Foreign Investment in Indonesia: Working With BKPM
BKPM, Indonesia’s investment ministry, is the front door for foreign investors. It promotes investment, licenses foreign-owned companies through the OSS system and helps investors with incentives and problems along the way.
We help you set up and license your Indonesian company and work with BKPM, as we have done for our own.
What BKPM Does
BKPM began as the Investment Coordinating Board (Badan Koordinasi Penanaman Modal). Today it works together with the Ministry of Investment and Downstream Industry (Kementerian Investasi dan Hilirisasi/BKPM), and one minister leads both. Investors still know the whole institution as BKPM.
Its own list of functions covers four areas:
Investment promotion
Promoting Indonesian investment opportunities at home and to global capital markets, and running bilateral and regional investment cooperation.
Licensing through OSS
Running the Online Single Submission (OSS) system, where foreign-owned PT PMA companies register, receive their NIB and apply for licences.
Incentive facilitation
Processing applications for fiscal incentives such as tax allowances and import duty facilities, now through an OSS subsystem.
Aftercare and debottlenecking
Monitoring investment through quarterly LKPM reports and helping investors resolve problems that hold projects up.
Setting Up a PT PMA
Foreign investors usually operate through a PT PMA (Perseroan Terbatas Penanaman Modal Asing), a limited liability company with at least one foreign shareholder. Many sectors allow 100% foreign ownership; a short list of business fields is closed or restricted under Indonesia’s investment list.
The rules for a PT PMA changed in October 2025, when BKPM Regulation 5/2025 replaced the 2021 rules:
- Investment value: more than Rp10 billion for each five-digit KBLI business code at each project location, excluding land and buildings. In property, accommodation and some agricultural sectors, land and buildings can count.
- Paid-up capital: at least Rp2.5 billion, down from Rp10 billion, unless a sector rule requires more.
- Capital lock-up: paid-up capital must stay in the company’s account for 12 months, except when it is used to buy assets, build or operate.
- Reporting: progress against the investment plan is tracked through quarterly investment activity reports (LKPM).
- Activity codes: Indonesia’s 2025 business classification (KBLI 2025) has replaced KBLI 2020 in OSS. Existing licences stay valid, but new applications use the new codes.
- 1
Structure and KBLI
Agree shareholders, capital, business activities and the KBLI codes that match them.
- 2
Deed and legal approval
A notary prepares the deed of establishment, which is then approved by the Ministry of Law.
- 3
OSS registration and NIB
Register the company in OSS and receive its business identification number (NIB).
- 4
Licences by risk level
Obtain the licences, standards and basic requirements your activities need, based on their risk level.
- 5
Ongoing compliance
File quarterly LKPM reports and keep licences and records current.
Licensing Through OSS
Government Regulation 28/2025 replaced PP 5/2021 on 5 June 2025 as the framework for risk-based business licensing. The main changes for investors:
- Service deadlines now cover technical, environmental and building approvals. If an agency misses the deadline on a complete application, the approval is deemed granted.
- Supporting licences were cut from 1,006 to 357.
- OSS grew from five to eight subsystems, including one for basic requirements (land use, environment and buildings) and one for investment facilities.
- Projects in special economic zones, free trade zones and national strategic projects can use a faster track.
Applications are digital, but many approvals still sit with regional government. Each province, regency and city has a one-stop investment and licensing office (DPMPTSP) for licences under its authority. Our government relations team coordinates with them. For projects that need land, spatial, environmental and building approvals, see our guides to industrial estates and data centers.
Investment Incentives
Tax holiday
Corporate income tax reduction for pioneer industries. Applications under the current rules were open to 31 December 2025. The Finance Ministry has announced an extension into 2026; we confirm the current position for each project.
Tax allowance
Under PP 78/2019: a 30% deduction on qualifying fixed-asset investment over six years, accelerated depreciation, a reduced dividend tax for non-residents and longer loss carry-forward.
Import duty facilities
Relief on duty for machinery, goods and materials for qualifying investments. Some exemptions now need a technical consideration from the Ministry of Industry first.
Special economic zones
Indonesia’s 25 KEKs offer corporate tax reductions, VAT relief on certain deliveries and customs facilities. See our industrial estate guide.
Incentives depend on your sector, location and investment size, and the rules change often. We work out which ones could apply and coordinate applications with your tax advisers.
We Have Done This Ourselves
Kinnara Capital’s two Indonesian companies are both foreign-owned PT PMAs, licensed through OSS risk-based licensing under the authority of the Minister of Investment and Downstream Industry/Head of BKPM.
PT Kinnara Capital Indonesia
Development company. NIB 2601260101567, issued 26 January 2026.
PT Saraya Resort Lombok
Resort management and sales. NIB 1411250065654, issued 14 November 2025.
We went through company setup, KBLI selection, OSS registration and licensing for our own projects, and we use that experience for clients. You can check our registrations on our buyer protection page.
