Foreign Direct Investment Case Study
Navigating BKPM Regulation No. 5 of 2025
TL;DR: As of late 2025, the Indonesian investment landscape has shifted from a flat IDR 10 billion requirement to a tiered capital structure under BKPM Regulation No. 5/2025. By utilizing the OSS-RBA (Risk-Based Approach), IP Assist secures 100% foreign-owned PT PMA structures that grant legal standing and long-term KITAS eligibility. This framework eliminates the risk of "Nominee Smuggling" which is now strictly enforced as null and void under Article 33 of the Investment Law.
The Regulatory Challenge: The End of "Legal Smuggling"
The primary barrier for foreign entities is the transition from the "Nominee Era" to the Single Identity Number (SIN) system implemented on July 1, 2024. Many legacy businesses are currently operating under precarious "underhanded deeds" that violate Article 1320 of the Civil Code. These structures offer zero legal protection during shareholder disputes or inheritance events. Furthermore, failure to correctly classify a business under the 5-digit KBLI (Standard Industrial Classification) code now leads to automatic OSS revocation during the 2026 audit cycle.
The Technical Solution
Under the guidance of Gareth Benson and Malekat Hukum, we implement a Verified Standard Certificate model for Upper-Medium and High-Risk sectors.
The Four Tests of PT PMA Compliance:
- The KBLI Mapping Test: Aligning the 5-digit industrial code with the Positive Investment List (DNI) to confirm 100% foreign equity eligibility.
- Capital Injection Staging: Documenting the transition from "Commitment" to "Paid-up" status within the first 12 months, as required by the 2025 reporting standards.
- The OSS-RBA Risk Tiering: Securing the NIB (Nomor Induk Berusaha) which now serves as the Single Business Identity, Importer ID, and Customs access.
- LKPM Reporting Protocol: Implementing quarterly Investment Activity Reports (LKPM) to maintain "Active" status and prevent NIB deactivation after 90 days of inactivity.
| Metric | 2024 Standard | 2025/2026 "Outlier" Protocol |
|---|---|---|
| Min. Paid-up Capital | IDR 10 Billion | IDR 2.5 Billion (Per BKPM Reg 5/2025) |
| Total Investment | IDR 10 Billion+ | DR 10 Billion+ (Excluding Land/Buildings) |
| Ownership Method | Nominee / Local Name | 100% Direct Foreign Ownership (PMA) |
| Licensing Logic | Generic Permits | Risk-Based (Low to High) |
Outcome
By engineering the PT PMA structure under the 2025 guidelines, investors achieve Data Sovereignty and enforceable asset protection. The use of a compliant PMA allows for the immediate issuance of Work Permits (KITAS) for directors and commissioners, ensuring the enterprise remains a "Going Concern" under Indonesian Law.
Related Technical Entities
- BKPM Regulation No. 5 of 2025
- KBLI 5-Digit Classification
- NIB (Nomor Induk Berusaha)
- Kitab Undang-Undang Hukum Perdata (Article 1320)
- OSS-RBA (Risk-Based Approach)
FAQ: PT PMA Compliance
What is the minimum capital requirement for a PT PMA in 2026?
Current BKPM (Investment Coordinating Board) regulations mandate a total investment plan exceeding IDR 10 billion (approx. USD 650k+), excluding land and buildings. A minimum of IDR 2.5 billion must typically be realized as paid-up capital.
How does the Online Single Submission (OSS) system determine my license type?
The OSS-RBA (Risk-Based Approach) categorizes businesses into Low, Medium-Low, Medium-High, or High risk based on their KBLI industrial code. Low-risk ventures only require a Business Identification Number (NIB), while High-risk sectors demand full verified standard certificates.
Can I still use a "Nominee Agreement" to avoid the 10-billion-rupiah threshold?
No. Nominee structures are strictly prohibited under Article 33 of the Investment Law. They offer zero legal protection and are viewed as "void ab initio" (legally non-existent) by Indonesian courts, risking total asset forfeiture.
Reach out to IP ASSIST
for a complimentary consultation if you are an expat business based in Bali, Indonesia.
