Establishing a PT PMDN Domestic Investment Company in Indonesia with XPND

Indonesia’s investment landscape has undergone significant change following the implementation of the 2025 regulatory framework, including Government Regulation No. 28 of 2025 on Risk Based Business Licensing and BKPM Regulation No. 5 of 2025. 

These reforms represent a major shift from traditional administrative licensing toward a risk based, digitally integrated, and post audit ecosystem through the OSS RBA platform.

Within this transformation, PT PMDN, now commonly referred to as a Swasta Nasional company, has emerged as an increasingly strategic business vehicle for local entrepreneurs. 

Its flexible capital structure, broader market access, and more integrated licensing mechanisms make PT PMDN particularly relevant for businesses seeking gradual and sustainable growth without being constrained by large upfront investment commitments.

At the same time, the ease of licensing at the initial stage is accompanied by tighter supervision and reporting obligations. Strategic guidance therefore becomes essential to ensure that companies are established on the right structural foundation, remain compliant with evolving regulations, and operate safely as they enter the implementation phase.

XPND positions itself as a strategic partner for business owners who intend to establish and operate a PT PMDN in a professional, structured, and compliance ready manner.

Why PT PMDN is Increasingly Relevant Under the 2025 Regulatory Framework?

Legally, PT PMDN refers to a limited liability company whose ownership is fully held by Indonesian shareholders. In practice, PT PMDN enjoys broader operational flexibility across various business sectors that may otherwise be restricted for foreign owned entities.

This provides a strategic advantage for local entrepreneurs who aim to build their businesses organically, require flexibility to adjust their business model over time, or operate in sectors closely connected to MSMEs, local service ecosystems, or community based economic activities.

This provides a strategic advantage for local entrepreneurs who aim to build their businesses organically, require flexibility to adjust their business model over time, or operate in sectors closely connected to MSMEs, local service ecosystems, or community based economic activities.

Capital Structure and Investment Value: Flexible but Strategically Managed

BKPM Regulation No. 5 of 2025 provides clearer separation between two capital concepts:

Corporate Capital 

There is no fixed minimum capital requirement for a PT PMDN, as the authorized capital structure is determined by shareholder agreement. However, the subscribed and paid-up capital must represent at least 25 percent of the total authorized capital.

Under the current Indonesian investment framework, PT PMDN companies are further classified based on their capital scale, which determines their business category:

• Micro Enterprise: capital of up to IDR 1 billion
• Small Enterprise: capital above IDR 1 billion up to IDR 5 billion
• Medium Enterprise: capital above IDR 5 billion up to IDR 10 billion
• Large Enterprise: capital exceeding IDR 10 billion

This capital classification plays an important role in determining licensing scope, reporting obligations, and regulatory treatment under the OSS RBA system.

Investment Value 

This figure is used for business scale classification, access to facilities, and compliance obligations. For the Large Enterprise category, the required investment value must exceed IDR 10 billion, excluding land and buildings, except for specific sectors where land assets are allowed to be counted.

As a comparison, PT PMA or Foreign Investment Companies are now required to have a minimum paid up capital of IDR 2.5 billion, reduced from the previous IDR 10 billion threshold, yet they must still maintain an investment value exceeding IDR 10 billion per KBLI classification.

In practice, PT PMDN companies are not required to immediately meet an investment value above IDR 10 billion at the time of establishment. Businesses may begin at a micro or medium scale and grow organically in line with their cash flow and commercial development.

Meanwhile, PT PMA entities operating at a larger scale remain bound by high investment value obligations, even though their paid up capital requirement has been made lower.

This creates a more flexible and realistic financial environment for domestic entrepreneurs who wish to establish and scale their businesses progressively without facing heavy capital pressure at the early stage of incorporation.

Recognition of Land Asset Value in Selected Sectors

In several sectors such as:

• property and real estate,
• hospitality and tourism,
• agriculture and agribusiness,
• special economic zones,

land and building assets may be calculated as part of the investment value to reach Large Enterprise classification.

For land based industries, this policy provides tangible financial advantages, including:

• reducing the burden of upfront cash capital,
• increasing eligibility for state facilities and incentives,
• enabling easier access to fiscal support programs,

This is particularly relevant for PT PMDN companies that aim to scale in stages while maintaining eligibility for government benefit schemes.

2025 Regulatory Environment: Licensing Convenience with Stronger Operational Supervision

The OSS RBA framework currently operates as a risk based system. Many business licenses are issued instantly through self declaration, especially for low and medium low risk activities. However, the strengthened 2025 regulations also introduce two critical compliance consequences.

