Home Blog How to Meet PT PMA Minimum Capital Requirements in Indonesia Business Setup | Company Registration | Indonesia | PT PMA How to Meet PT PMA Minimum Capital Requirements in Indonesia InCorp Editorial Team 20 February 2025 8 minutes reading time Table of Contents What is Paid-Up Capital in Indonesia What is Minimum Capital Investment Requirements for a PT PMA Minimum Capital Investment Requirements: The Exception What Type of Presence do Investors Need to Set Up a Business in Indonesia? How to Invest in Indonesia What are the Factors Affecting Foreign Direct Investment (FDI)? What is the Legal Basis for Foreign Direct Investment in Indonesia? Capital to Start a Local Company PT Forms of Injection of Minimum Paid-Up Capital Interested in Setting up a Company in Indonesia? The required minimum capital investment in Indonesia to set up a legal entity in Indonesia might seem straightforward, but this is often not the case. It might be simple for locals to set up a local-owned company (PT), but it becomes more complicated for foreigners to set up a foreign-owned company (PT PMA). The issue of minimum capital is also closely related to the type of business license, which may complicate the matter further. What is Paid-Up Capital in Indonesia Paid-up capital in Indonesia means the actual amount of funds injected into a company by shareholders. These funds are then exchanged for shares and issued to shareholders. These paid-up capitals will then be utilized for the initial and day-to-day company operations such as debts, payroll, and other expenses. What is Minimum Capital Investment Requirements for a PT PMA The Investment Coordinating Board in Indonesia (BKPM) specifies that the minimum capital requirement for a PT PMA is IDR 10 billion, depending on the industry foreigners invest in. This minimum capital amount is just a rough estimate. According to the company’s proposed investment plan, it will be invested over three years. In general, minimum capital is required for all industries to sustain local and small-medium companies while encouraging foreign direct investments (FDI) in Indonesia for large-scale companies. Currently, the paid-up capital for setting up a PT PMA in Indonesia is also IDR 10 billion – but there can be some exceptions. A higher minimum capital is also expected for more capital-intensive industries, such as financial and banking services, natural resources extraction, manufacturing, etc. Therefore, these industries shall be listed in the investment plan according to foreign investment regulations in Indonesia. Importantly, since OSS implementation, temporary and permanent business licenses have not been issued except for several still issued by BKPM, such as those for energy resources, property, and the financial sector. READ MORE:How to Register a Foreign-Owned Company as PT PMA in IndonesiaA Complete Guide for Registering a Company as ForeignersHow can Singaporean Entrepreneurs Set Up A PT PMA in Indonesia? Minimum Capital Investment Requirements: The Exception There are exceptions, such as for PMA companies in trading. Additionally, all PMA Companies must have a minimum issued and paid-up capital of at least IDR 10 billion (or its equivalent in USD). This requirement generally applies across sectors unless otherwise specified by relevant laws and regulations, such as those governing the banking sector, which may require a higher capital threshold. Generally, to operate a single business in one location, classified under the Indonesia Industrial Standard Classification (Klasifikasi Baku Lapangan Usaha Indonesia), the minimum investment must exceed IDR 10 billion (excluding land and building costs). What Type of Presence do Investors Need to Set Up a Business in Indonesia? Investors looking to engage in business in Indonesia through foreign direct investment typically have two options: Establish a local subsidiary as a limited liability company, a PT PMA company (Perusahaan Penanaman Modal Asing), specifically for foreign investment purposes. Set up a representative office (RO). According to Law No. 25 of 2007 on Investment (the “Indonesian Investment Law”), foreign investors intending to engage directly in commercial or business activities, such as providing services or selling goods in Indonesia, must establish a PMA company. A PMA company is a fully registered legal entity that can engage in various business activities as Indonesian regulations allow. Alternatively, investors can establish an RO, a licensed office set up by a foreign company in Indonesia. An RO’s activities are limited. They typically involve market research and acting as liaisons to connect its overseas headquarters with contacts in Indonesia. ROs are generally restricted from engaging in direct business activities, such as signing contracts, issuing invoices, or receiving payments. How to Invest in Indonesia Foreign investors seeking investment opportunities in Indonesia can consider the following phases of investment: What are the Factors Affecting Foreign Direct Investment (FDI)? FDI can boost a country’s economic development by creating jobs, transferring technology, and increasing business competitiveness. Factors affecting FDI include politics, economics, and culture, both internally and externally. Political stability, security, legal certainty, growth, inflation, interest rates, education levels, labor, culture, global economic conditions, and government policies can all impact FDI in Indonesia. 