Establishing a Foreign Investment Company in Indonesia: Capital, KBLI, and Business Licensing

Indonesia permits foreign investors to conduct business across a broad range of sectors through foreign investment companies commonly known as PT PMA.

Establishing a PT PMA, however, involves more than incorporating a limited liability company before a notary.

Before incorporation, investors should identify the activities the company will actually perform, determine the appropriate Indonesian Standard Industrial Classification or KBLI codes, establish whether the activities are open to foreign investment, review any foreign ownership limitations or partnership requirements, and calculate the applicable investment and capital requirements.

After incorporation, the company must also obtain the relevant business licences through the Online Single Submission system, or OSS, based on the risk classification and sector-specific requirements applicable to each activity.

What Is a PT PMA?

Foreign investment generally refers to investment undertaken by foreign investors to carry out business within Indonesia, whether entirely using foreign capital or together with domestic investors.

A limited liability company with foreign investment status is one of the principal corporate vehicles used for this purpose.

Foreign investment status has specific regulatory consequences.

Minister of Investment and Downstream Industry/BKPM Regulation No. 5 of 2025 categorises foreign investment business entities as large enterprises. As a result, a PT PMA is generally subject to the minimum investment and capital requirements applicable to foreign investment.

Start by Identifying the Business Activities and KBLI Codes

Before determining capital, an investor should first identify exactly what the Indonesian company will do.

Each activity should then be matched with the relevant KBLI classification.

The KBLI is important because it can determine:

• the regulated business activity;

• risk classification;

• required business licences;

• relevant ministry or authority;

• sector-specific standards;

• foreign investment restrictions;

• partnership obligations; and

• supporting licences required for operation.

Ministerial Regulation No. 5 of 2025 expressly requires risk-based business licensing to take account of KBLI classifications as well as priority sectors, sectors with specific requirements, sectors allocated to cooperatives and MSMEs, sectors available to large businesses subject to partnership requirements, closed sectors, and certain special-purpose sectors.

Commercial terminology used by an overseas investor therefore does not always correspond directly with one Indonesian KBLI code.

Foreign Ownership Is Not Identical across Every Business Activity

Once the appropriate KBLI has been identified, the investor should determine whether the activity is open to foreign ownership and whether any specific restrictions apply.

Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021, generally provides that commercial business sectors are open to investment unless they are specifically closed or reserved for activities undertaken by the Central Government. Certain activities nevertheless remain subject to investment conditions under the relevant schedules.

Depending on the particular KBLI, an activity may therefore:

• permit 100% foreign ownership;

• impose a foreign shareholding limitation;

• be reserved for cooperatives or MSMEs;

• require a partnership arrangement;

• carry additional sector-specific requirements; or

• be unavailable to foreign investors.

This assessment should be made before the shareholders and ownership percentages are fixed in the incorporation documents.

Minimum Investment Value for a PT PMA

The minimum investment requirement is frequently confused with the paid-up capital requirement.

They are not the same.

Under Article 26 of Ministerial Regulation No. 5 of 2025, foreign investment businesses are generally required to have a total investment value of more than IDR 10 billion, excluding land and buildings, for each five-digit KBLI business activity at each project location.

The IDR 10 billion amount is therefore generally a business investment plan, rather than an amount that must all be recorded as the company's paid-up share capital.

Does IDR 10 Billion Apply Separately to Each KBLI?

As a general rule, the threshold is calculated per five-digit KBLI per project location.

The 2025 regulation, however, establishes special calculation methods for certain businesses.

These include:

• wholesale trade, generally calculated per first four digits of the KBLI;

• food and beverage services, generally calculated per first two KBLI digits per location;

• construction services, calculated per first four KBLI digits; and

• manufacturing activities producing several products within a single production line.

Special calculation rules also apply to particular property, accommodation, agricultural, livestock, aquaculture, and electric vehicle charging activities.

An investor planning multiple activities should therefore not automatically assume that one IDR 10 billion investment plan will satisfy every KBLI.

Land and Buildings Are Treated Differently in Certain Activities

The general investment calculation excludes land and buildings.

Certain sectors are treated differently.

For activities including property, accommodation, agriculture, plantations, livestock, and aquaculture, the regulation provides particular rules allowing land and buildings to be taken into account in the relevant investment calculation.

The investment requirement should therefore be assessed based on the particular business model and sector rather than through one universal formula.

Minimum Paid-Up Capital Is Now IDR 2.5 Billion

A significant regulatory change occurred in 2025.

Article 26 paragraph (10) of Ministerial Regulation No. 5 of 2025 provides that the minimum subscribed and paid-up capital for a foreign investment company is IDR 2.5 billion per limited liability company, unless another law or regulation requires a different amount.

The distinction is therefore important:

Minimum investment value:
Generally more than IDR 10 billion under the applicable calculation basis.

Minimum subscribed and paid-up capital:
Generally at least IDR 2.5 billion per PT PMA.

The two amounts serve different purposes and should not be treated as interchangeable.

Restrictions on the Use of Paid-Up Capital

The paid-up capital is also subject to a specific commitment.

