Overview of BKPM 5/2025: Reduction of Minimum Paid Up Capital for Foreign-Owned Company

The Minister of Investment and Downstream Industry/ Head of Investment Coordinating Board (“BKPM”) recently issued BKPM Regulation No. 5 of 2025 on Guidelines and Procedures for Implementing Risk-Based Business Licensing and Investment Facilities through the Electronically Integrated Business Licensing System (Online Single Submission or “OSS”) (“BKPM Reg. 5/2025”). This regulation revokes several BKPM regulations that governed separate aspects of the business licensing framework (i.e. system integration, procedure, and supervision), which are now harmonized and consolidated under the new BKPM Reg. 5/2025. Notably, BKPM reduces the minimum paid-up capital required for foreign-owned company (Perusahaan Penanaman Modal Asing or “PMA Company”) and the new reporting deadline for the investment activity report (Laporan Kegiatan Penanaman Modal or “LKPM”).

In this article, we provide a high-level overview of BKPM 5/2025 in terms of the (i) New Paid-Up Capital and Minimum Investment for PMA Company; (ii) Mandatory 12-month Lock-Up Period for Paid-Up Capital; (iii) Inclusion of Supporting KBLI(s) in Notarial Deed; and (iv) New LKPM Deadline.

New Paid-Up Capital and Minimum Investment for PMA Company

The minimum paid-up capital requirement for PMA company was previously set as IDR 10 billion (USD 600,000). This amount is reduced to IDR 2.5 billion (USD 150,000) unless otherwise provided by other laws and regulations. (Article 26 (10) of BKPM Reg. 5/2025)

However, the minimum investment requirement per business classification (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) remains unchanged at IDR 10 billion for each 5-digit KBLI code per location, excluding the value of lands and buildings. Under the new regime of BKPM Reg. 5/2025, the calculation of this minimum investment threshold may now include the value of lands and buildings for certain business activities, namely:

1. property development, including construction, sales, and/or leasing;
2. short-term and long-term accommodation services;
3. agriculture;
4. plantation;
5. livestock farming; and
6. aquaculture.

(Article 26 paragraph (5) of BKPM Reg. 5/2025)

In the preceding regulation, the inclusion of land and building value in the calculation of the minimum investment amount was limited solely to property development and management activities involving property in the form of complete building structures or integrated residential complexes. BKPM Reg. 5/2025, therefore, reflects a broader acknowledgment of the substantial capital component represented by lands and buildings in asset-intensive sectors, especially those that rely on land mass for their business activities.

Mandatory 12-month Lock-up Period for Paid-Up Capital

Although the required limit of the paid-up capital of a PMA Company has been reduced to IDR 2.5 billion (USD 150,000), 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-declared by the businesses when they apply for the license through the OSS system. Failure to comply with this new requirement will be subject to administrative sanctions ranging from warnings up to license revocation. (Article 27 of BKPM Reg. 5/2025)

Inclusion of Supporting KBLI(s) in Notarial Deed

In general, a company may have more than one KBLI, consisting of a Main KBLI and Supporting KBLI(s). A Supporting KBLI refers to a business activity that supports or complements the Main KBLI. Such activity is usually non-revenue-generating, as it does not directly produce income for the company.

For instance, a company engaged in medical services (Main KBLI) may include laboratory testing or data processing services as Supporting KBLIs.

Under the previous regime, companies were allowed not to include their Supporting KBLIs in the deed of establishment or articles of association (“AoA”). They only registered the KBLIs in the OSS system.

Under BKPM Reg. 5/2025, a Supporting KBLI must be included in the AoA once it generates income or profit for the company. In such case, the company is required to meet the minimum investment requirement of IDR 10 billion per KBLI code per location. (Article 35 of BKPM Regulation No. 5 of 2025)

In light of the above, companies are advised to review and identify any Supporting KBLIs already registered in the OSS system that potentially generates income. If such activities exist, the company must convene a General Meeting of Shareholders to amend its AoA and include the relevant Supporting KBLIs accordingly.

New LKPM Deadline

While LKPM remains mandatory for small-scale businesses every semester, and, for medium to large-scale businesses (including PMA Companies), every quarter of the year (Article 286 paragraph (1) of BKPM Reg. 5/2025), the submission deadlines have been changed. The table below provides a comparison of the previous and updated deadlines.