Part of the series: Financial Management
- The IDR 10 Billion Question: Paid-Up Capital for a PT PMA in Indonesia
- The Villa Question and the Line on Directors' Personal Expenses
- Consultant Tax in Indonesia: PPh Article 23 and the Consultant-Employee Line
- Taking Money Out of a PT PMA: Dividends, Fees, Salary and Shareholder Loans
- What it Costs to Put an Employee on the Books in Indonesia
The Financial Management Series · TraceWorthy Financial Services
Foreign investors meet the IDR 10,000,000,000 (ten billion Indonesian Rupiah) paid-up capital question at the moment of incorporation. The figure looks like a single number. It carries a 12-month retention rule, a defined set of permitted operational deployments, a path back through the quarterly investment activity report (LKPM), and a separate decision on whether shareholder lending sits alongside the paid-up capital or in place of it.
Three legal figures sit in front of a foreign-owned company at the point of incorporation. The first is the authorised capital recorded in the deed of establishment. The second is the issued capital, the value of shares actually allocated to shareholders. The third is the paid-up capital, the value of those issued shares that shareholders have actually transferred into the company’s bank account. A foreign investment limited liability company (Perseroan Terbatas Penanaman Modal Asing, or PT PMA) is measured by the Investment Coordinating Board (Badan Koordinasi Penanaman Modal, or BKPM) on the third of those figures, the paid-up capital, which currently sits at IDR 10,000,000,000 per Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia, or KBLI) at the five-digit level per project location under BKPM Regulation No. 5 of 2025.
What the IDR 10 billion actually requires
The figure is set by Article 25 of BKPM Regulation No. 5 of 2025 as the minimum paid-up capital a foreign-owned company is treated as bringing to Indonesia. The figure excludes land and buildings and is read separately for each KBLI code the company licenses and each project location it operates from. A company licensing three KBLI codes at one project location commits to three separate IDR 10,000,000,000 figures, not one. A company that operates from two project locations commits to two figures per KBLI. The cumulative paid-up capital figure can reach substantial multiples of the headline once the licensing footprint extends.
The paid-up capital is the figure actually paid in. A figure recorded in the deed of establishment without the corresponding bank transfer does not satisfy the requirement. The mechanics run through the company’s notary at incorporation: the shareholders transfer funds into the new company’s bank account, the bank issues a certificate confirming the deposit, and the notary records the paid-up figure in the deed and the Online Single Submission (Sistem Perizinan Berusaha Terintegrasi Secara Elektronik, or OSS) application.
The supporting documents typically required to evidence the paid-up figure are the bank statement showing the inbound transfer, the bank’s confirmation of the company account, the deed of establishment, and the OSS submission carrying the paid-up figure. Where the company has multiple foreign shareholders, each contribution is transferred separately and the documentation traces back to the named shareholder. Where the funds arrive in foreign currency, the bank converts at the prevailing rate and records the Indonesian Rupiah figure that BKPM then reads.
The 12-month retention rule under Article 27
Article 27 of BKPM Regulation No. 5 of 2025 requires paid-up capital to remain in the company’s bank account for at least 12 (twelve) months from the date of issuance, subject to the limited exceptions the regulation defines. The rule is new under the 2025 regulation, which came into force on 2 October 2025, and applies to PT PMAs incorporated under the current regime.
The 12 (twelve) month clock starts at the date the bank confirms the deposit and the paid-up figure is recorded in OSS. The date of the deed of establishment is typically a few weeks earlier; the retention period does not run from that earlier date. Once the period expires, the company manages its cash according to the operational needs of the business, with the standard governance and tax rules continuing to apply.
During the 12 (twelve) month period, the regulator’s working assumption is that the funds remain available to support the licensed business activity. Drawing the funds down for purposes outside the regulation’s permitted uses produces a regulatory issue at the next LKPM and, in the worst case, an OSS sanction. The company’s auditors will also pick up the position at the first annual audit, particularly where the year-end cash balance falls below the paid-up figure without a clear operational explanation.
