If you are a foreigner planning to invest, run a business, or hold property in Indonesia, 2026 brings welcome news. Indonesia has reduced one of the biggest entry barriers for foreign-owned companies and continued to streamline its business licensing system. Below is a plain-language guide to what changed, what stayed the same, and what it means for you.
What is a PT PMA?
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is an Indonesian limited liability company with foreign shareholding. It is the standard, legally secure vehicle for foreigners who want to do business in Indonesia — and, importantly for many of our clients in Bali, the most reliable structure for foreigners to control and commercially use property without relying on risky nominee arrangements.
The big change: lower minimum paid-up capital
Historically, a PT PMA was generally required to place around IDR 10 billion in paid-up capital, which put company formation out of reach for many smaller investors. Under BKPM (Ministry of Investment) Regulation No. 5 of 2025, the minimum paid-up capital for a PT PMA has been reduced to approximately IDR 2.5 billion (about USD 150,000).
This is a significant lowering of the cash barrier to entry and opens foreign company ownership to a much wider range of entrepreneurs and investors.
What did NOT change: the investment plan threshold
It is essential not to confuse paid-up capital with the total investment plan. The long-standing rule remains: a PT PMA must have a total investment plan of more than IDR 10 billion per business field (5-digit KBLI code) per project location, excluding land and buildings.
In other words, the cash you must inject up front (paid-up capital) is now lower, but the overall planned investment value for each line of business remains substantial. If your company operates under multiple KBLI codes, the investment-plan requirement generally applies to each code separately.
PP 28/2025: faster, but stricter, licensing
Alongside the capital change, Government Regulation (PP) No. 28 of 2025 overhauled Indonesia’s risk-based business licensing system. The aim is to integrate zoning, environmental approvals, building permits, and operational standards into a single digital trail through the OSS (Online Single Submission) platform.
The trade-off is a shift toward “continuous compliance.” Faster setup comes with stricter ongoing obligations: failure to keep licensing, zoning, and reporting in order can lead to a frozen Business Identification Number (NIB), sealed premises, or revoked permits. Getting the structure right at the start — and staying compliant afterward — matters more than ever.
What this means for foreigners buying property
Foreign individuals and foreign companies cannot hold freehold title (Hak Milik) in Indonesia. The common, lawful routes are:
- Through a PT PMA — the company can hold Hak Guna Bangunan (Right to Build) and operate property commercially, for example villas or rental businesses, where the business activity is permitted.
- As an individual with residency — a foreigner holding a valid stay permit (KITAS/KITAP) may hold Hak Pakai (Right to Use) over a residence, subject to minimum price thresholds that apply in regions such as Bali.
With the lower paid-up capital requirement, the PT PMA route is now more accessible for foreigners who intend to operate property as a genuine business rather than simply own a private home.
Frequently asked questions
Is the PT PMA minimum capital really only Rp 2.5 billion now?
The minimum paid-up capital has been reduced to around Rp 2.5 billion under BKPM Regulation No. 5/2025. However, the total investment plan must still exceed Rp 10 billion per KBLI per location, excluding land and buildings. Both requirements operate together.
Can a PT PMA own a freehold villa in Bali?
No entity can hold Hak Milik as a foreigner. A PT PMA can, however, hold Hak Guna Bangunan and run a lawful property-related business. The right structure depends on your specific plans and KBLI classification.
Does a nominee arrangement work instead?
Nominee (“borrowed name”) structures are widely marketed but legally fragile and expressly discouraged under Indonesian law. They expose foreign buyers to a real risk of losing the asset. A properly established PT PMA or Hak Pakai is the safer path.
Disclaimer: This article is general information based on Indonesian law and regulations applicable as of 2026 and does not constitute legal advice. Regulations — including capital thresholds and licensing requirements — change frequently and may be applied differently by authorities. Please verify the current rules and seek tailored advice before acting.
For further information, contact Ubud Law Office — One Stop Business and Legal Solutions in Bali.
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