As we navigate the investment landscape of 2026, foreign investors in Indonesia are encountering a “double standard” in regulatory terms that is causing significant confusion.
With the enforcement of Ministry of Investment/Head of BKPM Regulation Number 5 of 2025, the government has lowered the initial entry barrier for Foreign Direct Investment (PMA). However, many investors mistakenly believe this means the overall financial commitment has dropped.
The most common question receiving conflicting answers is: “Do I need IDR 2.5 Billion or IDR 10 Billion to start a company?”
The answer is: You need both, but at different stages and for different purposes.
At Legalinfo Lawyers, we specialize in structuring foreign entities to comply with Indonesian law. Here is the definitive explanation of the difference between Paid-Up Capital and Investment Value under the 2026 regulations.
1. The Concept: Two Different Legal Realms
To understand the rules, you must distinguish between “Corporate Law” (Company Establishment) and “Investment Law” (Business Licensing/OSS).
Paid-Up Capital (Modal Disetor): This is the cash equity injected into the company bank account to validly form the legal entity (PT) under the Company Law.
Investment Value (Nilai Investasi): This is the total project cost (Capital Expenditure + Working Capital) committed to the government to qualify for a business license (NIB) under the Investment Law.
2. Paid-Up Capital: The “Entry Ticket” (IDR 2.5 Billion)
This is the new relaxation introduced in 2026. Previously, investors were often forced to inject IDR 10 Billion immediately.
Under Article 26 Paragraph (10) of Regulation No. 5 of 2025:
“The minimum capital requirement for PMA… is a placed/paid-up capital of at least IDR 2,500,000,000.00 (two billion five hundred million Rupiah)… per limited liability company.”
Practical Application: When you go to the Notary to sign your Deed of Incorporation, you only need to prove that shareholders have injected IDR 2.5 Billion into the company. This allows the Ministry of Law and Human Rights (Kemenkumham) to ratify your company as a legal entity.
3. Investment Value: The “License Key” (>IDR 10 Billion)
This is where the confusion often lies. Just because your Deed states IDR 2.5 Billion, you cannot declare the same amount in the OSS (Online Single Submission) system. If you do, your license will be rejected because PMA is classified as “Large Business” (Usaha Besar).
Under Article 26 Paragraph (2):
“PMA must have a total investment value greater than IDR 10,000,000,000.00 (ten billion Rupiah), excluding land and buildings, per 5 (five) digit KBLI business line per project location.”
Practical Application: When registering for your NIB (Business ID number), you must submit an investment plan that exceeds IDR 10 Billion.
The Formula: Investment Value = Fixed Assets (Machinery/Equipment) + Working Capital (1 Year).
The Gap: You must show how you plan to spend the remaining IDR 7.5 Billion+ (e.g., purchasing machinery, operational costs, marketing) over time.
4. How to Bridge the Gap Legally
You might ask: “If I only put IDR 2.5 Billion in the bank, how do I justify IDR 10 Billion in the system?”
This is a matter of financial structuring.
Initial Equity: You declare IDR 2.5 Billion as Paid-Up Capital (Equity).
Future Funding: The remaining amount required to reach >IDR 10 Billion can come from:
Future Retained Earnings (re-invested profit).
Shareholder Loans.
Third-party Financing.
Realization: You are not required to spend the full IDR 10 Billion on Day 1. However, you must report your progress quarterly via the LKPM (Investment Activity Report) to show the government you are moving towards that target.
5. Compliance Warning: The “Lock-Up” Rule
Beware of treating the IDR 2.5 Billion Paid-Up Capital as a mere formality. Article 27 of Regulation No. 5 of 2025 explicitly states that this capital:
“…cannot be transferred out of the business entity’s account for a minimum period of 12 (twelve) months.”
You cannot withdraw this money for personal use. It must be used for genuine business expenses (which counts towards your Investment Value realization).
Conclusion
In 2026, the Indonesian government has made it easier to start a PMA (lower cash upfront) but maintains high standards for operating one (high investment commitment).
Summary for Investors:
At the Notary: Prepare IDR 2.5 Billion cash.
At the OSS System: Prepare a plan for >IDR 10 Billion.
Misaligning these two figures is the most common reason for licensing delays.