Under Ministerial Regulation No. 5 of 2025, the subscribed and paid-up capital generally may not be transferred out of the company's account for at least 12 months after being contributed.

The funds may, however, be used for:

• purchasing assets;

• construction of buildings; and/or

• operational expenses of the company.

The company provides an independent declaration concerning this commitment when applying for its Business Licence through OSS.

The rule therefore does not necessarily require the capital to remain commercially idle for 12 months.

A PT PMA May Have More Than One Business Activity

A PT PMA can generally conduct several business activities provided those activities may lawfully be carried on by the same company and no sector-specific restriction requires otherwise.

However, adding another KBLI can affect:

• minimum investment requirements;

• permitted foreign ownership;

• risk classification;

• required licences;

• basic requirements;

• standard certification;

• competent regulatory authorities; and

• partnership obligations.

Under the 2025 investment regulation, a supporting activity that itself generates revenue or profit must be reflected through the appropriate KBLI and remain compliant with the applicable minimum investment and capital requirements.

Including numerous KBLI codes merely as a precaution is therefore not necessarily advisable.

Incorporating the Company

Once the investment structure has been determined, the PT should be incorporated under Indonesia's limited liability company framework.

The investors will need to determine matters including:

• company name;

• shareholders;

• ownership percentages;

• authorised capital structure;

• subscribed and paid-up capital;

• Board of Directors;

• Board of Commissioners;

• purposes and business activities; and

• registered address.

The incorporation is documented in a notarial deed and the company obtains legal entity status through approval by the Minister of Law.

Law No. 40 of 2007 on Limited Liability Companies remains the principal corporate statute, as subsequently amended, including by Law No. 6 of 2023.

Incorporation Alone Does Not Authorise Business Operations

Obtaining corporate legal entity status does not mean the PT PMA can immediately undertake every business activity listed in its corporate documents.

Government Regulation No. 28 of 2025 is now the principal framework for risk-based business licensing and replaced Government Regulation No. 5 of 2021.

It regulates basic requirements, Business Licences, Supporting Business Licences, OSS services, supervision, evaluation, and sanctions.

The company must therefore proceed through OSS to obtain its NIB and any additional licences required for each activity.

Licensing Depends on the Risk Level

Indonesia's licensing system uses a risk-based approach.

Depending on the risk classification and the particular sector, a company may require:

• a Business Identification Number or NIB;

• a Standard Certificate;

• a specific Business Licence; and/or

• a Supporting Business Licence or PB UMKU.

Relevant basic requirements may also include spatial-use approval, environmental approval, and building-related requirements.

Consequently, two PT PMAs with identical shareholders and capital structures may require very different licensing processes if their KBLI activities differ.

Sector-Specific Licensing Still Matters

OSS does not eliminate sector-specific regulation.

Businesses in sectors such as energy, mining, construction, healthcare, telecommunications, transport, financial services, food and pharmaceuticals, and environmental services may remain subject to detailed technical standards and additional regulatory approvals.

Investors should therefore review sectoral regulations after identifying the correct KBLI classifications.

Beneficial Ownership Requirements

A PT PMA is also subject to Indonesia's beneficial ownership reporting framework.

Where the foreign shareholder is itself a corporation or part of a multi-layer holding structure, the Indonesian company must consider the individual who ultimately owns, controls, or benefits from the company under the applicable beneficial ownership rules.

Ongoing Investment Reporting

Foreign investment companies should also account for their ongoing investment reporting obligations.

Because PT PMAs are classified as large enterprises, Ministerial Regulation No. 5 of 2025 provides for quarterly Investment Activity Reports, commonly known as LKPM.

For medium and large enterprises, the current deadlines are:

• 15 April for Quarter I;

• 15 July for Quarter II;

• 15 October for Quarter III; and

• 15 January of the following year for Quarter IV.

These reports track the company's investment implementation and operational progress.

Practical Establishment Sequence

A foreign investor can generally approach the establishment process in the following order:

1. define the actual Indonesian business activities;

2. identify the appropriate KBLI codes;

3. review foreign ownership restrictions;

4. determine applicable partnership or sector requirements;

5. calculate the investment requirement for each activity;

6. structure the company's capital;

7. identify shareholders, directors, commissioners, and beneficial owners;

8. incorporate the PT and obtain legal entity approval;

9. register the company through OSS;

10. obtain the NIB and risk-based business licences;

11. obtain sector-specific licences or PB UMKU where required;

12. satisfy applicable basic requirements before operations; and

13. maintain ongoing compliance, including LKPM reporting.

Conclusion

Establishing a PT PMA in Indonesia should not be treated merely as incorporating a company with foreign shareholders.

Three issues need to be analysed together: the business activities and KBLI classifications, the investment and capital structure, and the licences required to lawfully carry on the business.

Under the current framework, the general minimum subscribed and paid-up capital for a PT PMA is IDR 2.5 billion per limited liability company, while the minimum investment value generally remains above IDR 10 billion based on the applicable calculation for the relevant activity.

Foreign investors should therefore determine their actual business model and relevant KBLI classifications before finalising the ownership, capital, and corporate structure.