Indonesia’s Ministry of Investment and Downstream Industry/Head of the Investment Coordinating Board (“BKPM”) has issued BKPM Regulation No. 5 of 2025 on Guidelines and Procedures for the Implementation of Risk-Based Business Licensing and Investment Facilities through the Electronically Integrated Business Licensing System (Online Single Submission/OSS) (“BKPM Regulation 5/2025”). The regulation was issued on October 1, 2025, and entered into force on October 2, 2025.
BKPM Regulation 5/2025 is the principal implementing regulation under Government Regulation No. 28 of 2025 on the Organization of Risk-Based Business Licensing (“GR 28/2025”), which substantially overhauled Indonesia’s business licensing regime earlier in 2025.
The regulation consolidates and replaces previous BKPM implementing regulations, and is intended to strengthen regulatory clarity, increase procedural consistency, and enhance the integration of business licensing and supervision through the OSS system.
While GR 28/2025 introduced the overarching institutional and conceptual framework for risk-based business licensing, BKPM Regulation 5/2025 is particularly significant from an operational standpoint. It sets out, in much greater detail, how licensing applications are to be processed through the OSS system, the verification of basic requirements such as spatial planning and environmental and building approvals, and the BKPM’s supervision of post-licensing compliance and investment reporting.
- Transition to the Updated OSS System
Following the issuance of GR 28/2025, the OSS system has been undergoing phased adjustments to accommodate expanded licensing subsystems and inter-agency integration. Existing licenses recorded under previous OSS iterations generally remain valid, and businesses are not required to re-upload previously issued licenses solely for system migration purposes.
That said, businesses should anticipate that the updated OSS platform may introduce additional data fields, revised classifications, and new account validation steps. In practice, ensuring that OSS account information remains current will be important not only for obtaining new licenses, but also for processing amendments, extensions, changes to business activities, and periodic compliance reporting.
BKPM Regulation 5/2025 expressly revokes and replaces the following BKPM implementing regulations:
- BKPM Regulation No. 3 of 2021 on the Electronically Integrated Risk-Based Business Licensing System (OSS);
- BKPM Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities; and
- BKPM Regulation No. 5 of 2021 on Guidelines and Procedures for the Supervision of Risk-Based Business Licensing.
Section XVII of BKPM Regulation 5/2025 introduces a transitional (grandfathering) framework under which business licenses and OSS-based approvals that were issued under the previous BKPM regulatory regime remain valid and continue to apply, provided they are not amended, reissued, or otherwise required to be adjusted under BKPM Regulation 5/2025 and the updated OSS system.
Where implementation of the new framework is more favorable or operationally beneficial, business actors may elect to update and/or seek reissuance of their licenses under BKPM Regulation 5/2025, subject to the applicable requirements and procedures administered through the OSS system.
- Foreign Investment Structuring: Capital and Investment Rules
BKPM Regulation 5/2025 introduces several refinements to how Indonesia regulates investment commitments, particularly for foreign investment companies (Perseroan Terbatas dengan Penanaman Modal Asing or “PMA”). These refinements are likely to be relevant both for new incorporations and for companies seeking to add business lines, obtain new licenses, or monetize ancillary activities.
- Minimum Investment Threshold
As a matter of principle, the PMA framework continues to treat foreign investment as a large-scale investment category. Accordingly, the regulation generally maintains the expectation that investment exceed Rp 10 billion per five-digit Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) code per project location. As under the previous framework, land and buildings are excluded from the investment calculation, unless sectoral rules require otherwise.
However, BKPM Regulation 5/2025 provides more granular clarification on how business lines and locations are determined for certain sectors. These clarifications matter in practice because minimum investment thresholds are assessed not on a company-wide basis, but by reference to specific KBLI classifications and project locations. Where multiple KBLI codes are involved, the structuring of business activities may influence whether minimum investment thresholds are deemed to be satisfied.
- Lower Minimum Issued and Paid-Up Capital
One of the most notable commercial changes is the reduction of the minimum issued and paid-up capital for PMA companies to Rp 2.5 billion, replacing the previously applied benchmark of Rp 10 billion.
This reduction applies to (i) newly established PMA companies and (ii) new business activities added by existing PMA entities.
For existing business lines already registered and approved under the previous regime, the capital requirement is effectively maintained, and companies should not assume that a reduction can be implemented retroactively.
This adjustment may create more flexibility for foreign investors in structuring entry into Indonesia, particularly for professional services and other business lines where initial capex requirements are modest.
- Capital Lock-Up for 12 Months
BKPM Regulation 5/2025 introduces a new restriction prohibiting the transfer of injected paid-up capital out of a company’s bank accounts for 12 months after injection, except where the funds are used for legitimate business purposes, including asset acquisition, construction activities, and ordinary operations.
This provision reflects a policy intention to ensure that capital injection is substantive and supports business activity rather than merely satisfying licensing formalities.
