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Republic ublic of Indon onesi esia Main intain inin ing Stabil ilit ity y and S d Supporti ting Growt wth, Mit itig igat atin ing g Covid id-19 9 Ris isk June ne 202 020 About t Invest estor or Relati lations ons Uni

  1. Con once certed ed Effor orts ts to o Mitigat tigate Covi vid-19 9 Risk General al Measures ures 1 8 Establishment of a COVID-19 Task Force to Accelerate Decentralized tests by increasing the number of Covid-19 Coronavirus Disease 2019 (COVID-19) Handling. test laboratories throughout Indonesia. 2 9 Extension of the emergency status for COVID-19 until 29 th Providing Designated Hospitals, including additional May 2020. designated hospital in Galang Island. 3 10 Permission for civil servants to work from home, while Utilization of four (4) of ten (10) Wisma Atlet Kemayoran maintaining the continuity of public services. Towers (former Athletes Hotel) as emergency hospital. Promoting massive prevention of the spread of Covid-19; Preparation of 606 health workers and 192 non-health 11 application of health protocols in public areas, public workers in Wisma Atlet Kemayoran and recruitment of 328 4 transportation, and offices; calls for carrying out social medical volunteers and 2590 non-medical personnel in the distancing and the prohibition of carrying out activities that field of logistics and operations. involve large crowds. 12 5 Establishment of Contingency Plans in the regions level. Closing and limiting the mobility of Indonesian citizens abroad and foreigners to enter Indonesian territory with Preparation of drugs that have been used for Covid-19 13 strict immigration and health protocols. patients in China according to doctor's prescription. The 6 drug has been distributed to designated facilities and its Evacuation of Indonesian citizens from affected countries stock is continuously being augmented with domestic and strict quarantine processes with complete medical pharmaceutical production. facilities. 14 7 Speed up the procurement and distribution of personal Conducting Rapid Test in 17 provinces with positive patients protective equipment for designated hospitals and the of Covid-19. provision of incentives for medical personnel. 8

  2. Government ernment Measur asures es to o Mitigat tigate e Covid vid-19 Risk Fisc scal and Non Fisc scal al Stimuli muli Fiscal l Stimuli li Phase e 1 Fiscal l Stimul muli i Phase e 2 1 Brought forward the launch of the Pre-Employment Card in 1 Relaxation of Income Tax (PPh Article 21). Bali, North Sulawesi and the Riau Islands. Increased disbursements of the Noncash Food Assistance 2 Program (BPNT) from IDR150,000 to IDR200,000 for a six- 2 Relaxation of Income Tax on Imports (PPh Article 22). month period commencing March 2020. 3 Provided a stimulus package for housing in the form of an IDR800 billion subsidy as well as a subsidy on down payments 3 Relaxation of Income Tax (PPh Article 25). totalling IDR700 billion. 4 4 Relaxation of Value Added Tax (VAT) Restitution. Provided incentives for domestic and international travellers. 5 Reduced the air passenger service fee (PSF) by 20% for March-May 2020. Non Non-Fisc iscal Stimuli li Discounted the price of aviation fuel at airports located 6 1 Reduce and simplify restrictions on export activities to around nine travel destinations for March-May 2020. maintain export performance and competitiveness. Subsidised or provided grants totalling IDR3.3 trillion to local 2 Reduce and simplify restrictions on import activities to ensure 7 governments affected by lower tax revenues food service the availability of raw materials. activities. 9

  3. Bank Indonesia’s Meas easure ures to o Miti tigat gate Covi vid-19 9 Risk To mainta ntain n Monet etary y and Fina nanci ncial Mark rket t Stability Measu asures s Launched hed on March 2, 2020 Measu asures s Launched hed on March 18-19, , 2020 Strengthening the intensity of triple intervention policy to 1 Strengthening the intensity of triple intervention policy to 1 maintain rupiah exchange rate stability in line with the currency's maintain rupiah exchange rate stability in line with the fundamental value and market mechanisms. currency's fundamental value and market mechanisms Extending the SBN repo tenor to 12 months and providing daily 2 2 auctions to loosen rupiah liquidity in the banking industry. Reducing the foreign currency reserve requirement ratio for conventional commercial banks from 8% to 4%, effective 16 th March 2020. Increasing the frequency of FX swap auctions for 1, 3, 6 and 12- 3 month tenors from three times per week to daily auctions in order to ensure adequate liquidity. 3 Reducing the rupiah reserve requirement ratio by 50bps for Strengthening foreign currency term deposit instruments in order 4 banks engaged in export-import financing activity in to enhance foreign currency liquidity management in the coordination with the Government. domestic market. Expediting the enforcement of domestic vostro rupiah accounts 5 for foreign investors as underlying transactions for Domestic NDF, 4 Expanding the types of underlying transactions available to thus increasing hedging alternatives against rupiah holdings. foreign investors as hedging alternatives against rupiah Expanding the incentive of a 50bps looser daily rupiah reserve holdings in Indonesia. 6 requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors. 5 Global investors may utilise global and domestic custodian 7 Strengthening payment system policy to support COVID-19 banks for investment activity in Indonesia. mitigation efforts . Source: Bank Indonesia 10

  4. Exit it Strat rategy egy The Urgency of Exit Strategy for Indonesia The Indonesian economy is experiencing very heavy pressures, both in the supply side (business, industry - production) and in the demand side (people's purchasing power - consumption) Health Issues  Potential Economic and/or Financial Crisis  Potential Social Problems. The e possib ibili ility of shiftin ing communit ommunity grou oups s New Normal Imp mpleme menta ntati tion n in Indonesi nesia due e to prolo olonged ed loc ockdown New ew Norm ormal al is a Scenario to Maintain a Balance between Health Aspects that must be safeguarded, and Social-Economic Aspects that must continue to maintain welfare (livelihood) The New Normal al Scenar nario io is is implem lemen ented ed by by: Vulnerable community Low saving  Data-based Public Health Indicators:  Epidemiology Informal sector  Public Health Surveillance Poverty  Health Care Facilities Poor People Line which becomes a Neces essary ary Condition ition that must be met. Informal sector  Requires readiness from the Public Sector to be opened :  Health protocol (SOP) in each public sector 56.50% or 74.03 million Indonesian Savings and the accumulation of  Community awareness, compliance and discipline work in informal sectors with an average wealth to survive (especially informal income of USD 100 – 200 per month. workers) are very small • The fiscal capacity of the state is very limited • The Government is unable to fund all communities affected by COVID-19. Social Aid is prepared within a limited period (3 months, 6 months) Source: Coordinating Ministry for Economic Affairs 11

  5. New Normal mal Achieving Productive and Safe Indonesia from Covid-19 Necess ssary y Conditi ditions ns New Prot otoc ocol (General al) • Covid id-19 Cases Under the Decree of the Minister of Health (KMK) number HK.01.07 / MENKES / 328/2020, the new ► A declining number of cases, number of suspects, and protocol includes: deaths within 14 days ► Rt < 1 Make sure to clean your hands with soap and • Monit itorin oring g of the virus / P Public ic Healt lth clean water ► The number of tests and contact tracing increases (not only in big cities but also in regions) ► The application of the use of masks is increasingly Wear a mask when doing activities outside expanded (mask for all) (mask for all) • Health th servic ices es capac acit ity ► Medical personnel, PPE Apply physical distancing (1.5 - 2 m) ► Availability of drugs, ICU room, ventilator • Busines ess sector tor prepara arati tion on ► Establishing new SOPs/guidelines at work (temperature Self-isolation if exposed to positive cases and measurement, masks at work, distance keeping, etc.) illness • Public lic Respons nse ► Discipline the application of new protocols for activities ► Submission of information that is accurate, official and Temperature check-in each building transparent by the government to the public Source: Coordinating Ministry for Economic Affairs 12

  6. Protocols cols in Every y Economic omic-Socia Social l Sect ctor or Sec ector or Prot otoc ocol Impo mportan tant Point GENERA RAL Decree of the Minister of Health (KMK) number HK / 01.07 Regulate: / MENKES / 328/2020 about Covid-19 Prevention and • Rules at Work Control Guidelines in Office and Industrial Workplaces in • Rules for Workers Supporting Business Sustainability in Pandemic Situations • Alleged Covid-19 Management (OTG, PDP, ODP, or Confirmation) • Coordination between workplace and Regional Government INDUSTRY Minister of Industry Circular No.4 / 2020 about Regulate: Implementation of Factory Operations in the Corona Virus • Rules for Industrial Estates Disease-19 Public Health Emergency • Rules for Workers • Cleaning and Disinfection Guide • Social Distancing Guide TOURIS RISM Standard Operational Procedure (SOP) is in the process of Arranging SOPs for Hotels, Homestay, Restaurants, Travel harmonization with the Task Force Attractions, Art Venues, Film Production, TV Coverage TRANSP SPOR ORTATION ION Transportation Minister Regulation No.18 of 2020 about Regulate: Transportation Control in order to Prevent the Spread of • Transportation control for the whole region Covid-19 Virus • Transportation control in areas designated as PSBB (Large-scale Social Restrictions) • Transportation control for homecoming activities in 2020 TRADE • SOP on Health Protocol for Modern and Regulate: People’s /Traditional Market and Retail - Ministry of Trade • Rules in the Market Environment • Protocol on Prevention of Covid-19 Distribution in • Rules for Traders and Management Shopping Centers - Source: Association of Indonesian • Rules for Consumers Shopping Center Management • Operating Time Source: Coordinating Ministry for Economic Affairs 13

  7. Govern ernment ment Measure ures s to Mitigat igate e Covid id-19 Risk Government Regulation In UU 2/2020, Previously Perppu No.1 2020 Regulat ates es two topi pics: s: (1) Nationa nal Budget t (APBN) and (2) Fina nanci ncial Sector or Policy Natio ional al Budget t (APBN) N) Financi ancial al Sec ector or Polic icy 1. Relaxation Deficit exceeds 3%, but starting in 2023 it 1. Improved Coordination among KSSK members returns to the maximum level of 3%. 2. Provide the necessary authority to 4 institutions to 2. Relaxation is related to the allocation/reallocation of prevent a crisis (forward looking) in the KSSK forum for expenditure between institutions, between functions, and between programs and mandatory spending. example to issue instruments, BI buys SUN on the primary 3. Relaxation of allocation / reallocation of Regional market, lending to LPS and OJK may request a merger or Government Expenditures. consolidation of Financial Services Institutions. 4. Lending to LPS. 3. Foreign exchange management (LLD) management for 5. Issuance of SUN and SBSN can be purchased by BI, BUMN, residents coIDRorate investors and / or retail investors. 4. Increase public confidence without causing moral hazard. 6. Use of alternative budget sources for example SAL, education endowment funds, and funds managed by the Public Service Agency. 7. Taxation Policy: a) Decrease in CoIDRorate Income Tax Rates gradually to 20% starting in 2022; b) Taxation Incentives in the Capital Market for public ownership <40%; c) Taxation of Electronic Transactions; d) Extension of tax administration time; e) Customs facilities in the context of COVID-19. Source: Coordinating Ministry for Economic Affairs 14

  8. Govern ernment ment Measure ures s to Mitigat igate e Covid id-19 Risk Budget Refocusing Policy I. I. Pr Pres esid idential Regula latio ion (Perp rpres res) No No 7/2020 2020 on on Tas askforce to to Manage CO COVI VID-19 19 Outb tbrea eak → Renewed th through Pres eside dentia ial Regula lation (Per erpr pres es) No No 9/2020 1. Answer to the President → Director (Chair: Coordinating Minister for Economic Affairs) and Implementer (Chair: Head of Indonesian National Board for Disaster Management), focusing on accelerating the mitigation of COVID-19 through synergy between ministries and government 2. Funding comes from the state budget, regional budget, and other legal sources II. II. Pr Pres esid idential Instru ruction on (In Inpres res) No No 4/2020 2020 con oncern rning Refocusing of of Activiti ties es, Reallo locatio ion of of Minis istry/Ag Agency Bud udget, and Pr Procurem ement nt of of Goods ods an and Ser ervices es in in th the Framework of of Mitiga gatin ing COVID-19 19 Outbreak ak and Min inis istr try of of Fin inance Circula lar (SE) E) No No 6/2020 on on Ref efoc ocusing ng Acti tivity and nd Reall ealloc ocation on of of Mini Ministry/Agen ency Budge udget in in the the Frame ramework of of Miti Mitigati ting CO COVID ID-19 19 Outbre Outbreak ak 1. Minister / Head of Institution prioritizes the use of budget allocations for the acceleration of mitigating COVID-19 outbreak in accordance with COVID-19 Handling Protocol 2. Done through a budget revision mechanism (done quickly, simply and accountably) III. I. Poli olicy to to sup uppor ort ef effor orts to to adj adjus ust region regional allo allocat ations ns and and relax relax trans transfers rs for or handli handling Co Covid vid-19 19 1. Minister of Finance Regulation (PMK)19/2020 concerning Distribution and Use of Profit Sharing Fund (DBH), General Allocation Fund (DAU), and Regional Incentive Fund (DID) budget year 2020 in the context of COVID-19 Countermeasures; 2. Minister of Finance Decree (KMK) 6/2020 concerning Distribution of Physical Special Allocation Fund (DAK) on Health and Health Operational Assistance (BOK) in the framework of Prevention and/or Handling of COVID-19; 3. Ministry of Home Affairs Regulation (Permendagri) 20/2020 on acceleration of COVID-19 Mitigation in the Scope of Regional Government IV. V. Govern rnmen ent Regulat ation on Number er 23 23 of of 2020 for Im Imple lemen entat ation of of the Nati tional al Econ onomic Recover ery Pr Progr gram in in the Context of of Suppor Sup orti ting St Stat ate Fi Finan nancial al Poli olicies es for or Han Handli dling Cor Corona ona Virus irus Dise isease ase 2019 (CO COVID ID-19 19) and and / or or Fac acin ing Threa hreats ts that that Harm Harm Nati tion Source: Coordinating Ministry for Economic Affairs 15

  9. Mechanism nism of Interest erest Subsid sidy y Alloc ocation ation to MSMEs Es Interest erest subsid idy polic icy is a relie lief aid d for ultra ra micro and MSMEs MEs that have e loan ans in finan ancial ial instit itutio ions, , so that they can an survi vive even en though their ir business ess has dropp opped ed signif ifican icantly ly DISTR TRIBUT IBUTORS RS CRIT ITER ERIA IA OF DEBT BTORS ORS  MSMEs with a maximum loan ceiling of 10 billion  Bank  Not on the National Blacklist for loans  Financial Companies  Credit quality before Covid-19 (29 Feb 2020)  Government credit channeling institution Collectability 1 / Collectability 2 in SOEs, BLUs, and / or cooperatives  Have a Tax Identification Number (NPWP) or register a TIN/NPWP  Restructuring credit, especially for debtors with loans PERIOD OD of more than IDR500 million to IDR10 billion. Period of 6 months starting from May 2020 Source: Ministry of Finance 16

