The Investment Coordinating Board, otherwise known as BKPM, or Badan Koordinasi Penanaman Modal, has announced a new minimum capital requirement for foreign investment in Indonesia. The Investment Ministry, led by Deputy Minister of Investment and Downstreaming Todotua Pasaribu, confirmed that foreign investors must meet a minimum capital requirement of IDR 10 billion (around USD 620,000) to establish a business in the country. This regulation, he said, creates a clear distinction between local and foreign enterprises while also presenting challenges in attracting new investors.
According to Todotua, the difference between Indonesia and other countries is striking. In many nations, the minimum capital for foreign investors can be as low as US$200, or around IDR 3.3 million. “In other countries, small businesses can start with just US$200. But in our country, the minimum requirement for FDI is IDR 10 billion,” he said during a meeting with Committee IV of the Regional Representative Council (DPD RI), broadcast on the DPD’s YouTube channel on November 4, 2025.
Minimum Capital Rule for Foreign Investment in Indonesia
BKPM’s IDR 10 billion regulation applies to all foreign investors seeking to operate under the Foreign Direct Investment (FDI) scheme. This requirement reflects the government’s intention to attract large-scale and serious investors who can contribute to economic growth, employment, and infrastructure. It also ensures that small-scale business opportunities remain accessible for local entrepreneurs.
Todotua emphasized that the policy aligns with Indonesia’s broader investment strategy, which focuses on sustainable and equitable development. However, he acknowledged that the capital requirement can be a hurdle for certain investors. By contrast, neighboring countries often provide more lenient entry points for foreign businesses. This gap, he explained, adds competitive pressure as Indonesia strives to remain an attractive destination for global investors.
BKPM’s Policy Aims to Protect Local MSMEs
While the IDR 10 billion rule may appear restrictive, BKPM insists that it serves to protect micro, small, and medium enterprises (MSMEs). Lowering the threshold, Todotua warned, could disrupt the balance between domestic and foreign business actors.
“Why is that? Because if we lower it, it will impact our MSME players,” he explained. The ministry aims to prevent a situation where foreign-owned micro enterprises compete directly with local small businesses, potentially undermining domestic economic stability.
This approach underscores BKPM’s commitment to inclusivity. By setting a high investment floor, the ministry ensures that local entrepreneurs continue to have space to grow while foreign investors focus on medium to large-scale projects that generate broader economic benefits.
Read More: EU Investment in Indonesia Boosted by New BKPM Desk
BKPM Cracks Down on Illegal Foreign Businesses
In addition to enforcing investment requirements, BKPM has taken firm action against illegal business activities conducted by foreigners. Todotua highlighted several cases, particularly in Bali, where foreign investors operated without proper authorization.
“A few months ago, there was a sealing action in Bali against a group of Russian investors involved in villa and rental businesses — that was conducted by our ministry,” he said. He also addressed criticism from Bali Governor I Wayan Koster, who claimed that the Investment Ministry failed to act.
“I told the governor, ‘Sir, we had already revoked those permits five to six months ago.’ In Bali, some investors obtained a Business Identification Number (NIB) and immediately started building villas and hotels. But now, we are certainly more aware and taking stricter action,” Todotua added.
These enforcement efforts demonstrate the government’s determination to maintain legal compliance and protect the integrity of Indonesia’s investment landscape.
Indonesia Seeks Balanced Investment Environment
Despite the high entry requirements, the government remains committed to creating a fair and transparent investment environment. BKPM plans to collaborate more closely with regional governments to streamline licensing processes and ensure that legitimate investors face fewer administrative barriers.
Through consistent oversight and clear regulations, Indonesia aims to attract credible investors who align with national priorities such as job creation, sustainability, and industrial development. This balanced approach seeks to make Indonesia competitive while maintaining safeguards for local businesses.
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Outlook for Foreign Investment in Indonesia
The IDR 10 billion rule marks a decisive step in shaping the future of foreign investment in Indonesia. While it raises the entry bar, it also enhances market credibility and prioritizes sustainable, large-scale projects. BKPM’s ongoing enforcement and policy clarity reflect Indonesia’s commitment to fostering a responsible and well-regulated investment climate that benefits both international investors and local communities.
Source: finance.detik.com
Image: Getty Images