What the company can spend the paid-up capital on
The regulation permits limited operational deployment of paid-up capital during the retention period. The deployable categories all align with the licensed business activity and fall into four practical streams.
| Deployment category | What it covers |
|---|---|
| Fixed asset acquisition | Land where the licence permits, buildings, machinery, equipment, vehicles, and fit-out costs aligned with the licensed business activity |
| Construction | Payment of construction costs where the company is building out its premises, including the main contractor invoices, materials, and professional consulting fees |
| Operational expenditure | Rent, utilities, salaries and BPJS contributions, professional fees, marketing and sales costs, and the other ordinary trading expenses recorded in the company’s books |
| Working capital cycles | Inventory purchase, trade receivables financing, prepayments to suppliers, and the cash float required to support the operating cycle |
The intent of Article 27 is that capital is deployed into the business, not extracted from it. Payments back to shareholders during the retention period sit outside the permitted uses. The categories that fall into the prohibited zone include dividend payments (even where the company has accumulated retained earnings), repayments of shareholder loans, fees to the shareholder for services not commercially benchmarked, and withdrawals to fund related-party transactions where the related party is the foreign shareholder or a company under common control with the shareholder.
The conservative position where there is doubt about whether a particular transaction falls within the permitted uses is to wait until the retention period expires, or to obtain a written read from BKPM through the company’s licensing advisor.
Capital deployed into operations, fixed assets, and working capital cycles is uncontroversial.
Capital that flows back out to the shareholder ecosystem in the first 12 (twelve) months is the issue.
How paid-up capital relates to the investment plan
The paid-up capital figure of IDR 10,000,000,000 is the floor, not the ceiling. The broader investment plan recorded at incorporation can sit considerably above the paid-up figure, particularly where the company commits to multi-year construction, expanded inventory cycles, or scaled-up working capital. The investment plan is the multi-year commitment against which BKPM measures realisation through each quarterly LKPM, and it covers fixed capital and working capital across the full operational horizon of the licence.
The relationship between the two figures runs as follows. The paid-up capital is the money in the bank at day one. The investment plan is the projected total cumulative investment the company will deploy over the licence period, which can run between approximately 4.5 (four and a half) and 15.5 (fifteen and a half) years for full project realisation under Appendix II to BKPM Regulation No. 5 of 2025, varying by sector. The cumulative deployed investment recorded in each quarterly LKPM is the position against the investment plan, measured against the milestones the realisation schedule set at the outset.
A PT PMA that sets its investment plan at IDR 30,000,000,000 with IDR 10,000,000,000 paid-up at day one will, over the licence period, deploy the further IDR 20,000,000,000 through a combination of additional paid-up capital injections, shareholder loans, retained earnings, and (where applicable) third-party debt. The LKPM records the cumulative deployed figure against the plan each quarter.
The shareholder loan alternative
A shareholder loan is a common funding route for a PT PMA that needs working capital above the IDR 10,000,000,000 paid-up figure. The loan sits separately from share capital, does not affect the paid-up figure, and does not satisfy the paid-up requirement. Where a foreign investor wishes to fund a PT PMA with IDR 30,000,000,000 in total, the typical structure is IDR 10,000,000,000 paid-up plus IDR 20,000,000,000 shareholder loan, instead of IDR 30,000,000,000 entirely paid-up.
The structure carries operational advantages. Loan principal is repayable to the shareholder under the loan agreement, which gives the foreign investor a route to recover capital from the PT PMA without dividend withholding. Interest paid to the offshore shareholder is deductible to the company, subject to the thin capitalisation rules in Minister of Finance Regulation No. 169/PMK.010/2015, which cap interest deductibility where the company’s debt-to-equity ratio exceeds 4 (four) to 1 (one). The interest paid offshore is subject to PPh Article 26 withholding at 20 (twenty) per cent, reducible under tax treaty.
The structure also carries discipline. The loan must be documented in a written agreement specifying the principal, the interest rate, the repayment schedule, and any security. The interest rate must be set at arm’s length under the transfer pricing rules; an interest-free loan or one significantly below market produces a transfer pricing adjustment risk. The loan agreement should be executed before the first drawdown, not retrospectively, and should be in a form a tax inspector can read.
Loan-funded investment is recorded as realisation in the LKPM under the working capital category, provided the loan documentation is in place and the funds flow through the company’s bank account. The realisation is measured at the date the company deploys the funds, not at the date the loan is signed. A loan that sits undrawn in the company’s account does not count as realisation.
What this looks like in practice
The practical position can be set out through a worked example. A foreign investor incorporates a PT PMA in Bali with one KBLI at one project location, paid-up capital of IDR 10,000,000,000, and a total investment plan of IDR 25,000,000,000 over five years. The capital arrives in the company’s bank account on 15 January 2026 through a USD transfer from the shareholder, converted by the bank at the day’s rate. The OSS records the paid-up figure on the same day; the 12 (twelve) month retention clock starts.
