Indonesia’s updated investment regulations may appear to lower the entry threshold for businesses. In reality, the integration of risk-based licensing into the OSS system introduces tighter, digitalized, and far more enforceable supervision.
For Indonesian companies expanding into new sectors and foreign enterprises entering Indonesia, the message is clear:
Lower capital ≠ easier compliance.
Indonesia has entered a zero-tolerance era for capital and investment violations.
01 Paid-Up Capital: Transparent, Digitalized, Enforceable
Under Government Regulation No. 28/2025 and Investment Ministry Regulation No. 5/2025, the OSS (Online Single Submission) system fully governs risk-based business licensing.
The minimum paid-up capital for PT PMA (foreign-owned companies) is set at:
IDR 2,500,000,000
≈ USD 150,000
Capital must remain in the company account for 12 months, unless used for:
- legitimate asset purchases
- construction activities
- operational expenses
This requirement applies both to foreign companies and Indonesian shareholders involved in joint ventures.
02 Legal Basis: Key Provisions for All Investors
Investment Ministry Regulation No. 5/2025 (Articles 26–27)
- Minimum paid-up capital for PT PMA = IDR 2.5 billion
- Capital cannot be withdrawn for 12 months (exceptions apply only for compliant spending)
Unified Penalty System:
Both Regulation No. 5/2025 and Government Regulation No. 28/2025 provide an escalating penalty framework:
- Written warnings
- Temporary suspension / activity restrictions
- Administrative fines (PNBP)
- Compulsory administrative measures
- Business license revocation
This applies to all companies operating under OSS, regardless of origin.
03 Penalty Breakdown
1. Written Warnings
Issued when a company:
- fails to complete the capital injection
- submits inaccurate or incomplete documentation
Up to three warning levels.
2. Temporary Suspension
If the issue is not corrected:
- OSS may restrict or freeze operations
- Applications and system access may be limited
3. Administrative Fines (PNBP)
Given for:
- incomplete capital injection
- falsified documents
- failure to fulfill committed investment
Calculated using: Violation Points × Fine Rate
4. Compulsory Administrative Actions
For severe or repeated violations:
- suspension of government services
- seizure of goods/equipment
- forced closure of premises
- removal of non-compliant facilities
5. Business License Revocation
Executed through OSS.
Consequences include:
- business interruption
- project delays
- contract breaches
- HR and financial liabilities
04 Why Digital Enforcement Is Now Stronger
All companies must submit a self-declaration in OSS confirming:
- capital injection completed
- 12-month retention
- valid bank evidence
OSS automatically cross-checks:
- bank data
- accounting records
- tax systems
- inter-agency data
This digital evidence chain eliminates previous loopholes.
05 What Counts as a Violation?
Sanctions may apply for:
- not injecting the minimum capital
- injecting below the committed amount
- false bank slips or misleading documentation
- failure to submit LKPM (investment activity reports)
Escalation:
Warning → Suspension → Fine → Enforcement Action → License Revocation
06 Five Key Reminders for Indonesian & Foreign Companies
- OSS actions are automatic — late submission still triggers sanctions.
- Capital use must be justified with complete documentation.
- Biggest risk is not fines but suspension and license revocation.
- Sector-specific rules apply in forestry, islands, KEK zones, etc.
- Transition cases under old rules must update OSS immediately.
07 Compliance Recommendations
- Review your OSS status now — ensure all capital evidence is complete.
- Build a full evidence chain — bank statements, invoices, contracts, construction progress.
- Assign a compliance owner — reconcile OSS, LKPM, and bank data monthly/quarterly.
- Coordinate early with regulators / KEK / OIKN if operating in special zones.
Summary
Indonesia’s new capital rules lower the formal entry threshold, but enforcement is now stricter, faster, and fully digital.
Both Indonesian companies and foreign investors must treat:
🔥 capital injection
🔥 documentation accuracy
🔥 OSS compliance
as priority compliance workstreams.