BKPM Regulation 5/2025 Explained: Crucial Steps to Comply with the New Regulation for PT PMA

A New Era for Foreign Investment in Indonesia

Indonesia continues to stand tall as one of Southeast Asia’s most attractive investment destinations, thanks to its growing consumer base, stable economy, and strategic location. In recent years, the government has accelerated reforms to make it easier for foreign investors to set up and expand their operations, ensuring a more transparent, digital, and accountable business ecosystem.

In this evolving landscape, BKPM Regulation No. 5 of 2025 marks a significant milestone. Known widely as the New Regulation for PT PMA, this reform reshapes how foreign-owned companies operate in Indonesia. It redefines requirements for paid-up capital, strengthens compliance supervision, and integrates all licensing processes under the OSS (Online Single Submission) system. For investors, this means fewer procedural barriers, but also tighter oversight to ensure long-term business integrity.

The regulation represents more than just a policy update; it’s a signal of Indonesia’s intent to balance openness to foreign capital with accountability and governance. Understanding its contents is therefore essential for any investor looking to enter or grow within the Indonesian market.

This article will serve as your roadmap to navigate the New Regulation for PT PMA, outlining key changes, compliance checklists, and strategic steps every foreign business should prepare before investing or expanding in Indonesia.

Background: Why Indonesia Introduced the New Regulation for PT PMA

The New Regulation for PT PMA did not emerge in isolation, it’s part of Indonesia’s broader effort to modernize its investment ecosystem under the Job Creation reform agenda. Anchored by Law No. 6 of 2023 on Job Creation and Government Regulation No. 28 of 2025 on Risk-Based Licensing, this new framework seeks to simplify business processes while strengthening governance and accountability for foreign investors.

Previously, the main guideline for foreign investment was BKPM Regulation No. 5 of 2021, which, while progressive at the time, no longer matched Indonesia’s rapidly evolving business environment. Foreign investors often faced overlapping procedures between central and regional authorities, inconsistent interpretations of capital requirements, and delays in licensing. The New Regulation for PT PMA addresses these issues by streamlining approval processes, unifying standards across regions, and fully integrating licensing through the OSS (Online Single Submission) platform.

Beyond administrative efficiency, this update reflects Indonesia’s ambition to attract quality investment, those that contribute to technology transfer, sustainability, and local job creation. By aligning with global best practices and emphasizing transparency, the regulation strengthens investor confidence and positions Indonesia as a more competitive destination for long-term capital.

In short, the New Regulation for PT PMA carries a dual mission: to make investing in Indonesia easier, faster, and more predictable, while ensuring that every foreign business operates with greater accountability and compliance. This balance between facilitation and control marks Indonesia’s next step toward a more mature, investor-friendly economy.

Overview of the New Regulation for PT PMA

The New Regulation for PT PMA introduces one of the most comprehensive updates to Indonesia’s foreign investment framework in recent years, designed to simplify procedures while enforcing stronger compliance. At its core, the regulation places the OSS (Online Single Submission) system as the centralized platform for all investment activities — from company establishment and licensing to incentive applications and ongoing compliance reporting. This digital approach aims to reduce bureaucracy and ensure that foreign investors can manage all regulatory requirements through a single, integrated system.

One of the most significant updates under the New Regulation for PT PMA is the clarification of capital and investment thresholds. Every foreign-owned company (PT PMA) must have a minimum paid-up capital of IDR 2.5 billion and a total investment value exceeding IDR 10 billion, excluding the cost of land and buildings. This reinforces Indonesia’s focus on attracting serious and sustainable investors, while preventing the misuse of PT PMA structures for small-scale or retail operations.

The regulation also aligns licensing requirements with a risk-based approach, providing:

• Automatic licensing for low-risk activities, enabling instant business operation approval.
• Sector-based verification for medium- and high-risk businesses, requiring technical evaluations, environmental assessments, or sectoral ministry clearances before final approval.
• Integration of fiscal and non-fiscal incentives, such as tax holidays, super deductions for R&D, and import duty exemptions, directly through OSS, making access to incentives faster and more transparent.

So, what does this mean for foreign investors?

The New Regulation for PT PMA promises a more efficient and predictable business environment, fewer manual steps, faster turnaround times, and clear benchmarks for compliance. However, it also imposes greater accountability: investors are now expected to maintain updated data, submit periodic reports, and ensure that every operational step aligns with their approved business classification and investment plan.

In essence, the New Regulation for PT PMA delivers both efficiency and responsibility, ensuring that investment in Indonesia remains attractive, credible, and future-ready.

Nine Key Steps to Prepare Before Investing

The New Regulation for PT PMA introduces a more structured, transparent, and digitalized approach to setting up foreign-owned businesses in Indonesia. Whether you’re a first-time investor or expanding operations, these nine steps will guide you through the preparation process to ensure full compliance and a smoother licensing journey.

