Indonesia has taken a major step toward simplifying and modernizing its business licensing system with the enactment of Government Regulation No. 28 of 2025 on the Organization of Risk-Based Business Licensing (Perizinan Berusaha Berbasis Risiko, PBBR).
To operationalize this new framework, the Ministry of Investment and Downstream Industry/Head of BKPM issued Regulation No. 5 of 2025, effective 2 October 2025, which repealed three prior BKPM regulations issued in 2021.
This reform significantly restructures the country’s licensing framework, enhancing transparency and aiming for a more investment-friendly environment.
In this article, we provide a comprehensive overview of the key changes to the Online Single Submission (OSS) system for businesses in Indonesia. We will detail the introduction of new subsystems, such as Investment Facilitation and Partnerships, and highlight stricter monitoring rules, including the quicker deactivation of inactive accounts.
We also cover practical adjustments, like the five-day extension for mandatory Investment Activity Reports (LKPM) and a critical revision to Foreign-Owned Company (PMA) capital, which now permits issued and paid-up capital as low as IDR 2.5 billion.
Ultimately, we view these adjustments as reinforcing Indonesia’s proactive stance on foreign investment, while simultaneously introducing new compliance expectations that underscore the need for robust local advisory support.
Over the past years, ILA Global Consulting has built a strong reputation by helping hundreds of international clients navigate the country’s legal, tax, business, and investment frameworks with precision and care.
Our team combines deep local knowledge with international best practices, ensuring that every solution is both compliant and strategic.
With a proven track record, clear communication, and a client-focused approach, ILA has established itself as a trusted advisor for individuals and businesses seeking to build a strong, sustainable presence in Indonesia.
What Are the Key Structural Changes in the OSS System?
One of the most impactful updates is the introduction of three new OSS subsystems, in addition to the existing ones. These include:
- The Investment Facilitation Subsystem provides access to various investment incentives, including customs and tax facilities.
- Basic Requirements Subsystem simplifying the verification and fulfilment of essential licensing requirements.
- Partnerships Subsystem enabling collaboration between investors and priority sectors, including MSMEs and cooperatives.
Under the new rules, OSS access rights are subject to stricter monitoring. Previously, unused accounts were reviewed after six months of inactivity.
Regulation 5/2025 now triggers automated evaluations after just 90 days of inactivity, followed by automated deactivation and the possibility of reactivation upon request.
This change reflects the government’s push for greater efficiency, digital accountability, and consistent data management across the national licensing platform.
Key Structural Changes and Terms in the New OSS System
| Term | Definition |
|---|---|
| Minister of Investment and Downstream Industry/Head of BKPM | The head of the government ministry responsible for issuing investment regulations (like Regulation No. 5/2025), coordinating foreign investment, and overseeing the entire Online Single Submission (OSS) system. |
| OSS System | The Online Single Submission system. The national digital platform for processing and managing business licensing in Indonesia. |
| Regulation 5/2025 | The Minister of Investment and Downstream Industry Regulation, who operationalizes the new risk-based business licensing framework and introduced the structural changes to the OSS. |
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Validity Period and Simplification for Shared Facilities
Under the previous framework (BKPM Regulation 4/2021), business licenses (Perizinan Berusaha, PB) generally remained valid for as long as the business was operational.
Regulation 5/2025 introduces a key modification: licenses may now have limited validity for specific sectors, particularly those involved in handling hazardous or restricted goods.
Moreover, business actors operating within shared commercial or service buildings (such as shopping centers or office towers) benefit from simplified procedures.
If the building manager has already secured the necessary environmental and basic permits, tenants can directly apply for their PB using those documents, eliminating redundant submissions.
Where a central or regional government manages the premises, applicants may be exempt from attaching a Business Identification Number (NIB) or other basic documents.
Key Terms for Licensing Validity and Shared Facilities
| Term | Definition |
|---|---|
| Perizinan Berusaha (PB) | Business Licenses. The general term for operational licenses granted to businesses. Regulation 5/2025 modifies the validity period for specific high-risk sectors. |
| BKPM Regulation 4/2021 | The previous regulatory framework for business licensing, which generally granted indefinite validity to operational licenses, provided that the business remained active. |
| Business Identification Number (NIB) | The unique registration number for a business. In specific cases where the government manages the premises, applicants may be exempt from submitting this and other basic documents. |
Investment Reporting: What Are the LKPM Updates and Deadlines?
