Classification of Companies Based on Capital in Indonesia

Companies in Indonesia are classified by capital size (excluding land/buildings) into Micro (up to Rp1 billion), Small (Rp1–5 billion), Medium (Rp5–10 billion), and Large (>Rp10 billion) businesses. Foreign Investment (PMA) companies are generally classified as large, requiring a minimum of Rp10 billion in capital.

These classifications are governed by BKPM Regulation No. 4 of 2021 and Government Regulation No. 7 of 2021, which are key references for both domestic and foreign investors.

Business Scale Classification Based on Capital

Business capital refers to the total capital used to carry out business activities, consisting of owner’s equity and loan capital, and excluding land and buildings used for business premises.

Based on this framework, legal entities in Indonesia are categorized as follows:

• Micro Business
  A micro business is a business entity with business capital of up to IDR 1,000,000,000, excluding land and buildings.
• Small Business
  A small business has business capital of more than IDR 1,000,000,000 and up to IDR 5,000,000,000, excluding land and buildings.
• Medium Business
  A medium business has business capital exceeding IDR 5,000,000,000 and up to IDR 10,000,000,000, excluding land and buildings.
• Large Business
  A large business is defined as having business capital of more than IDR 10,000,000,000, excluding land and buildings.

These classifications apply broadly to legal entities operating in Indonesia and are used for regulatory, licensing, and policy purposes.

Foreign Investment Companies (PT PMA)

Business Scale Status of PMA

Under BKPM Regulation No. 4 of 2021, companies with foreign ownership, known as Foreign Investment Companies (Penanaman Modal Asing or PMA), are generally classified as large-scale businesses, regardless of the actual capital injected, unless specific laws or regulations provide otherwise.

As a result, PMA entities are required to comply with minimum investment value requirements set by the Indonesian investment authority.

Minimum Investment Value Requirements for PMA

In principle, a PMA must have an investment value exceeding IDR 10,000,000,000, excluding land and buildings. However, the method of calculating this investment value differs depending on the business sector.

a. Large-Scale Trading Activities
For wholesale and large-scale trading activities, the minimum investment value must exceed IDR 10,000,000,000, excluding land and buildings, calculated based on the first four digits of the KBLI classification.

b. Food and Beverage Service Activities
For food and beverage service businesses, the investment value must exceed IDR 10,000,000,000, excluding land and buildings, calculated based on the first two digits of the KBLI per business location.

c. Construction Service Activities
For construction services, the minimum investment value must exceed IDR 10,000,000,000, excluding land and buildings, calculated per activity using the first four digits of the KBLI.

d. Industrial Activities
For industrial businesses producing multiple product types under five different KBLI digits within a single production line, the required investment value remains more than IDR 10,000,000,000, excluding land and buildings.

Read more: Challenges of Establishing a PT PMA for Foreigners in Indonesia

Property and Real Estate Investment Rules

For property development and real estate activities, the treatment of land and buildings differs depending on the project structure.

If the property is developed as a complete building or integrated housing complex, the minimum investment value must exceed IDR 10,000,000,000, and this calculation includes land and buildings.

If the property consists of individual units that do not form a single complete building or integrated complex, the investment value must still exceed IDR 10,000,000,000, but land and buildings are excluded from the calculation.

Paid-Up Capital Requirements for PMA

BKPM Regulation No. 4 of 2021 also regulates the minimum paid-up capital for PMA entities.

As a general rule, a Foreign Investment Company must have paid-up capital of at least IDR 10,000,000,000, unless specific laws or sectoral regulations impose a higher requirement.

For example, under Government Regulation No. 5 of 2021, construction work businesses are required to have a minimum capital of IDR 25,000,000,000.

These capital and investment value requirements do not apply to representative offices and certain foreign business entities that do not conduct commercial operations in Indonesia.

Share Divestment Obligations for PMA

Prior to the enactment of the Job Creation Law, several sectors required mandatory divestment of shares from PMA companies to Indonesian parties.

One notable example is the mineral and coal mining sector, where license holders are required to divest 51 percent of their shares to Indonesian stakeholders during the production operation stage.

Under BKPM Regulation No. 4 of 2021, existing divestment obligations remain valid and must be carried out within the stipulated timeframe.

Divestment may be conducted to:

• Indonesian individuals (WNI), or
• Domestic Investment companies (PMDN),

either through direct share ownership or via the domestic capital market.

For direct ownership, the minimum share value per Indonesian shareholder is IDR 10,000,000.

Read more: Getting a Business License and Permit in Indonesia

Exceptions to Mandatory Divestment

Divestment may not be required if:

• The prevailing regulations for the relevant business sector do not mandate divestment, and
• The company’s deed explicitly states that Indonesian parties do not request or demand share ownership, or
• There is no agreement or commitment with any Indonesian party regarding future share transfers.

Such shareholder agreements must be submitted to the investment authority for evaluation. If approved, the divestment obligation will be declared null.

If rejected, the authority will issue a formal explanation and rejection letter.

Once divestment is completed and approved by the Ministry of Law and Human Rights, Indonesian shareholders may transfer their shares to other eligible parties, provided that all applicable laws and regulations are observed.

Any changes must also be updated in the OSS system.

Final Note for Foreign Investors

Understanding company classification based on capital is essential when planning business activities in Indonesia.

For foreign investors, the distinction between MSME classifications and PMA investment requirements is particularly important, as PMA entities are generally treated as large-scale businesses with stricter capital and compliance obligations.

Foreign investors in Indonesia will need an Investor KITAS (Temporary Stay Permit for Investors) to live and work for their business. Visa BaliEasy can help you through the process to make sure everything goes smoothly and on time.

If you are planning to establish a company in Indonesia and need help determining the correct structure, capital requirements, or KBLI classification, Visa BaliEasy can guide you through the process step by step.