The IDR 10 Billion Question: Paid-Up Capital for a PT PMA in Indonesia

The Financial Management Series · TraceWorthy Financial Services

The capital framework for a foreign investment limited liability company (Perseroan Terbatas Penanaman Modal Asing, or PT PMA) in Indonesia carries two distinct figures under BKPM Regulation No. 5 of 2025, effective 2 October 2025. The paid-up capital floor, set at IDR 2,500,000,000 (two billion five hundred million Indonesian Rupiah), is the cash equity injection shareholders must inject at incorporation. The investment value threshold, set above IDR 10,000,000,000 (ten billion Indonesian Rupiah) per 5-digit KBLI per project location, is the broader capital commitment the company plans to deploy over time. The two figures sit at different points in the lifecycle, govern different operational realities, and are commonly conflated by founders setting up a PT PMA for the first time.

---

The PT PMA is the only Indonesian corporate vehicle through which foreign investors can own equity directly and operate commercially in Indonesia. The capital requirements for incorporation were materially restructured under BKPM Regulation No. 5 of 2025, which replaced the prior BKPM Regulations 3/2021, 4/2021, and 5/2021 governing investment licensing. The restructuring separated two figures that earlier guidance had often treated as a single threshold.

The paid-up capital floor was reduced to IDR 2,500,000,000 (two billion five hundred million Indonesian Rupiah), down from the IDR 10,000,000,000 (ten billion Indonesian Rupiah) figure commonly cited under the prior framework. The investment value threshold, set at above IDR 10,000,000,000 (ten billion Indonesian Rupiah) per 5-digit KBLI per project location, was confirmed as a separate concept covering the broader capital deployment. The two figures sit at different points in the company’s lifecycle. Paid-up capital is the cash equity injection that must arrive in the corporate bank account at incorporation and remain for a 12-month lock-up period. Investment value is the total capital deployment the company commits to making over the operating period, including machinery, equipment, working capital, staffing costs, and facility expenses. The distinction is operationally significant for founders making capital deployment decisions at incorporation and for tax and accounting structuring in the early years.

The two-figure capital framework

A new PT PMA founder approaching the Online Single Submission (OSS) system for the first time encounters two figures that are easily confused. The OSS interface requires both to be declared and the deed of establishment records both. The two figures answer different questions and impose different obligations.

The paid-up capital figure answers: how much cash equity have shareholders actually injected into the company at incorporation. This is the figure that must arrive in the corporate bank account, be reflected in the corporate books, and remain locked for 12 (twelve) months under Article 27 of BKPM Regulation No. 5 of 2025.

The investment value figure answers: what is the total capital commitment the company will deploy in Indonesia over time. This is the broader figure covering all capital expenditure (fixed assets, working capital, machinery, equipment, facility costs, staffing) that the company plans to deploy per 5-digit KBLI activity classification per project location. The figure must exceed IDR 10,000,000,000 (ten billion Indonesian Rupiah) for each KBLI per location and is reported against quarterly through the LKPM Investment Activity Report (Laporan Kegiatan Penanaman Modal, or LKPM).

The two figures are not in competition. The investment value is the broader concept; the paid-up capital is the cash equity floor that sits within the broader commitment. Founders who conflate them either over-commit cash at incorporation or under-commit and fail the investment value test through the LKPM.

The paid-up capital sits at the start of the company’s life as a precondition for licensing. The investment value runs across the operating period as the cumulative commitment the company demonstrates through its LKPM realisation reports. The paid-up capital is a snapshot of cash equity at a moment in time; the investment value is a trajectory of capital deployment over years.

Paid-up capital under Article 26: the IDR 2.5 billion floor

The paid-up capital floor under BKPM Regulation No. 5 of 2025 Article 26 is IDR 2,500,000,000 (two billion five hundred million Indonesian Rupiah). This is a reduction from the prior framework’s commonly-cited IDR 10 billion figure, which under earlier interpretations was often treated as both the paid-up and investment value figure conflated together. The 2025 regulation separated the two and reduced the paid-up component substantially to lower the entry barrier for foreign investors while retaining the broader investment commitment.