  10. People's ple's Business iness Loans ns (KUR) UR) Polic licy y During ing the Covid id-19 9 Pa Pandemic ndemic Period riod People's le's Busines iness s Loan ans s (KUR UR) ) Policy icy durin ing the Covi vid-19 Pandem demic ic Perio iod For KUR Recipient ient Candida idates es For KUR Recipients ients Specia pecial Provi ovisions ions for or KUR UR for or Pros ospecti pective B. B. Speci pecial al KUR UR pr prov ovision isions for or KUR UR rec ecip ipient ients A. Additional A. dditional KU KUR In Inter eres est/Ma Margin rgin KUR UR Recipients cipients affected ected by by Covid id-19 19: affected ected by by Covid id-19 19: Subsidi idies The relaxation of KUR special provisions for KUR • Relaxa elaxation ion of of ful ulfil illment lment of of adminis ministrativ ive • In order to provide interest relief recipients affected by Covid-19 is in the form of: requir equiremen ements in in the pr proc oces ess of of KUR UR for KUR installments / margins in a. Provision of pos postponem ponement ent of of KUR KUR pr principa incipal Appl pplica ication ion, such as the Business the Covid-19 period, the ins install llmen ments for or a ma maximum imum pe perio iod of of 6 Registration Number (NIB) or micro and government provides additional small business certificate issued by months according to the assessment of KUR mon KUR interest/margin subsidies Distributors shall take effect on 1 April 2020 authorized officials and/or other for 6 months until 31 December until no later than 31 December 2020; and/or equivalent certificates, NPWP, additional 2020. b. b. KUR UR restructur ucturing ing provisio isions ns in in the form of of: collateral documents, and/or other • Additional interest subsidies / i. Extension of KUR period; administrative documents ; and/or • Relaxat elaxation ion of of ful ulfil illme lment nt in in the he for orm of of a ii. Additional KUR ceiling limit; and / or KUR margins during the Covid-19 iii. Delay fulfillment of administrative temporary emporary delay elay in in the admini ministration ion of of period were 6% for or the the fir irst 3 requirements in the restructuring admini ministrativ ive doc ocume ument nts until the end mon onth ths and nd 3% for or the the sec econd nd 3 process until the end of national disaster of national disaster of Covid-19 months hs. period of Covid-19 pandemic. pandemic set by the government. Awarded to KUR Recip ipie ients nts who have Awarded to KUR Recip ipie ients nts affec ected ed by by Covid id-19 Awarded to prospective KUR recipients affected by Covid-19 in accordance with credit dit qualit ality as of 29 Feb 2020 in the according to specific criteria and requirements. established criteria and requirements category of perform orming ing loans Col ol. 1 or 2. ( Article 3: for recipients of Micro KUR, Small KUR, ( Article 5 ) Special KUR; Article 4 for KUR TKI recipients ) 17 17 Source: Ministry of Finance 17

  11. Pre-Em Emplo ployment yment Card d Program ogram • Indonesia needs to prepare human resources for economic transformation in the Industrial Revolution 4.0 and the Digital Economy, as well as increase the Productivity and Competitiveness of Indonesian HR. To prepare these HR needs, one of them is through the Pre-Employment Card Program which provides training costs for developing work competencies • including Skilling, Upskilling and Reskilling. • On 11 April 2020, this program was officially launched and received a positive response from the community. Terms of Rec ecip ipie ient Prior orit itie ies s on Affec ected ed Workers Covid-19 affected workers are prioritized, based on reconciliation data (Ministry of Manpower & BPJS Employment) there are 1,722 722,958 958 affected cted worker kers. A. Form rmal l Worker: rker: B. Inform ormal l Worke ker: Indon onesia esian Not t curren entl tly y atte tending ≥ 18 years -ol old Nati tion onal forma mal educati tion on 1.032.794 375.331 314.833 ELIGIBLE BLE TO REGISTER ER people people people The program is also aimed at workers who are laid off or lost their Formal Workers Formal Workers Affected Informal jobs, and Micro and Small Business Actors (MSEs) who close their are dismissed are laid-off Workers businesses due to the impact of the Covid-19 pandemic. Date as of 27 April 2020 Benef nefit it Amoun ount Each recipient of the Pre-Employment Card receives a total benefit package of IDR3,55 550,000 000, consisting of: a. a. The trainin The ining fee assistan istance ce is IDR1,000 000,00 000 which can be used to purchase one or more trainings on the digital platform’s partners. b. b. The The incen entiv ives es will be transferred to the participant's bank acco count unt or e-wallet LinkAj nkAja, Ovo or GoPay. This incentive consists of 2 parts: 1. 1. The first post-compl The completion ion training ining incent centiv ive is IDR 600,000 per month for 4 months = IDR2,400 400,000 000; 2. 2. Incenti entives es for fill lling ing out out the evalua luatio ion surveys eys of IDR 50,000 per survey for 3 surveys = IDR15 150,000 000. Source: Coordinating Ministry for Economic Affairs 18

  12. Pre-Em Emplo ployment yment Card d Program: ogram: Statistical Data & Recipient of Pre-Employment Cards • From the 3 registration period, there are 10.9 million people who have registered for the Pre-Employment Card. A total of 7.8 million people have verified email and 5.6 million people have done NIK (Identity Card) validation. • There were 680,918 participants who had received the Pre-Employment Card. Enrolme olment t Progress ss Verif ified ied NIK Approve oved d Partic icipan ants ts Regis istered ered Accoun ount Verif ified ied email il Join in Batc tch 10,998,3 ,315 7,846,46 ,465 5,706,33 ,333 5,028,7 ,729 680 680,918 Pre-Em Emplo loymen ent t Card Recipient ient Progres ress Total Train inin ing g Partic ticip ipan ants s Comple letin ting One Partic ticip ipan ants s Receiv iving ing Purcha chases ses Train ining ing Incentiv ives 573,00 000 477,00 000 361,0 1,000 00 Pre-Emplo loymen yment t Card d Recipien ient Profil iles es Gender der Age e Grou oup Educatio ion Leve vel 5043 3535 55 and… Master & PhD Female 30910 169275 45 - 54 Undergradu… Male 39% 83418 51548 35 - 44 D1,D2, D3 61% 292978 403190 25 - 34 High… 268571 53371 18 - 24 Elementary… Note: Data as of 22 June 2020 Source: Coordinating Ministry for Economic Affairs 19

  13. Fiscal cal Incentiv tives es SUPER DEDUCTIO CTION The The Go Governmen ment of of In Indones donesia ia iss issues es TAX HOLID IDAY TAX ALLOW LOWANCE CE (VOCA CATION IONAL & R&D R&D) var arious ous fisc iscal al incen incentiv ives es to to de develop elop the he manufactu man turin ing industr indu try, attra ttract • Invest in priority sectors with investm estmen ent, t, absorb abso emplo em loymen ent, t, and • For investment in the criteria for having high Vocati ationa onal Super er Dedu educt ction ion investment or export enhanci ancing econom onomic ic growth wth pioneering industry • Involve the industry in oriented, absorbing high which has broad links, vocational activities to labor or using high local provides added value component provide knowledge and and high externalities, • Facilities in the form of an encourage the transfer of investment allowance of introduces new knowledge • Procedure simplification 30%, depreciation and technologies, and has • Maximum gross income • Provide clear rights and obligations amortization are accelerated strategic value for the reduction of 200% of with a 10% dividend income economy tax and additional costs in the context of • Facility for reducing compensation for losses that providing work practices, are longer than 5 years coIDRorate income tax apprenticeship, and / or by 100% (for a learning activities Simplicity & minimum investment of INVESTMENT ALLOWA OWANCE Certainty IDR 500 billion) or by R&D Super R&D er Ded eduction uction 50% (for a minimum Trust & • Increasing the role of the investment of IDR 100 industry in fostering • Government support for Verify billion) innovation and utilizing employment creation and the latest technology in employment programs the production process • The facility is in the form • Maximum reduction in of a 60% reduction in net • The initial easiness process is in line with the gross income of 300% of principle of self assessment income from the total R&D costs carried out in • Verification process conducted under investment for specific framework of supervision Indonesia labor-intensive industries Source: Coordinating Ministry for Economic Affairs 20

  14. Fiscal cal Incentiv tives: es: Tax Holiday Realization as of 31 May 2020 Fisc scal Incenti ntives es To A Attrac ract t Invest stment ent And Boost t Expor orts ts Not otes MoF Regulat MoF lation ion 150/2018 • Tax holiday facility is given to 75 75 taxpay xpayer ers • The capital investment plan is ID IDR1,249 249.23 23 trill illion ion, with the largest New investment in pioneer Industry with a investment reaching IDR123 trillion. Those investments are estimated to minimum investment value of IDR500 Billion Type e of absorb 59 59,016 016 worker kers. Taxpay xpayer ers • Project location : 21 21 provinc inces es • 18 sectors • Investor’s Country of Origin: 14 14 Countr ntries ies • 169 ISIC Percen centage ge • 100% (Tax Holiday) 18 Sectors ctors accordi ccording to MoF Regula latio tion No. No.150 150/2 /2018 Reduction uction T/H • 50% (Mini Tax Holiday) a. Upstream base metal industry (steel and non-steel) Tax Holid iday: ay: b. Oil and gas purifying and / or refining industries Investment value IDR500 B to < IDR1 T – >  c. Petrochemical industry based on petroleum, natural gas or coal 5 years d. Basic inorganic chemical industry  Investment value IDR1 T to < IDR5 T – > 7 e. Organic-based chemical industry sourced from agricultural products, & plantations years f. Raw material for pharmaceutical industry  Investment value IDR5 T to < IDR15 T – > g. Manufacture of irradiated, electromedical or electrotherapy equipment Time e Frame me 10 years h. Manufacture of main components of electronic or telematics equipment, such as  Investment value IDR15 T to < IDR30 T – > semiconductor wafers, backlights for Liquid Crystal Display (LCD), electrical drivers, 15 years or displays  Minimum Investment IDR30 T – > 20 years i. Manufacture of machinery and major components of machinery j. Robotics component manufacturing industry that supports machinery industry Mini i tax holid iday ay: k. Manufacture of main components of electric power generator machinery l. Manufacture of motorised vehicles and major components of motorised vehicles  Investment value IDR100 B to < IDR500 B m. Shipyard Trans nsition ion • 50% for 2 years ( tax holiday ) n. Train and railways manufacturing industry Period iod • 25% for 2 years ( mini tax holiday ) o. Manufacture of major components of aircraft and supporting activities of the aerospace industry Proces cess Using OSS p. Agriculture, plantation, or forestry-based processing industries that produce pulp without or with any of its derivatives q. Economic infrastructure r. Digital economy which includes data processing, hosting, and activities related to it Source: Coordinating Ministry for Economic Affairs 21

  15. Fiscal cal Incentiv tives: es: Super Deduction For Research & Development The Go The Governme ment develo elopin ing a su super de deduction ion tax ax sc scheme me to to pr provi vide de Incom ome Tax Law (Law No.7 .7/1983 jo. Law No. 36/2018) busin sines esse ses wi with in incen centiv tives es to to condu onduct res esear arch an and de developmen elopment in in Article 35: the hopes of the of spurrin ing innovat ation ion Matters that have not been sufficiently regulated by law are further regulated by Object ct Subje ject Government Regulation Domestic coIDRorate taxpayers who Certain R&D activities in carry out certain research and Indonesia, the costs of which are development (R&D) activities in Law No. No. 45/20 /2019 charged within a certain period. Indonesia. Article 29C:  Facility for reducing gross income for domestic Am Amoun ount t of faciliti lities es (propos oposed) d) taxpayers condu onducti ting ng cer ertain ain resear re earch and nd devel velop opmen ent activities in Indonesia  The maximum gross income reduction facility is Stages es RPMK 300% of the cost Real Cost 100%  Further arrangements through technical Addit ditional ional: regulations - Commercialisasion 100% - Registration of Intellectual Property Rights (IPR) in the form of 50% Tec echn hnical ical Regulati lations (RP RPMK MK) Patents or Plant Variety Protection Rights (PVT) in the country - Registration of IPR abroad / product innovation 25% In the process of coordinating the drafting of the - Collaboration with government / private R&D institutions 25% Minister of Finance Regulation (IDRMK) with the Ministry of Finance, the Ministry of Research and Tot otal al 300% Technology, and the Ministry of Industry Source: Coordinating Ministry for Economic Affairs 22

  16. Medium um-Term erm Nation ional al Developm lopmen ent t Plan n (RPJM JMN) N) 2020 2020-2024 President’s Vision: "The Establishment of an Advanced Sovereign, Independent and Personality Based on Mutual ual Coopera rati tion". n". Presid esident ‘s Miss ssions Top 5 Presid esidentia tial l Prio ioriti ities 7 RP 7 RPJM JMN N De Development Agenda Improvin ing the Qualit ity of the Indon onesia esian Labou our HR HR 1 1 Force ce Stren ength then ening ing Econ conomi omic c Resi esilien ence ce to Develo lopmen ent Achie ieve Superio perior Econ onomi omic Growth owth Achie ieving ing Prod oducti ctive, , Indepen ependen ent t and 2 Comp mpetit etitiv ive e Eco conomic mic Struct cture Devel elop oping ing Mor ore e Remo mote Region gions to to Reduce e Econ onomi omic Gaps ps and Improv ove Equa qualit ity Infrastruc ucture 2 Atta tain inin ing Equitabl quitable and Pros osperou perous Nati tion onal 3 Develo lopmen ent Develop elopme ment Impr prov ovement ment of Qualit ity and Achie ieving ing Sust staina inable Enviro ironment mental 4 Compet mpetit itiv ivenes ess of the e Labour Force ce Climat ate Regulat lation ion 3 Devel elop oping ing Cultu tural Prog ogres ess Simp mplif ific ication on 5 Enga gaging ing in Menta tal Revolu evoluti tion Reflecti ting g the Nation ion's Personalit ity and Cultu ture e Devel elop opmen ment Develop evelopin ing a a Dignified ed and Trust stwor worth thy y Lega egal 6 Sys ystem em Free Free from om Cor orruption Stren ength then ening ing Infrastructu cture e to o Simplifi lifica cation ion of 4 Supp pport ort Econo conomi mic Devel velopm pmen ent t Bureau aucr cracy cy Protect otectio ion of All All Nati tion ons and and and Improv prove Basi sic Services ces 7 Prov ovision sion of Secu curit ity y to All Citizen ens Conse servati tion on of Enviro ironmen ment, t, Supp pporti ting Clima mate te Change, e, and Enhanci cing Disa saster ter Resil silie ience ce Attain ining Good od, , Ef Effecti ective, , and and Econom omic c 8 5 Reliable Govern ernance Tran ansformation on Enhanci cing Polit itical, ical, Lega egal, Defen ense e and Stab ability ty and Transformi orming Public ic Servi vice ces Achie ieving ing Synerg ergy y of Gov overn ernmen menta tal 9 Framewo mework with the Region onal Governmen ent Source: Coordinating Ministry for Economic Affairs 23

