Legal Insights

Indonesia Reduces Minimum-Paid-Up-Capital Requirement for PT PMAs – A Long Awaited Move Back to Past Openness

October has brought significant changes for international enterprises doing or planning to do business in Indonesia. By means of the Ministry of Investment and Downstream Industry Regulation No. 05/2025, the Indonesian government has reduced the IDR 10 billion (approximately 520,000 Euro) minimum paid-up capital threshold for foreign-owned limited liability companies (Perseroan Terbatas Penanaman Modal Asing, or PT PMA) by 75 percent to IDR 2.5 billion (around 130,000 Euro) per business field at the time of incorporation or registration. 

Following its announcement in the Indonesian State Gazette on October 2, 2025, Regulation No. 5/2025 entered into force, sending a strong signal particularly to foreign investors intending to establish a presence in this roughly 280 million population market full of opportunity. 

Previously, the IDR 10 billion threshold had been considered comparatively high and therefore burdensome for foreign investors, especially in fields that are not capital-intensive, since neighboring ASEAN member states such as Malaysia, Thailand, and Singapore apply significantly lower minimum capital thresholds—if any. This change marks a return to the rules applicable prior to 2021, when implementing regulations under the Omnibus Law introduced the IDR 10 billion threshold for the first time.  

However, even though the minimum equity threshold is now lower, the former IDR 10 billion minimum investment plan requirement remains in place. Regulation No. 5/2025 also expressly states that the paid-up capital of at least IDR 2.5 billion must remain deposited within the affected company for at least 12 months and may only be used for essential operational expenses during that period. This does not change the availability of the paid-up capital as working capital. 

The revision clarifies that the paid-up capital threshold of IDR 2.5 billion applies to the company in general, while the IDR 10 billion investment plan threshold applies to each individual business field as defined by the KBLI (Klasifikasi Baku Lapangan Usaha Indonesia – Indonesian Standard Classification of Business Fields) guidelines. 

At the same time, a quarter of the investment planned for each business field must be contributed as equity. This means, for instance, that a company with three (3) business fields according to the KBLI would require paid-up capital of at least IDR 7.5 billion and a minimum investment plan of more than IDR 30 billion. Since the introduction of the IDR 10 billion threshold, there had been legal uncertainty as to whether the paid-up capital requirement had to be met for the company as a whole or for each business field individually. By realigning the minimum paid-up requirement with the minimum investment per business field, legal certainty has now been restored. 

Overall, the barriers to entering the Indonesian market have been significantly lowered for foreign investors, particularly for small and medium-sized enterprises, which can now start business operations in Indonesia with a lower initial financial commitment. This adjustment may be especially helpful for service- and/or sales-oriented setups without significant physical assets.