Introduction
Alongside the lower paid-up capital threshold, BKPM Regulation No. 5 of 2025 (Perka BKPM 5/2025) introduces a new rule for foreign investors in Indonesia — the capital retention requirement.
Under Article 26, Foreign Investment Companies (PMA Companies) must keep their paid-up capital in the company’s bank account for at least 12 months after deposit.
This is the first time Indonesia has formally regulated how long paid-up capital must remain in place after incorporation, signaling stronger financial oversight.
Retention Period: 12-Month Capital Holding
While the minimum paid-up capital is now IDR 2.5 billion, companies must retain it for 12 months from the deposit date.
This ensures that the declared capital truly exists and is used for genuine business operations — not just administrative compliance.
Previously, no specific rule required companies to keep their capital after establishment.
Now, the government enforces this to maintain transparency and credibility in foreign investment.
Verification Through OSS Self-Declaration
The requirement is implemented through a self-declaration system in the Online Single Submission (OSS) platform.
When applying for a business license, company representatives must confirm their commitment to retain the paid-up capital for 12 months.
This declaration acts as a legal attestation and provides an audit trail for regulators to verify compliance.
Through this method, BKPM enhances financial monitoring without imposing heavy manual checks — promoting both efficiency and accountability.
Allowable Use During Retention Period
The regulation clarifies that the retained funds do not need to remain idle.
They can be used for legitimate activities, including:
- Purchasing fixed assets or equipment,
- Building or leasing facilities, and
- Covering operational expenses.
All spending must follow the approved investment plan submitted in OSS.
This balance between flexibility and traceability ensures capital remains productive while still compliant.
Transparency and Compliance Enhancement
The capital retention rule strengthens financial integrity among PMA companies.
It ensures that the paid-up capital reflects real funds available for operations, not just recorded figures.
It also enables authorities to cross-check between declared commitments, financial records, and LKPM reports.
Companies are encouraged to maintain detailed documentation — such as bank statements and transaction records — to prove proper fund utilization.
Sanctions for Non-Compliance
Companies that fail to meet the retention commitment may face administrative sanctions under Perka BKPM 5/2025.
Possible actions include:
- Written warnings,
- Temporary suspension of business licenses, or
- Other corrective measures imposed by BKPM.
Accurate bookkeeping and consistent reporting in OSS and LKPM will prevent compliance risks and regulatory delays.
Conclusion
The capital retention rule under BKPM Regulation No. 5/2025 marks a significant milestone in Indonesia’s investment governance.
By requiring PMA companies to hold their paid-up capital for 12 months, the government promotes financial transparency and stability while allowing practical business use.
For foreign investors, this requirement goes beyond formality — it demonstrates good corporate governance and reinforces long-term credibility in Indonesia’s growing investment landscape.