The Ministry of Investment/BKPM has issued Regulation No. 5 of 2025 on Guidelines for Risk-Based Business Licensing (“BKPM Regulation 5/2025”), as the implementing regulation of the new Government Regulation No. 28 of 2025 on Risk-Based Business Licensing (“GR 28/2025”). BKPM Regulation 5/2025 also revokes three previous BKPM regulations, namely Regulations No. 3, 4, and 5 of 2021. This regulation not only provides more relaxed and flexible investment facilities, but now also enveloped a sectoral and scattered investment facilities into one, in this regulation.

What’s New?

1. Minimum Issued and Paid-up Capital Requirement: The minimum issued and paid-up capital for foreign investment companies (PMA Company) has been reduced to IDR 2.5 billion per company from the previous IDR 10 billion. However, please note that BKPM Regulation 5/2025 prohibits the issued and paid-up capital from being transferred out of the company’s account for at least 12 months from the date of placement, except for business operations.

2. Sectors Exempted from the General PMA Investment Value Requirement: The general PMA minimum investment requirement is a total investment of more than IDR 10 billion (excluding land and buildings) per 5-digit KBLI business field per project location. However, certain sectors are exempt from this general requirement, as follows:

3. Inclusion of Land and Buildings in PMA Investment Value: PMA companies are generally required to have a minimum investment of Rp10 billion excluding land and buildings. However, PMA companies engaged in property, accommodation, agriculture, plantation, livestock, and aquaculture may include land and buildings to fulfil the minimum foreign investment value requirement.

4. Requirements for Revenue-Generating Supporting Activities: Through GR 28/2025, supporting business activities are now permitted to generate revenue for businesses. However, BKPM Regulation 5/2025 introduces further requirements for such supporting activities to generate revenue, including: (i) listing the KBLI of the supporting business activity in the company’s articles of association; and (ii) meeting the minimum investment value and capital requirements.

5. Conversion of Importer Identification Numbers: BKPM Regulation 5/2025 adopts the Ministry of Trade’s provision under which an NIB functioning as a General Importer Identification Number (API-U) may be converted into a Producer Importer Identification Number (API-P). However, an API-P cannot be converted into an API-U.

6. Expedited Licensing for High-Risk Business Activities: Businesses engaged in high-risk activities that: (i) are located in Special Economic Zones (SEZ), Free Trade Zones (FTZ), or Industrial Estates; and/or (ii) part of the National Strategic Projects, are entitled to accelerated business licensing. They may obtain a Business Identification Number (NIB) and license marked as issued under the acceleration scheme, allowing them to conduct business preparation activities even if all requirements have not yet been fully met. However, businesses are still required to fulfil the necessary licensing requirements thereafter.

7. Shared Building Permits : Businesses conducted in shared buildings or complexes may use the building owner’s existing location (KKPR), environmental (PL), and building permits (PBG/SLF) for OSS-based licensing.

8. Extension of LKPM Reporting Deadline: The reporting deadline for investment activities through the LKPM has been amended under BKPM Regulation 5/2025, extending the submission period by five days, from the 10th to the 15th of each reporting month. The updated schedule is as follows: (i) Q1 – April 15; (ii) Q2 – July 15; (iii) Q3 – October 15; and (iv) Q4 – January 15 of the following year.

How Beneficial?

BKPM Regulation 5/2025 aims to attract more foreign investment by providing more relaxed and consolidated investment facilities, while enhancing Indonesia’s investment climate through lower capital barriers and streamlined licensing procedures.