  17. Simplify plifying ing Regulat ulations ions throu ough gh Omnibu ibus s Laws Omnibus us Laws Group p a D Diverse Range of Issues sues into Legisl slati tion, n, Aimed d at Creati ting ng Jobs and Empoweri ering ng SMEs. s. Omnibus Law Pri Omni riori ority Sect ctors ors Financial T axes Labour Sector 1 6 Pillars of Omnibus Law w Perpa pajakan (Taxa xati tion on) 3) Personal Taxpayer 5) Equity of Business 1) Investment Funding 2) Territorial System 4) Taxpayer Compliance 6) Taxation Facility Investment 11 Cluster ters s of Omnibu bus s Law Cipta Lapa pangan Kerja (Job Creati tion on) ) 7) Government Administration 10) Government Investment and 4) Ease, Empowerment and Protection of MSMEs 1) Simplification ofLicensing Projects 8) Imposition of Sanctions 2) Investment Requirements 5) Ease of Doing Business 11) Economic Zone 3) Employment 9) Land Acquisition 6) Research and Innovation Support  Following the inauguration of his second presidential term in October 2019, President Joko Widodo announced his administration’s plans to continue regulatory reform by focusing on initiatives such as developing a dynamic and qualified workforce, promoting industry cooperation through technology, further enhancing infrastructure development and economic reform as well as simplifying regulations and bureaucracy.  To achieve such ends, President Widodo’s Government subsequently prepared three bills of omnibus laws, namely an omnibus bill on job creation, an omnibus bill on development and strengthening the financial sector and an omnibus bill on tax provision.  Omnibus laws refer to laws that group diverse and unrelated issues which are drawn into a bill which is accepted in a single vote by a legislature. 1 Under discussion Source: Coordinating Ministry for Economic Affairs 24

  18. The Economic omic Policy icy Pa Packages ages “To improve national industry competitiveness, export and investment to generate significant economic growth” Harmoni nizing ng Regul ulat ation ons Simplifying g Bureau eaucrat atic Proc oces ess Ensurin uring g Law Enfor nforceab eability Phase e I (9 (9 Sept pt ’15) Phase se IX (27 Jan ’16) Improving national industry competitiveness Accelerating electricity generation, stabilizing meat prices and Phase e II (29 Sept ’15) improving rural – urban logistics sector Easing permit requirement and simplifying export proceeds Phase e X (11 Feb ’16) requirement Revising the Negative investment List and improving protection Phase e III I (7 Oct t ’15) for SMEs Financial services facilitation, export financing and elimination of Phase se XI (29 29 Mar ’16) business unnecessary burden Stimulating national economy through facilitation to SMEs and Phase e IV (15 Oct t ’15) industries Social safety net and betterment of people welfare Phase e V (22 Oct t ’15) Phase e XII II (28 28 Apr ’16) Improving industry and investment climate through tax incentives and Improving Indonesia’s rank on Ease of Doing Business (EODB) deregulation on sharia banking Phase e XIII I (24 Aug ’1 6) Phase e VI (5 Nov ’15) Low Cost Housing for Low-Income Communities Stimulating economic activities in border areas and facilitating strategic commodities availability Phase e XI XI V (10 Nov ’1 6) Roadmap for E-commerce Phase se VII I (7 De Dec ’15) Stimulating business activities in labor-intensive industries nation-wide Phase e XV (15 Jun ’1 7) through incentives in the form of accelerating land certification process Improving logistics for individuals Phase e XVI (1 (16 Nov ’1 8) Phase se VIII II (21 De Dec ’15) Improving the competitiveness and domestic economy Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries In addit ition on to the 16 Policy icy Packages kages, , on Augus ust 31, 2017 7 the Gover ernment nment has issued sued a Presi sident ential ial Regulat ulation ion No.91/2017 1/2017 for enhanc ancing ing busines siness s license cense service ice stand ndard ard Source: Coordinating Ministry for Economic Affairs 25

  19. Improving ving the Compe peti titiv tiven eness ess and Domes esti tic c Econom omy th Econom The 16 th omic Policy y Pac Packa kage has been launched hed TAX HOLIDAY DAY EXPANSI SION EXPORT PROCEEDS DS (DHE) SCHEME Backgr groun ound In order to further increase investment value in Indonesia, there is a need for expansion of sector and standard classification of Indonesian Business Fields (KBLI) that are given tax holiday, complemented with a process simplification to receive the tax holiday according to the Online Single Submission (OSS). Objecti tives es and benefit its 1) Increasing investment and strengthening the industrial sectors from the downstream to the upstream through the expansion of the business sector, KBLI’s pioneer industries, and Special Economic Zones (SEZ) that can receive tax holiday facilities Tax Rates es on Deposit 2) Increasing the process of convenience of filing process and Tax Rates es on Deposit Inter eres est Incom ome Inter eres est Incom ome tax holiday facilities provision Source: Coordinating Ministry for Economic Affairs 26

  20. Other er Progress ogress on Econom omic ic Polic licy y Pa Packages ages Developme pment nt of Fair, , Simplified mplified & & Spesial Economi mic Zone (SEZ) Project ctable Wage Syst stem 29 Provinces have set 2016 Minimum Wage Investment commitments in SEZ up to 2017 System in accordance to the Government reach 41 T, with 3 hour licenses already Regulation (GR) No. 78/2015 applied in 4 SEZ’s Administrators in 2017 Indus ustrial trial Zone Deregul ulati ation n on Logist stics cs Sector or 52 Bonded Logistic Center has been • The Provinces of Central Java proposed 3 launched to support various industries IZ’s : Kendal, Demak, and Ungaran • Pharmaceutical IZ in Bitung (North Sulawesi) in 2017 27

  21. Investment estment Incentiv entives es to o Boo oost st Industr ustry y Sect ctor or BUSINESS INESS EXPAN ANSION ION INDUS USTR TRIA IAL ZONE NE Tax all llowa owance ce • • VAT exem emption ption on import or delivery of capital goods, Exem emption ption or relief ief of import port duty ty on capita pital l goods, , machine inery ry or equip ipmen ent • • Impo port t Duty ty exem emption ption on machineries/goods/materials, for production purposes that can not be produced domestically; • Tax Allow lowance ce and Tax Holi liday Exem emption ption or relief ief of import port duty ty on raw materi terials ls or auxil ilia iary ry materia terial l for • production purposes for a certain period of time and certain conditions; Exem emption ption or suspe spensio sion of VAT on the e import port of capita pital l goods or • machine inery ry or equipm ipmen ent for production purposes that have not been FREE EE TRAD ADE E ZONES NES AND D PORTS TS produced domestically for a certain period of time; Accelerate depreci reciation tion or amortiz ortization tion (part of tax allowance); and • Property perty tax reli lief ef, especially for certain business sectors in certain regions; Exem emption ption of: • Combine with Online Single Submission (OSS) • Impo port t Duty ty • • VAT • Luxury ry Goo oods s Sales les Tax (PPnBM BM) • Custo toms s duty ty MICRO, O, SMAL ALL, L, MEDIUM IUM ENT NTERPRISES ERPRISES (MSMES MES) PIONEER NEER INDUS USTR TRIE IES Decrea creasing ing MSMEs Es Tax from 1% to 0.5 .5% of gross revenue Tax holid oliday of corporate income tax in a certain amount and time SPECIA CIAL L ECONO ONOMIC MIC ZONE NE E-CO COMM MMERCE CE • No coll llec ection tion of VAT and Luxury ry Goods ods Sales les Tax (PPnBM BM), ), • Sales from customs areas for non non-small ll entrepren repreneu eurs rs through the • Custo toms s tax exem emption ption, market place will be subject to 0.5 .5% incom come e tax and 1% VAT • Tax Allow lowance ce and Tax Holi liday, • Sales from customs areas for small ll entrepren repreneurs rs through the market • Suspe spensio sion of Impo port t Duty ty, place will be subject to 0.5 .5% incom come e tax • 0% Import port Duty ty for goods produced using local components of a certain level Source: Coordinating Ministry for Economic Affairs 28

  22. New w Tax Hol olida iday y Pol olicy icy* to boost t indu dustr stry y sector BEFORE RE PROVIS VISIO ION AFTER ER Pioneer Industry with minimum investment value of 500bn Rupiah Pioneer Industry with minimum investment value of 1 trillion Rupiah (minimum investment value of 500bn Rupiah for telecommunication sector) Applied to 17 industry groups: (i) upstream base metal; (ii) oil and gas refinery; (iii) petrochemical (oil, gas, Applied to 8 industry groups: or coal based); (iv) non-organic base chemical; (v) organic base chemical; (i) upstream basic metal industry; (ii) oil and gas refinery (vi) pharmaceutical materials; (vii) semiconductor and other components; industry; (iii) organic basic chemicals industry; (iv) machinery (viii) communication devices components; (ix) medical devices industry; (v) plantation, forest, and fishery products Taxpa payer er components; (x) machine manufacturing for industry; (xi) machine main processing industry; (vi) telecommunication, information and components manufacturing; (xii) robotic components manufacturing; (xiii) communication industry; (vii) marine transportation; and (viii) ship components manufacturing; (xiv) airplane components manufacturing; economic infrastructure (xv) train components manufacturing; (xvi) power plants; and (xvii) economic infrastructure 10 – 100% 100% (single rate) Corporat ate Incom ome Tax (CIT) reduc uction ion rate 5 – 20 years depends on the investment value (in IDR): • 5 – 15 years; or 1. 500Bn – 1Tn : 5 years 4. 15Tn – 30Tn : 15 years • Can be extended to 20 years; subject to MoF 2. 1Tn – 5Tn : 7 years 5. ≥ 5Tn : 20 years Conces cession ion perio iod discretion 3. 5Tn – 15Tn : 10 years Not available 50% CIT reduction for the next 2 years Transiti ition on Tax allowance for business expansion can be provided Tax allowance not provided with terms and conditions applied After Tax Holid iday ay *) MoF has issued a new Tax Holiday policy through Regulation No. 35/PMK.010/2018 (PMK-35) dated 4 April 2018. Source: Coordinating Ministry for Economic Affairs 29

  23. Enhan ancing cing Busin ines ess s License nse Servic ice e Stand andar ard Presi side dent ntial al Regulati ation n to Ac Accelerat rate Ease of Doing ng Busi siness ness has been launche ched Improve efficient, streamlined, & Provide business licensing Overcome the barriers to integrated business license service process assurance in terms of doing business in standards the costs and lead times Indonesia cy Goals 2 4 6 3 5 1 Policy Accelerate the business Increase coordination & synergy Implement integrated licensing process (single licensing process between central & regional submission) government nd Phase st Phase 2 nd 1 st Forming a Task Force to identify & Business license overcome the end-to-end licensing regulatory reforms Main Policy cy barriers Implementing a licensing checklist for Implementation of the Special Economic Zones (KEK), Free Single Submission Trade Zones (FTZ), Industrial Zones & system Tourist Zones Utilizing data sharing Note: 1 st and 2 nd Phase are implemented in parallel Source: Coordinating Ministry for Economic Affairs 30

  24. Improving ing Invest estment ment Climat mate Online e Single le Submiss missio ion (OSS) Has Been en Launched hed.. ... OSS is a web eb-base based d busines iness s licensin sing system tem intende ded d to cut the red ed tape e invo volv lved d in obtainin taining business s permit mits and integ egrated ated betwe tween en the centr tral al gove vernme ment t and regio ional al admin ministra stratio ions Secto tors rs Lorem Ipsum Enviro ironment ment & Public lic Works & Electr tric icit ity Indus ustry ry Sector tor Health th Sector or Suitable for all Forest stry ry Secto tor Housing ng Sector tor Secto tor category, Infor ormation ation & Marine ne & Fishery ery Medic icine ine & Transporta ortation ion Trade e Sector tor Commun unic icati ation on Secto tor Food d Sector or Secto tor Secto tor Other r Sector or The Adva vanta tage ge of Using g OSS Business licenses can Standardized Ellectronically be secured in under an business licenses integrated hour are available The whole licensing Accessible at More practical process is monitored by anytime and the Task Force anywhere Source: Coordinating Ministry for Economic Affairs 31

  25. Improving ving Investmen stment t Clima imate …Bonded Logistic Center to Improve Indonesia’s Competitiveness Bonded Logistic Center To dat To ate, e, 52 Bond onded ed Log Logis istic tic Cen enter er has has be been en lau launche hed to to suppor ort var ario ious us industries stries. (Pusat Logistik Berikat/PLB) is a facility provided by Ministry of Finance as part of the Small ll and Food d & implementation of the 1 st Economic mediu ium m beverages verages indus ustry y indus ustry Policy Package. Personal Pe onal Oil il and care/ ga gas, s, and PLB facility aims to improve home care e mining ing Synthet thetic ic efficiency and reduce the cost of industry indus ustry textile le transportation and logistics in Auto- (chem emic ical al motive ive Indonesia; support the growth of the substanc ances) indus ustry ry industry. . domestic industry, including small Textile ile Heavy vy (cott otton on) and medium industries; increase Equip uipmen ent t indus ustry indus ustry investment; and to make Indonesia Aircraf raft t to become a logistics hub in Asia MRO RO Defen ence Pacific. indus ustry indus ustry 32

