Indonesia has taken a significant step to attract more diversified foreign investment. The Investment Coordinating Board (BKPM) has officially approved a new, lower minimum paid-up capital requirement for foreign-owned companies, known as a PMA (Penanaman Modal Asing).
The New Investment Threshold
The new minimum threshold is now IDR 2.5 billion (approximately USD 150,000).
This decision formalizes a practice many investors were already using—depositing an initial amount while committing to invest the remaining capital progressively. Under the new rule, this IDR 2.5 billion must either remain in the company’s bank account for 12 months or be spent on tangible assets, construction, or operational costs.
It is important to note that higher investment thresholds (approximately USD 600,000) still apply to specific business sectors, including wholesale trade, food and beverage (F&B), manufacturing, and construction.
Why This Matters for Foreign Investors
This policy change is a major development for foreigners looking to invest in Indonesia, especially in the property market.
- A More Realistic Entry Point: The previous IDR 10 billion requirement was a significant barrier for small to medium-sized enterprises (SMEs) and individual investors. This new, lower amount creates a much more accessible entry point.
- Long-Awaited Clarity: This new regulation provides clear, official guidelines for PMA company setup, removing the uncertainty that previously surrounded investment procedures.
- Attracting Diversified Capital: This move aligns with Indonesia’s broader economic strategy to attract a wider range of international capital, moving beyond just large-scale industrial projects.
Compliance Remains Key
While this new rule opens the door wider, it is not a free pass. As regulations evolve, enforcement is also tightening. The Indonesian government is placing a stronger emphasis on compliance, particularly regarding correct business licensing (KBLI), regular investment activity reports (LKPM), and proper land use permits.
This change signals that while Indonesia is more open to investment, it is also raising the bar for serious, compliant investors who are ready to build long-term, sustainable ventures in the country.
How This Impacts Your Investment Plans
Navigating Indonesia’s evolving legal and investment landscape can be complex. Understanding how these new rules apply to your specific business or property investment goals is essential for success.
For professional guidance on setting up your PMA and securing your investment in Bali or elsewhere in Indonesia, our team is here to help.