Holding these licences does not mean BKPM endorses Kinnara Capital. It means we know the process first-hand.
Buying Property Instead?
This guide is for business investors setting up operations in Indonesia. If you are buying a villa or other property, our foreign ownership guide explains the PT PMA / HGB and leasehold structures for property buyers.
Frequently Asked Questions
Does BKPM fund or co-invest in projects?
No. BKPM promotes investment, licenses companies through OSS, facilitates incentives and helps resolve problems. It does not lend or take equity. State capital is invested through separate bodies such as Danantara and INA.
What is the minimum investment for a PT PMA?
Under BKPM Regulation 5/2025, more than Rp10 billion for each five-digit KBLI business code at each project location, excluding land and buildings, with some sector exceptions.
What is the minimum paid-up capital for a PT PMA?
Rp2.5 billion since October 2025, unless a sector rule requires more. It must stay in the company’s account for 12 months unless used to buy assets, build or operate.
Can a PT PMA be 100% foreign-owned?
In many sectors, yes. Indonesia’s investment list opens most business fields to foreign investment, while a small number are closed or have ownership limits. We check your activities against the list before you set up.
Is the tax holiday available now?
Applications under the current regulation were open until 31 December 2025, and the Finance Ministry has announced an extension into 2026. Check the latest regulation before relying on it; we confirm the position for each project with your tax advisers.
What is the difference between BKPM and Danantara?
BKPM is a government ministry that promotes and licenses investment. Danantara is a state investment management agency, launched in February 2025, that manages state assets and invests capital. They are separate bodies with different roles.
Related Advisory Services
Data Center Development
Site acquisition, PLN power planning and approvals for data center, colocation and AI compute projects.
Industrial Estates
Finding, assessing and acquiring industrial land and estate lots, with design-and-build through our construction partners.
Government Relations
Structured, documented engagement with central ministries and regional government on permits, land and investment approvals.
Planning to Invest in Indonesia?
Tell us what you plan to do and where. We’ll outline the structure, licences and incentives that could apply.
Contact Our TeamSources (checked 27 October 2026)
- Kementerian Investasi dan Hilirisasi/BKPM, “Daftar Satuan Kerja (unit functions)”.
- Kementerian Investasi dan Hilirisasi/BKPM, “Minister of Investment and Downstream Industry: AI Drives Indonesia’s Economy to Grow”, January 2026.
- Cabinet Secretariat, “Two Years into President Prabowo’s Administration, Investment Reaches Rp3,923.2 Trillion”, 19 October 2026.
- A&O Shearman, “Risk-based licensing: BKPM Regulation 5/2025 consolidates and clarifies the 2021 regime”, 27 October 2025.
- Withers / KARNA Partnership, “Indonesia eases foreign capital rules: key takeaways from BKPM Regulation No. 5 of 2025”, 10 October 2025.
- Hukumonline Klinik, “Adakah Pembatasan Investasi Asing pada KBLI 21012? (Perpres 10/2021 as amended by Perpres 49/2021)”, 2 March 2026.
- SSEK Law Firm, “Indonesia Overhauls Risk-Based Business Licensing with Government Regulation No. 28 of 2025”, 15 August 2025.
- DDTCNews, “KBLI 2025 Resmi Dipakai untuk Perizinan, Pelaku Usaha Perlu Tahu Ini”, 19 June 2026.
- Directorate General of Taxes, “Pemerintah Terbitkan Aturan Perpanjangan Fasilitas Pengurangan Pajak Penghasilan Badan”, 14 November 2024.
- Kontan, “Kemenkeu Perpanjang Insentif Tax Holiday Hingga Desember 2026”, 23 December 2025.
- Hukumonline, “Apa Saja Bentuk Fasilitas Tax Allowance?”, 2 March 2026.
- Hukumonline Pro, “Eligibility for Import-Duty Exemptions Updated: Technical Considerations Now Required”, 16 March 2026.
- PwC Worldwide Tax Summaries, “Indonesia – Corporate – Tax credits and incentives”, reviewed 11 June 2026.
- DDTCNews, “Investasi di KEK Capai Rp382 Triliun, Airlangga: Serap 302.000 Pekerja”, 21 October 2026.
- Makarim & Taira S., “DANANTARA: Indonesia’s New Sovereign Wealth Fund Marks a New Era for State-Owned Enterprises”, February 2025.
- Indonesia Investment Authority, “INA home page”.
- DPMPTSP Provinsi Jawa Timur, “Tupoksi (duties and functions)”.
- Kinnara Capital × Hua Chuang, “Strategic Partnership Investor Profile 2026 (NIB records)”, 2026.
Images: SCBD Jakarta by Rantemario, CC BY-SA 4.0, via Wikimedia Commons
This page is general information, not legal, tax or investment advice. Indonesian regulations change often. We confirm current requirements for each project with licensed Indonesian legal and tax advisers, and no outcome, approval or timeline is guaranteed.