Indonesia Reduces Paid-Up Capital Requirement for Foreign Investors to IDR 2.5 Billion

Indonesia lowers foreign company paid-up capital requirement from $640,000 to $160,000, easing entry barriers and promoting foreign investment, with capital flexibility for project development.

Indonesia Eases Investment Entry Barriers

Amid increasing regional competition for foreign investment in ASEAN, Indonesia has taken a significant step to lower one of its longstanding entry barriers. The government has reduced the required paid-up capital for foreign-owned limited liability companies, known as PT PMAs, from IDR 10 billion (approximately US $640,000) to IDR 2.5 billion (around US $160,000) through Minister of Investment Regulation No. 5 of 2025. This change aims to attract more foreign investors by making the process less stringent.

A Shift Toward Greater Capital Flexibility

For over ten years, Indonesia mandated an upfront capital injection of IDR 10 billion for foreign investors, which often discouraged mid-sized and service-sector entrants. The new regulation allows companies to phase their capital investments over time based on project needs, reducing initial financial burdens. This shift encourages a more flexible and progressive approach to investment, aligning with regional trends.

Regional Investment Benchmarks

Compared to Indonesia’s previous and current thresholds, neighboring countries maintain varying entry capital requirements. Vietnam generally approves foreign projects with starting capital around US $100,000, depending on the sector. Meanwhile, Thailand’s minimum is about THB 3 million (US $80,000), and Malaysia’s ranges between RM 500,000 and RM 1 million (US $105,000–$210,000).