The Indonesian government has introduced Regulation of the Minister of Investment/Head of the Investment Coordinating Board (BKPM) No. 5 of 2025, a landmark regulation designed to significantly refine and clarify the investment process. This new rule revokes and consolidates three previous regulations from 2021 (No. 3, 4, and 5), creating a unified guide for risk-based licensing and investment facilities via the Online Single Submission (OSS) system.

While the initial announcement highlighted a move towards simplification, the specific details within the regulation present crucial, tangible changes for investors. This detailed breakdown explores the most significant amendments that businesses must understand to ensure compliance and strategic planning.

Foreign Investment (PMA) Capital Requirements: A Major Shift

This is arguably the most impactful change for foreign investors. The new regulation clarifies the long-standing ambiguity between the total investment value and the minimum paid-up capital required at the time of incorporation.

• The Old Rule (Ambiguity under BKPM Reg. 4/2021): Foreign investors were required to have a total investment plan of more than IDR 10 billion. However, the regulation was often interpreted as requiring the minimum issued and paid-up capital to also be IDR 10 billion, a significant upfront financial barrier.
• The New Rule (Clarity under BKPM Reg. 5/2025): The requirements are now clearly separated:
  • Total Investment Value: Remains greater than IDR 10 billion (approx. USD 650,000) for each 5-digit KBLI (Indonesian Standard Business Classification) code, per project location. This value explicitly excludes the price of land and buildings.
  • Minimum Paid-up Capital: The minimum issued and paid-up capital that must be deposited into the company’s bank account at establishment is now set at IDR 2.5 billion (approx. USD 162,500) per company.

Implication: This change significantly lowers the initial cash barrier for establishing a PMA company. It acknowledges that the full IDR 10 billion investment is a long-term commitment that can be realized progressively, while ensuring the company is still well-capitalized from the start with IDR 2.5 billion.

Investment Activity Report (LKPM) – New Deadlines and Expanded Scope

The regulation brings important updates to the mandatory Investment Activity Report (LKPM), affecting both submission timing and the companies required to report.

• New Submission Deadlines

The deadline for submitting quarterly and semesterly reports has been extended, giving businesses more time to prepare accurate data. Reporting Period New Deadline (under BKPM Reg. 5/2025):

• • • Medium & Large Business Scale – Reporting Period Quarter I (Jan-Mar) 1st – 15th of April
    • Medium & Large Business Scale – Reporting Period Quarter II (Apr-Jun) 1st – 15th of July
    • Medium & Large Business Scale – Reporting Period Quarter III (Jul-Sep) 1st- 15th of October
    • Medium & Large Business Scale – Reporting Period Quarter IV (Oct-Dec) 1st – 15th of January (next year)
    • Small Business – Reporting Period Semester I (Jan-Jun) 1st – 15th of July
    • Small Business – Reporting Period Semester II (Jul-Dec) 1st – 15th of January (next year)

• Expanded Reporting Obligations

Previously, several key sectors were exempt from the LKPM reporting requirement. BKPM Regulation No. 5 of 2025 removes these exemptions.

• • Newly Obligated Sectors: Businesses operating in upstream oil and gas, banking, non-bank financial institutions, and insurance are now required to submit regular LKPMs through the OSS system.

Implication: All medium and large businesses, including those in the newly specified financial and energy sectors, must adapt their internal compliance schedules to meet the new LKPM deadlines and requirements to avoid administrative sanctions.

A Unified and Streamlined Legal Framework

One of the core objectives of the new regulation was to eliminate regulatory fragmentation.

• From Three to One: BKPM Regulation No. 5 of 2025 officially revokes and integrates the entire contents of:
  • BKPM Regulation No. 3 of 2021 (on the OSS System)
  • BKPM Regulation No. 4 of 2021 (on Licensing Guidelines and Investment Facilities)
  • BKPM Regulation No. 5 of 2021 (on Licensing Supervision)

Implication: This consolidation provides investors with a single, authoritative source of rules. It removes potential contradictions and gray areas that existed between the three separate regulations, leading to greater legal certainty and a more predictable application process.

Other Notable Procedural Refinements

• Application Verification Timelines: The regulation mandates that the verification of licensing applications by the OSS system must be completed no later than one day before the expiry of the service level agreement (SLA) for that specific license.
• Correction Period for Applicants: If an application is found to have deficiencies and is returned, business actors are now formally given a 10-working-day period to make the necessary corrections and resubmit.

Conclusion: What This Means for Investors

BKPM Regulation No. 5 of 2025 is more than a simple consolidation; it is a strategic recalibration of Indonesia’s investment policies. The reduction in upfront paid-up capital for PMAs makes market entry more accessible, while the expansion and formalization of LKPM reporting signal a stronger focus on monitoring and compliance.

For both new and existing investors, it is crucial to review current and future business plans in light of these specific changes. Adapting capital structures, updating compliance calendars, and understanding the unified legal framework will be key to successfully navigating Indonesia’s evolving and increasingly transparent investment landscape.

How Bali Visa Advisor Can Help

At Bali Visa Advisor, we specialize in assisting both foreign and local investors in navigating Indonesia’s ever-changing regulatory environment.

Our expert team can help you:

• Establish or restructure your PMA (Foreign Investment Company)
• Ensure full compliance with BKPM and OSS requirements
• Prepare and submit LKPM reports accurately and on time

Whether you are setting up a new business or adapting to the new BKPM Regulation No. 5 of 2025, Bali Visa Advisor provides personalized, end-to-end support to make your investment process in Indonesia smooth, compliant, and successful.

Contact us today to discuss your investment goals and let our team guide you through Indonesia’s evolving business landscape with confidence.