Setting Up a Company in Indonesia as a Foreigner
Setting up a company in Indonesia as a foreigner requires establishing a limited liability company with foreign ownership, known as
The Indonesian government continues to encourage foreign investors to invest in Indonesia. Foreign investment plays an important role in driving national economic growth and creating jobs.
According to data from BKPM, foreign investment realization in 2022 reached USD 43.6 billion, an increase of 44.2 percent compared to 2021. In recent years, the government has also set ambitious national investment targets exceeding IDR 1,400 trillion.
Although Indonesia is open to foreign investment, the government still applies certain regulations to ensure that foreign capital does not harm local businesses, especially micro and small enterprises.
One of the main differences between foreign-owned companies and local companies lies in capital requirements and minimum investment value.
If a foreign investor wants to conduct business in Indonesia, the investment must generally be structured under the Foreign Direct Investment scheme known as Penanaman Modal Asing or PT PMA.
Foreign Direct Investment in Indonesia must be established in the form of a limited liability company under Indonesian law. This company structure is called a Perseroan Terbatas or PT.
According to Law No. 40 of 2007 on Limited Liability Companies: ‘A Limited Liability Company, hereinafter referred to as a company, is a legal entity that constitutes a capital partnership, established based on an agreement, conducts business activities with authorized capital that is entirely divided into shares, and fulfills the requirements set forth in this law and its implementing regulations.’
In the case of PT PMA, the shareholders include foreign individuals or foreign legal entities, either fully foreign-owned or in partnership with Indonesian shareholders.
Many founders are confused about the difference between company capital and investment value. These two concepts are related but legally distinct. Understanding the difference is essential before establishing a PT PMA.
Read more: What to Prepare to Establish a PT PMA in Bali Indonesia
Within a PT structure, there are three main types of capital:
1. Authorized Capital
This is the total share capital stated in the company’s Articles of Association. It represents the maximum amount of shares the company is allowed to issue.
2. Issued Capital
This refers to the portion of authorized capital that shareholders agree to subscribe to.
3. Paid-Up Capital
This is the capital that has actually been paid by shareholders as settlement of the shares they subscribed to.
Based on Article 33 Paragraphs (1) and (2) of Law No. 40 of 2007 on Limited Liability Companies, at least 25 percent of the authorized capital must be issued and fully paid up. Proof of payment must be submitted electronically to the Ministry of Law and Human Rights within 60 days from the date of the deed of establishment, as regulated under Government Regulation No. 8 of 2021 article 4 (2).
However, for PT PMA, there is a special minimum capital requirement. According to Article 26 Paragraph (10) of PermenBKPM No. 5/2025, the minimum issued and paid-up capital for a foreign-owned company must be at least IDR 2.5 billion per company, unless otherwise specified by other regulatory provisions.
This capital structure is clearly reflected in the Articles of Association, which contain information such as:
Company data can be verified through the official AHU (Administrasi Hukum Umum) system managed by the Ministry of Law and Human Rights.
Read more: Capital Requirements for PT PMA in Indonesia
Capital is different from investment value.
When applying for business licensing through the OSS RBA system, companies must declare their total investment value. This is a mandatory step.
Under Government Regulation No. 7 of 2021, business scale classification for Indonesian companies is based on business capital excluding land and building value:
However, PT PMA companies are categorized as large-scale businesses and must comply with minimum investment value requirements.
Read more: Classification of Companies Based on Capital in Indonesia
In the OSS RBA system, total investment value consists of:
Fixed capital includes:
Working capital covers operational costs for three months.
It is important to fill in this investment value accurately and realistically. Incorrect projections may create problems when submitting the Investment Activity Report or LKPM, where actual investment realization must be reported.
In general, a PT PMA must have an investment value exceeding IDR 10 billion per five-digit KBLI business classification code per project location, excluding land and building value.
This requirement is linked to the risk-based licensing framework under Article 26, Paragraph (2) of PermenBKPM No. 5/2025. Each five-digit KBLI code has its own risk level and licensing requirements.
Even within the same KBLI code, risk levels may differ depending on the business activity.
Example
If a PT PMA operates:
And the company has projects in two different locations, the minimum investment value would be:
In total, the company must declare investment exceeding IDR 30 billion, excluding land and buildings.
In simple terms:
For PT PMA:
Both requirements must be met. Having sufficient capital does not automatically fulfill the minimum investment value requirement, and vice versa.
Understanding capital and investment value requirements is essential before establishing a PT PMA in Indonesia. Mistakes in structuring capital or declaring investment value can delay licensing, affect risk classification, and create compliance issues in LKPM reporting.
BaliEasy provides end-to-end support for PT PMA establishment, from company structuring and capital planning to OSS registration, KBLI selection, and full licensing compliance.
We also assist with Investor KITAS applications, ensuring your stay permit is aligned with your company structure and investment plan.
Our team offers 24/7 human customer support, clear guidance at every step, and transparent pricing with no hidden fees, so you can build and operate your business in Indonesia with confidence.
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