  26. Improving ving Investmen stment t Clima imate e …revising the Negative Investment List Introduc roduction tion of New Foreign reign Owners ership ip Regula lati tion on for Stra rategi tegic c Sectors ctors Sports Center, Pharmace ceutica ical l Raw Materia ials ls Cold storage ge Restaurants, s, Bars Film Proces essi sing g Lab, Crumb Rubber Manufact cturing After Before After Before After Before After Before 100% 100% 100% 100% 33% 85% 49% 51% Priva ivate e Museum, m, Caterin ing, g, apparel el Toll l Road Operator or, Distrib ibutio ion, Warehousi sing Key Reforms ms in Negative e Foreign ign Manufact cturing, g, Exhibit bitio ions s & Teleco comm mmunica icatio ion Testin ing g Company Investmen estment t List st Conventio ions Before After Before After Before After Revision ision of "Partn tnership ip" catego egory y to refer to partn tners ership p with Micro, o, Small and Medium m Ente terprises ses (MSMEs) s) 100% 67% 67% 95% 33% 51% Grandfath ther er Law: w: If a parti ticu cular sector tor is tightened tened in future, e, existi ting g foreign gn Profess essio ional l Train inin ing, g, Golf Course Management, Air Teleco comm mmunica icatio ion Provi vider er invest estor r does s not t need to compl ply y with Transp spor ort Support Service ices, s, Travel el Bureau Consult ltancy cy for Construct ctio ion 1 with Integrated ed Service ices tighter ter stake Before After Before After Before After Stren ength then en implementa mentati tion on of nega gati tive investmen estment t law throu ough active ive roles es from ministr strie ies, s, agen encie ies s and regiona ional 67% 67% 67% 49% 55% 65% gov overnments ments 1 For total project value of IDR10bn and above Source: Investment Coordinating Board (BKPM) 33

  27. Investment estment Realization lization (Q1-20 2020) 0) Direct rect Inves estm tmen ents ts Top p 8 FDI I Reali lizatio zation by Sectors tors (Q1-2020 vs Q1-2019) 2019) IDR tn Meta tal, , Except ept Mach chine inery ry, , 240 and Equipm ipmen ent Industry stry 210,7 220 FDI DDI TOTAL 200 US$1,523.8 ,523.8 mn mn Food od Crops, ps, 180 149.1% 160 Planta tation tions, s, and 112,7 ,7 140 Electrici ectricity ty, , Gas, s, and Lives esto tock ck 120 Water ter Supply pply 100 US$478.8 78.8 mn mn US$868.6 68.6 mn mn 80 120.5% 5% 60 43.1% 98,0 40 20 0 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 Food od Industry try Mining ing 2017 2019 2020 2015 2016 2018 2013 2014 Investme stment nt US$298.4 98.4 mn mn US$482.7 82.7 mn mn 22.1% Realizat zation 21. 1.5% IDR21 210.7tn 0.7tn Rp159.4 9.4 T IDR195 95.1tn .1tn 434 434,463 463 375,982 37 ,982 Rp145.4 5.4 T Transporta portation tion, , Wareh rehou ouse, e, * Housi sing, g, Industria strial l Esta tate, te, and Telec ecom ommunica cation tion 8.0% and Offic ice e Build lding ing 9.6% 15.6 .6% US$806.9 06.9 mn mn US$602.9 02.9 mn mn Q1-2019 Q1-20 2020 20 50.9% 36.5% Q1-2016 Q1-2017 Q1-2016 Q1-2017 * * person on Chem emica cal l and Pharm rmaceu ceutic tical l Industry stry IDR11 112.7tn 2.7tn IDR10 107.9tn 7.9tn IDR87 87.2tn .2tn US$569.4 69.4 mn mn IDR98 98tn tn 81. 1.3% decre reasi sing 9.2% 29.3% Q1-2019 Q1-20 2020 20 Q1-2019 Q1-20 2020 20 Source: Investment Coordinating Board (BKPM), compared to Q1-2019 period 34

  28. Section Se tion 2 Econom onomic ic Factor or: Stable le Growth wth Prospect spects Amid id Tempo empora rary y Mode derati tion on

  29. Condu duciv cive e Envir ironmen onment t Under Un derpinn inning ing Stable ble Growth wth Fun undamen damental tals s Am Amid d Tempora porary y Modera derati tion on Tax base e to be 4th Most Populous us Budget et reform m as a a broadened ed from m part t of larger ger Larges gest Economy in count ntry in the one reduce e economi omic c reform South h East Asia World ld; 64% in dependen ency cy on initiative iative produc uctiv ive age commod moditi ties es Large e and Stable table Consis sisten tent Econ onomy omy Fuel subsi sidie ies s Budget et Refor form Rising ing Middle le Clas ass sign gnifican icantl tly y reduce ced Manag ageab eable le Pruden ent t debt and Afflue luent nt and spen ending Inflat flation ion Rate managem gemen ent redirec ected ted to more Customer ers prod oducti tive e alloca cati tion on Refo form rm-Or Orien iented ed Admin inis istra ration ion Three e main sources ces of financing ing for investm estmen ent t From commod odity ty-based sed to manufactu cturing needs: s: State te and region onal budget, et, State te Owned ed and service ce sectors tors via infrastr structu ture Ente terprises ises and PPP developme opment New w Economic onomic High Conti tinuing ing from 2015 15 polic icy, y, infrastr structu ture will Structure Infrastructu astructure From consu sumpti mption on-led to invest estme ment-led growth owth be high gher than fuel subsid sidy via a stron onge ger manufactu cturin ing sector tor and more Inve vest stme ments ts investmen estment t initiatives iatives Infra rastru tructure cture spend ending ing focuse sed on basic ic infrastru tructu cture e proj ojec ects ts Polici cies es to mainta tain in purch chasin sing g power er to stimu mulate te domesti estic c economy omy in the midst t of Fiscal and non on-fisca iscal incenti tives es to attra tract ct weaken ening ing macroe oecon conomic ic condit ition ons infrastru tructu cture e investmen estment t and promote mote PPP 36

  30. Indonesia’s GDP Growth Momentum Moderated Stron ong g GDP DP Growt owth 1 • COVID-19 pandemic, which broke out at the beginning of 2020, has affected Indonesia’s economic growth in the first quarter of 2020. Indonesia’s economic % QoQ YoY growth stood at 2.97% (yoy) in the first quarter of 2020, down from 4.97% (yoy) in the 7,0 previous quarter. The drop in domestic demand was largely due to the impact of 5,06 5,27 5,175,185,075,055,024,97 5,19 5,12 5,17 5,18 5,05 5,06 5,01 5,01 5,01 COVID-19 amid the positive performance of external sector. Moving forward, Bank 4,94 4,93 4,92 4,94 4,82 4,74 4,77 5,0 Indonesia will continue to monitor the dynamic spread of COVID-19 and its impacts on 4,21 4,01 4,20 3,83 3,74 4,01 Indonesia’s economy, and will consistently strengthen coordination with the 3,31 3,27 3,14 3,19 3,09 3,06 Government and the relevant authority to maintain macroeconomic and financial 3,0 2,97 system stability, and boost national economic recovery. On the expenditure side, the economic growth deceleration in the first quarter of 1,0 • 0,04 2020 is primarily affected by the declining domestic demand. Domestic consumption stood at 2.84% (yoy), far lower than the performance in the fourth quarter of 2019 of (0,16) -1,0 (0,30) (0,36) (0,41) (0,52) 4.97% (yoy). Growth in investment also declined by 1.7% (yoy), chiefly affected by (1,73) (1,70) (1,69) building investment slowdown. The Government’s stimulus response through the (1,81) (1,74) (2,07) (2,41) -3,0 Government’s consumption, which grew at 3.74% (yoy), curb deeper domestic Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 demand slowdown. In addition, net export has positively contributed as influenced by 2014 2015 2016 2017 2018 2019 2020 export, which grows to 0.24% (yoy), and import, which recorded contraction of 2.19% (yoy). By sector, economic slowdown was primarily driven by activities of trade and accommodation as well as transport and storage, resulting from declining public Favou oura rabl ble GDP P Growt owth Compa pared red to Peers rs 2 mobility as an impact of COVID-19 mitigation efforts. In addition, agriculture sector % performance declined due to unfavorable weather condition. 10,00 8,20 Grow owth th Prospe spect 7,62 8,00 5,03 5,91 7,43 6,00 2020 20 GDP P growth owth 4,23 Institu stituti tion ons 4,00 (%YoY oY) 1,87 2,00 0,65 2020 Budget 5.3 - 0,50 0,9-1,9 Bank Indonesia -2,00 -4,00 World Bank (GEP June 2020) 0.0 -6,00 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* ADB (ADOS June 2020) -1.0 Consensus Forecast (June 2020) -0.6 Bulgaria Colombia India Indonesia Philippines 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption 2. Source: World Economic Outlook Database – April 2020; * indicates estimated figure 37

  31. GDP Growt wth Brea eakdo kdown GDP DP Growth th Based sed on Expend endit itures ures (%, YoY) 1 2015 2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 By expenditure HH. Consumption 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 5.0 5.2 5.0 5.1 5.1 5.0 5.2 5.0 5.0 5.0 2.8 Non profit HH. (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8.1 8.8 8.6 10.8 9.1 17.0 15.3 7.4 3.5 10.6 (4.9) consumption Government 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 2.7 5.2 6.3 4.6 4.8 5.2 8.2 1.0 0.5 3.2 3.7 consumption Gross Fixed Cap. 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 7.9 5.8 6.9 6.0 6.6 5.0 4.6 4.2 4.1 4.4 1.7 Formation Exports (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.9) 3.9 (1.7) 8.4 2.7 16.5 8.4 8.9 5.8 7.5 8.3 4.6 6.5 (1.6) (1.7) 0.1 (0.4) (0.9) 0.2 Imports (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.4) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.5 14.9 13.8 7.1 11.9 (7.5) (6.8) (8.3) (8.0) (7.7) (2.2) GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 3.0 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption GDP DP Growth th by Sector ctor (%, YoY) 2015 2016 2017 2018 2019 2020 By sectors Tot Q3 Q4 Tot. Q4 Tot. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q1 Q2 Q1 Q2 Q3 . Agriculture, forestry, and 3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 3.9 3.4 4.7 3.6 3.8 3.9 1.8 5.3 3.1 4.3 3.6 0.0 fishery Mining and Quarrying (1. 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 2.1 1.8 0.0 0.7 1.1 2.6 2.7 2.2 2.2 2.3 (0.7) 2.3 0.9 1.2 0.4 3) Manufacturing 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.3 3.5 4.9 4.5 4.3 4.6 3.9 4.4 4.2 4.3 3.9 3.5 4.1 3.7 3.8 2.1 Construction 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 7.0 7.0 7.2 6.8 7.4 5.7 5.8 5.6 6.1 5.9 5.7 5.6 5.8 5.8 2.9 Wholesale and Retail Trade, Repair of Car and 3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5.0 5.2 5.3 4.4 5.0 5.2 4.6 4.4 4.2 4.6 1.6 Motorcycle Transportation and 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5 8.5 8.7 5.7 5.5 7.1 5.5 5.9 6.7 7.6 6.4 1.3 Storage Information and 10. 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 11.1 8.8 8.3 9.6 7.8 5.1 8.1 7.1 7.0 9.1 9.6 9.2 9.7 9.4 9.8 communication 5 Financial service 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.1 3.8 5.5 4.3 3.1 3.1 6.2 4.2 7.2 4.5 6.1 8.5 6.6 10.7 Other Services * 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5.4 6.2 6.7 6.4 6.2 6.8 7.3 6.4 6.2 6.7 4.6 GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 3.0 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 38

  32. Regio gional nal Econom omic ic Growt wth Decline in domestic demand due to COVID-19 amid a positive growth in non-oil and gas exports suppressed economic growth in all regions in the first quarter of 2020 R EGIONAL IONAL ECONO ONOMIC MIC GROWTH FIRST QUAR ARTER ER 20 2020 20 (% (%, YOY) KAL ALIMAN ANTAN West Kalimantan 2.49 SUMAT ATRA RA 5.23 5.39 5.67 Central Kalimantan 2.95 Aceh 3.17 3.73 SULAW LAWESI, I, MALU LUKU AND PAPUA South Kalimantan 5.68 N.Sumatra 4.65 4.63 2.49 4.57 4.5 4.61 East Kalimantan 1.27 Riau 2.24 3.25 Sulut 4.27 North Kalimantan 5.01 W. Sumatra 3.92 Gorontalo 4.06 Jambi 1.65 Sulteng 4.91 I II III IV I Riau Island 2.06 Sulbar 4.92 I II III IV I Bengkulu 3.82 Sulsel 3.07 2019 2020 Babel Island 1.35 2019 2020 Sultra 4.37 S. Sumatra 4.98 Lampung 1.73 RGDP ≥ 7,0% JAVA JA Banten 3.09 6,0% ≤ RGDP < 7,0% 5.65 5.59 5.51 5.34 Maluku 4.01 Jakarta 5.06 BALI ALI-NUSA TENG ENGGARA RA 3.42 5,0% ≤ RGDP < 6,0% North Maluku 3.06 West Java 2.73 Bali -1.14 Papua 1.48 5.34 5.52 Central Java 2.60 4,0% ≤ RGDP < 5,0% 4.77 4.59 West Nusa Tenggara 3.19 West Papua 5.4 East Java 3.04 East Nusa Tenggara 2.84 0% ≤ RGDP < 4,0% Yogyakarta -0.17 0.94 I II III IV I RGDP < 0% 2019 2020 I II III IV I 2019 2020 Source: Central Bureau of Statistics of Indonesia (BPS) 39

  33. Se Sect ction ion 3 Exter ernal l Factor: r: Impr mproved ed Exter ernal Res esil ilie ience ce

  34. Ext xtern ernal al Balance nce under r Control ntrol Support ported ed by Adequate uate Reserves erves Balanc lance e of Payment nts Portrait ait Current ent Accoun unt Deficit within hin Safe Thresh eshold ld 2013: 2013: 2014: 2014: 2015: 2015 201 2016: 201 2017: 2018: 2018: 2019: 2019: 2020: 2020: CA Defici cit CA Defici cit CA Defici cit CA Defici cit CA Defici cit CA Defici cit CA Defici cit CA Defici cit US$bn US$bn (US$29. 29.1bn) n) (US$26. 26.7bn) n) (US$17. 17.5bn) n) (US$16. 16.9bn) n) (US$16. 16.2bn) n) (US$30. 30.6bn) n) (US$30. 30.4bn) n) (US$3. 3.9bn) n) 20 160 120,97 97 US$bn 8 0,0 15 4,40 0 6 -0,5 120 10 4 -1,42 -1,0 2 -1,5 5 (3,92) 92) 0 80 -2,0 -2 0 -2,5 (2,93) 93) -4 -5 -3,0 -6 (8,08) 08) 40 -3,5 -8 -10 (8,54) 54) -4,0 -10 (1,87) 87) -15 0 -12 -4,5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 2017 2018 2019* 2020** 2013 2014 2015 2016 2017 2018 2019* 2020** Current Account Capital & Financial Account Overall Balance Reserve Assets (rhs) Goods Service Primary Income Secondary Income Current Account (%GDP)+(rhs) Source: Bank Indonesia Source: Bank Indonesia Trade Balanc lance Portrai ait Substant antial al FX Reserves es to Mitiga igate Externa nal l Challe alleng nges es 2013: 2013 2014: 2014 2015: 201 2016: : 2017: 2018: 2019: 2020: FX Reserve ves as of May 2020: US$130.5 bn n Deficit Deficit Surplus us Surplus us Surplus us Deficit Deficit Suplus us (Equiv. to 8.0 month ths of imports ts + servicing of government debt) t) (US$4.10bn) n) (US$2.37bn) n) US$7.59bn US$8.83b 3bn US$11.83bn bn (US$8.65bn) n) (US$3.24bn) n) (US$4.19bn) n) US$bn US$bn FX Reserves (LHS) Month of Import & Debt Service (RHS) Month 4,00 130 15 OG Non-OG Total 14 2,1 120 3,00 13 12 110 2,00 11 10 100 9 1,00 8 90 7 0,00 6 80 5 -1,00 8 4 70 3 2,09 -2,00 2 60 1 -3,00 50 - 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 * Preliminary Figure ** Very Preliminary Figure 41 Source: Bank Indonesia Source: BPS

