The Indonesian government has officially reduced the minimum paid-up capital for Foreign Investment Companies (PMA) to Rp 2.5 billion under the newly issued BKPM Regulation No. 5 of 2025. The policy aims to ease entry for foreign investors seeking to establish a PMA and obtain access to the country’s integrated Online Single Submission (OSS) licensing system. However, foreign investors are cautioned that the Rp 2.5 billion requirement is only an initial figure and does not represent the minimum capital expected during the company’s operational phase. Several additional obligations remain in place once the business becomes active.

The change, which lowers the paid-up capital threshold from Rp 10 billion to Rp 2.5 billion, is designed to streamline early-stage company formation and ensure that foreign entities can quickly register and activate an OSS account. In practice, the Rp 2.5 billion requirement functions solely as an administrative prerequisite for obtaining a Business Identification Number (NIB) and OSS access—rather than a capital level deemed sufficient to operate a business or meet long-term investment obligations. Once the company begins operating, its capital base must still be increased to meet actual investment requirements in the relevant sector.

Despite the easing of PMA establishment rules, a regulatory mismatch persists between BKPM’s new capital threshold and Indonesia’s immigration requirements for foreign investors. While BKPM now recognizes Rp 2.5 billion as the minimum entry capital, immigration rules have not been adjusted. To obtain an Investor ITAS (Limited Stay Permit), a foreign shareholder must demonstrate that the company has at least Rp 10 billion in paid-up capital under their individual ownership—rendering the Rp 2.5 billion requirement insufficient for ITAS applications.

A stricter requirement applies to the Investor ITAP (Permanent Stay Permit), which mandates a minimum of Rp 15 billion in capital, also under the individual investor’s name. As a result, companies are still required to significantly increase their capital if their foreign shareholders intend to reside and work in Indonesia. Although BKPM has eased the administrative threshold, the Directorate General of Immigration continues to rely on the previous capital metrics when assessing investor eligibility.

BKPM Regulation 5/2025 also reaffirms that all PMAs must maintain a minimum investment value exceeding Rp 10 billion per KBLI per business location, excluding land and buildings except in specific sectors. This means that while the paid-up capital may start at Rp 2.5 billion, the overall investment plan must still surpass Rp 10 billion. For foreign investors, the policy shift brings mixed implications. The reduced initial capital requirement lowers entry barriers, allowing first-time investors to register a company and obtain an OSS NIB more easily. However, the company’s capital must still be increased before full operations—particularly for businesses seeking to employ foreign shareholder-investors, obtain Investor ITAS or ITAP, or meet sector-specific investment thresholds. This underscores the need for staged capital planning, as the Rp 2.5 billion requirement serves primarily as “administrative capital” rather than actual operational funding.

Overall, the reduction of the PMA minimum capital to Rp 2.5 billion marks a progressive step toward improving Indonesia’s ease of doing business and accelerating early-stage foreign investor registration through the OSS system. Nevertheless, the new threshold does not replace the longstanding minimum investment requirement of Rp 10 billion and does not satisfy immigration rules for Investor ITAS or ITAP applicants. Consequently, companies must still increase their capital as operations expand to ensure full compliance with cross-sector regulatory requirements—including both BKPM investment regulations and Indonesia’s immigration regime.