As part of this regulatory overhaul, Investment Activity Reports (Laporan Kegiatan Penanaman Modal, LKPM) remain mandatory; however, several practical adjustments have been made.
All businesses must report investment realization and employment data for each activity and location after obtaining their NIB.
The scope now explicitly includes supporting business activities, in addition to the main ones. The most notable update is a five-day extension for all reporting deadlines:
| Business Scale | Reporting Period | Previous Deadline | New Deadline |
|---|---|---|---|
| Small Enterprises | Semesterly | 10 July / 10 Jan | 15 July / 15 Jan |
| Medium & Large Enterprises | Quarterly | 10 Apr / 10 Jul / 10 Oct / 10 Jan | 15 Apr / 15 Jul / 15 Oct / 15 Jan |
What are the Minimum Capital Requirements for PMA Entities?
Regulation 5/2025 maintains the minimum total investment value for foreign-owned companies (PMA) at Rp 10 billion per KBLI code per project location.
However, it introduces a critical clarification: PMA established as limited liability companies (PT PMA) are now permitted to have issued and paid-up capital as low as IDR 2.5 billion, except in specific regulated sectors such as construction.
This revision offers a more realistic entry point for smaller international investors, signalling Indonesia’s commitment to striking a balance between openness and prudence in foreign investment governance.
Key Terms for PMA Minimum Capital Requirements
| Term | Definition |
|---|---|
| PMA | Penanaman Modal Asing (Foreign Investment). Refers to a foreign-owned company in Indonesia, typically established as a PT PMA. |
| Minimum Total Investment Value | The minimum financial commitment required for a PMA project, which **Regulation 5/2025 maintains at IDR 10 billion** per KBLI code per project location (excluding land and buildings). |
| Issued and Paid-up Capital | The amount of money or assets formally injected into the company by its shareholders. Regulation 5/2025 reduces the **minimum requirement to IDR 2.5 billion** (down from IDR 10 billion), making the initial cash outlay for PT PMA establishment lower. |
| KBLI Code | Klasifikasi Baku Lapangan Usaha Indonesia (Standard Classification of Indonesian Business Fields). A specific code used to classify a company’s business activities. The IDR 10 billion minimum investment applies to each KBLI code. |
| PT PMA | Perseroan Terbatas Penanaman Modal Asing (Foreign-Owned Limited Liability Company). The standard legal form for a foreign company, which now benefits from the lower IDR 2.5 billion paid-up capital threshold. |
What Are the Legal and Practical Implications for Investors?
These regulatory adjustments reinforce Indonesia’s position as one of the most proactive investment destinations in Southeast Asia. However, they also introduce new compliance expectations:
- Businesses must remain vigilant in maintaining OSS activity to prevent suspension of access rights.
- Investors must ensure LKPM reports are timely and comprehensive, reflecting all operational aspects.
- Foreign entities should review capital structures and sectoral restrictions before incorporation under the new capital thresholds.
For companies managing multiple projects or joint ventures, these requirements underscore the importance of a robust compliance framework and reliable local advisory support.
Key Terms for Compliance and Investment Implications (Regulation 5/2025)
| Term | Definition |
|---|---|
| LKPM Reports | Laporan Kegiatan Penanaman Modal (Investment Activity Reports). Mandatory periodic reports that businesses must submit via OSS, detailing investment realization, employment data, and all operational aspects. |
ILA Global Consulting’s Perspective
At ILA Global Consulting, we view Regulation 5/2025 as a forward-looking reform that, while increasing procedural discipline, also opens new opportunities for smoother project implementation and structured investment in Indonesia.
Our firm continues to assist investors from company establishment and OSS registration to LKPM compliance and sector-specific licensing with a dual commitment to legal precision and operational efficiency.
If your business is affected by the new OSS framework or requires assistance adapting to Regulation 5/2025, our legal team can provide a detailed review of your licensing portfolio and ensure alignment with the latest requirements.
For personalized consultation on business registration in Indonesia, contact our legal experts at info@ilaglobalconsulting.com.