The paid-up capital 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 declared in the deed without a corresponding bank transfer does not satisfy the licensing requirement. The bank confirmation letter (Surat Keterangan Bank, or SKB) is the standard supporting document submitted through OSS to evidence the deposit.

The paid-up capital can be contributed in cash or in non-cash assets. Cash contribution is the typical default and the simplest to evidence. Non-cash contributions are also permitted under Law No. 40 of 2007 on Limited Liability Companies (Undang-Undang Perseroan Terbatas) and recognised by BKPM where the contributed assets are independently valued by a licensed appraiser, the valuation report is registered with the company, and the assets serve the company’s business activity. Common non-cash contributions include equipment, machinery, intellectual property, and shares in related entities. Land and buildings are typically excluded from the contribution unless real estate development is the company’s primary KBLI activity.

The paid-up capital figure is recorded in three places that must reconcile: the deed of establishment (Akta Pendirian) prepared by the notary, the legal entity registration with the Ministry of Law administered through the AHU Online system, and the OSS-RBA business licensing application. The figure must be consistent across all three records. Discrepancies between the records (a common error where a founder amends one record without updating the others) trigger a licensing review by BKPM and a request to reconcile.

Investment value under Article 25: above IDR 10 billion per KBLI per location

The investment value threshold under BKPM Regulation No. 5 of 2025 Article 25 is above IDR 10,000,000,000 (ten billion Indonesian Rupiah) per 5-digit KBLI activity classification per project location, excluding the value of land and buildings. The threshold is the floor of the total capital commitment the company plans to deploy in Indonesia over the operating period for each business activity at each location.

The investment value covers a broader scope than the paid-up capital. Items that fall within the investment value include the paid-up capital itself (the cash or non-cash equity contribution), machinery and equipment used in the business, furniture and fixtures, facility expenses including rent and fit-out costs, working capital deployed in operations (inventory, receivables, operational cash), staffing costs incurred in operating the business, intangible assets and licensed intellectual property, and shareholder loans deployed in operations.

Items typically excluded from the investment value include the value of land and buildings (which is calculated separately under the LKPM framework), security deposits returned at the end of arrangements (which do not represent deployed capital), and taxes and government fees (which are not capital expenditure).

The investment value applies per KBLI per location, which carries an important multiplier effect. A PT PMA with two distinct KBLI activities at one location must commit to investment value above IDR 20,000,000,000 (twenty billion Indonesian Rupiah) total (IDR 10 billion per KBLI). A PT PMA with one KBLI activity at three locations must commit to investment value above IDR 30,000,000,000 (thirty billion Indonesian Rupiah) total. The OSS system performs the calculation at the licensing stage and will not issue the Business Identification Number (Nomor Induk Berusaha, or NIB) where the declared investment plan does not satisfy the per-KBLI per-location floor.

The investment value is realised progressively across the operating period, well beyond the incorporation date itself. The LKPM submitted quarterly to BKPM evidences the progressive deployment of the investment value against the plan recorded at NIB issuance. The realisation periods set out in the appendices of BKPM Regulation No. 5 of 2025 vary by sector, ranging from 4.5 (four and a half) years for trading and services to 15.5 (fifteen and a half) years for manufacturing and infrastructure investments. Within the relevant realisation period, the company is expected to demonstrate progressive deployment against the committed investment value.

The 12-month retention rule under Article 27

The paid-up capital deposit is subject to a 12 (twelve) month lock-up period under Article 27 of BKPM Regulation No. 5 of 2025. The lock-up is a substantive change from the prior framework, which did not impose an explicit lock-up period on the deposit.

Classification as a large-scale enterprise

A foreign investment company in Indonesia is classified as a large-scale enterprise (usaha besar) regardless of its actual turnover or workforce, under BKPM Regulation No. 5 of 2025 and consistent with Law No. 20 of 2008 on Micro, Small, and Medium Enterprises (Undang-Undang Usaha Mikro, Kecil, dan Menengah). The classification is a structural attribute of the foreign investment status and is independent of operating size.

The large-scale classification has four operational consequences for a PT PMA.

The LKPM Investment Activity Report is filed quarterly, by the 15th (fifteenth) of the month following each calendar quarter. The semi-annual reporting cadence available to small enterprises does not apply. Even a PT PMA that is dormant during a quarter must file a nil LKPM with explanatory notes.

