Indonesia has reduced the minimum issued and paid-up capital for a foreign-owned company (PT PMA) to IDR 2.5 billion (USD 142,000), significantly lowering the equity that foreign investors generally need to commit when establishing an Indonesian company.
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The change was introduced by Minister of Investment and Downstreaming/Head of BKPM Regulation No. 5 of 2025. It does not remove the separate minimum investment requirements applying to foreign investment projects.
Does the IDR 10 Billion Investment Requirement Still Apply?
The reduction in paid-up capital did not abolish Indonesia’s minimum investment requirement for foreign-owned companies.
A PT PMA is generally required to have a total investment value of more than IDR 10 billion (USD 568,000), excluding land and buildings, for each applicable business activity and project location, subject to sector-specific calculation rules.
This is separate from the IDR 2.5 billion (USD 142,000) paid-up capital requirement. Paid-up capital is shareholder equity in the Indonesian company, while investment value represents the scale of the business activity being undertaken.
The method for calculating investment value can differ for certain sectors and activities, making the company’s KBLI codes and project locations relevant to the required investment amount.
Can the IDR 2.5 Billion Be Used by the Company?
The IDR 2.5 billion (USD 142,000) paid-up capital does not have to remain unused in the company’s bank account.
Under the current rules, shareholders generally may not withdraw the minimum paid-up capital for at least 12 months, except when the funds are used to finance the company’s business activities.
The company can use the capital for its business activities during this period.
Does Every Foreign-Owned Company Qualify for IDR 2.5 Billion?
The IDR 2.5 billion (USD 142,000) threshold is the general PT PMA minimum. Sector-specific capital rules can impose higher requirements, particularly in regulated industries.
The lower threshold also does not open activities reserved for Indonesian cooperatives or micro, small, and medium enterprises. Foreign investment remains subject to Indonesia’s rules governing which activities are open to foreign ownership and any conditions attached to them.
What Does the Change Mean for Existing PT PMAs?
A PT PMA established under the previous rules may already have issued and paid-up capital above IDR 2.5 billion (USD 142,000). The introduction of the lower minimum does not itself require an existing company to reduce its registered capital.
An existing company can consider reducing its registered capital, but a formal capital reduction is different from withdrawing funds already invested in the business and carries its own corporate, tax, and regulatory consequences.
How Can a PT PMA Fund Investment Above Its Paid-Up Capital?
The lower minimum creates a distinction between the equity required in the company and the funding required to carry out an investment exceeding IDR 10 billion (USD 568,000).
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A company can receive additional equity or use other financing arrangements, including shareholder loans where appropriate. Using an offshore shareholder loan can introduce Indonesian tax and foreign-debt reporting obligations that do not arise in the same way with equity funding.
Cross-border shareholder loans can also be subject to Indonesian rules affecting interest deductibility and foreign-debt reporting.
Does the Lower Capital Requirement Change LKPM Reporting?
The lower paid-up capital requirement does not remove a PT PMA’s investment-reporting (LKPM) obligations.
Through LKPM reporting, a PT PMA reports how much of its registered investment has actually been carried out.
Registered capital, planned investment, and realized investment are three different figures.
Applying the New Capital Rules With MAP Resources Indonesia
MAP Resources Indonesia assists foreign investors with PT PMA establishment, investment structuring, and Indonesian compliance. Contact us at info@mapresourcesindonesia.com.