Step 1: Confirm Sector Eligibility and KBLI Code

Before you start the incorporation process, identify whether your intended business activity is open to foreign ownership. Under the New Regulation for PT PMA, investors must refer to the Positive Investment List (Presidential Regulation No. 49/2021) and match their business activities with the correct KBLI (Indonesian Standard Classification of Business Fields) code.

This ensures your investment aligns with the government’s approved sectors and avoids rejection during OSS registration. Certain sectors, like retail trade or small-scale services, remain restricted for PT PMA, while others may require local partnerships or special licensing. Choosing the wrong KBLI can lead to delays or non-compliance penalties.

Step 2: Meet Capital and Investment Requirements

The New Regulation for PT PMA reaffirms the minimum paid-up capital of IDR 2.5 billion and a minimum investment plan above IDR 10 billion per KBLI and location (excluding land and buildings).

Investors must transfer this capital into the company’s local bank account and maintain the funds for at least 12 months, unless they are used for asset acquisition or operational expenses. This rule ensures only serious and long-term investors enter Indonesia’s market. Failing to meet this threshold can result in licensing revocation or OSS rejection.

Step 3: Register on the OSS System

All PT PMA establishments must begin by registering on the Online Single Submission (OSS) system, which serves as the central government platform for investment licensing. The OSS generates your NIB (Business Identification Number), the core legal identity for your company under the New Regulation for PT PMA.

This NIB acts as both your business license and tax registration, allowing operations and access to facilities. Ensure the company name, KBLI, capital, and ownership data are accurate and consistent with your deed of establishment to prevent verification issues later.

Step 4: Complete Foundational Permits

Depending on your sector and location, you must secure key foundational permits before starting operations. Under the New Regulation for PT PMA, this includes:

• KKPR (Kesesuaian Kegiatan Pemanfaatan Ruang) – spatial and location compliance.
• Amdal or UKL-UPL – environmental impact assessments.
• PBG (Building Approval) and SLF (Building Worthiness Certificate).
  Medium- and high-risk companies must complete these verifications before receiving operational approval. These steps ensure your investment is environmentally compliant and structurally sound from the outset.

Step 5: Submit Mandatory Declarations and Compliance Forms

The New Regulation for PT PMA mandates investors to submit declarations of compliance related to occupational health, safety, and environmental standards (K3L). These declarations confirm your business’s commitment to sustainable and safe operations in Indonesia.

Failure to submit or update these forms can suspend your operational permit within OSS. It’s recommended that companies prepare internal standard operating procedures (SOPs) for K3L compliance to avoid future sanctions.

Step 6: Apply for Fiscal Facilities through OSS

Indonesia offers a range of tax and investment incentives for qualifying PT PMA businesses. Under the New Regulation for PT PMA, you can apply for:

• Tax Holidays for large-scale or priority industries.
• Tax Allowances for specific business activities.
• Super Deduction Incentives for R&D or vocational training.
  All these applications are now integrated directly into the OSS system, allowing faster processing and transparency. Businesses must attach feasibility studies and financial projections to support their applications.

Step 7: Maintain Capital Documentation and Bank Proof

Transparency in capital injection is a critical aspect of compliance under the New Regulation for PT PMA. Companies must retain official bank statements, SWIFT confirmations, and auditor-verified financial reports showing the capital transfer.

These documents serve as proof to the BKPM and Ministry of Law that your company meets the paid-up capital requirement. During audits or supervision, incomplete capital documentation can trigger compliance warnings or delays in expansion approvals.

Step 8: Fulfill Reporting Obligations (LKPM)

All foreign investors are required to submit Quarterly and Annual LKPM (Investment Realization Reports) via OSS. Under the New Regulation for PT PMA, this reporting ensures transparency in how funds are used, employment levels, and project development progress.

Failure to submit LKPM on time can lead to temporary suspension of business licenses. To streamline this, assign an internal compliance officer or outsource reporting to professional service providers familiar with Indonesian investment laws.

Step 9: Prepare for Risk-Based Supervision

Under Indonesia’s Risk-Based Licensing System, the New Regulation for PT PMA implements automatic compliance monitoring through OSS. Businesses receive compliance scores based on timely reporting, permit renewals, and adherence to operational standards.

Be ready for random inspections or audits, especially for medium- and high-risk sectors like manufacturing, energy, or construction. Keeping digital records of permits, financial reports, and tax filings ensures you pass these checks seamlessly. Companies that maintain strong compliance scores may also gain faster access to government incentives or project approvals.

Final Note

Preparing for investment in Indonesia is no longer about paperwork alone—it’s about building a compliance-ready business foundation. The New Regulation for PT PMA sets clear expectations: transparency, responsibility, and consistency. By following these nine steps, investors can ensure a smooth entry into one of Southeast Asia’s fastest-growing economies—confidently and compliantly.

Common Challenges and Mistakes to Avoid

Even with the streamlined process under the New Regulation for PT PMA, many investors still face costly setbacks due to simple yet avoidable mistakes. Here are the most common pitfalls, and how to prevent them.

