Regulation Of The Minister Of Investment And Downstreaming/Head Of The Investment Coordinating Board Number 5 Of 2025 On Guidelines And Procedures For Implementing Risk-Based Business Licensing And Investment Facilities Through An Electronically Integrated Business Licensing System (Online Single Submission) (“BKPM Regulation No. 5/2025”), which was promulgated and entered into force on 2 October 2025, repeals and declares invalid three regulations: (a) Regulation of the Investment Coordinating Board Number 3 of 2021 on the Electronically Integrated Risk Based Business Licensing System (“BKPM Regulation No. 3/2021”), (b) Regulation of the Investment Coordinating Board Number 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities (“BKPM Regulation No. 4/2021”), and (c) Regulation of the Investment Coordinating Board Number 5 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Supervision (“BKPM Regulation No. 5/2021”). To avoid inconsistencies, Article 399 BKPM Regulation No. 5/2025, requires the Online Single Submission (“OSS”) Agency to make the necessary adjustments to the OSS system no later than 5 October 2025.
BKPM Regulation No. 5/2025 is intended to ensure legal certainty in the process of implementing risk-based business licensing and implementing the provisions of Government Regulation Number 28 of 2025 concerning the Implementation of Risk-Based Business Licensing (“GR No. 28/2025”).
With the enactment of BKPM Regulation No. 5/2025, there are several changes to business licensing and investment facilities in Indonesia, among others: (a) the minimum capital, (b) the conformity of spatial utilization activities, and (c) the investment activity report.
- Minimum Capital Provision
Consistent with the now revoked BKPM Regulation No. 4/2021, BKPM Regulation No. 5/2025 still stipulates that the minimum investment value for foreign investment is IDR 10,000,000,000.00 (ten billion rupiah), excluding land and buildings per 5-digit KBLI business field per project location.
However, BKPM Regulation No. 5/2025 introduces an additional exception under Article 26, pursuant to which the minimum investment requirement for foreign investment—amounting to IDR 10,000,000,000 (ten billion rupiah)—may include the value of land and buildings, provided that the business activities conducted fall within the following categories:
- property management which includes construction, sales, and/or rental;
- provision of short-term and long-term accommodation;
- agriculture;
- plantations;
- animal husbandry; and
- aquaculture.
Furthermore, as previously stipulated under BKPM Regulation No. 4/2021 and reaffirmed in Article 26 (2) of BKPM Regulation No. 5/2025, there are exceptions to the minimum investment requirement applies to foreign investment for several business activities, including food and beverage service business activities. Under this exception, the minimum investment threshold of IDR 10,000,000,000 (ten billion rupiah), excluding land and buildings, is calculated for each two-digit KBLI classification per one location point. Article 26 (3) BKPM Regulation No. 5/2025 further clarifies that one regency or city constitutes a single location point.
The key change introduced under BKPM Regulation No. 5/2025 concerns the minimum capital requirements for foreign investment companies. This adjustment is significant given that foreign investment companies are always categorized as large‑scale businesses under Indonesia’s investment framework. BKPM Regulation No. 5/2025 reduces the minimum issued and paid-up capital requirement for a foreign investment company to at least IDR 2,500,000,000 (two billion five hundred million rupiah) per limited liability company, as stipulated in Article 26 (10).
- Conformity of Spatial Utilization Activities
BKPM Regulation No. 4/2021 and BKPM Regulation No. 5/2025 both provide that the OSS system conducts a Conformity of Spatial Utilization Activities (“KKPR”) verification whether the proposed business location conforms to the applicable Detailed Spatial Planning Plan (“RDTR”).
The key distinction lies in the basis of the assessment. Under the previous regulation, KKPR assessment was based on the availability of a regional RDTR while Article 47(4) of BKPM Regulation No. 5/2025 stipulates that the assessment is based on the availability of an RDTR that has been integrated with the OSS system.
Accordingly, where the RDTR has not been integrated with the OSS system, Article 49 BKPM Regulation No. 5/2025 provides that KKPR Approval shall be issued after a registration, examination of the proposed spatial utilization documents, and assessment of such documents have been completed.
- Investment Activity Report
Previously, Article 32 of BKPM Regulation No. 5/2021 required business actors to submit their Investment Activity Report (“LKPM”) no later than the 10th day of the month following the relevant reporting period.
Under the current framework, Article 286 of BKPM Regulation No. 5 of 2025 extends this deadline to the 15th day of the month following the respective reporting period. Accordingly, the applicable reporting obligations are as follows:
- for small scale business actor:
- First semester: submitted no later than 15 July of the relevant year; and
- Second semester: submitted no later than 15 January of the following year.
- for medium and large scale business actor:
First quarter: submitted no later than 15 April of the relevant year;
Second quarter: submitted no later than 15 July of the relevant year;
Third quarter: submitted no later than 15 October of the relevant year; and
- Fourth quarter: submitted no later than 15 January of the following year.
Furthermore, the exemptions from LKPM reporting previously granted to upstream oil-and-gas business, banking, non-bank financial institutions, and insurance companies under Article 32 BKPM Regulation No. 5/2021 no longer apply.
Pursuant to Article 286 (2) BKPM Regulation No. 5/2025, exemptions from LKPM submission are now limited solely to:
- business actors operating micro-scale enterprises; and/or
- business activities financed through the State Revenue and Expenditure Budget (APBN) or the Regional Revenue and Expenditure Budget (APBD).
Conclusion
In conclusion, BKPM Regulation No. 5 of 2025 alongside GR No. 28/2025 now serves as the integrated regulatory framework for business licensing in Indonesia, effectively consolidating and replacing BKPM Regulations No. 3 of 2021, No. 4 of 2021, and No. 5 of 2021.
The primary change that may significantly affect Indonesia’s investment regime is the adjustment to the minimum capital requirement for foreign investment companies. The lower capital threshold is expected to attract greater foreign investment across various sectors in Indonesia. However, questions may arise as to whether this revised criterion could intensify competition with locally owned companies, potentially affecting the competitiveness and market dynamics of domestic businesses.
For Further Information, Please Contact:
MetaLAW, Legal Consultant, Jakarta, Indonesia
maser@metalaw.id
