Updated October 2025 to reflect Regulation No. 5/2025, which reduced the minimum paid-up capital for foreign companies from IDR 10 billion to IDR 2.5 billion, while retaining the IDR 10 billion investment plan requirement.
Indonesia has become a focal point for global investors, offering vast opportunities across various sectors. In 2023 alone, the country attracted over US$47 billion in foreign direct investment, reflecting its growing appeal as a business hub. The government’s pro-investment policies, coupled with the rapid expansion of industries like manufacturing, technology, and services, have created a fertile environment for international companies.
However, navigating the regulatory landscape, particularly the capital requirements for foreign businesses, can be challenging.
Indonesia’s Foreign Investment Framework
Indonesia’s investment environment is governed by regulations that aim to attract international businesses while protecting national interests. The Investment Coordinating Board (BKPM) is central to this framework, ensuring that all investment activities align with the country’s economic goals. In recent years, the introduction of the Online Single Submission (OSS) system has simplified the process of applying for business licenses, making the investment climate more accessible for foreign entities.
The OSS-RBA system has also been upgraded to handle investment plan registration, paid-up capital validation, and SME partnership commitments under the 2025 regulation.
General Capital Requirements for Foreign-Owned Companies
Under Minister of Investment Regulation No. 5 of 2025, the minimum paid-up capital for foreign-owned companies has been reduced to IDR 2.5 billion (USD 160,000).
However, the total investment plan per project and per business classification remains at IDR 10 billion (USD 640,000).
This distinction lowers the initial entry barrier while ensuring that foreign investment remains large-scale and economically meaningful.
It’s important to note that certain industries may have higher capital requirements due to their nature. For instance, sectors such as financial services, logistics, and freight forwarding often necessitate a larger capital base.
Additionally, the classification of a company in Indonesia is determined by its capital size:
| Enterprise Type | Capital (Excl. Land/Buildings) | Turnover |
| Micro | Up to IDR 1 billion (USD 65,000) | Up to IDR 2 billion (USD 130,000) |
| Small | > IDR 1 billion–IDR 5 billion (USD 65,000–325,000) | > IDR 2 billion–IDR 15 billion (USD 130,000–975,000) |
| Medium | > IDR 5 billion–IDR 10 billion (USD 325,000–650,000) | Up to IDR 50 billion (USD 3.25 million) |
Because foreign-owned companies must register an investment plan of at least IDR 10 billion, they are automatically classified as large enterprises.
Sector-Specific Capital Rules
Capital requirements in Indonesia vary across industries, reflecting the distinct needs and strategic importance of each sector. In the trading and retail sectors, companies must meet certain thresholds to promote fair competition. Manufacturing businesses often have higher requirements due to their scale and impact on the economy. Service providers, such as consulting firms and IT companies, typically face more flexible thresholds. Meanwhile, capital-intensive industries like construction, real estate, and technology require tailored approaches to meet their unique demands.
Sectoral Exceptions and Higher Thresholds
The reduced paid-up capital threshold does not apply uniformly across all sectors. Certain industries remain subject to higher requirements because of their regulatory framework or systemic importance.
For instance, commercial banks must maintain at least IDR 10 trillion (USD 640 million) in capital under the Banking Law, while insurance companies are required to maintain IDR 150 billion (USD 9.6 million). Companies operating in special economic zones (SEZs) may also face distinct capital requirements under separate presidential or ministerial regulations.
These exceptions mean that investors should always verify the applicable sectoral capital thresholds before incorporation.
Foreign Ownership Regulations
Indonesia balances openness to foreign investment with measures to encourage local participation. Ownership limits vary depending on the industry, with some sectors allowing full foreign ownership and others requiring partnerships with local entities. Investors should be aware of the Positive Investment List, which outlines sectors open to foreign investment, and the Negative Investment List, which highlights restrictions. Furthermore, share valuation and distribution must align with regulatory guidelines, ensuring compliance.
Capital Valuation and Verification
Paid-up capital must be deposited in cash or contributed as verifiable non-cash assets. The new regulation requires that the minimum IDR 2.5 billion remain in the company for at least 12 months unless used for legitimate business expenses such as equipment purchases or operational costs. The Ministry of Investment and the OSS-RBA system jointly monitor compliance.
Contact MAP Resources Indonesia at info@mapresourcesindonesia.com for guidance on meeting the new capital and OSS-RBA compliance rules.
The use of Indonesian Rupiah is often required, although other approved currencies may also be accepted. Non-cash assets must undergo rigorous valuation processes, typically involving independent audits. This ensures that all contributions meet regulatory standards and are accurately reflected.
Practical Steps for Establishment
Establishing a foreign-owned company in Indonesia involves several essential steps.
- Determine Your Business Sector and Ownership Limits
Verify if your sector is open to foreign ownership. The Positive Investment List defines sectors with 100% foreign ownership and those requiring local partnerships. - Establish a Local Partner (If Required)
For sectors with ownership limits, consider a joint venture with a local company to meet regulations and gain local market insights. - Prepare Required Documentation
The application requires identification documents for shareholders/directors, a registered address, Articles of Association, and proof of minimum capital (typically IDR 10 billion). - Register with the Online Single Submission (OSS) System
Registering through the OSS system provides essential licenses and your Business Identification Number (NIB). - Open a Corporate Bank Account and Deposit Capital
Open a corporate bank account and deposit the paid-up capital of at least IDR 2.5 billion. Declare the full IDR 10 billion investment plan through the OSS-RBA system, which will monitor realization through LKPM filings. - Obtain Necessary Licenses and Permits
Additional permits may be needed depending on the industry, like environmental or health permits. The OSS system assists in this process. - Register for Tax and Social Security
Register with the tax office and enroll employees in Indonesia’s social security programs.
Ensuring Ongoing Compliance
Compliance now revolves around the OSS-RBA platform, where companies must validate paid-up capital, declare their investment plan, and report realization through regular LKPM filings. Failure to meet these commitments can trigger progressive sanctions — from written warnings to suspension or revocation of the Business Identification Number (NIB).
12-Month Lock-Up on Paid-Up Capital
The minimum equity of IDR 2.5 billion (USD 160,000) must remain in the company for at least twelve months unless it is used for legitimate business purposes such as asset purchases or operational expenses. Compliance with this lock-up requirement is monitored through the OSS-RBA system and by the Ministry of Investment.
If the paid-up capital is withdrawn prematurely or not used as declared, the company may face enforcement measures. These include written warnings, suspension of its business identification number (NIB), or, in severe cases, the revocation of business licenses and incentives. The rule ensures that investors maintain real capital presence in Indonesia rather than relying on temporary deposits.
Partner with MAP Resources Indonesia
Navigating Indonesia’s capital requirements can be complex, but with the right guidance, it becomes manageable. At MAP Resources Indonesia, we offer tailored solutions to help foreign investors comply with local regulations and streamline their operations. Contact us today at info@mapresourcesindonesia.com to learn how we can support your investment journey.