In practice, this reinforces the importance of (i) clear payment trails and accounting documentation; and (ii) careful planning of capex and operational expenditure deployment following capital injection.
- Supporting Business Activities that Generate Revenue
BKPM Regulation 5/2025 also introduces a more structured approach to income-generating supporting activities. Supporting business activities that generate revenue must (i) be included in the company’s articles of association; and (ii) where conducted by a PMA company, be taken into account in assessing applicable investment and capitalization thresholds.
This will be relevant for many businesses whose “support” functions have commercial value in practice, such as technical services, maintenance, operational support, or ancillary service offerings tied to the primary business.
- Licensing Process Enhancements: Service Standards and the Deemed Approval Mechanism
Consistent with GR 28/2025, BKPM Regulation 5/2025 reinforces the role of service-level standards (“SLAs”) across licensing categories. These SLAs define maximum processing times for key licensing stages, including document verification, substantive review and issuance, across multiple types of business licenses and approvals. These include:
- Technical Approvals (Persetujuan Teknis);
- Environmental Approvals (Persetujuan Lingkungan); and
- Building Approval and Worthiness Certificates (PBG and SLF).
Each of these is now subject to maximum processing times that must be specified by the responsible agency and integrated into the OSS system. These time frames are binding and form the basis for triggering the fiktif positif mechanism, a concept that allows for deemed approval in cases of bureaucratic delay.
Under BKPM Regulation 5/2025, where a business actor submits an application that fully complies with both substantive and administrative requirements and the competent authority fails to act within the prescribed SLA, the license is deemed granted. The OSS platform must then issue the relevant proof of licensing, which carries the same legal validity as a manually issued license.
This is a major departure from GR 5/2021, which applied the deemed approval mechanism more narrowly, primarily to Conformity of Spatial Utilization Activities (“KKPR”) approvals, and often left its implementation unclear. BKPM Regulation 5/2025 not only codifies this mechanism but applies it broadly across licensing types, reinforcing regulatory certainty and empowering businesses facing administrative inertia.
However, BKPM Regulation 5/2025 also introduces robust post-approval safeguards. Under BKPM Regulation 5/2025, the OSS Institution and relevant authorities retain the right to:
- Conduct post-licensing audits;
- Verify whether the application materials were complete and accurate at the time of deemed issuance; and
- Revoke the license if the audit reveals that the applicant misrepresented data or failed to meet material requirements.
If a license is revoked, BKPM Regulation 5/2025 provides for a written notice and requires the decision to be recorded and archived digitally in the OSS system. The balance between procedural efficiency and regulatory control is thus maintained, allowing compliant businesses to move forward while deterring opportunistic use of the fiktif positif mechanism.
- OSS Access Rights: Increased Administrative Discipline
BKPM Regulation 5/2025 introduces stricter rules on OSS access rights management. Access rights may be deactivated after 90 days of inactivity. Notifications will be delivered to the registered email address before deactivation.
For many companies, OSS access administration is handled by a small internal team or by third-party consultants. Under the new framework, businesses should ensure that OSS administration is actively monitored to avoid disruptions affecting licensing amendments, reporting submissions, or compliance filings.
- LKPM Reporting and Supervision
BKPM Regulation 5/2025 introduces practical changes to Investment Activity Report (Laporan Kegiatan Penanaman Modal or “LKPM”) compliance.
First, it extends LKPM submission deadlines from the 10th to the 15th day of the relevant reporting period. While this provides administrative flexibility, it is coupled with stronger compliance monitoring.
Second, the regulation introduces a new non-compliance trigger: if a company remains in the construction stage and reports no additional investment realization for four consecutive quarters, it may be treated as non-compliant. This signals an expectation that the “construction” stage should not remain static and that investment realization should be demonstrable within a reasonable time frame after the issuance of Business Identification Number (Nomor Induk Berusaha or “NIB”) and licensing approvals.
- Outlook and Next Steps
BKPM Regulation 5/2025 should be viewed as a continuation of the Government’s broader reform agenda under GR 28/2025: licensing is increasingly proceduralized, digitized, and supervised through the OSS system.
At a practical level, the regulation offers greater clarity and predictability through standardized processes and service standards. At the same time, it introduces stricter compliance discipline through supervision mechanisms, post-issuance audits, and enhanced LKPM monitoring.
In preparation for this transition, we recommend that businesses:
- review their OSS profiles and ensure all registered information remains current;
- confirm that their KBLI mapping reflects actual operational scope and monetized supporting activities;
- ensure that capital injection and use of capital are documented clearly (particularly in the first 12 months);
- organize documentation supporting compliance with basic requirements (spatial, environmental and building approvals); and
- implement internal compliance calendars for OSS access and LKPM reporting.
We will continue to monitor developments and implementation practice and provide further updates as the regulatory framework evolves. (14 January 2026)
