On 2 October 2025, the Indonesian Investment Coordinating Board (BKPM) officially enacted BKPM Regulation No. 5 of 2025 concerning Investment Licensing, Risk-Based Business Licensing, and Investment Facilitation (hereinafter referred to as “BKPM Regulation 5/2025”). This regulation simultaneously revokes three prior regulations—BKPM Regulation No. 3/2021, No. 4/2021, and No. 5/2021—which previously governed the electronic risk-based licensing system, licensing procedures, and investment supervision. The new regulation introduces significant changes that foreign investors must carefully consider, particularly regarding investment value and capital requirements.

General Minimum Investment Threshold for PMA

BKPM Regulation 5/2025 reiterates Indonesia’s consistent policy that foreign direct investment (PMA) must take the form of large-scale business operations. As provided in Article 26(1), business entities classified as PMA under Article 23(9) and (10) must comply with a minimum investment requirement unless otherwise stipulated by applicable laws and regulations. Article 26(2) establishes that the minimum total investment must exceed IDR 10,000,000,000 (ten billion rupiah), excluding land and buildings, for each 5-digit KBLI (Indonesia Standard Business Classification) code per project location. Minimum Paid-Up Capital Requirement for PMA In addition to meeting the minimum investment value, foreign investors establishing a limited liability company (PT PMA) are also required to meet a minimum capital threshold. Article 26(9) of BKPM Regulation 5/2025 stipulates that PMA in the form of a Limited Liability Company (Perseroan Terbatas) must have a minimum paid-up or subscribed capital of IDR 2,500,000,000 (two billion five hundred million rupiah) per company, unless otherwise provided by the prevailing laws and regulations. This requirement aims to ensure that foreign investment entities are financially sound and adequately capitalized.

Mandatory 12-Month Lock-Up Period for Paid-Up Capital

To reinforce the credibility of capital commitments, Article 27(1) provides that the paid-up capital referred to in Article 26(9) may not be transferred out of the PMA’s bank account for at least 12 (twelve) months from the date of placement, unless used for asset purchases, building construction, or business operations. Article 27(2) requires that this commitment be made through a self-declaration by the investor at the time of applying for business licensing through the OSS (Online Single Submission) system. The required self-declaration format is set out in Annex I of BKPM Regulation 5/2025 pursuant to Article 27(3). Any breach of this declaration is subject to administrative sanctions, as stipulated in Article 27(4), thereby making the self-commitment legally binding.

Sector-Specific Exceptions to Investment Thresholds

While the general investment threshold applies per 5-digit KBLI and per project location, Article 26(3) provides notable exceptions for specific sectors. In the wholesale trade sector, the minimum investment of more than IDR 10 billion (excluding land and buildings) applies per 4-digit KBLI. For food and beverage services, the threshold is calculated per 2-digit KBLI and per single location, excluding land and buildings. Construction services are also governed by a 4-digit KBLI threshold, while industrial businesses that produce various types of products within a single production line must exceed IDR 10 billion in investment, excluding land and buildings.

Location Definition for F&B Sector

For clarity, Article 26(4) provides that the definition of “single location” for food and beverage services is to be understood as per district or city (kabupaten/kota), thereby standardizing the interpretation for licensing purposes.

Inclusion of Land and Buildings in Specific Sectors

Article 26(5) introduces an important deviation from the general rule by stating that for several business sectors, the investment value includes land and buildings. These sectors include property development and operations (both for sale and lease), short-term and long-term accommodation services, as well as agricultural, plantation, livestock, and aquaculture activities. The inclusion of land and building values in these sectors underscores the capital-intensive nature of these activities.

Property Development: Two-Tiered Investment Rules

For businesses engaged in the construction and operation of property, Article 26(6) draws a distinction between two models. Where the development involves a fully integrated building or housing complex, the investment threshold of more than IDR 10 billion includes land and building. Conversely, for the development of individual property units not part of a single building or complex, the minimum investment must still exceed IDR 10 billion, but this excludes the value of land and buildings.

EV Charging Stations and Provincial Scope

Investors in the electric vehicle ecosystem must also take note of Article 26(7), which sets a specific minimum investment requirement for the development and operation of public EV charging stations. The threshold is more than IDR 10 billion, excluding land and buildings, and is calculated per province.

Special Economic Zones (KEK) and Presidential Flexibility 

For businesses operating within designated Special Economic Zones (KEK)—including production, logistics, tourism, digital economy, energy, and research zones—Article 26(8) provides that the minimum investment value shall follow the specific provisions stipulated under Presidential Regulations concerning investment fields. This allows for sectoral flexibility based on national strategic priorities.

Conclusion

BKPM Regulation 5/2025 provides clearer frameworks of the foreign investment to ensure that foreign investment in Indonesia is significant, capitalized, and aligned with national economic goals. The clear delineation of minimum investment thresholds—along with the mandatory capital lock-up and self-declaration mechanism—creates a more predictable yet demanding investment climate. Business actors must ensure that their investment structure, sector classification, and capital arrangements fully comply with the provisions of BKPM Regulation 5/2025 to avoid delays, rejections, or administrative sanctions.