Legal Insights

Navigating Changes: What you Need to Know about BKPM’s New Regulation

The Ministry of Investment and Downstream Industry / Investment Coordinating Board (“BKPM”) has issued Minister of BKPM Regulation No. 5 of 2025 on Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facilities through the Online Single Submission (OSS) System (“2025 BKPM Regulation”). This regulation serves as an adjustment following the issuance of Government Regulation No. 28 of 2025 on the Implementation of Risk-Based Business Licensing (“GR 28/2025”). 

Effective as of October 2, 2025, the 2025 BKPM Regulation consolidates and replaces three previous regulations, namely: 

1. BKPM Regulation No. 3 of 2021 on the Integrated Risk-Based Business Licensing System; 

2. BKPM Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing and Investment Facilities; and 

3. BKPM Regulation No. 5 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Supervision. 

Key Changes and Highlights

1. Lower Capital Threshold for Foreign Investment Companies (PT PMA) 

One of the most notable changes concerns the capital requirement for Foreign Investment Companies (“PT PMA”). Previously, the minimum paid-up capital requirement for PT PMA was IDR 10 billion (approx. USD 600.000). Under the 2025 BKPM Regulation, the minimum paid-up or issued capital has been reduced to IDR 2.5 billion or equivalent to approximately USD 150.000.  

It should be noted that the minimum investment value requirement of more than IDR 10 billion per 5-digit KBLI remains the same. The investment value does not have to be fully reflected in the authorized or issued capital stated in the deed. It represents the overall investment plan, which includes the purchase of machinery, equipment, working capital, and other operational expenses, not just injected capital. It is essential that both requirements are met and remain fully align with the company’s deed and data recorded in the OSS system. 

2. Deadline Extension and Exemption for Investment Activity Report (“LKPM”) 

The 2025 BKPM Regulation introduces a more targeted and streamlined approach to LKPM compliance, with direct implications for business actors across sectors. 

Previously, LKPM submission was not mandatory for several categories, including micro-scale enterprises, upstream oil and gas sectors, banking institutions, non-bank financial institutions, and insurance companies. Under the 2025 BKPM Regulation, the exemption has been narrowed significantly. Now, only micro-scale enterprises and businesses whose activities are financed by the State Budget (APBN) or Regional Budget (APBD) are excluded from the reporting obligation.  

In addition to narrowing exemptions, the regulation also revises the LKPM reporting schedule, as follows:  

1. Small-Scale Enterprises 

1. Semester I: 15 July (previously 10 July) 

2. Semester II: 15 January of the following year (previously 10 January) 

2. Medium- and Large-Scale Enterprises 

1. Quarter I: 15 April (previously 10 April) 

2. Quarter II: 15 July (previously 10 July) 

3. Quarter III: 15 October (previously 10 October) 

4. Quarter IV: 15 January of the following year (previously 10 January) 

3. Expanded Investment Facilities 

The 2025 BKPM Regulation introduces several new non-fiscal investment facilities designed to support business operations across key sectors. These updates replace the previous immigration-related facility.  

The new non-fiscal facilities include: 

1. Recommendations for the transfer of machinery granted import duty exemptions for re-export purposes; 

2. Recommendations for the transfer of capital goods granted import duty facilities for public electricity generation; and 

3. Recommendations for the transfer of imported goods that have received import duty exemptions or reductions under Contract of Work (Kontrak Karya) and Coal Contract of Work (Perjanjian Karya Pengusahaan Pertambangan Batubara) schemes. 

In addition, Business operating within the Nusantara Capital City (IKN) and its designated partner regions are now eligible for fiscal facilities. These include: 

1. Reduction in income tax rates; and  

2. Deductions on gross income.   

4. Ease of Business Licensing without Basic Requirements 

Under GR 28/2025, all business actors are required to fulfil basic requirements, including Conformity of Spatial Utilization Activities (“KKPR”), Environmental Approval (“PL”), Building Approval (“PBG”), and Certificate of Proper Function (“SLF”), to obtain a Business License. To promote regulatory efficiency, the 2025 BKPM Regulation added the facilitation of the licensing process for businesses operating in shared commercial or service buildings. Previously unregulated, this provision now allows business actors to utilize the existing spatial and building permits (e.g., PL, PBG, SLF) of the building owner or manager in the course of obtaining a Business License through the OSS system. This facilitation is provided for business activities in trade or services that do not require the construction of buildings. 

This facilitation applies to businesses operating in shopping centres, markets, office buildings, rest areas, public transport facilities, hospitals, and vertical housing, provided that their activities do not involve new construction. Business actors are only required to submit supporting documents, such as a valid lease agreement, the Business Identification Number (“NIB”) of both parties, and copies of the owner’s or manager’s permits. Notably, if the building or complex is managed by the central or regional government, business actors may be exempted from the obligation to attach a NIB and other basic documents during the licensing process. The OSS institution or relevant DPMPTSP office will then verify these documents and issue a notification confirming whether additional permits are required. 

5. Ease of Business Licensing without KKPR 

Another newly introduced provision under the 2025 BKPM Regulation is the facilitation of licensing without KKPR, which streamlines licensing for businesses expanding or integrating existing operations. Under this regulation, business actors are no longer required to obtain a new KKPR when applying for a license to conduct activities that are an extension, capacity increase, or integration of an already approved business. 

This exemption applies as long as the business already holds a valid location permit or KKPR, operates on the same land area, and is conducted by the same business entity. The rule also recognizes vertical integration (supply chain-related activities) and horizontal integration (similar or related business activities within the same KBLI group) as qualifying expansions. 

Beyond these key provisions, the 2025 BKPM Regulation introduces several other procedural and substantive changes compared to the 2021 framework. While the full regulation is still under review, it represents a significant reform in Indonesia’s ongoing efforts to streamline investment procedures and strengthen the risk-based licensing ecosystem.  

For a detailed comparison between the previous regulation and the 2025 BKPM Regulation, click here.