One of the most interesting things happening in Southeast Asia in recent years, and one to which every foreign investor interested in doing business in this area must pay attention, is the uninterrupted process of regulatory liberalization and bureaucratic simplification in which all the countries that form part of it are embarked, from Indonesia in its westernmost extreme to the Philippines in its easternmost extreme. While it is true that the starting point has historically been constituted by highly protectionist rules and regulations, aggravated in the case of some countries, such as the Philippines, Indonesia, or Thailand, by negative lists of sectors in which foreign investment was prohibited or limited, it is equally true that at present, following the timely reforms, this protectionism is being subject to a consistent and gradual opening.

Proof of this is constituted by Indonesia, with its Omnibus Law 11/2020, of November 2, on job creation, subsequently amended, as a consequence of a decision of the Constitutional Court of November 25, 2021, by Law 6/2023, of March 21, from which 78 laws were modified and new concepts were introduced, such as the “Positive Investment List”, replacing the “Negative Investment List”. And, also, with its Regulation 69/2024, of October 9, extended until December 31, 2025, intended, like the previous laws, to boost foreign investments, in this case through the granting of tax holidays or tax allowances to companies investing in renewable energies, in activities requiring intensive labor, or in businesses located in special economic zones (Gresik, Kendal, Batang, Batam, or Mandalika).

Along this same line, the measure taken by the Government through Regulation 28/2025 (GR 28/2025), of July 16, completed by that adopted by the Ministry of Investment and Downstream Industry (BKPM) by means of Regulation 5/2025 (BKPM Reg 5/2025), of October 1, on risk-based business licensing, represents an advance regarding the preceding regulations. Until now, for example, to incorporate a foreign-owned limited liability company (Penanaman Modal Asing -PT PMA-), the disbursement of a minimum capital of 10 billion Indonesian Rupiah (IDR) (USD 600,000) was required, among other requirements, which posed a deterrent barrier for the foreign investor when establishing themselves in the country, unless they renounced owning 100% of the share capital and associated with a local investor in a “Joint-Venture“.

Now, however, the threshold of paid-up capital has gone from 10 billion IDR to 2.5 billion (USD 150,000), which in principle is good news, news that, for a perfect understanding of its scope, requires specifying that it coexists, on the one hand, with the requirement of a minimum investment of 10 billion IDR (USD 600,000) (capital and debt) for each activity of the standard classification of economic activities (Klasifikasi Baku Lapangan Usara Indonesia -KBLI-); and, on the other, with that of the commitment to keep that capital blocked in the company’s account for 12 months, by means of an independent declaration at the time of applying for the corresponding license (“Perizinan Beruhasa” -PB-), unless that capital is used for the acquisition of assets, construction of buildings, financing of commercial operations or, eventually, settlement of administrative sanctions.

Although the requirement of this minimum investment is the general rule, there are exceptions that attenuate or compensate for its rigor. In the first case, in the food and beverage sector, as its territorial scope of application is extended and is not required for each “point” or “coordinate”, but for each district (“Kabupaten“) or city (“Kota“); in the automotive sector, specifically in the case of electric vehicles, as that same scope is equally expanded, and required only by provinces; and in the real estate, short-term (holiday) and long-term (residential) accommodation, agriculture, livestock, and aquaculture sectors, as it is permitted to include, within that minimum investment, land and buildings. And, in the second case, regarding permits, as the granting to the investor of a temporary stay permit (“Kitas” E28A) for one or two years, renewable up to five, and activated in the country once the entry E-Visa is processed, is associated with said investment.

In addition to the changes pointed out in the amount of paid-up capital, there are others to which attention must equally be paid and consequently a brief reference made, such as those relating to the evaluation of the risk level and the type of license required for the different types of companies and business sectors. Thus, holding companies dedicated to the management of subsidiary company distinct shares, and whose activities correspond to the financial and insurance activities sector (KBLI 64200), are included within the category of companies with a low risk level, requiring only a Business Identification Number (NIB). Something similar happens to consultancy companies (KBLI 70209), which, being considered now as investment companies, and not as industrial companies, their level also becomes low, which means they need nothing more than an NIB.

Conversely, providers of electronic commerce or intermediation services (KBLI 63122), such as web portals and/or digital platforms for commercial purposes, are now qualified as high risk level, so they are required, in addition to the NIB cited above, to register with the Ministry of Communication and Digital Affairs and to obtain a business license (Sukat Izin Usaha Perdaganga Melaui Sistem Elektronik -SUIPMSE-) from the Ministry of Trade. A qualification undoubtedly related to the identification of vulnerabilities related to cyberattacks (“Malware“, “Phishing” or “E-Skimming“), service interruptions (“DDos“) or first-hand data management (“Zero-Party Data“), which has caused the Indonesian Government, like others, in order to mitigate those vulnerabilities, to reinforce security regulations with the requirement of the registration and license cited above.

Finally, it is worth noting that, in addition to regulatory liberalization, the Indonesian Government is carrying out a very necessary policy of bureaucratic simplification, specifically within the framework of the centralized digital platform OSS (“Online Single Submission”), with the object of increasing transparency and creating a more favorable, efficient, and responsible environment. To this end, it has introduced, through Regulations 28/2025 and 5/2025, already cited, three new subsystems: that of investment facilitation (to provide access to incentives, including customs and tax facilities); that of basic requirements (to simplify the verification and compliance of essential requirements for the granting of licenses); and that of partnerships (to allow collaboration between investors and priority sectors, including small and medium-sized enterprises and cooperatives).