The company is subject to the full Indonesian corporate tax framework from incorporation onwards, including monthly PPh 25 corporate income tax instalments, the annual Corporate Income Tax Return (Surat Pemberitahuan Tahunan Pajak Penghasilan Badan, or SPT Tahunan PPh Badan), and PPN (Pajak Pertambahan Nilai) registration where turnover exceeds the IDR 4,800,000,000 (four billion eight hundred million Indonesian Rupiah) threshold or where the company opts in voluntarily.

The smaller-turnover final tax regime under Government Regulation No. 55 of 2022 as amended by Government Regulation No. 20 of 2026 (effective 22 April 2026) is no longer available to PT PMAs. The PT PMA operates under the standard 22 (twenty-two) per cent corporate income tax rate with the Article 31E 50 (fifty) per cent reduction available for the portion of taxable income proportionate to the first IDR 4,800,000,000 (four billion eight hundred million Indonesian Rupiah) of gross turnover where annual turnover is at or below IDR 50,000,000,000 (fifty billion Indonesian Rupiah).

The foreign worker employment framework permits the PT PMA to employ foreign workers under a Permit to Hire Foreign Workers (Rencana Penggunaan Tenaga Kerja Asing, or RPTKA), subject to the standard restrictions on activities reserved for Indonesian citizens and the BPJS Kesehatan and BPJS Ketenagakerjaan obligations covered in Article 4 of this series.

Cash and non-cash contributions to paid-up capital

Two principal modes of contributing paid-up capital are available under Law No. 40 of 2007 on Limited Liability Companies.

Cash contribution is the most common mode. Shareholders transfer the agreed amount in IDR (or convertible currency converted at the date-of-contribution exchange rate published by Bank Indonesia) into the company’s bank account. The bank issues a confirmation letter (SKB) evidencing the deposit. The bank confirmation is submitted to the notary at execution of the deed of establishment and to OSS at the licensing stage.

Non-cash contribution requires additional procedural steps before recognition. The asset must be independently valued by a licensed Indonesian appraiser (Kantor Jasa Penilai Publik, or KJPP), with a formal valuation report issued and registered. The valuation report must be accepted by the notary and recorded in the deed. The asset must be physically or legally transferred to the company, with the transfer evidenced by registration documents (for registered assets) or possession documents (for movable assets). Common non-cash contributions for PT PMA structures include machinery and production equipment imported from the parent company’s overseas operations, intellectual property licensed or assigned to the PT PMA, shares in a related Indonesian entity that the new PT PMA will absorb or operate alongside, and vehicles, furniture, and fixtures already deployed in a predecessor activity.

Land and buildings as a non-cash contribution carry specific procedural friction. Indonesian land law restricts foreign ownership of land, with PT PMAs limited to the Hak Guna Bangunan (HGB, Right to Build) and Hak Pakai (HP, Right to Use) titles. A contribution of land in HGB form is permitted where the title is owned by an Indonesian entity contributing the land into the PT PMA structure as part of the equity arrangement; direct contribution by a foreign shareholder of land owned in their personal name is typically not feasible.

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.

The shareholder loan alternative

Where the paid-up capital floor (IDR 2.5 billion) has been satisfied and additional capital is required to satisfy the investment value threshold (above IDR 10 billion per KBLI per location), the shareholder loan is the standard instrument for the gap. The shareholder loan sits on the PT PMA’s balance sheet as a liability owed to the foreign shareholder, with the shareholder loan agreement documenting the loan terms, interest rate, repayment schedule, and currency.

Three operational disciplines apply to a shareholder loan in a PT PMA structure:

The loan can be advanced in tranches over time to match the company’s deployment plan, with each tranche evidenced through the LKPM as investment realisation in the relevant quarter. This staged approach allows the foreign shareholder to retain working capital flexibility while satisfying the cumulative investment value commitment recorded at NIB issuance.

The KBLI position and the per-location calculation

The IDR 10 billion investment value threshold applies per 5-digit KBLI per project location. This is the most commonly underestimated structural rule in PT PMA incorporation. A PT PMA that wishes to operate under multiple KBLI codes (a common pattern for businesses with related supporting activities) must commit to the investment value floor for each KBLI separately.

