If you are a European investor looking to invest in Bali and Lombok as a foreigner, one of the first legal hurdles you’ll face is the regulation on foreign capital (modal asing) for establishing a PT PMA (the legal vehicle for foreign-owned companies in Indonesia). As of October 2025, Indonesia introduced a major regulatory update: Peraturan Menteri Investasi dan Hilirisasi / Kepala BKPM Nomor 5 Tahun 2025 (“Permen Invest / BKPM 5/2025”)
One of the most significant changes is the shift in the required paid-up capital (modal disetor) from IDR 10 billion down to at least IDR 2.5 billion. This change affects your planning, capital structure, and overall investment strategy. In this article, I will explain the regulation in detail, compare the “old rule” vs “new rule,” highlight sectoral exceptions, and walk you through how this plays out for property/investment in Bali & Lombok.
Why This Change Matters
- Lower Barrier to Entry – Previously, many foreign investors hesitated because the IDR 10 billion (≈ USD 600-700k, depending on exchange rate) threshold was steep. The shift to IDR 2.5 billion (for paid-up capital) reduces the upfront cash lock.
- Better Capital Efficiency – You no longer need to tie up all that capital in your company’s bank account; you can plan usage more strategically (within regulatory constraints).
- Competitive Edge – For those exploring real estate, hospitality, tourism, and property development in Bali / Lombok, this change makes it more attractive to enter or scale.
- Regulatory Certainty – The regulation is now codified (Peraturan menteri Investasi / BKPM 5/2025), which replaces earlier regulations (Peraturan menteri Investas / BKPM Nos. 3, 4, 5 of 2021).
However, the change does not eliminate the requirement for a total investment plan of IDR 10 billion. You are still expected to commit to a credible business plan with that scale. The distinction now is between total investment plan vs paid-up capital.
Key Provisions from Peraturan Menteri Investasi / BKPM 5/2025
Below is a breakdown o the relevant articles and their implications:
| Aspect |
Regulation / Article |
What It Requires / Changes |
Notes / Implications |
| Total Investment Plan |
Article 26(2) |
You must declare a project investment plan of more than IDR 10 billion, excluding land & building (in most sectors) |
For property / real estate development, land and building value may be included in some cases (since it is integral to the business). |
| Minimum Paid-up Capital |
Article 26(10) |
At least IDR 2.5 billion must be deposited (“disetor”) at establishment as part of the total investment plan. |
This is the material change: lowers the cash you must show upfront. |
| Restriction on Withdrawal |
Article 27 |
The funds in that paid-up capital account cannot be withdrawn (for non-business purposes) for at least 12 months from deposit. However, those funds can be used for business purposes (assets, operational costs, etc). |
Ensures your commitment is real, while giving flexibility to use capital for real business needs. |
| Transition / Amending Capital Structure |
– |
Existing PT PMA with higher capital may apply to adjust their structure under the new rule (i.e. reduce the capital if above 10 billion) as permitted. |
It is expected that many existing PMAs will restructure to improve capital efficiency. |
Old Rule vs New Rule: What’s Different?
- Old Rule (pre-2025 / under BKPM Reg 4/2021 etc.)
Foreign investors were often required to show a paid-up capital of IDR 10 billion, in addition to having a total investment plan of at least IDR 10 billion (excluding land and building). In many industry guides, they still quote that minimum 10 billion as the base rule.This created a significant capital burden, especially for property or tourism businesses with high land costs.
- New Rule (Permen Invest / BKPM 5/2025)
The shift is to decouple “paid-up capital” from “total investment plan.” You now need to commit to a project of 10 billion+, but only deposit 2.5 billion upfront (as paid-up). The rest can be realized progressively per your business plan.
In effect, the new rule lowers the cash barrier for entry while preserving the government’s objective of ensuring foreign investments are serious and large-scale.
Specific Sectors and Exceptions
- Property / Real Estate / Hospitality / Accommodation
In the property or hotel/tourism sectors, because “land & building” are integral, some of those costs may be included in the total investment plan. This gives more flexibility in qualifying your project.
- Business Classification (KBLI codes)
For trading, food & beverage, construction, the regulation uses certain truncations of KBLI codes (e.g. 2-digit or 4-digit) to determine whether your project is subject to the 10 billion threshold.
- Strategic or Regulated Sectors
Some sectors remain heavily regulated or require additional capitalization beyond the baseline, e.g. financial services, energy, mining. Always verify sector-specific rules.
- Special Economic Zones, Technology Startups
Some zones or startup-friendly policies may have exceptions or relaxations (though the new regulation does not broadly exempt the 10 billion requirement across the board).
- Use of Land & Building Value
In general, land & building costs are excluded from the 10 billion threshold in most sectors; inclusion is only where justified by business nature (e.g. property).
Impact for Investors Targeting Bali and Lombok
If your plan is to invest in Bali or Lombok, whether in property development, hotel/resort, or tourism enterprises, here’s how to strategically apply this:
- You must design a credible business plan that shows total investment > IDR 10 billion (or its equivalent). The inclusion of land & building costs can help in property or real estate projects.
- You must deposit at least IDR 2.5 billion into an Indonesian company’s bank account (at incorporation). This ensures you comply with the new paid-up requirement.
- That deposit cannot be withdrawn for non-business purposes for 12 months, but before or after that, you may use those funds for business needs (asset acquisition, operational cost).
- Because land in Bali or Lombok is pricey, you should justify how your total investment plan covers both land & development, and ensure that the remainder of your investment (beyond 2.5 billion) is realistic and scheduled.
- If you already have a PT PMA with capital above 10 billion under old rules, you should assess whether it makes sense to restructure / downsize capital for more efficiency under the new rule.
The shift from a rigid IDR 10 billion paid-up capital rule to a more flexible minimum paid-up capital of IDR 2.5 billion under Permen Invest / BKPM 5/2025 is a significant step to making Indonesia more accessible to foreign investors. Yet, the spirit of the regulation remains foreign investments should be serious, with a credible plan exceeding IDR 10 billion in value.
For European investors eyeing Bali and Lombok, this change reduces the upfront cash burden and offers room to structure your investments more strategically. But the onus remains on you to design a sound business plan, comply with licensing and reporting, and navigate local constraints like land law.
Get free consultation with IndoNed Consultancy, your trusted partner for foreign investment and company setup in Indonesia.
Disclaimer
The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.