  35. Exch change ange Rate e In Line e with h Fundame ament ntals als Movem emen ent t of Rupia iah IDR/US$ The rupiah iah is is gaini aining ng stren engt gth as as for forei eign gn capita apital con ontinu inues es to to flow flow int into 17.000 dom omest estic ic fin financ ancial ial market ets. As of 17th June 2020, the rupiah appreciated IDR/USD 3.75% (ptp) or 5.69% on the average level recorded in May 2020. 16.500 Notwithstanding, the rupiah has still lost around 1.42% of its value Quarterly Average 15.711 compared with the end of 2019. Recent rupiah appreciation is consistent 16.000 Monthly Average with less global financial market uncertainty, coupled with highly attractive 15026 15.500 domestic financial assets for investment and maintained foreign investor 15.179 confidence in the national economic outlook. Bank Indonesia still perceives 14798 14.381 15.000 14.232 the rupiah as fundamentally undervalued, leading to potential appreciation 14.220 14254 14.113 and supporting the economic recovery process. Potential rupiah appreciation 14120 14.500 13.714 14.855 is underpinned by several fundamentals, such as low and controlled 14601 14083 inflation, a narrow current account deficit, competitive yields on domestic 14.000 14352 financial assets and a lower risk premium. Furthermore, supporting 14.055 14134 14064 14.141 exchange rate policy effectiveness, Bank Indonesia continues to optimise 13.500 14.006 14.031 data as of June 17 th , 2020 monetary operations in order to safeguard market mechanisms and 13.000 preserve adequate liquidity in the money market and foreign exchange 17-Jul 6-Aug 26-Aug 15-Sep 5-Oct 25-Oct 4-Dec 24-Dec 13-Jan 14-Mar 23-Apr 13-May 2-Jun 22-Jun 12-Jul 1-Aug 21-Aug 10-Sep 30-Sep 20-Oct 9-Nov 19-Dec 8-Jan 28-Jan 8-Mar 28-Mar 17-Apr 7-May 27-May 16-Jun 14-Nov 2-Feb 22-Feb 3-Apr 29-Nov 17-Feb market. Rupia iah Exch change ge Rate te Fared red Rela lative tively Well ll Compared red to Peers ers Rupia iah Exch change ge Rate te Volati latilt lty YTD 20 2020 20 vs vs 201 019 data as of June 17 th , 2020 35,10 BRL -22,53 -18,80 2019 ZAR -12,58 -18,35 YTD 2020 -12,99 TRY 27,50 -11,76 -6,32 Average YTD 2020 INR -4,60 24,20 -4,76 AVG 2019 KRW -3,24 -4,53 THB -1,83 18,10 17,23 17,60 -4,36 17,00 point-to-point MYR 16,00 -2,30 -3,36 SGD average -2,38 10,10 -1,76 CNY 12,50 -1,58 9,20 -1,42 IDR -2,97 7,00 6,40 6,20 5,90 5,90 0,44 5,40 EUR 4,70 -1,67 1,16 JPY 0,61 data as of June 17 th , 2020 1,23 PHP 2,14 -25,0 -20,0 -15,0 -10,0 -5,0 0,0 5,0 ZAR BRL TRY IDR THB PHP INR MYR 42 Source: Bank Indonesia

  36. Ample le Line nes of De Defense nse Against nst Ext xtern ernal al Shocks ks Ampl ple e Reserv erves es Ample level of FX reserves to buffer against external shock  FX Reserve FX Reserves as of May 2020: US$130.5 billion  Swap p Arra range gemen ent Renewed a 3 year USD22.76 billion swap line with Japan on October 14 th , 2018  Japan The facility is available in USD and JPY  South Korea rea Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2020  eral ateral Australia ralia Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018  Bilat Singap gapore ore Renewed a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2019  Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in  China November 2018 Malaysia ia Established a 3 year RM/IDR swap arrangement with a size up to USD2 billion (equivalent) in September 2019  Entitled to a maximum swap amount of USD600 million under ASA  ASEAN Swap p The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million  Arrangemen ngement (ASA) Doubled to USD2 billion in 2005 ional al  Region Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool created under the  Chiang ng Mai i Initiativ iative e agreement Mult ltilater ilaterali liza zation ion Came into effect in 2010 with a pool of US$120 bn  (CMIM IM) ) Agreeme eement nt Doubled to US$240 bn effective July 2014  al Global IMF Global al Financ ancial ial Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem  Safety ety Net t - GSFN Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)  Source: Bank Indonesia 43

  37. Solid lid Polic licy y Coordination dination In Managing ging Financi ncial al Markets ts Volat atility ility The e enact ctmen ment of Law No. 9/2016 regarding g Prev even ention and Mitiga gation of Financi cial l Syst stem em Crise ses as a legal foundation Gov’t Securities Crisis is Managem agemen ent t Protoc ocol ol (CMP) for the government to serves at the time of financial crisis in  Indicato tors rs: the form of Financi cial l Syst stem em Stabil bility Commi mmittee ee (KSSK SK) - Yield of benchmark series; - Exchange rate; - Jakarta Composite Index; - Foreign ownership in government securities KSSK K member mbers: the Ministry of Finance, Bank Indonesia, the  Policie licies s to address the crisis at every level : Financial Services Authority, and the Deposit Insurance - Repurchase the government securities at secondary market Corporation - Postpone or stop the issuance Bond Stabil iliz izati ation on Framew ewor ork Swap facility arrangements based on international cooperation Firs rst t Line of Defense Buyback fund at DG of Budget Financing and Risk Management State’s Budget Investment fund at Public Service Agency Enhancing coordination between government institutions (BLU) (min. level Aware) and continuous dialogue with market participants State te Owned ed Enterp terprises ises Related SOEs (min. level Aware) (BUMN)’s Budget Social cial Secu curit ity y Orga ganizin izing g BPJS (min. level Aware) Agency (BPJS)’s Budget CMP Implementing Crisis Management Protocol (CMP) Second Line of Defense State General Treasury Account (Rekening KUN) (min. level Alert) State’s Budget Accumulated cash surplus (SAL) (min. Level Crisis) BSF Implementing Bond Stabilization Framework (BSF) Source: Ministry of Finance 44

  38. Stren rengt gthen ened d Priv ivat ate e Ext xter ernal al Debt t Risk sk Managem ement nt Encou coura ragi ging Corpora porates tes Compli pliance ce on Hedgi ging Ratio tio & Liquid quidity ity Ratio tio Debt Burden n Indic icat ator (Externa nal l Debt/GDP) Remains ains Compar arab able le to Peers Rating ing Hedgin ging Ratio io* Extern ernal Debt ebt/GDP (%) 2020F 54,3 Bulgaria 56,5 160; 243; 2019F 57,3 6.2% 42,3 9.4% 2018 Colombia 42,9 39,9 21,4 India 20,9 20,0 37,0 ≤ 3 months > 3 - 6 months Indonesia 36,7 36,2 21,9 2.425; 2.342; Philippines 23,0 93.8% 23,9 90.6% 0 10 20 30 40 50 60 70 Source: Moody’s Statistical Handbook, November 2019 Liquid uidit ity Ratio io* Regulat ulation n on Prudentia ential l Principle le in Manag aging ing External nal Debt 308; Phase 1 Phase 2 Phase 3 11.9% Regu gulati tion on Key Points ints Jan 1,2015 2015 – Jan 1,2016 2016 – Jan 1, 2017 17 & & Dec 31,20 2015 15 Dec 31,20 2016 16 beyond Object ect of Regul egulation on Governs all Foreign Currency Debt Hedgi dging g Ratio < 3 months 20%* 25%** > 3 – 6 months 20%* 25%** 2.277; Liqu quidity y Ratio (< 3 months) 50% 70% 88.1% Credi edit Rating Not applicable Minimum rating of BB- Must be done Hedgi dging g transaction on to meet eet not necessarily be done with a bank in Comply Not Comply with a bank in hedge ge ratio Indonesia Indonesia *Data as of Q4 2019, with total population 2.585 corporates Sanction on As of Q IV-2015 Applied Source: Bank Indonesia Source: Bank Indonesia 45

  39. Health althy Ext xternal ernal Debt t Composition osition Extern ernal l Debt bt Structure cture The e Structure cture of Extern ernal l Debt bt is Dom omin inated ted by Long-Term erm Debt bt Private External Debt Public External Debt Short Term External Debt Long Term External Debt 100% 100% 90% 90% 80% 80% 57,4 58,6 52,6 50,0 46,4 44,2 45,9 49,5 51,2 49,6 49,2 50,2 50,0 50,2 50,5 49,8 47,2 48,1 70% 70% 60% 81,7 78,8 79,3 78,3 78,8 79,8 82,1 82,9 84,4 84,0 83,9 84,3 85,9 84,3 85,5 85,4 84,5 85,2 60% 50% 50% 40% 40% 30% 30% 42,6 41,4 47,4 50,0 53,6 55,8 54,1 50,5 48,8 50,4 50,8 49,8 50,0 49,8 49,5 50,2 52,8 51,9 20% 20% 10% 18,3 21,2 20,7 21,7 21,2 20,2 17,9 17,1 15,6 16,0 16,1 15,7 14,1 15,7 14,5 14,6 15,5 14,8 10% 0% 0% Extern ernal l Debt bt Remains ins Managea geable le Extern ernal l Debt bt to GDP DP Ratio tio & Debt bt to Export rt Ratio tio % External Debt / GDP Ratio External Debt / Export Ratio (rhs) Million USD % % External Debt External Debt Growth (rhs) 450.000 20,0 200 40 36,1 34,3 34,7 36,0 36,8 36,6 36,2 36,1 34,5 17,1 18,0 400.000 32,9 35 31,8 180 16,0 27,4 29,1 350.000 183,8 30 26,5 25,0 168,9 172,5 177,6 177,8 176,1 14,0 11,3 12,0 300.000 160 11,5 168,4 168,0 25 10,2 10,5 12,0 10,2 10,1 160,8 Axis Title 250.000 10,0 140 20 8,3 7,8 200.000 139,5 6,5 8,0 5,9 15 5,4 150.000 120 6,0 123,1 121,8 10 3,0 100.000 114,9 4,0 113,8 100 5 50.000 0,5 2,0 101,0 0 0,0 80 0 Source: Bank Indonesia, External Debt Statistics of Indonesia, June 2020 *Provisional Figures **Very Provisional Figures 46

  40. Managea geable ble Ext xtern ernal al Debt t Profile ile Shor ort term non-ban ank corp rpor orat ate e debt (non on affiliation) ) represe sents only ly 9.1% 1% of tot otal private e externa nal l debt Public lic Long g Term 1 Privat ate Bank nk Affiliati Af tion on US$192.4bn US$158.3bn US$18.6bn or or or 48.1% 76.2% 8.9% US$12.1bn of Total Ext. of Private Ext. of Private or or Debt Debt Ext. Debt 5.8% External nal Debt of Private e Positio ion Ext. Debt US$2 $207 07.8b 8bn US$49.5bn US$30 30.9bn or or or 51.9% 51 US$400 00.2bn bn 23.8% 14.9% 9% of total of Private of Private Ext. Debt Ext. Debt Ext. Debt Privat ate Non-Ba Bank nk US$18.8bn Short-Term 1 or or 9.1% Privat ate of Private e Ext. Debt External Debt Position as of April 2020 1 Based on remaining maturity Non Af Affiliati tion on Source ce: External Debt Statistics of Indonesia, June 2020 47

  41. Sect Se ction ion 4 Fiscal Per Fi erforma ormance nce and F d Flexib ibil ilit ity: The De e Desig ign of Econom onomic ic Rec ecover ery y Progr gram am

  42. Indonesia’s Policy Responses in Dealing With COVID -19 Cris isis is Prioritizing 3 Aspects: Protecting people’s health and saving lives; maintaining purchasing power particularly the poor , and Preventing bankruptcy Health Measures: Social Safety Net: Business Support:  Reducing of import restriction including  PKH improvement and  Appoint dedicated hospital, manufacturing support, food and health/medical goods, acceleration of the expansion emergency hospital, export-import process, and improvement of equipment support, and  Basic food cards services through the National Logistics medical personnel support improvement and expansion Ecosystem  Testing and tracing  Pre-Work Card expansion  Incentives and tax facility  physical distancing, work and flexibility  The National Economic Recovery Program and study from home, etc.  Exemption from electricity (PEN)  Large-scale Social bills  Various policies and relaxation in the financial Restriction (PSBB)  Additional interest rate sector: BI, OJK, LPS, and the Government subsidy assistance 49

  43. The Stim imulus ulus Pa Packages ages – Evolving lving FISCAL POLICY MONETARY AND Line ministries and regional FINANCIAL POLICY Maintaining people's govt: budget priorities to purchasing power and ease of tackle COVID-19 export and import: MONETARY • Fiscal stimulus • Non-Fiscal Stimulus IDR190 T Spending cut/saving • • Policy in the Financial Reducing BI 7DRR interest rate • IDR55 T Spending Reallocation Sector Increasing triple intervention intensity • Lowering Currency Statutory Reserves (GWM) in Rupiah & foreign STIMULUS II STIMULUS I STIMULUS III Budget currency %% T Realokasi Belanja (March) (Feb) (March) • Extend SBN tenure Refocusing & • IDR22.5 Expand the type of underlying IDR8.5 T IDR405.1 T Reallocation transaction T • Providing hygienic money, etc BANKING Strengthening the domestic Rescuing national health and economy, as well economy through: as maintaining the stability of the financial • Accelerating spending & sector (through Perppu No.1/2020 ) • Relaxation of credit/financing/fund encouraging labor- • State Financial Policy (health, social safety provision requirements for MSMEs intensive policies net, business support & economic recovery • MSMEs credit/financing • Stimulus for specific financing support) restructuring sectors • Policy in the Financial Sector Source: MoF, World Bank 50

