The Indonesian government has made efforts to simplify the process of establishing a company through Government Regulation in Lieu of Law No. 2 of 2022. This regulation changes several aspects of company establishment and business norms in Indonesia.

Based on the Regulation of the Investment Coordinating Board of the Republic of Indonesia No. 4 of 2021 (BKPM Reg 4/2021), the minimum capital requirement for foreign investment companies (PT PMA) is a total investment of at least 10 billion rupiah (US$696,000). Previously, the minimum capital for PT PMA was 2.5 billion rupiah (US$167,065).

Additionally, the government has adopted a new risk-based approach for issuing business licenses. Business activities will be assessed based on the potential level of hazard, classified into low risk, medium-low risk, medium-high risk, and high risk.

Previously, foreign businesses had to navigate through multiple layers of bureaucracy involving various local and federal authorities, making it difficult for investors to determine which business licenses they needed to obtain.

Overall, the regulatory changes through Government Regulation in Lieu of Law No. 2 of 2022 and BKPM Regulation No. 4 of 2021 have made the process of establishing a company and issuing business licenses in Indonesia easier. With the risk-based approach, the licensing process becomes clearer and more structured, helping foreign investors understand and meet the existing requirements. These steps are expected to create a more conducive and competitive business climate, maximize profit potential for investors, and drive economic growth in Indonesia.

If you are interested in establishing and building your company in Indonesia, we can provide the best land, building or office for you. Please contact us on the contact page.