Foreign investment in Indonesia is gaining stronger momentum as the government implements major reforms to attract overseas capital and simplify the investment process.

The newly issued BKPM Regulation No. 5 of 2025, which took effect in October 2025, introduces a more efficient and transparent framework for foreign investment in Indonesia, lowering barriers to entry and ensuring greater legal certainty for overseas investors.

Lower Capital Requirement Opens the Door for More Foreign Investors

According to Business Indonesia, the regulation reduces the minimum paid-up capital required to establish a PT PMA (foreign-owned limited liability company), making it more accessible for small and medium-sized investors.

This latest investment policy update introduces a major change to how much capital foreign investors would need to start a business. The minimum paid-up capital for a foreign-owned company (PT PMA) has been reduced from IDR 10 billion (around USD 640,000) to IDR 2.5 billion (around USD 160,000).

This significant reduction makes market entry far more accessible for smaller and mid-sized international investors seeking to participate in Indonesia’s growing economy.

Clearer Investment Rules Bring Certainty to Multi-Project Businesses

The regulation also clarifies how investment value and location are calculated for projects operating across multiple regions.

Previously, overlapping administrative rules often caused delays and confusion. With these revisions, foreign investment in Indonesia is now guided by standardized definitions and risk classifications, ensuring greater consistency for businesses planning long-term operations.

As explained in A&O Shearman’s analysis, the new system promotes accountability while offering flexibility to investors managing diverse portfolios. This move marks another step toward Indonesia’s goal of aligning its investment procedures with global best practices.

Transparent and Faster Licensing through the OSS Risk-Based System

One of the most notable changes is the enhancement of the OSS (Online Single Submission) platform, which is now applying a risk-based licensing approach.

The system categorizes business activities based on their level of risk, with low-risk ventures receiving automatic approval and higher-risk ones undergoing stricter evaluation. This digital approach drastically cuts approval times, reduces bureaucracy, and increases transparency throughout the licensing process.

For investors, this means a smoother entry into Indonesia’s markets, enabling them to focus more on execution and less on administrative hurdles.

One-Year Capital Lock to Ensure Real Commitment

Under BKPM Regulation No. 5 of 2025, companies are required to demonstrate their capital commitment within the first year of operation, reinforcing investor credibility while preventing inactive entities. During this time, the paid-up capital must remain within the company; either held in its account or used solely for business operations or asset purchases.

Reporting obligations have also been simplified, allowing for easier compliance through the OSS portal.

These practical improvements demonstrate Indonesia’s commitment to creating a transparent and business-friendly environment. One that invites sustainable, responsible investment across industries.

Why These Reforms Make Bali a Stronger and Safer Investment Destination

For investors eyeing on Bali’s property and real estate, the impact of these reforms is immediate. Lower capital thresholds and streamlined processes make it easier for foreign buyers to establish legal ownership structures through PT PMA companies.

The enhanced risk-based framework also protects investors by ensuring compliance with both national and regional regulations.

At Pertama Property, we view these reforms as a major step toward a more open, trustworthy investment climate in Indonesia. With fully compliant projects such as Casaverde Residence, Beraban Luxury Lofts, Abadi Residence, and ELLE Villas Seminyak, we help investors navigate the legal landscape confidently and securely.

As Indonesia continues to modernize its investment ecosystem, Pertama Property remains your trusted gateway to sustainable, regulation-ready investments in Bali’s most promising locations.

Contact Pertama Property today.

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