1.

Minimum Capital Requirement and Investment Value 

    Minimum Capital Requirement (IDR 2.5 billion). BKPM Reg. 5/2025 reduces the minimum issued and paid-up capital for foreign investment companies (‘‘PMA companies’’) from IDR 10 billion to IDR 2.5 billion regardless of the number of 5-digit Indonesian Standard Business Field Classification (“KBLI”), lowering the entry threshold for small to medium scale foreign investors.

    12 Month Capital Lock Up Requirement. The deposited capital cannot be transferred for 12 months, except when used for legitimate business purposes such as asset purchases or construction.

    Minimum investment value. PMA Companies are classified as large-scale businesses and must invest more than IDR 10 billion (excluding land and buildings) per KBLI and per project location. However, such investment requirement is exempted for the following sectors: (i) Wholesale trade (4-digit KBLI); (ii) Food and beverage services (2-digit KBLI); (iii) Construction services (4-digit KBLI); and (iv) Manufacturing (multiple products produced in one production line).

2.

Basic Requirements and Environmental Approval

The previous regulation addressed basic licensing requirements relating to spatial conformity, environmental approval and building approvals. BKPM Reg. 5/2025 expands the scope of Risk-Based Business Licensing (“PBBR”) to cover:

(i)        Conformity of Spatial Utilization Activities (KKPR), Conformity of Marine Spatial Utilization Activities (KKPRL), and/or forest area approval;

(ii)      Environmental Approval (PL); and

(iii)     Building Construction Approval (PBG) and Certificate of Feasibility (SLF).

3.

Fiktif Positif (fictitious positive)

    The fiktif positif (fictitious positive) is a legal mechanism under which the licensing process may continue to the next stage if the relevant authority does not issue a decision within the prescribed timeframe. It applies, among others, to the processes for: (i) Technical Approvals (Persetujuan Teknis); (ii) Environmental Approvals (Persetujuan Lingkungan or ‘‘PL’’); and (iii) Building Approval and Worthiness Certificates. The mechanism ensures that delays by the authorities do not impede the overall licensing sequence, thereby supporting greater predictability and legal certainty for investors.

    An example of how the fiktif positif mechanism works can be seen in the procedure for Technical Approvals. The regulation prescribes fixed timeframes for the authority to issue its decision, and once the application has been confirmed as complete, the business actor may proceed to submit the PL application even if the Technical Approval has not yet been issued. The PL examination must proceed even if the Technical Approval is still pending. This allows the licensing process to continue despite delays, illustrating how the tacit approval mechanism operates in practice.

4.

Stages of Starting and Performing Business

BKPM Reg. 5/2025 introduces a more structured licensing framework by expressly dividing business activities into two stages: (i) starting a business (memulai usaha); and (ii) performing or operating a business (menjalankan usaha). While earlier BKPM regulations referred to these concepts, they did not present them as two distinct, sequential stages with clearly defined requirements. Reg. 5/2025 formalizes this separation, providing a more predictable process flow for business actors navigating OSS licensing.

5.

Issuance of Supporting Business Licensing (‘‘PB UMKU’’)

   Clarified Scope and Timing of PB UMKU. While PB UMKU existed under the previous OSS regime, BKPM Reg. 5/2025 provides a clearer and more structured framework for its implementation. The regulation expressly confirms that PB UMKU may be applied through the OSS system either before or during the company’s operational or commercial phase.

   Defined Categories of Supporting Licenses. BKPM Reg. 5/2025 also refines the categorisation of PB UMKU by outlining the types of supporting licences that fall within its scope, including: (i) product distribution; (ii) operational feasibility; (iii) product or service standardisation; and (iv) other facilitative business licences.

6.

