The Indonesian Ministry of Investment (BKPM) has introduced significant updates to the rules governing PT PMA registration through BKPM Regulation No. 5 of 2025, effective October 2025. This article provides a crucial overview of the changes that make the company creation process slightly different.
We detail the primary financial adjustment: a reduction in the Paid-Up Capital requirement to IDR 2.5 billion (to attract new investment), while simultaneously confirming the retention of the IDR 10 billion Minimum Investment Capital commitment per activity code (KBLI).
Crucially, we explain which financing counts toward this IDR 10 billion and highlight the new, stricter administrative procedures that have extended the setup timeline to approximately 10 working days (due to requirements such as distinct phone numbers for each shareholder and the company).
Finally, we cover the increased importance of quarterly LKPM Reports (Investment Activity Reports), as non-compliance can now lead to business license suspension, and advise existing PT PMAs on capitalizing on the new IDR 2.5 billion threshold.
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What Is the New Rule for PT PMA Registration?
Here’s the explanation of the IDR 2.5 billion vs. IDR 10 billion paradox.
The New IDR 2.5B Paid-Up Capital Requirement and 12-Month Rule
The paid-up capital for PT PMA has decreased to 2.5 billion IDR. This amount is the same as the amount required in 2021. This is a significant move from the government to attract foreign direct investment.
In theory, the company can be closed for at least 12 months, as the paid-up capital can be recovered during that period. For people investing in property or starting a serious business, this restriction has no impact. Per the definition, the capital is used for investment or to run the business as working capital.
Retaining the IDR 10B Minimum Investment Commitment
The government introduces the concept of investment capital. This notion applies to a specific activity: in addition to the paid-up capital, companies need to invest 10 billion IDR.
No duration is specified in the regulation, but the BKPM (Ministry of Investment) oversees investments made by companies. A report has to be done every quarter (LKPM Report) to report the investment made.
Some activities are not subject to the 10 billion, while others are. The critical part to notice is that the 10 billion is still required per KBLI (activity code). For example, a company with 2 activities, such as consulting and real estate, will, in theory, need to invest more than 20 billion IDR.
Key Terms for New PT PMA Capital Rules (BKPM Reg 5/2025)
| Term | Definition |
|---|---|
| PT PMA | Perseroan Terbatas Penanaman Modal Asing (Foreign-Owned Limited Liability Company). The legal entity that foreigners must establish for direct investment in Indonesia. |
| Paid-Up Capital (IDR 2.5B) | The minimum amount of shareholder capital that must be officially injected into the company’s account. The new regulation sets this threshold at IDR 2.5 billion. |
| 12-Month Rule | The implied restriction is that the Paid-Up Capital must remain in the company’s account for at least 12 months, unless used for investment, purchasing assets, or core business operations. |
| Investment Capital (IDR 10B) | The minimum total investment value a PT PMA must commit, in addition to its paid-up capital. This commitment remains at IDR 10 billion. |
| KBLI (Activity Code) | Klasifikasi Baku Lapangan Usaha Indonesia (Standard Classification of Indonesian Business Fields). The IDR 10 billion minimum investment is required per KBLI code (per core business activity). |
| BKPM | The Ministry of Investment (formerly the Investment Coordinating Board). The government body responsible for overseeing and controlling all foreign investment and ensuring compliance with the IDR 10 billion commitment via LKPM reporting. |
| LKPM Report | Laporan Kegiatan Penanaman Modal (Investment Activity Report). A mandatory report that PT PMAs must submit every quarter to the BKPM, detailing the investment realization made against the IDR 10 billion commitment. |
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What Can Be Considered An Investment?
One common question is what counts toward the 10 billion. For example:
- Bank loans count
- Shareholder loans count
- Client financing counts
- Escrow-to-company funds count
This financing counts for the portion that has been spent. For example, for a loan of 7 billion, if the villa was 6 billion and only 6 billion has been paid, then the investment to be reported is only 6 billion.
What is the New Administration Procedure?
The process of setting up a PMA takes longer than before. When it was possible to make a PMA from 1 to 5 days, the procedure now takes around 10 working days. The director now needs to process an NPWP (tax card) after the deed is issued by the notary and the ministry has approved it.
AHU, the Indonesian registry, requires 1 distinct phone number per shareholder and 1 distinct phone number for the company. While it was possible to use the director-shareholder’s phone number for both positions, a company now needs at least 3 phone numbers (2 shareholders’ numbers and 1 company number).
That additional administrative information has slowed the process compared to before the issuance of BKPM Regulation No. 5 of 2025, effective from October 2, 2025.
The BKPM is now checking companies that do not report to the BKPM every quarter. The new regulation can revoke a company’s business licence if it has not filed its LKPM report.
Opportunity or Risk? Changes for Existing PT PMAs (Reducing Capital)
For companies established before the new regulation, it is possible to reduce the paid-up capital from 10 billion to 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, having an investor KITAS will not reduce the company’s paid-up capital, as the requirement to obtain an investor KITAS remains at 10 billion IDR.
For companies, before the regulation, it can be an opportunity to reduce capital requirements and cash out some capital that had been initially unavailable.
Key Terms for PT PMA Administration and Compliance
| Term | Definition |
|---|---|
| NPWP (Tax Card) | Nomor Pokok Wajib Pajak (Taxpayer Identification Number). A mandatory tax card that the director of the PT PMA must now process shortly after the company’s deed is legalized, adding a new administrative step. |
| AHU (Indonesian Registry) | Direktorat Jenderal Administrasi Hukum Umum (Directorate General of General Legal Administration). The Ministry of Law and Human Rights’ registry system now requires separate phone numbers for each shareholder and the company, slowing the setup process. |
| Investor KITAS | A specific residency permit for foreign investors. The capital requirement to be eligible for this KITAS remains IDR 10 billion, preventing existing PT PMAs from reducing capital if the director relies on this visa. |
| Business License Revocation | The severe penalty that the BKPM can impose on a PT PMA if it fails to consistently and accurately file its mandatory LKPM Reports. |
Starting a foreign-owned company in Indonesia has become a journey of strategic compromise and intricate paperwork. Don’t risk costly delays or license suspension by mismanaging the new NPWP, AHU, and LKPM requirements.
ILA Global Consulting specializes in PT PMA registration under the New 2025 Rules.
Contact us today to ensure your company setup is compliant, fast-tracked, and strategically optimized to handle the IDR 2.5 billion/IDR 10 billion paradox from day one.