  44. Legal al Aspect ct for COVID ID-19 Handling dling PERPPU No. 1/2020 Background: Quick and Extraordinary Steps in Handling COVID-19 COVID CO VID-19 19 PAND ANDEM EMIC: IC: and the Impact • Esc scalati tion n of confirmed ed case ase an and d fatal alitie ies MAIN PRINCIPLE/SETTINGS IN PERPPU • Gr Grea eat t ec econom omic c imp impact • Potenti tial disrup disruption on to the the stab ability ty of fina inanc ncial system State Financial Policy Financial Sector Policy • • Adjustment of state budget deficit Expanding the authority of KSSK and 1 2 threshold the scope of the KKSK meeting Need quick Forceful • • Utilization of budget funding alternative Strengthening the authority of the BI, urgency and sources including in buying long-term SBN in the anticipatory • Adjusment of mandatory spending , primary market to support the handling of step shifting and refocusing central and Covid-19 pandemic • regional budgets Strengthening the authority of • SBN issuance and loan program to Financial Service Authority (OJK) and finance the additional deficit Deposit Insurance Corporation (LPS) to • Incentives and tax facilities prevent risks that endanger financial PERPPU No. 1 Tahun 2020 • Implementation of the National system stability and protect bank Economic Recovery Program for the customers. as as a a leg legal l basis basis for or tak aking ing rapid apid and and • sustainability of the real sector and Strengthening the authority of the extraordin inary ry and and coo oordi dina nated steps s to o financial sector. government in handling banking cou ounter the he COVI VID-19 pand pandemic. problems and financial system stability due to COVID-19 pandemic Perppu No.1/2020 has already been passed into law (Law No.2/2020) 51

  45. Funding ing for COVID ID-19 Hand ndli ling For health, social protection, SMEs, business, and regional government FUNDI N G FOR COVI D - 19 HAN D LI NG (I DR Rp695. 20 T )* Health Social Protection Business Incentives IDR120.61T IDR87.55 T IDR203.90T 1. Expenditure for Covid-19 Handling 1. Conditional Cash Transfer Program IDR37.40T; 1. Government-Borne Income Tax IDR39.66T; IDR65.80T; 2. Basic Foods IDR43.60T; 2. Income Tax Exemption on Import IDR14.75T; 2. Incentives for Paramedic IDR5.90T; 3. Social Assistance - Jabodetabek IDR6.80T; 3. Tax Deduction IDR14.40T; 3. Death Compensation IDR0.30T; 4. Social Assistance – Non - Jabodetabek IDR32.40T; 4. VAT Return IDR5.80T; 5. Pre-Working IDR20.00T; 4. National Health Insurance Fee IDR3.00T; 5. Corporate IT Rate Reduction IDR20.00T; & 6. Electricity Discount IDR6.90T; 5. Covid-19 Task Force IDR3.50T; & 6. Other Stimulus IDR26.00T 7. Logistical / Foods / Basic Foods IDR25.00T; 6. Tax Incentives in Health IDR9.05T 8. Village Fund - Cash Transfer IDR31.80T SMEs Corporate Financing Sectoral and Regional Government IDR106.11 T IDR53.57 T IDR123.46 T 1. Interests Subsidy IDR35.28T; 1. Line Ministries labor Intensive Program 1. Labor Intensive-Fund Placement IDR3.42T; 2. Fund Placement IDR78.78T; IDR18.44T; 2. State Equity Participatiozn (PMN) IDR20.50T; 3. Guarantee Return IDR5.00T; 2. Housing Incentives IDR1.30T; 3. Working Capital Investment IDR29.65T 4. Working Capital Guarantee (Stop Loss) 3. Tourism IDR3.80T; IDR1.00T; 4. Regional Incentive Fund (DID) IDR5.00T; 5. Government-Borne Final Income Tax 5. Physical Special Allocation Fund Reserve IDR2.40T; & IDR8.70; 6. Investment Financing to Cooperatives 6. Regional Loan Facility IDR1.00T; & IDR1.00T 7. Diversification Reserve IDR58.87T Source: Ministry of Finance *The number of PEN allocation Fund is still in the process of finalization and the final number will be stated in Revised Perpres No. 54/2020 52

  46. The e Princi cipl ples es & Financin ancing Channels nnels of The National ional Ec Econ onom omic c Reco cover ery y Program ram (PEN EN) PEN’s  The principle of social justice Principles  The greatest prosperity of the people PP 23/2020  Supporting Business Actors  Policy rules: prudence, good governance, transparency, The PEN Program aims to acceleration, fairness and accountability  Does not cause moral hazard protect, maintain and  of costs and risks between stakeholders according to their improve the economic respective duties and authorities capabilities of Business Actors in running their  Capital Injection (PMN) businesses  Funds Placement article 4  Government Investment  Government Guarantees channels  State Expenditures article 5 53

  47. Flexibi ibili lity ty in 2020 Budget et is Used to Respond ond Emerge gency ncy Cond ndition tion Widening the deficit above 3 percent of GDP is to accelerate the mitigation of COVID-19, salvage the economy from threatening crisis, and maintain the stable financial system  Focusing for health, social safety net, and businesses  Slow economic activity, support, including the small and medium one ; plummeting of oil and commodities price  Reducing the non-priority spending, refocusing, and  Tax incentive for businesses reallocating to bolster the management of COVID-19;  Enhancing the spending for COVID-19 treatment Widening (Rp545.8T) Perpres Budget Budget No.54/2020 Perpres No.54/2020 IDR2,233.2T IDR2,540.4T IDR2,613.8T IDR1,760.9T Revenue Spending  Deficit The increasing of accumulated cash surplus utilization (IDR45 trillion) Budget Perpres (IDR307.2T) = 1.76% GDP  Financing to promote the national No.54/2020 economy recovery (IDR150 trillion) (IDR853.0T) =  Adding the securities issuance to cover 5.07% GDP* financing gap Source: Ministry of Finance 54

  48. Outlook: look: Flexibility xibility in 2020 Budget t is Used d to Respo spond nd Emerge ergency ncy Condit dition ion State Budget 2020 (In Trillion Rupiah) Budget Perpres 54/2020 Outlook Difference A. REVENUE 2,233.2 1,760.9 1,699.1 (61.7) I. DOMESTIC REVENUE 2,232.7 1,760.4 1,698.6 (61.7) 1. TAX REVENUE 1,865.7 1,462.6 1,404.5 (58.1) Tax Ratio % (Broad definition) 11.56 9.14 9.01 2. NON-TAX REVENUE 367.0 297.8 294.1 (3.6) II. GRANT 0.5 0.5 0.5 0.0 B. EXPENDITURE 2,540.4 2,613.8 2,738.4 124.5 I. CENTRAL GOVERNMENT 1,683.5 1,851.1 1,974.4 123.3 1. Line Ministries 909.6 836.5 786.5 (50.0) 2. Non-Line Ministries 773.9 1,014.6 1,187.9 173.3 Of which (o/w). Other Expenditures 128.0 360.1 504.3 144.2 o/w - Compensation for the diff. in electricity tariff & fuel oil’s retail price 15.0 15.0 91.1 76.1 - Mitigation for COVID- 19’s impact - 255.1 328.5 73.4 II. TRANSFER TO REGION AND VILLAGE FUNDS 856.9 762.7 763.9 1.2 1. Transfer to Region 784.9 691.5 692.7 1.2 2. Village Funds 72.0 71.2 71.2 0.0 C. PRIMARY BALANCE (12.0) (517.8) (700.4) (182.7) D. SURPLUS/(DEFICIT) (307.2) (852.9) (1,039.2) (186.3) % Budget Surplus/(Deficit) to GDP (1.76) (5.07) (6.34) E. FINANCING 307.2 852.9 1,039.2 186.3 Source: Ministry of Finance * The fix number will be stated in Revised Perpres No. 54/2020 55

  49. Development lopment of Macroe oeco conomi nomic Assum umpti ption on Indicat cator ors s 2020 2019 2020 Notes: Realization Realization State State 1) Realization of quarter I as of as of Budget Budget 2) April average exchange 31 May 2020 31 May 2020 rate: IDR14,906 / USD Growth (%) 5.3 5.07 1) 5.3 2.97 1) a. (April eop IDR14,165 / USD) Inflation b. (%, yoy) 3.32 2.19 3) ICP May US $ 25.7 / 3.5 3.1 barrel (%, ytd) 1.48 0.90 4) Lifting oil and gas in SPN 3-Month Interest Rate (%) April c. 5.3 5.8 5.4 3.2 Exchange Rate 14,192 14,684 d. (Rp/US$) 15,000 14,400 (Rp/US$, eop) 14,385 14,733 2) CPI (US$/barel) e. 70 64 63 41 3) Oil Lifting (thousand barrel/day) 775 745 755 710 4) f. Gas Lifting (thousand barrels of oil equivalent / day) g. 1,250 1,038 1,191 1,025 4) Source: Ministry of Finance 56

  50. STATE E BUDGET T REALI ALIZA ZATION ION AS OF 31 MAY 2020 Govern rnment nt Revenue ue and Expendi nditure ture experi rienc enced negati tive growth wth as impact ct on Covid-19 9 Pressur ssure 2018 2019 2020 % to Budget Budget (IDRtn) Realization as Unaudited Realization as % to Realization as % to Audited Growth (%) Growth (%) (Perpres Growth of 31 May Budget of 31 May Budget of 31 May Budget Budget No.54/2020) A Revenue and Grant 686.0 35.3 15.5 1,958.6 730.1 37.3 6.4 1.760.9 664.3 37.7 (9.0) I. Domestic Revenue 684.5 35.5 15.3 1,953.3 729.7 37.4 6.6 1.760.4 663.1 37.7 (9.1) 1. Taxation Revenue 538.7 35.5 14.5 1,546.1 571.2 36.9 6.0 1.426.6 526.2 36.0 (7.9) Tax ratio % (board Definition) 3.98 10.69 4.00 9.14 3.50 a. Tax Revenue (Include 484.9 36.9 14.2 1,332.7 498.5 37.4 2.8 1,254.1 444.6 35.4 (10.8) Oil & Gas Income Tax) b. Custom and Excise 53.8 26.2 17.4 213.5 72.7 34.0 35.1 208.5 81.7 39.2 12.4 2. Non Taxation Revenue 145.9 35.6 18.1 407.1 158.5 38.9 8.6 297.8 136.9 46.0 (13.6) II. Grants 1.4 9.3 580.5 5.4 0.5 9.2 (66.0) 0.5 1.2 240.2 143.7 B Expenditure 779.5 35.2 7.9 2,304.3 855.9 37.1 9.8 2,613.8 843.9 32.3 (1.4) I. Central Government Expenditure 458.0 31.5 18.0 1,493.2 530.8 35.6 15.9 1,851.1 537.3 29.0 1.2 1. Line Ministries 231.5 27.3 19.9 870.3 288.2 33.1 24.5 836.5 270.4 32.3 (6.2) Expenditure 2. Non Line Ministries 226.5 37.2 16.2 622.9 242.6 38.9 7.1 1,014.6 267.0 26.3 10.1 Expenditure III. Transfer to Region and Village 321.5 42.4 (4.0) 811.1 325.1 40.1 1.1 762.7 306.6 40.2 (5.7) Fund 1. Transfer to Region 300.8 43.1 (1.9) 741.3 304.7 41.1 1.3 691.5 277.7 40.2 (8.8) 2. Village Fund 20.7 34.5 (26.7) 69.8 20.4 29.3 (1.1) 71.2 28.9 40.6 41.3 C Primary Balance 19.0 (164.9) (163.5) (70.1) 1.3 (1.9) (93.1) (517.8) (33.9) 6.6(2,710.4) D Surplus/(Deficit) (93.5) 34.7 (27.3) (342.6) (125.8) 36.4 34.5 (852.9) (179.6) 21.1 42.8 % of GDP (0.63) (2.18) (0.79) (5.07) (1.10) E Financing 179.4 58.7 (8.3) 398.9 159.9 40.1 (10.9) 852.9 356.1 41.7 122.6 Remaining Budget Balance 85.9 34.1 29 Source: Ministry of Finance 57

  51. Progress Updates on Fiscal Stimulus and National Economic Recovery Program (1) The administration process of program’s disbursement has been expedited Incentive for Businesess Health Social Safety Net 1 3 There are 2 The disbursement Needs to uncharged medical of preemployment promote this treatments from card and cash incentives more the health care transfer through widely and facilities to the village fund has to intensively government be accelerated 1,54% 28,63% 6,8% • 1. COV 1. OVID ID-19 19 trea eatmen ment ▪ Trans ransfer fer for r socia ial l safet fety net is relat elatively ely accele elera rated ed Elig igible ible taxpa payer ers to receiv eive e incen entiv ives es hav ave e no not a. Recovered cases → 87,19% (Cash trasnfer, food subsidy); enro nroll lled ed for r the e progr rogram; • b. Closed cases → 43,54% Addit ditio iona nal l elec ectric icit ity subsid idy has been een implem mplement ented d ▪ Intensive promotion is needed (paym aymen ent to PLN is start arted d in June ne 2020) 20); 2. 2. Ther ere are re rigid igid verific rificat ation on proc rocess ess to disbur burse the e bene nefi fit • Pre-employment card and cash transfer through progr rogram m for or me medic ical al work orker ers village fund has been slow; • 3. Ther 3. ere are re gaps ps betwee een n actual ual trea eatme ment and d healt ealth h care re Chall alleng enges es in the e field eld: mi mismat atched hed datab abase e and d claim aim to gover ernm nmen ent overl erlap apping ing Source: Ministry of Finance 58

  52. Progress Updates on Fiscal Stimulus and National Economic Recovery Program (2) The administration process of program’s disbursement has been expedited SECTORAL AND SUBNATIONAL CORPORATE FINANCING MSME GOVERNMENT 5 4 6 0,06% 0 % 3,65% • Regulations are on Completion of the support ▪ Regulations are on progress progress; and regulatory scheme, as ▪ Labor intensive program by well as preparation of • Data preparation and IT line ministries is being supporting tools infrastructure to support implemented the delivery Source: Ministry of Finance 59