A typical example illustrates the calculation. A foreign-owned services business in Bali operating under KBLI 70209 (other management consulting activities) wishes to add KBLI 73100 (advertising services) as a related supporting activity. Under BKPM Regulation No. 5 of 2025, the company must commit to investment value above IDR 10 billion for KBLI 70209 plus above IDR 10 billion for KBLI 73100, for a combined committed investment value above IDR 20,000,000,000 (twenty billion Indonesian Rupiah). The OSS system performs the calculation at the licensing stage and returns a rejection where the declared investment plan does not satisfy the per-KBLI floor.

TraceWorthy has tested the per-KBLI calculation in OSS directly during its work on client incorporations, including in cases where founders had previously been advised that a single IDR 10 billion commitment would cover multiple KBLI codes. The OSS rejection is automatic and reasoned; the system returns an error identifying the per-KBLI shortfall and the licensing application is blocked until the investment plan is increased to satisfy the threshold for each declared activity. The error response is consistent with the regulation’s text. It is, however, often misunderstood by founders relying on older guidance circulated before the October 2025 regulation came into force.

Two operational positions follow from the per-KBLI rule.

Founders should structure the KBLI selection conservatively at incorporation, declaring only the KBLIs the business will substantively operate under in the early years. Adding KBLIs later through OSS amendment is procedurally straightforward and allows the investment commitment to be staged as the business grows into new activities.

Where multiple KBLIs are required from the outset, the investment plan should be sized to satisfy the per-KBLI floor for each activity, with the deployment schedule supporting realistic capital movement across each KBLI. A plan that allocates the bulk of the investment value to one KBLI with token amounts to the others does not satisfy the threshold and will be rejected at the OSS licensing stage.

Common mistakes at incorporation

Four mistakes recur in founder approaches to the capital framework.

1. The conflation of paid-up capital and investment value is the most frequent. Founders read older guidance citing “IDR 10 billion” as the capital requirement, treat the figure as the paid-up component, and either over-commit cash equity at incorporation or under-commit and fail the investment value test through the LKPM. The corrective discipline is to treat the two figures as distinct from the outset: IDR 2.5 billion paid-up capital deposited at incorporation, plus a broader investment value plan above IDR 10 billion per KBLI per location to be realised over the operating period under the LKPM cycle.
   
2. The bank deposit timing problem is the second common issue. The paid-up capital must arrive in the corporate bank account before the OSS licensing application can be submitted, yet the corporate bank account cannot be opened until the deed of establishment is registered. The sequence requires the founder to use a temporary parking arrangement (often a notary escrow or an interim account in the founder’s name) to evidence the funds at deed execution, with transfer to the corporate account immediately on its opening. A documented sequence with bank-issued evidence at each stage is the operational requirement.
   
3. The valuation rigour on non-cash contributions is the third common issue. Founders treating an asset contribution as a quick way to satisfy paid-up capital sometimes obtain a casual valuation that does not meet the licensed appraiser standard. The OSS system requires the KJPP licence number and the formal valuation report; informal valuations or self-declarations are not accepted.
   
4. The KBLI declaration error is the fourth common issue. Founders sometimes declare a primary KBLI plus several speculative “potential future activity” KBLIs without sizing the investment value commitment appropriately. The OSS system rejects under-sized commitments at the licensing stage, requiring either a reduction of the declared KBLIs or an increase in the investment plan. The cleaner position at incorporation is to declare only the KBLIs the business will operate under in the first 12 (twelve) to 24 (twenty-four) months, adding others through OSS amendment as the business expands.

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-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 licenses, the alignment of capital deployment with the 12 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.

Where this sits in TraceWorthy’s work

TraceWorthy advises foreign investors on the PT PMA capital structuring at incorporation, including the paid-up capital deposit mechanics, the investment value sizing across the KBLI portfolio, the cash and non-cash contribution arrangements, the shareholder loan structuring within the thin capitalisation cap, and the LKPM reporting infrastructure that monitors the capital deployment over the operating period. We work with foreign owners from the initial KBLI selection through to incorporation completion and continue through the post-incorporation reporting cycle to ensure the company’s investment realisation reporting aligns with the plan recorded at NIB issuance.

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.

---