Mistake #1: Choosing the Wrong KBLI Code

Selecting an incorrect KBLI can cause license rejection or later suspension when authorities audit your operations. Always cross-check your business activities against the Positive Investment List and ensure they match the KBLI registered under OSS.

Mistake #2: Insufficient Paid-Up Capital Documentation

Many investors declare the minimum capital but fail to provide proper proof of transfer or bank statements. Under the New Regulation for PT PMA, this can trigger compliance warnings or even invalidate your NIB. Keep SWIFT confirmations and bank letters ready for audits.

Mistake #3: Delay in Environmental or Location Approvals

Skipping or delaying your KKPR and Amdal/UKL-UPL submissions can halt your project. Start these early and consult local authorities to ensure spatial and environmental compatibility.

Mistake #4: Late Submission of LKPM Reports

Failure to submit your quarterly or annual LKPM on time results in license suspension. Assign a compliance officer or use professional services to ensure timely reporting.

In short, the New Regulation for PT PMA demands tighter compliance and documentation discipline. Preventing these mistakes early helps your investment remain secure, transparent, and fully operational.

Accessing Investment Incentives Under the New Regulation for PT PMA

The New Regulation for PT PMA not only redefines compliance standards but also opens new opportunities for foreign investors through a range of government-backed incentives. These incentives are designed to reward companies that contribute to Indonesia’s long-term economic growth, technology transfer, and employment creation.

Available incentives include tax holidays for strategic industries, tax allowances for high-value projects, super-deductions for companies investing in R&D or workforce training, and import duty relief for machinery and raw materials. In addition, investors operating in Special Economic Zones (KEK) or the new Nusantara Capital (IKN) may qualify for extra fiscal and non-fiscal incentives such as extended tax holidays, simplified customs processes, and land-use flexibility.

Applications for these incentives are submitted digitally through the OSS system, coordinated with BKPM and relevant ministries. To qualify, businesses must meet criteria such as minimum investment thresholds, local workforce absorption, or measurable technology contribution.

By integrating all these incentive mechanisms, the New Regulation for PT PMA ensures that investors can access benefits more transparently and efficiently. Proper compliance, timely reporting, and accurate documentation not only strengthen your legal standing, they also maximize your eligibility for Indonesia’s most valuable investment incentives.

Compliance Monitoring and Sanctions

Under the New Regulation for PT PMA, compliance is no longer just a formality, it’s a continuous process closely monitored through the OSS (Online Single Submission) system. The platform now includes an automatic compliance scoring mechanism, tracking each company’s activity, reporting accuracy, and adherence to licensing commitments.

Every PT PMA is assigned a risk level, which determines the intensity of supervision. Failure to meet regulatory obligations, such as late LKPM submissions, unfulfilled environmental commitments, or inaccurate capital reporting, may result in official warnings, temporary business suspension, or even license revocation.

The system also creates an audit trail, ensuring every submission and update is recorded for government review. This data-driven approach enables authorities to identify potential risks faster and apply sanctions more consistently.

Maintaining proactive compliance under the New Regulation for PT PMA not only helps avoid penalties but also builds trust with regulators, financial institutions, and partners. Consistent and transparent reporting ultimately strengthens your company’s reputation as a credible and responsible investor in Indonesia.

Checklist: Is Your Business Ready for the New Regulation for PT PMA?

Before you start or expand your business in Indonesia, make sure your company meets all the key requirements under the New Regulation for PT PMA. Use this 10-point checklist as your quick readiness guide:

✅ Sector eligibility verified according to the Positive Investment List
✅ Paid-up capital of at least IDR 2.5 billion deposited and documented
✅ Investment plan exceeding IDR 10 billion clearly recorded
✅ NIB (Business Identification Number) obtained via OSS
✅ Environmental permits (Amdal/UKL-UPL) completed
✅ KKPR (Location Permit) approved
✅ Fiscal and non-fiscal facility applications submitted
✅ LKPM reporting schedule set and team assigned
✅ Compliance declarations (K3L) uploaded on OSS
✅ Legal or investment advisor appointed for ongoing supervision

If you can confidently check all these boxes, your business is fully prepared to thrive under the New Regulation for PT PMA.

Future-Proof Your Business in Indonesia: Compliance Starts Here

The New Regulation for PT PMA marks a major milestone in Indonesia’s effort to streamline investment procedures and strengthen business transparency. With faster licensing through the OSS system, clearer risk-based classifications, and integrated fiscal incentives, Indonesia is positioning itself as a top destination for global investors, especially in emerging regions like Bali, Lombok, and Sumbawa.

However, these benefits come with one crucial condition: preparation. A successful investment journey starts with understanding compliance obligations, structuring your PT PMA correctly, and maintaining continuous reporting discipline.

At Synergy Pro, we help foreign businesses navigate every stage, from setting up a PT PMA, securing permits, and managing compliance under the New Regulation for PT PMA, to ensuring your operations remain audit-ready.

Ready to invest with confidence? Contact Synergy Pro today for end-to-end business setup, licensing, and regulatory advisory, and turn your investment vision into a compliant success story in Indonesia.