  53. Progress Updates on Fiscal Stimulus and National Economic Recovery Program (3) Improved recovery cases and suited social safety net program 14 June 2020 Change of household shopping basket (%) Recovered and Deaths Ratio (Daily) Ratio of Recovered to Death (Daily) Number % 3% Electricity Positive 38,277 100.00 8% 1. Active Cases 21,612 56.46 Processed Foods Recovered 2. Closed 16,665 43.54 14% Phone/Internet bill Deaths Number % 20% Health Closed 16,665 100.00 51% Food materials 1. Recovered 14,531 87.19 0% 20% 40% 60% 2. Deaths 2,134 12.81 • Closed cases increased to 43.54% compared to the previous week which reached 39.6% and the proportion of recovered cases continued to show an increasing trend reaching 87.19% • The Social Safety Net program that has been given is matched with the urgently need by impacted households Source: Indonesia Statistics, Ministry of Finance 60

  54. Conclusions and Further Action Plan to Accelerate The Delivery Encourage accelerated execution and program effectiveness CONCLUSION ACTION PLAN ▪ In general, government’s programs still face challenges in ▪ Identifying restraining factors and formulating an execution stage due to on process regulation, administration and acceleration strategy, specifically in health, MSME, delivery process; incentives and subnational govenrmente support programs; ▪ Realization of new health support reached Rp1, 35T (1.54%), mainly due to: delay in the billing process, verification process of ▪ Efforts to accelerate the completion of regulations claim by BPJS Health, and the budget revision process and simplification of administrative procedures; ▪ The realization of the social protection program was relatively good, namely Rp. 58.37 (28.63%) through various assistance such ▪ Immediately delivery the support programs for as cash transfer, food subsidy, pre-employment card, Electricity businesses, both MSMEs and corporations, to subsidy drive the economy and support national economic ▪ There are still problems at the execution level in the field, among recovery; others: Issues related to target error, overlapping, and pre- ▪ employment card training materials are irrelevant; Increasing the effectiveness of public communication, to disseminate government ▪ Some regulations, data collection, and supporting infrastructure / program and get constructive input → can be IT to support the MSME program, tax incentives, corporate optimally utilized by the community in financing and local government are still on progress encouraging national economic recovery Source: Ministry of Finance 61

  55. 2020 Finan ancin cing g Needs Fulfilled d from m Government nment Securi urities es IDR1, 1,289.2 289.27 tn tn (89.55%) 55%) and Loan IDR150.48 0.48 tn tn (10.4 .45%) 5%) GS*** Investment Other Loan Lending Liability Financing Financing IDR325.85T IDR107.55 T Financi ancing Needs eds (IDR5.81T) IDR0.59T IDR229.32T (IDR70.64T) 75.18% 24.82% IDR1 R1,4 ,439 39.75 .75 T Non-Debt Financing (nett) Matured Debt Budget Foreign Denominated Debt Domestic Debt Deficit IDR153.46T IDR433.35 T IDR852.94T 22.47% 77.53% Financi ancing Needs eds Foreign Domestic Domestic Loan Foreign Loan Denominated Government IDR1, R1,439.75 .75 T Bonds Securities Gross ss Gover ernmen ment Debt bt to GDP Ratio atio Securities ties (Through auction & 2020 Matured Reali aliza zatio ion Proj ojec ectio ion non-auction) T-Bills Issuance GDS GDS Sukuk uk 2019 2020 70 – 75% 70 75% 25 – 30% 25 30% 30.2% 36.4% Note: * preliminary result Source: Ministry of Finance 62

  56. Finan ancin cing g Strat trategy egy 2020 Oppor ortu tunis istic, tic, Measu easured, and d Pruden dent t Financing Strat ateg egie ies s to suppor ort State e Reven enue e and Expen endi ditu ture e Budget t (APBN) BN) 2020 20 in acceler leratin ating the handlin dling of COVID VID-19 9 and protec ectin ing the econ onom omy from om the threa eat of crisis isis Non-Debt Financing Sources Optimization of Debt and  SAL L (IDR70 70,64 ,64 T) Non-Debt Financing  Government Endowment Fund Post Budget Financing 1 Sources  Fund sourced BLU LU 2020 Flexibility of adding SBN Cash Loan Flexibility  Upsize the issuance of Domestic SBN and Foreign Upsize Program Loans from Development Denominated SBN (USD10 -12 billion) subject to Partners, both bilateral and multilateral, financial market conditions amounting to USD 6-8 billion 3 Open opportunity for Private Placement requests  ex. World Bank, ADB, AFD, KfW, JICA, from SOE/Institution EDCF, and AIIB ex. LPS, BPKH, and others Prioritize SBN publishing Bank Indonesia support 4 through market mechanisms as a last resort / back (includ ludin ing Ret etail ail IDR50-75 75 T) stop financing source 5 Source: Ministry of Finance 63

  57. Govern ernment ment Securi riti ties es Indi dicati ative Fina nanci ncing ng Plan for 2020 0 according ding to Presidenti dential Regulation ation 54/20 2020 20 Gover ernment t Bond d 71% Shar aria ia Bond d 29% 29% Fron ont t Retail etail Loadin ading 4-10% 0% 40 40-50 50% Governm rnmen ent t Securi riti ties For Semester II 2020, the (gross ss) Government plans to issue Foreign Currency Government IDR 1. 1.334T 4T Securities in Japanese Currency (Samurai Bond) and Euro • Auction: • Conventional Securities – 24x • Foreign denominated GS as • Islamic Securities – 24x com omple lemen enta tary Avoid oid  • Non-auction: crow owding ding out out in domestic Retail GDS (tradable/ORI & • IDR R 87% market. non-tradable), Retail Sovereign Auction tion Sukuk (tradable/Sukri & non- Forex 13% • The he target target am amou ount nt can an be be 40-60% 40 tradable); adj adjusted ed to the potential of • Private Placement – based on other financing sources and request. financing needs. Source: Ministry of Finance 64

  58. Government ernment Secur curit itie ies Finan anci cing g Realiz ealizat ation ion (as of May 31, 1, 2020) *Dual-currency bonds issuance using SEC format amounted USD2 bn and EUR1 bn, settlement on January 14, 2020 (BI mid day exchange rate; 1 USD = 13,654 IDR & 1 EUR = 15,207.83 IDR) - Including SBR009 issued February 17, 2020 Source: Ministry of Finance 65

  59. GS Prim imar ary y Mark rket t Perfor ormanc mance e 2019-2020 2020 Through Auction Incoming bid 2020 = IDR53.61T/ auction, while awarded bid 2020 = IDR13.80T/auction Source: Ministry of Finance 66

  60. Repub ublic lic of Indon onesi esia – USD4.3b .3bn n GLOBA BAL L BONDS DS ISSU SUAN ANCE CE On April 7, 2020, the Republic of Indonesia priced a transaction comprising USD4.3bn in senior unsecured notes Iss ssuer Republ blic c of Indon ones esia ia Investor Breakdown Issuer Rating Baa2 Moody’s (Stable) Investor Breakdown by Region by Investor Type BBB S&P (Stable) BBB Fitch (Stable) RI103 030 Exp. Issue Rating Baa2 Moody’s / BBB S&P / BBB Fitch RI105 050 RI1030 9% RI105 050 Format U.S. SEC registered 1% 1% 2% 3% 10% 2% 1% 21% Issue Senior unsecured fixed rate notes 4% 45% 1% 26% 22% Pricing Date April 6, 2020 Settlement Date April 15, 2020 52% 20% 25% Aggregate Size USD4,300 mm 64% 71% 20% RI047 470 Long 10.5-year year Long 30.5-year year Long 50-year year 1% 1% 1% 1% 18% Maturity Oct 15, 2030 Oct 15, 2050 Apr 15, 2070 11% RI047 470 Tranche Size USD1,650 mm USD1,650 mm USD1,000 mm 44% Coupon (p.a.) 3.850% 4.200% 4.450% Reoffer Price 99.573 99.150 99.009 38% Reoffer Yield (p.a.) 3.900% 4.250% 4.500% Asset Managers Insurance/Pension Fund 85% US Europe Asia ex-Indonesia Indonesia Listing Singapore, Frankfurt Open Market Central Bank/Sovereign Wealth Fund Law New York Banks Use of Proceeds For general purposes of the Republic of Indonesia, including Private Banks financing COVID-19 relief and recovery Others Transaction Highlights  Net proceeds will be used for general purposes of the Republic, including financing COVID-19 relief and recovery efforts for the Republic to contain the virus and mitigate its impact on Indonesia.  The Republic's fiscal policy amidst volatile market conditions includes support for healthcare, the social safety net, and small and medium enterprises.  The debut 50-year offering on strong demand in the long end of the curve.  The transaction is the largest global offering by the Republic and demonstrates the Republic’s ability to respond swiftly to markets and capture favorable issuance windows. Source: Ministry of Finance 67

  61. Disciplin ciplined ed and Sophistic histicat ated ed Debt t Portf tfolio olio Managemen gement Stabl ble Debt bt to GDP DP Ratio tio Over er the e Years rs Pruden ent t Fisc scal l Defic icit it Govern ernmen ent Debt bt / GDP (%) IDR R Tn Tn Debt bt Outstandi ding (Trillion IDR) 442 442 500 0,0% 407 407 362 362 358 358 400 32,09% -0,5% 265 265 35,00% 30,18% 29,81% 300 29,40% 28,33% 5.000,0 27,43% 764,5 30,00% 200 -1,0% 24,74% 810,7 100 4.000,0 19 19 14 14 746,2 25,00% -1,5% 734,8 - (9) (7) (4) 755,1 20,00% (20) 3.000,0 (100) -2,0% (69) (66) 677,6 (56) (58) -1,8% 15,00% 714,4 (200) 4.442,90 2.000,0 4.014,8 -2,2% -2,5% (227) 3.612,7 (300) 3.248,6 10,00% 2.780,6 (298) 8) (269) (308) -2,5% 2.410,0 -2,6% -2,5% (341) (400) -3,0% 1.000,0 1.931,2 5,00% 2014 2015 2016 2017 2018 - 0,00% Bonds (Net) Loans (Net) SBN (neto) Pinjaman DN & LN (neto) 2014 2015 2016 2017 2018 *) 2019**) May-20 Non Debt (Net) Budget Surplus/Deficit Non Utang (neto) Surplus (Defisit) APBN Fiscal Deficit (%GDP, RHS) Bond Loan Debt/GDP Ratio [RHS] Rasio Defisit APBN thd. PDB (RHS) Note: *) as of end of December 2019, **) Preliminary number using GDP assumption Weig ighted ted Avera erage ge Debt bt Maturity turity of ~8. 8.8 Years rs Well ll Divers ersif ified ied Acros ross Differen erent t Curren rencie cies % of Yearl rly y Issuance Average Time To Maturity y 1% 1% 1% 1% 1% 100% 6% 5% 5% 6% 7% 4% 4% 5% 9,8 4% 4% 80% 9,4 27% 27% 30% 30% 31% 9,1 60% 8,8 8,7 8,5 8,4 40% 62% 62% 59% 57% 58% 20% 2014 2015 2016 2017 2018 2019 May-20 0% 2016 2017 2018 2019 May-20 ATM (in years) IDR USD EUR JPY OTHER Source: Ministry of Finance 68

  62. Well Bala lanced nced Maturity urity Profile ile Wi With h Strong ng Resilience silience Against nst Ext xtern ernal al Shocks ks Decl clinin ining g Interes erest t Rate te Risks sks Decl clinin ining g Exch change ge Rate te Risks ks FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) 44,5 Variable rate ratio [%] Refixing [%] 43,4 42,6 41,3 41,0 21,0 20,7 37,9 38,0 19,7 19,2 17,5 16,1 15,8 14,8 13,7 12,1 10,6 10,6 9,8 9,3 12,3 12,2 12,1 12,1 12,2 11,3 10,7 2014 2015 2016 2017 2018 2019 May-20 2014 2015 2016 2017 2018 2019 May-20 Debt bt Maturity turity Profil ile Upcom coming ing Maturities turities (Next t 5 Yea ears) rs) IDR tn tn 500 450 41,0 400 40,4 39,3 38,7 166 IDR Denominated (Triliun Rp) Other Currencies (Triliun Rp) 36,0 157 350 34,7 33,9 176 171 300 162 25,5 25,0 250 88 24,3 24,3 127 22,7 21,4 128 20,1 200 129 77 46 74 17 150 291 281 10,6 9,9 226 231 28 24 100 208 33 8 8,4 8,1 8,2 194 177 153 134 7,7 6,5 162 165 152 27 149 35 3 111,3 50 99 96 94 27 35 24 31 89 62 39 23 20 36 28 2 38 55 2 34 20 39 31 20 - - - - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049-2070 2014 2015 2016 2017 2018 2019 May-20 in 1 year (%) in 3 year (%) in 5 year (%) Note: 1. *) as of end of December 2019, preliminary number and using GDP assumption Source: Ministry of Finance 69

  63. Holder lders s of Trada adable ble Centr tral al Governm rnment nt Securities rities More Balance ce Ownership hip In Terms ms of Holders and Tenors Hold lders ers of Tradable Gov’t Domestic Debt Securities Forei eign gn Owners ership ip of Gov’t Domestic Debt Securit ritie ies s by Tenor or 100% 100% 34,8% 30,5% 36,0% 36,2% 37,0% 38,6% 80% 38,2% 37,5% 37,7% 38,6% 44,7% 80% 39,8% 60% 60% 34,1% 37,4% 36,8% 39,0% 35,6% 38,3% 32,8% 39,8% 38,6% 38,2% 37,5% 37,7% 37,8% 39,9% 36,8% 42,0% 40,3% 40% 40% 30,5% 19,2% 20% 20% 22,0% 17,3% 17,8% 31,1% 18,4% 23,9% 23,4% 22,5% 21,1% 20,3% 11,8% 5,1% 8,9% 5,3% 6,7% 1,9% 1,3% 0% 5,0% 4,3% 3,2% 3,5% 2,9% 2,4% 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 May-20 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 May-20 Foreign Holders Domestic Non -Banks Domestic Banks 0-1 >1-2 >2-5 >5-10 >10 % Foreign Ownership of Total Source: Ministry of Finance 70

