Minimum Capital Requirements for PT PMA in Indonesia Explained

Indonesia continues to attract foreign investors across sectors such as hospitality, property development, manufacturing, technology, and professional services. While the market potential is strong, one of the most common questions raised by foreign investors is about minimum capital requirements for PT PMA in Indonesia.

Understanding the PT PMA capital requirement is essential before starting the incorporation process. This article explains what the capital rules mean, how they are applied in practice, and what foreign investors should prepare before setting up a PT PMA.

What Is a PT PMA

A PT PMA (Penanaman Modal Asing) is a foreign-owned limited liability company in Indonesia. It is the only legal entity that allows foreign individuals and/or foreign entities to own shares directly in an Indonesian business. PT PMA companies are regulated under Indonesian investment law and monitored through the OSS and BKPM systems.

Why Indonesia Regulates Foreign Investment Capital

Indonesia’s capital requirements for PT PMA are designed to:

• Ensure serious and sustainable foreign investment
• Maintain economic stability
• Encourage long-term business operations

The rules are not meant to discourage investors, but to ensure that foreign-owned companies have sufficient financial capacity to operate responsibly in Indonesia.

Official Minimum Capital Requirement for PT PMA

Under the latest Regulation of the Investment Coordinating Board (BKPM) Number 5 of 2025, effective from 2 October 2025, a PT PMA must meet the following minimum capital requirements:

• Minimum total investment value: IDR 10 billion 
• Minimum issued and paid-up capital: Generally at least IDR 2.5 billion. Paid-up capital may not be transferred out of the company’s account within the first 12 months, except for legitimate business purposes such as asset purchases, construction, and operational expenses.
• Capital stated in the deed of establishment

The IDR 10 billion refers to planned investment value, not cash deposited at the time of incorporation.

Understanding the IDR 10 Billion Investment Requirement

One of the most misunderstood points is in relation to the IDR 10 billion foreign investment capital requirement.

What Does IDR 10 Billion Mean

The IDR 10 billion represents the total investment plan, which may include:

• Building or renovation costs
• Machinery and equipment
• Office fit out and interior
• Technology and software
• Operational setup costs

This amount does not have to be deposited entirely as cash at incorporation.

What Is Included

Pursuant to Article 26(5), PT PMA companies operating in sectors such as property-related business activities, including development, sale, and/or leasing, as well as the provision of short-term and long-term accommodation, may now include land and buildings in their investment value calculations. Combined with the reduction of the minimum paid-up capital from IDR 10 billion to IDR 2.5 billion, this marks a significantly more investor-friendly regulatory framework.

Paid-Up Capital vs Investment Value

Foreign investors often confuse paid-up capital with investment value.

Paid-Up Capital

• Refers to capital injected into the company’s shares
• Typically minimum 25 percent of authorized capital
• Must be stated in the company deed

Paid-up capital demonstrates ownership commitment but does not represent the full investment.

Investment Value

• Represents total capital allocated to operate the business
• Includes assets, equipment, and operational setup
• Reported gradually through LKPM

Both are required, but they serve different regulatory purposes.

How Capital Requirements Apply by Business Sector

Capital requirements may vary depending on the business sector and KBLI classification.

Common Sectors Requiring Full PT PMA Capital

• Hospitality and resorts
• Property development
• Manufacturing
• Trading and distribution
• Professional services

Some sectors allow partial foreign ownership but still require compliance with the IDR 10 billion investment threshold.

Is 100 Percent Foreign Ownership Allowed

Whether foreign investors can own 100 percent of a PT PMA depends on the business sector.

Indonesia’s Positive Investment List determines:

• Sectors open to full foreign ownership
• Sectors requiring Indonesian partnership
• Sectors closed to foreign investment

Capital requirements remain applicable even if ownership is shared.

Capital Deposit and Bank Account Requirements

A PT PMA must open a corporate bank account in Indonesia. Banks may request supporting documents depending on the company structure.

LKPM Reporting and Capital Realization

Once incorporated, PT PMA companies must submit LKPM (Investment Activity Reports).

LKPM and Capital Reporting

• Reports submitted quarterly
• Investment realization reported gradually
• Assets and expenditures documented

Common Mistakes Foreign Investors Make

Many foreign investors misunderstand capital requirements, leading to delays or compliance issues.

Common Errors Include

• Declaring unrealistic investment plans
• Choosing incorrect KBLI codes
• Ignoring LKPM obligations
• Using nominee structures to avoid capital rules

Can Capital Requirements Be Reduced

Typically, PT PMA capital requirements cannot be bypassed. Attempting to reduce capital artificially or misrepresent investment plans creates compliance risk.

Why Proper Consultation Matters

Correct interpretation of capital rules depends on:

• Business model
• Industry classification
• Ownership structure
• Long-term operational plan

Professional consultation ensures your PT PMA is structured correctly from the beginning.

How DKConsulting Supports PT PMA Capital Planning

DKConsulting assists foreign investors with:

• Capital structure assessment
• Investment plan preparation
• KBLI and ownership analysis
• PT PMA incorporation and OSS registration
• Post-incorporation compliance and LKPM reporting

We ensure your company meets Indonesian regulations while remaining practical and scalable.

Understanding the minimum capital requirements for PT PMA in Indonesia is critical for foreign investors. While the IDR 10 billion investment threshold may seem high, it reflects total planned investment rather than immediate cash deposit.

With proper planning, guidance, and compliance support, PT PMA incorporation can be efficient and secure. The key is structuring your investment correctly from the start.