Representative Offices (‘‘RO’’)

   Consolidated Framework and New RO Category. BKPM Reg. 5/2025 consolidates the rules on Representative Offices, which were previously spread across sector-specific regulations. The regulation now provides a unified framework and, in addition to reaffirming established RO types (KPPA, KP3A, BUJKA RO and KPJPTLA), it formally introduces a specific category for electronic commerce trading representative offices (KP3A PMSE), which was not explicitly classified under the earlier regime

   Standardized Licensing and Reporting. The regulation harmonises licensing and supervisory requirements across all RO types. All ROs must now obtain a three-year, renewable Business Identification Number (‘‘NIB’’) and submit LKPM through the OSS system. Reporting is semi-annual for most RO categories, while BUJKA ROs and Foreign Electricity Support ROs remain subject to annual reporting.

7.

Indonesian National Standard (‘‘SNI’’) Certification

    The NIB may also serve as provisional compliance with the SNI for micro, small and medium enterprises, while the SNI certification process is being taken.

    The OSS system will communicate SNI applications to the National Standardization Agency (BSN), which may provide technical assistance and update OSS once the SNI certificate is issued. When the SNI certificate is granted, OSS updates the NIB to reflect the certification number and status.

8.

Investment Activity Reports (“LKPM”)

    Extended LKPM Deadlines. The underlying principle for supervision remains unchanged, that all investment activities in Indonesia must be monitored through LKPM submission. Large-scale business enterprises, including PMA companies, remain subject to quarterly LKPM reporting, but the submission deadline now extended from 10 days to 15 days after the end of each quarter.

    LKPM Reporting Stages. BKPM Reg. 5/2025 formalises LKPM reporting into two defined stages, namely the Preparation Stage and the Operational or Commercial Stage. While the previous regime recognised a similar distinction in practice, it did not expressly structure LKPM reporting using these two standardised stages. Both LKPM stages must include information on investment realization, employment data, revenue, the fulfilment of business obligations, and any operational challenges encountered.

9.

Sanctions

    BKPM Reg. 5/2025 expands and clarifies the administrative sanctions that may be imposed for violations of basic requirements, business licensing (PB), and supporting business licensing (PB UMKU). The regulation now recognises administrative fines and administrative coercive measures as additional sanction types.

    The available administrative sanctions consist of (i) written warnings (including first, second, third, and first-and-final warnings), (ii) temporary suspension of business activities, (iii) administrative fines, (iv) administrative coercive measures, and (v) the revocation of basic requirements, PB, and PB UMKU.

    Detailed administrative sanctions under BKPM Reg. 5/2025 include temporary suspension, administrative fines, and administrative coercive measures. Temporary suspension now expressly covers prohibitions on business activities and restrictions on corporate actions in OSS. Unpaid administrative fines may lead to coercive measures or revocation of risk-based business licensing (PBBR). Coercive measures may involve suspension of public services, seizure of equipment, withdrawal of products, prohibition from operating, closure of premises, demolition of buildings, or other actions permitted by law to stop harmful violations.

10.

Merger, consolidation, spin off, and dissolution

    Corporate restructuring actions such as merger, consolidation, spin-off, and dissolution are now explicitly accommodated under BKPM Reg. 5/2025. Any deed effecting such actions must be validated in coordination with the Ministry of Law, and the OSS system must be updated with new licensing data for the surviving or newly formed entity. Meanwhile, the NIB and business licensing (PB) of merged, dissolved, or otherwise terminated entities will be automatically cancelled once the deed is accepted and validated in OSS.

    For spin-offs, business activities, assets, and liabilities may be transferred partially or fully to either affiliated or non-affiliated entities. Both the transferring and the receiving entities must update the OSS system accordingly by registering business lines and applying for any licenses required for the transferred activities.

11.

Branch Offices

BKPM Reg. 5/2025 introduces a requirement to register administrative branch offices through the OSS System. These branches are limited to administrative purposes and are located separately from the head office or main business site. They are not permitted to conduct commercial activities. Companies with multiple administrative branches must submit the data for each branch location in OSS.

12.

Public Oversight Mechanism

The public and business actors may participate in supervising business activities by submitting reports or complaints directly or electronically through the OSS System. Each report must be based on a legitimate reason and will trigger verification, clarification, and, where necessary, enforcement measures by the relevant authority.