Capital Locking Rule

Paid up capital must be used for real economic activities within the first 12 months and may not be withdrawn merely as a nominal proof of capital placement. This requires disciplined cash flow planning from the first day of operation.

Post Audit Supervision and NIB Revocation Risk

Although initial licensing is simplified, on site inspections and compliance reviews are now significantly tightened. Any inconsistency between OSS declarations and real business conditions may lead to sanctions, operational suspension, or permanent license revocation, which directly affects activities such as export import operations and government tender participation.

At this stage, companies not only need business licenses that are issued quickly, but also require an operational structure that is ready to withstand post audit verification. This is where professional advisory support becomes essential.

On the other hand, the regulatory framework also provides greater certainty for compliant businesses.

Fictitious Approval and Certainty of Licensing Timelines

Under the 2025 framework, the risk of project delays due to slow technical verification at regional administrative levels has been significantly reduced. Government Regulation No. 28 of 2025 strengthens the Fictitious Approval mechanism, where if the verifying authority exceeds its Service Level Agreement timeframe, the OSS system automatically issues the relevant approval.

For businesses, this is not merely an administrative feature, but a strategic operational advantage that supports:

• reduced project stagnation due to prolonged manual processes,
• greater predictability in project execution timelines,
• stronger certainty for developers, contractors, and capital intensive project owners.

With this mechanism, PT PMDN companies benefit from greater speed to market, provided that all technical documentation is accurate, traceable, and audit ready.

PT PMDN as the Preferred Vehicle Before Transitioning to PT PMA

For many entrepreneurs, particularly early stage startups, technology companies, professional service firms, and businesses that are still validating their market positioning, PT PMDN represents the most secure and efficient corporate structure during the initial growth phase.

With its flexible structure, companies are able to start from a smaller to medium scale, manage cash flow more realistically, and expand capital progressively as the business matures.

When the business enters an expansion phase, such as:

• receiving corporate or venture capital investment,
• onboarding foreign strategic partners,
• or pursuing larger scale international growth,

a PT PMDN structure may be converted into a PT PMA through shareholding adjustments and corresponding updates in the OSS platform.

This approach enables entrepreneurs to benefit from domestic investment flexibility in the early phase, while still retaining a clear pathway toward international investment structuring in the future.

XPND supports clients through this transition by ensuring that the process remains safe from legal, financial, and administrative perspectives.

XPND as a Strategic Partner for PT PMDN Establishment and Operations

XPND does not merely process incorporation documents. Our role extends to acting as a strategic advisor, ensuring that companies:

• are established with the right and realistic capital structure,
• select KBLI classifications that align with regulatory risk and business objectives,
• are fully prepared for post audit and LKPM obligations,
• maintain a secure and sustainable administrative framework during operations,

Our advisory support is delivered through three key phases.

Pre Establishment Phase

At the pre establishment stage, XPND does not immediately focus on document submission. Instead, we assist clients in designing a structural foundation that aligns with regulations, business needs, and long term growth strategy.

At this stage, we support clients in:

• Formulating a capital structure that is realistic and audit proof
• Planning capital utilization within the first 12 months
• Selecting KBLI classifications aligned with regulatory mapping and business roadmap
• Placing investment value figures strategically to support credibility and compliance

The objective is not only to establish a company quickly, but to ensure that it stands on a mature, sustainable, and regulation ready foundation.

Licensing Phase

Our team also assists clients during the licensing implementation stage, including:

• Supporting OSS self declaration submissions
• Ensuring that compliance claims can be substantiated during verification
• Monitoring SLA timelines to secure eligibility for automatic approval where applicable

Before submission, we conduct a pre audit simulation to minimize the risk of findings during inspection.

Operational Compliance Phase

Our support does not stop once the company is established.

XPND assists clients in:

• Preparing and managing LKPM reporting narratives
• Ensuring consistency across investment realization data
• Mitigating risks of NIB suspension
• Evaluating eligibility for relevant fiscal incentives

This approach ensures that PT PMDN companies remain secure from a compliance perspective while maintaining strategic room for business growth.

If you are planning to establish a PT PMDN company, expand your existing operations, or wish to ensure that your business structure and reporting are aligned with the latest regulatory framework, we invite you to consult with the XPND team so that we can help you assess your needs, identify potential risks, and design the most relevant strategic options for your business.