Should you plan to open or expand a business in Indonesia in 2026, you will likely be operating under a significantly updated regulatory framework.
On 2 October 2025, the Ministry of Investment / Investment Coordinating Board (BKPM) introduced Regulation No. 5 of 2025 on Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facilities via the OSS System (the “2025 BKPM Regulation”).
This regulation adjusts Indonesia’s investment rules to align with Government Regulation No. 28 of 2025 on Risk-Based Business Licensing (GR 28/2025) and consolidates three earlier BKPM regulations into a single, more streamlined framework.
For foreign investors and PT PMA (foreign-owned companies), these changes directly affect how you structure capital, report investment realization, obtain licenses, and plan your expansion strategy in Indonesia.
What Is BKPM and What Does It Do?
BKPM (Badan Koordinasi Penanaman Modal), now integrated into the Ministry of Investment, is Indonesia’s central authority for investment policy and implementation. It is responsible for:
- Formulating and overseeing investment policy, including risk-based licensing via OSS-RBA
- Coordinating foreign direct investment (FDI) and domestic investment (DDI)
- Managing investment facilities and incentives, both fiscal and non-fiscal
- Monitoring and enforcing investment compliance, including capital realization and reporting (LKPM)
In practice, BKPM is the key regulator you engage with when you:
- Establish a PT PMA
- Obtain an NIB (Business Identification Number)
- Secure business and commercial licenses
- Apply for investment facilities
- File your LKPM (Investment Activity Reports)
Overview of BKPM Regulation No. 5 of 2025
Effective 2 October 2025, the 2025 BKPM Regulation:
- Replaces BKPM Reg. 3/2021, 4/2021, and 5/2021
- Aligns with GR 28/2025 on Risk-Based Licensing
- Refines capital requirements, LKPM obligations, investment facilities, and licensing procedures within the OSS system
For investors entering Indonesia in 2026, it is the primary reference for how your PT PMA will be assessed, licensed, and monitored.
Key Changes and What They Mean for Investors
1. Lower Minimum Capital for PT PMA: IDR 2.5 Billion
The most visible change is the reduction of the minimum paid-up capital for PT PMA:
- Previous minimum: IDR 10 billion
- New minimum: IDR 2.5 billion (approximately USD 150,000)
- This applies to:
- Newly established PT PMA
- Existing PT PMA, which must align their capital structure with the new rules
However, this does not change the minimum investment value requirement > IDR 10 billion per 5-digit KBLI per project
This investment value includes machinery, equipment, working capital, and other project costs, not just equity capital. Both the paid-up capital and investment value must be consistent with your deed of establishment and OSS data.
Impact for 2026 investors:
- Lower capital entry point
- Still need a credible investment plan above IDR 10 billion per KBLI/project
2. Mandatory 12-Month Capital Lock-Up
Paid-up capital placed into the company’s bank account is subject to a 12-month lock-up period, and cannot be freely withdrawn unless:
- Used for legitimate operational costs, or
- Used for capital expenditures (e.g., purchasing assets, construction, equipment)
This is designed to:
- Discourage “fictitious capital”
- Ensure that declared capital is genuinely available for business use
Investors must now plan cash flow and capitalization carefully.
3. API-U to API-P Conversion, but Not the Other Way Around
Under the updated import rules linked to investment implementation:
- API-U (General Importer Number) can be converted to API-P (Producer Importer Number)
- API-P cannot be converted back to API-U
In principle:
- API-U: For importing goods to trade in Indonesia
- API-P: For importing goods for your own production
For 2026 investors, it is critical to decide early whether your PT PMA will function primarily as a trading entity or a producer, as this determines which API is appropriate and avoids future restrictions.
4. Revenue-Generating Supporting Activities and KBLI Planning
If your company has supporting activities that also generate revenue (for example, warehousing, consulting, or technical services), the 2025 BKPM Regulation requires that:
- These activities are clearly included in your Articles of Association
- The correct KBLI (Indonesian business classification) is used
- Each revenue-generating supporting activity meets the > IDR 10 billion Total Investment Value requirement per KBLI per project
General, catch-all KBLI codes are no longer acceptable. Detailed, strategic KBLI planning is now essential from the very beginning.
