAS will not reduce the company’s paid-up capital, as the requirement to obtain an Investor KITAS remains at IDR 10 billion.

This means a foreign investor who incorporates a PT PMA with IDR 2.5 billion in paid-up capital, with their shareholding valued at that level, does not qualify for an Investor KITAS. They would need to apply for a Work KITAS as a foreign worker instead, which carries a different cost structure and different obligations. Structuring individual shareholding correctly from the outset, with the Investor KITAS threshold in mind, is a decision that must be made before a single corporate document is drafted.

Change 4: Sectoral Exceptions to the IDR 2.5 Billion Minimum

The IDR 2.5 billion paid-up capital applies “unless otherwise provided by other laws and regulations.” This qualifier is not incidental. Several sectors impose higher minimum capital requirements through their own sectoral regulations, and BKPM Regulation No. 5 of 2025 does not override those.

Banking, insurance, and financial services are the most obvious examples, with their own capital adequacy frameworks set by the Financial Services Authority (Otoritas Jasa Keuangan or OJK). Mining, energy, and telecommunications sectors also carry higher capitalization requirements under their respective sectoral laws. Healthcare facilities have minimum investment thresholds set by the Ministry of Health.

For investors in these sectors, the IDR 2.5 billion figure is effectively irrelevant because the sectoral minimum is higher. The broader point is that any PT PMA investor should confirm the applicable capital requirement for their specific KBLI code before treating IDR 2.5 billion as the definitive answer.

Change 5: Location Clarification for the IDR 10 Billion Investment Threshold

One of the most practically significant clarifications in BKPM Regulation No. 5 of 2025 addresses a question that has caused genuine confusion since the 2021 regulations: what counts as a “project location” for the purpose of the IDR 10 billion investment threshold?

The New Regulation now clarifies and eases the requirement by expressly tying location to certain government administrative units for certain industries only. For example, in the food and beverage industry, the geographic scope of a single business location is the city or regency (kota/kabupaten), whereas for electric vehicle charging stations it is the province (provinsi).

For F&B operators with multiple outlets within the same city, this is a material change. Previously, there was genuine uncertainty about whether the IDR 10 billion investment threshold applied per outlet or per city. The regulation now confirms it applies per city or regency for F&B, which means a company operating ten cafes across Jakarta is not required to demonstrate IDR 100 billion in investment. It is required to demonstrate more than IDR 10 billion as a single Jakarta-level investment.

For sectors not specifically addressed in the regulation, the previous interpretation (per location, which could mean per outlet or per site) continues to apply until further clarification is issued.

Change 6: Supporting KBLI Activities and Revenue Generation

BKPM Regulation No. 5 of 2025 introduced a significant new obligation for companies with supporting business activities. A Supporting KBLI must be included in the Articles of Association (Anggaran Dasar or AoA) once it generates income or profit for the company. If such activities exist, the company is required to meet the minimum investment requirement of IDR 10 billion per KBLI code per location and must convene a General Meeting of Shareholders (Rapat Umum Pemegang Saham or RUPS) to amend its AoA to include the relevant Supporting KBLI codes accordingly.

This provision catches a common operating pattern: a PT PMA incorporated for one primary business activity that, over time, begins generating revenue from adjacent activities registered as supporting KBLI codes. Under the previous framework, these supporting activities did not always trigger additional investment obligations. Under the new regulation, the moment a supporting activity generates income, it must be elevated to a primary KBLI, incorporated into the AoA, and supported by its own IDR 10 billion investment plan.

Companies should conduct a KBLI audit against their actual revenue-generating activities to identify any supporting activities that now require AoA amendment. The investment threshold per supporting KBLI that has been generating revenue is not grandfathered. It applies from the point the regulation came into force.

Change 7: Revised LKPM Deadlines

The date for filing the investment activity report has been extended so that each LKPM report is now due on the 15th of April, July, October, or January, rather than the 10th of these months as was previously the case.