1. Political and Security Stability Political and security stability is an important factor that can affect FDI. Foreign investors will be more interested in investing their capital in a country with good political and security stability. 2. Legal Certainty Legal certainty is an important factor that can affect FDI. Foreign investors will be more interested in investing their capital in a country with good legal certainty. 3. Economic Growth High economic growth is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a country with high economic growth. 4. Inflation Rate A low inflation rate is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a country with a low inflation rate. 5. Interest Rate A low interest rate is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a country with a low interest rate. 6. Education Level A high education level is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a highly educated country. 7. Skilled Labor Skilled labor is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a country with skilled labor. 8. Open Culture An open culture is a factor that can attract foreign investors. Foreign investors will be more interested in investing their capital in a country with an open culture. What is the Legal Basis for Foreign Direct Investment in Indonesia? Law Number 25 of 2007 on Investment is the legal basis for FDI in Indonesia. This law regulates various matters related to FDI, including: The definition of FDI Types of FDI FDI procedures Investor rights and obligations Government policies related to FDI Law Number 25 of 2007 on Investment has undergone several changes, namely: Government Regulation Number 60 of 2007 on the Implementation of Law Number 25 of 2007 on Investment Government Regulation Number 91 of 2015 on the Second Amendment to Government Regulation Number 60 of 2007 on the Implementation of Law Number 25 of 2007 on Investment Government Regulation Number 24 of 2022 on the Third Amendment to Government Regulation Number 60 of 2007 on the Implementation of Law Number 25 of 2007 on Investment The Indonesian government is continuously working to improve the investment climate in Indonesia, including FDI. This is done in various ways, including: Improving political and security stability Strengthening legal certainty Increasing economic growth Reducing inflation Reducing interest rates Improving the quality of education and labor Creating an open culture These efforts are expected to attract more foreign investors to Indonesia. Capital to Start a Local Company PT For local companies called PT, the number of capital investments influences the company’s size and whether it can employ foreign workers. According to the latest changes laid out in Job Creation Law, the classification of Local PT in Indonesia based on paid-up capital is as follows: A micro-enterprise: less than IDR 1 billion A small enterprise: IDR 1 – 5 billion A medium enterprise: IDR 5 – 10 billion A large enterprise: more than IDR 10 billion Due to the high capital investment requirements, only large and medium-sized enterprises allow foreign employment. Forms of Injection of Minimum Paid-Up Capital The minimum paid-up capital can be injected as cash into the company’s bank account or other assets. If the paid-up capital is put in with help instead of cash, the value of these assets is determined based on the current market prices. However, the value of buildings and land is excluded from the capital unless it is a company’s primary business activity in the field. The details of the asset payment must also be recorded in the Deed of Establishment (DOE), and the deadline for submission of the capital statement letter is 60 (sixty) days after the DOE signing. After that, the completion can be done online. Guide to Doing Business in Jakarta Mailchimp Free eBook Indonesia Business Insight Subscribe Full NameEmail I have read InCorp's Privacy Policy and agree to InCorp using my information provided to contact me about related content, and services.*Subscribe Interested in Setting up a Company in Indonesia? InCorp Indonesia has over a decade of experience in market entry, specializing in assisting businesses in establishing their presence in Indonesia. Our team of experts ensures a seamless company registration and licensing process, guiding you to set up your operations in the country successfully. The legal representatives from InCorp Indonesia specialize in corporate law and thus will walk you through the formation process of your company in Indonesia and the minimum capital investment. Contact InCorp now, and we will help you with a seamless company incorporation in Indonesia. Fill out the form below to discuss your matter with our experts. Read Full Bio Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.