5. LKPM: Narrowed Exemptions and Adjusted Deadlines
The 2025 BKPM Regulation makes LKPM (Investment Activity Report) more central to supervision:
- Only micro-scale enterprises and businesses funded fully by APBN/APBD (State or Regional Budgets) are now exempt
- Most sectors, including medium and large companies, must submit LKPM
Updated reporting deadlines:
- Small enterprises:
- Semester I: 15 July
- Semester II: 15 January (following year)
Medium and large enterprises:
- Q1: 15 April
- Q2: 15 July
- Q3: 15 October
- Q4: 15 January (following year)
The OSS system can issue automatic administrative sanctions if LKPM shows zero realization for four consecutive quarters, highlighting the need for genuine, traceable investment progress.
6. Updated Investment Facilities
The regulation expands non-fiscal facilities such as:
- Recommendations for transfer of machinery that previously enjoyed import duty exemptions (for re-export)
- Recommendations related to capital goods for public electricity generation
- Recommendations regarding imported goods under Contract of Work and Coal Contract frameworks
Additionally, investments within Nusantara Capital City (IKN) and designated partner regions are now eligible for:
- Income tax reductions
- Deductions on gross income
These facilities are designed to support strategic projects and priority sectors.
7. Licensing Facilitation in Shared Buildings (Without New Basic Requirements)
Previously, every business needed to independently meet basic requirements for licensing, including:
- KKPR (Conformity of Spatial Utilization)
- PL (Environmental Approval)
- PBG (Building Approval)
- SLF (Certificate of Proper Function)
The 2025 BKPM Regulation now allows certain trade and service businesses operating in shared commercial buildings (e.g., malls, offices, hospitals, transport hubs, vertical housing) to use the existing permits of the building owner or manager.
For these businesses:
- No new KKPR/PBG/SLF is required if no new construction is involved
- Lease agreements, NIB, and existing building permits are submitted instead
- In government-managed buildings, some document requirements may be waived
This significantly simplifies licensing for businesses that rent space rather than build their own facilities.
8. Licensing Without New KKPR for Expansions
If a company is expanding or integrating activities on the same land, by the same entity, and already holds a valid location permit or KKPR, it may no longer need a new KKPR when:
- Increasing capacity
- Adding vertically integrated activities (supply-chain related)
- Adding horizontally integrated activities (similar KBLI group)
This facilitates growth for companies already operating in Indonesia, especially in manufacturing and industrial sectors.
What These Changes Mean for Investors in 2026
For foreign investors, the 2025 BKPM Regulation can be summarized as:
- Lower entry capital, but higher documentation and monitoring
- More licensing flexibility for shared premises and expansions
- Tighter supervision through LKPM and OSS digital monitoring
- Increased importance of proper structuring, especially around KBLI, capital planning, and environmental requirements
FAQ: Foreign Investment in Indonesia (2025–2026)
1. What is the new minimum capital for a PT PMA?
The minimum paid-up capital is now IDR 2.5 billion, but you must still meet the > IDR 10 billion Total Investment Value per KBLI per project.
2. Can I own 100% of a PT PMA as a foreign investor?
In many sectors, yes. However, some business fields remain restricted or capped for foreign ownership. A detailed review of the Positive Investment List is required before choosing your KBLI.
3. Do I still need to submit LKPM if my company is small?
If your company is not classified as micro-scale and is not funded purely by State or Regional Budget, you must submit LKPM, even if realization is still low.
4. How does the 12-month capital lock-up affect my cash flow?
You must treat paid-up capital as dedicated to genuine business operations. It cannot be withdrawn for unrelated purposes in the first year, so financial planning must account for this.
5. Can I change my business activities after incorporation?
Yes, but changes to business activities and KBLI will require amendments to your deed of establishment, updates in OSS, and possible reassessment of your investment plan.
7. How can LMI Consultancy help?
We assist with:
- PT PMA and PT PMDN setup
- OSS-RBA licensing and NIB registration
- Capital and KBLI structuring in line with BKPM Reg. 5/2025
- LKPM preparation and submission
- Import licensing (API-U/API-P)
- Tax, visa, and work permit coordination
Plan Ahead and Invest in Indonesia with LMI Consultancy
Since 2016, LMI Consultancy has supported thousands of investors in navigating Indonesia’s licensing, investment, and compliance requirements. With the introduction of BKPM Regulation No. 5 of 2025, planning correctly from the outset is more important than ever.
For a tailored roadmap for your 2026 investment in Indonesia, Contact LMI Consultancy for a professional consultation.