This is a minor but operationally relevant change. Companies that have set up internal compliance calendars based on the 10th of each quarter’s filing month need to update those calendars to the 15th. For companies using payroll and compliance outsourcing providers, confirm that the updated deadline is reflected in their compliance calendar for your entity.

The regulation also narrows LKPM exemptions significantly. Previously, several categories were exempt from LKPM submission including micro-scale enterprises, upstream oil and gas sectors, banking institutions, non-bank financial institutions, and insurance companies. Under the 2025 regulation, only micro-scale enterprises and businesses whose activities are financed by the State Budget or Regional Budget are excluded from the reporting obligation.

Change 8: PMA Subsidiary Conversion, Deadline Removed

The previous regulations imposed a one-year deadline for a non-PMA subsidiary of a converted PMA company to also convert to PMA status. That deadline is absent from the new regulation. Whilst this change appears to offer more flexibility in terms of timing, the enforcement risk should be carefully considered in structuring and planning the timeline for transactions requiring PMDN-PMA conversion.

This change removes a time pressure that had been operationally significant for corporate groups undergoing restructuring. It does not remove the underlying obligation: a subsidiary of a PT PMA that has foreign ownership must still convert to PT PMA status, but it removes the one-year window within which that conversion had to be completed.

What This Means for Existing PT PMA Entities

The capital reduction creates a theoretical option for existing PT PMA entities that were incorporated under the IDR 10 billion paid-up capital requirement: reduce the paid-up capital to IDR 2.5 billion and return the excess IDR 7.5 billion to shareholders.

For companies established before the new regulation, it is possible to reduce the paid-up capital from IDR 10 billion to IDR 2.5 billion to make the company’s capital less restricted. The part of the capital can be converted into a loan, or the shareholder can take this capital back.

However, this requires a formal capital reduction process: a RUPS resolution, an amendment to the Articles of Association, notarization, and approval through the Ministry of Law and the Legal Entity Administration System (Sistem Administrasi Badan Hukum or SABH). The SABH submission deadline requirement under Minister of Law Regulation (Peraturan Menteri Hukum or Permenkum) No. 49 of 2025, which is within 30 days of the notarial deed recording RUPS approval, applies to this amendment.

Before pursuing capital reduction, existing PT PMA entities should assess: whether the reduction would disqualify any directors or shareholders from Investor KITAS eligibility, whether the reduced capital level is sufficient for the company’s operational requirements and banking relationships, and whether there are any contractual obligations such as loan covenants or lease agreements that reference a minimum capitalization level.

What This Means for New PT PMA Investors

For investors who have been holding back from incorporating a PT PMA because of the IDR 10 billion capital barrier, the practical message is straightforward: the upfront cash commitment has been reduced by 75%. A PT PMA that required IDR 10 billion sitting in a corporate bank account before operations could begin now requires IDR 2.5 billion in the same position.

The IDR 10 billion total investment commitment remains. But that commitment can now be met progressively through asset purchases, construction, equipment, and operational expenditure over the company’s business plan horizon, rather than being required as cash on day one.

For investors planning their entry structure, the key decisions that remain unchanged are: KBLI selection, which determines both the licensing pathway and the investment threshold per business activity; whether the individual shareholding structure will qualify for an Investor KITAS; and the compliance infrastructure required to manage LKPM reporting, tax obligations, and corporate governance from the first month of operations.

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How XPND Supports PT PMA Incorporation Under BKPM Regulation No. 5 of 2025

XPND handles PT PMA incorporation as a structured end-to-end engagement, covering entity establishment, KBLI selection, NIB issuance, capital planning, Investor KITAS structuring, and the compliance handover that ensures the company is operationally ready from day one rather than discovering compliance obligations after they have already begun.

For investors evaluating capital structure under the new regulation, including whether to pursue Investor KITAS eligibility alongside the reduced paid-up capital, and for existing PT PMA entities assessing whether capital reduction makes sense for their specific situation, our team is available for a free initial consultation.