Over the first 12 months, the company spends IDR 4,000,000,000 on fit-out of a leased commercial premises, IDR 1,500,000,000 on operational expenses (rent, salaries, BPJS, utilities), and IDR 2,000,000,000 on initial inventory. The remaining IDR 2,500,000,000 sits in the operating account. The first four quarterly LKPMs report cumulative realisation moving from IDR 1,000,000,000 (Q1, mostly opening costs and the first month’s rent), to IDR 7,500,000,000 (Q4 cumulative, including the major fit-out spend). At the close of the 12-month retention period on 14 January 2027, the company has deployed IDR 7,500,000,000 of paid-up capital, with IDR 2,500,000,000 sitting in the bank, and has a further IDR 15,000,000,000 to deploy over the remaining four years of the investment plan.
At the start of year two, the shareholder advances a further IDR 10,000,000,000 as a shareholder loan, documented at 6 (six) per cent per annum with a five-year repayment schedule. The loan-funded working capital deployment over year two takes the LKPM cumulative realisation to IDR 15,000,000,000. The remaining IDR 10,000,000,000 is deployed over years three to five, with the LKPM tracking the position quarter by quarter.
When to bring in an external team
A foreign investor incorporating a single PT PMA with a straightforward structure can run the paid-up capital question internally, provided the supporting documentation is properly assembled at the outset and the 12 (twelve) month retention rule is respected. The cases where external support saves money in the first year are those with multi-KBLI or multi-location structures, shareholder loan financing alongside paid-up capital, foreign currency contributions, related-party transactions in the first year, and any structure where the investment plan sits significantly above the paid-up floor.
TraceWorthy’s financial services team performs the structuring of paid-up capital and the broader investment plan at the point of incorporation for foreign-owned companies on Indonesian licences, the alignment of capital deployment with the 12 (twelve) month retention requirement under Article 27, the preparation of shareholder loan documentation where loan funding sits alongside paid-up capital, and the response to BKPM where a regulatory question arises in the first year of operation.
A scope-of-work assessment is the starting point. The assessment reads the proposed licensing footprint, the funding structure (paid-up versus loan), the deployment plan against the 12 (twelve) month retention rule, and the LKPM trajectory through the first four quarters. The output is a written reading of the position and a proposed structure that survives the first year of operation without regulatory friction.
To request an assessment, email office@traceworthy.com or message the office on +62 812 1803 1893.
Frequently asked questions
What is the IDR 10 billion paid-up capital figure for a PT PMA?
IDR 10,000,000,000 (ten billion Indonesian Rupiah) is the minimum paid-up capital per KBLI per project location for a foreign-owned PT PMA under Article 25 of BKPM Regulation No. 5 of 2025. The figure excludes land and buildings and is recorded in the company’s bank account at incorporation.
Does paid-up capital have to actually be in the company’s bank account?
Yes. The paid-up figure is the value of shares shareholders have actually paid in, transferred to the company’s bank account, and recorded in the corporate books. A figure recorded in the deed without a corresponding bank transfer does not satisfy the licensing requirement.
How long does paid-up capital have to remain in the bank under Article 27?
At least 12 (twelve) months from the date of issuance, subject to the limited exceptions the regulation defines. The clock runs once and starts at the date the bank confirms the deposit and the paid-up figure is recorded in OSS.
What can the company spend paid-up capital on during the retention period?
Acquisition of fixed assets, construction costs, operational expenditure (rent, utilities, salaries, professional fees), and working capital cycles (inventory, trade receivables). Payments back to shareholders, including dividends and shareholder loan repayments, sit outside the permitted uses.
Can a foreign investor lend money to their own PT PMA instead of injecting paid-up capital?
A shareholder loan can fund operations alongside paid-up capital, although it does not replace the IDR 10,000,000,000 paid-up requirement. The loan must be documented with an arm’s-length interest rate, and is subject to the 4 (four) to 1 (one) thin capitalisation cap on interest deductibility.
What happens if paid-up capital is drawn down too early?
Drawing the funds down for purposes outside the regulation’s permitted uses during the 12-month retention period produces a regulatory issue at the next LKPM and can trigger an OSS sanction. The annual audit will also flag the position where the year-end cash balance falls below the paid-up figure without a clear operational explanation.
This article provides general information on paid-up capital for a PT PMA in Indonesia as at May 2026 and does not constitute legal, tax, accounting or regulatory advice. Capital thresholds, retention rules, deductibility caps and exemptions are set by regulation and can change, and the position for any individual company depends on its scale, sector, licensing and operating history. Obtain advice specific to your circumstances before acting on any point set out above.