  64. Ownership ership of IDR Trada dable ble Centr tral al Governmen rnment t Securitie urities (as of May 31, 1,2020) 2020) (IDR tn) Descrip iption Dec-15 15 Dec-16 16 Dec-17 17 Dec-18 18 Dec-19 19 May-2020 2020 Bank nks* 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 581.37 21.12% 949.35 31.12% Govt Instit itut utions ions (Bank nk 148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 262.49 9.54% 248.17 8.13% Indones nesia* ia**) Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 273.21 9.93% 443.48 14.54% GS used for Monetary 23.63 1.33% 38.01 1.81% (36.15) (1.52%) 10.72 0.39% 195.31 6.40% Operation Non-Banks nks 962.8 .86 65.87 87% 1,239 39.57 57 69.90 90% 1,466.33 69.83% 1,633.65 68.98% 1,908.88 69.34% 1,853.23 60.75% Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 130.86 4.75% 133.55 4.38% Insurance Company and 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 471.67 17.13% 505.80 16.58% Pension Fund Foreign gn Holder ers 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 1,061.86 38.57% 931.83 30.54% Foreign Govt's & 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 194.45 7.06% 188.17 6.17% Central Banks Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 81.17 2.95% 95.66 3.14% Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 163.32 5.93% 186.39 6.11% 1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company and Pension Fund. Total 1,461.85 100% 100% 1,773.28 100% 100% 2,099.77 100.00% 2,368.45 100.00% 2,752.74 100.00% 3,050.74 100.00% 2) Others such as Securities Company, Corporation, and Foundation. *) Including the Government Securities used in monetary operation with Bank Indonesia. **) net, excluding Government Securities used in monetary operation with Banks. Source: Ministry of Finance 71

  65. Se Sect ction ion 5 Commi mmitme tment t to Susta tain inabil bilit ity y and d Clim imat ate e Chan ange ge Mit itig igat ation ion

  66. Commitm itment ent to Sustai stainabi nabili lity y and d Climat mate Change nge Mitigati gation on Republic of Indonesia’s Commitment to Sustainability Including Climate Change Mitigat ation ion Background Commitment to o Sustainability For orefront of of En Environmental Pr Protection The President’s Nawacita Pr Progr gramme Indonesia’s Environmental Law was enacted in 2009 based The “Nine Agenda Priorities” of the President’s Commitment to implement the United Nation’s (“UN”) on the concept of sustainable development, prevention, priority actions. Shifting to a low-carbon and Sustainable Development Goals (“ SDG ”) in order to achieve the precaution and a “polluter pays” principle. To better climate-resilient development path is an 2030 development agenda introduced by the UN. Through address environmental issues, the Ministry of Environment integral part of this mission and is integrated in Presidential Regulation No. 59/2017 relating to the and the Ministry of Forestry were merged to become the development policies, strategies and programs implementation of SDGs in Indonesia, the National Ministry of Environment and Forestry in October 2014 Development Planning Agency was instructed to present a roadmap to implement the SDGs Indonesia’s En Environmental Commitment andObje jectives Mi Mitigation Ada daptation Biod odiver ersity • • Adopted the National Action Plan for Greenhouse Gas Emission National Action Plan on Climate Change Adaptation: National • Indonesia is an archipelago made up of 17,504 Reduction in 2011. framework for adaptation initiatives mainstreamed into the islands with unique ecosystems containing a National Development Plan. large number of diverse species. • Focuses on reducing greenhouse gas emission through a National Determined Contribution with an unconditional reduction target of • Medium Term Development Plan 2020-2024 (RPJMN): reflects • Indon onesi sian Bi Biod odiversi sity St Strategy and Action on Plan 29% by 2030 compared to the 2010 baseline. An additional 12% Indonesia’s strong commitment to shift to a low carbon 2015-202 2015 2020: launched to provide an outline on reduction is conditional on technology transfer, capacity building, development based approach to economic development and a how biodiversity could be utilized sustainably results for payment and access to finance. more climate resilient path. Includes key priorities such as to improve economic and development • Environmental Fund Management Agency (BPLDH): established in renewable energy and energy efficient development, forest opportunities. October 2019 with the vision to create a trusted institution to attract conservation and reforestation, waste management, land national and international donors as well as effectively mobilize public intensification, food security as well as governance and and private fund in order to support protection programmes. institutionalization of investment and regulation. Source: Green Sukuk Report 2020, Bank Indonesia, Ministry of Finance 73

  67. Indonesia’s Existing Green Bond and Suk ukuk uk Frame mewor ork Existin sting g Green n Bond d and Sukuk Framewor ork k under which h the Republic ublic of Indone onesia sia can Finance nce and Refina nance nce Select cted ed Eligib ible e Projects cts 2 3 1 4 Project Evaluation Management of Proceeds Use of proceeds Reporting and Selection Management- Ministry of Finance of Green Bond and GreenSukuk Ministry of Finance will Review and approval The Green Bond and Green Sukuk proceeds prepare and publish a process by Ministry of Green Bond and Green will be credited to a designated account of Eligible Green Finance and National relevant ministries for funding exclusive Sukuk annual report Projects must fall Development Planning projects as previously defined. Allocation is on the list of projects, into one of the Agency amounts of proceeds managed by Ministry of Finance. nineeligible allocated to such sectors projects and Line Ministries estimation of The line ministries utilizing the proceeds beneficial impacts shall track, monitor and report to Ministry of Finance, on the environmental benefits of the Eligible Green Projects The Framework has received a second opinion from the Centre for International Climate Research (CICERO) and is awarded medium green shading, which allows the possibility of light, medium and dark green project types. This shade also shows that eligible listed projects are representing the country ongoing efforts towards the long-term vision in carbon emission reduction Source: Indonesia’s Green Bond & Green Sukuk Framework 74

  68. Indonesia’s Existing Green Bond and Suk ukuk uk Frame mewor ork k (Cont’d) Existin sting g Green n Bond d and Sukuk Framewor ork k under which h the Republic ublic of Indone onesia sia can Finance nce and Refin inan ance ce Select cted ed Eligible ible Project cts Source: Green Sukuk Issuance Allocation and Impact Report (February 2020) 75

  69. Indonesia’s Green Initiatives: Financing Green Projects Development of Indonesia’s Green Projects Financing The Republic of Indonesia has issued two sovereign global Green Indonesia has continued to develop the Green market through the introduction of the first Retail Sukuk, consecutively in February 2018 and 2019, with the total Green Sukuk in the world (Savings Retail Sukuk, ST006) in November 2019. The ST006 is an amount of USD 2 Billion investment instrument based on Sharia principles issued and sold to individual Indonesian citizens in the domestic market with an online platform. Allocation and impact of the Retail Green Sukuk is not 2019 Issuance 2018 Issuance included in the Green Sukuk Issuance Allocation and Impact Report issued in February 2020 USD 750 million USD 1.25 billion (or IDR 11.25 trillion) (or IDR 16.75 trillion) 29% allocated to Green investors* 29% allocated to Green investors* Each issuance comprised of: and 49% financing new projects 51% refinancing existing projects Allocation by Sector Managed by 3 Ministries: Note: Information extracted from Green Sukuk Issuance Allocation and Impact Report (February 2020), and subject to change and assurance from PwC. Projects were financed in Indonesian Rupiahs and the currency exchange rate based on the State Budget Assumption for 2019 budget year of IDR 15,000 per USD was used to re-calculate the spent amount on each project *These statistics are based on the HSBC’s in house assessment of investor ESG/ SRI appetite and sophistication, which is deve loped from Market Intelligence and our own understanding from client conversations. A green classification is assigned to investors taking into account whether they have Green/SRI fund and/or strategy, whether they are signatories of a variety of SRI initiatives and with awareness to their broader activities / public announcements in the SRI market. Classifications evolve over 76 time

  70. Indonesia’s Green Initiatives: Projected Environmental Benefits Environmental Benefits Arising from Indonesia’s Green Suk ukuk Issuanc nce 3,21 3,218,0 ,014.41 to tonnes CO2e emissions reduced, towards a low carbon future 691.4 km 691. km of railway constructed, linking the nation 2,05 2,056,2 ,200 7,42 7,429 kW kWh of households benefitting from of additional power improved waste management generation capacity Source: Green Sukuk Issuance Allocation and Impact Report (February 2020) 77

  71. Tangible Results from Indonesia’s Green Sukuk uk Initiativ iatives Green Projects Refinanced and Financed with Proceeds from Indonesia’s Green Sukuk uk Issua uanc nce Ren Renewable le Energy Resilie Resilience ce to Cl Clim imate Ch Change Wast aste an and Waste to Energy Ma Management Loc ocati tion ons Across the country Across the country Across the country Amou mount nt Co Committ mmitted ed to o USD4.31 mil USD96.57 mil USD10.83 mil Fina Fi nanc nce 2019 2019 Projects ts Amou mount nt Co Committ mmitted ed to o USD63.13 mil USD39.62 mil - Refin efinance 2017 2017 Projects ts 134,872.41 tonnes of CO2e - In order to achieve 48,000,000 tonnes target set in RAN-GRK Targ rget t Impa mpact / Emis missio ions Reductio tion (2017 2017) • • • Pla Plannin ing, Dev evelo elopmen ent and Super ervisi sion of of New ew, Cons Co nstru tructio tion of of Fl Flood ood Co Cont ntro rol Fa Facil ilitie ties (Financing) Impro rovem emen ent of of Munic icip ipal Soli lid Wast ste Managem emen ent Ren enew ewable le Ener ergy and Ener ergy Conser ervatio tion Syste stem (Refinancing) Inf nfra rastru tructu ture re (Refinancing and Financing) Construction of retention ponds/polders, flood canals, dikes, Construction of new and renewable energy infrastructure, checkdam, and river maintenance and normalization. It aims Improvement of basic waste management infrastructure with a focus on areas outside current electricity coverage. to reduce the risk of flooding due to increased rainfall services through the development of city, regional and The project aims to improve the electrification ratio in off- intensity and land use changes. special area-scale of final disposal sites. Project Example les Fi Fina nanced ed / grid areas across the country. Power generation is sourced Locations: All provinces except East Kalimantan Ref efin inanced from solar, mini hydro, and micro hydro power plants*. Locations: West Java, Central Java, Yogyakarta, North • Sumatera, West Sumatera, South Sulawesi, Maluku, Bali Impro rovem emen ent of of Munic icip ipal Soli lid Wast ste Managem emen ent Locations spread across 19 provinces in 2017 (Refinancing) Syste stem (Financing) and the 2019 development of such infrastructure are spread across all provinces (Financing) Improvement of basic waste management infrastructure services through the development of city, regional and special area-scale of final disposal site. Locations spread across 11 provinces *Micro-hydro is of <100 kW and mini-hydro is of 100 kW-10 MW Note: Information extracted from Green Sukuk Issuance Allocation and Impact Report (February 2020), and subject to change and assurance from PwC Projects were financed in Indonesian Rupiahs and the currency exchange rate based on the State Budget Assumption for 2019 budget year of IDR 15,000 per USD was used to re-calculate the amount spent on each project 78

  72. Tangible Results from Indonesia’s Green Sukuk uk Initi tiativ atives es (Cont’d ) Green Projects Refinanced and Financed with Proceeds from Indonesia’s Green Sukuk uk Issuance Proceeds from Indonesia’s Green Sukuk Initiative has been Successfully Deployed to a Range of Eligible Green Projects Sustain Su inable le Tr Transport rt Energy Effic icie iency cy Loc ocati tion ons Jakarta, Sumatera, Java Across the country Amou mount nt Co Committ mmitted ed to o USD288.77 mil - Fina Fi nanc nce 2019 2019 Projects ts Amou mount nt Co Committ mmitted ed to o USD77.95 mil USD202.72 mil Refin efinance 2017 2017 Projects ts 1,543,000 tonnes of CO2e 355,394 tonnes of CO2e Targ rget t Impa mpact / Emis missio ions Reductio tion (2017 2017) • • • Dev evelo elopmen ent of of Ja Jabodeta etabek ek Urb rban Tra rain in Construction and Management of Ins nsta tall llatio tion of of Navig igatio tion Fa Facil ilitie ties (Refinancing) (Refinancing) Double Track Railways Infrastructure and Supporting Construction, rehabilitation and replacement of marine navigation aids and the installation of Construction of double-double track of the Facilities (Refinancing and solar cells to power marine navigation aids. The shift towards solar powered marine Jabodetabek urban railway network. Financing) navigation aids reduces the use of fossil-fuel sources of power. Locations: Jabodetabek (Jakarta, Bogor, Locations: spread across 21 provinces in 2017 Depok, Tangerang, Bekasi) The construction of the double track • railway project in the Trans Java Impro mprovem ement of of Land Transpo porta rtati tion on Traffi ffic Mana nagem ement Syste stem (Refinancing) • Co Constr structio tion and Managem emen ent of of railway’s northern section, upgrading Project Example les Fi Fina nanced ed / Rail ilways Infra frastru structu ture re and Supportin rting the single-track railway. Installation of road traffic equipment such as traffic signs, area traffic control systems (ATCS) Refin efinanced d in n 2019 2019 Facil iliti ities in in Sumater tera (Refinancing and Locations: Jabodetabek (Jakarta, Bogor, and navigation aids for river and take crossings (SBNP) with energy-saving sensors. Financing) Depok, Tangerang, Bekasi) Locations: Jakarta, West Java, Central Java, Yogyakarta, East Java • Construction of the Trans Sumatera Railway Co Cons nstru tructio tion, Rehabil ilita tatio tion and nd Main inte tena nance of of Airp rport ort Inf nfra ra-stru tructu ture res (Refinancing) from Aceh to Lampung province. The Trans Sumatera Railway causes a mode shift from The installation of solar-powered street lights and solar power plants. It improves the energy road transport to rail transport and logistics efficiency of airports and ensure electricity is sourced from renewable sources Locations: Aceh, North Sumatera, West Locations: spread across 30 provinces in 2017 Sumatera and South Sumatera Note: Information extracted from Green Sukuk Issuance Allocation and Impact Report (February 2020), and subject to change and assurance from PwC Projects were financed in Indonesian Rupiahs and the currency exchange rate based on the State Budget Assumption for 2019 budget year of IDR 15,000 per USD was used to re-calculate the spent amount on each project 79

  73. Se Sect ction ion 6 Monet netar ary y an and d Fi Fina nanc ncia ial Fac actor: or: Cred edib ible e Monet etary y Polic icy y Track k Rec ecor ord d and d Favoura rable ble Fi Financia ial Sec ector or

  74. Bank Indonesia’s Policy Mix To Maint ntain in Macroeco oecono nomi mic c and Financi ncial System em Stabil bilit ity Accommodative monetary policy  consistent with controlled inflation  Implementing Macro prudential in the target corridor, while serving Intermediation Ratio (RIM) as a pre-emptive measure to Implementing Macro prudential Liquidity  maintain domestic economic growth Buffer (MLB) momentum 2 1  Stabilize exchange rate consistent with fundamentals Macro- pruden enti tial al Monetar etary  Optimize monetary operations in Polic Po icy order to ensure market Polic Po icy  Electronification: Social program, e- mechanisms and adequate liquidity payment for Government in the money and foreign exchange  Financial technology markets 3  National Payment Gateway (NPG)  QRIS (QR Indonesia Standard) Paymen ent  Expanding National Clearing System Coordina dinati tion on System em (SKNBI) services with ot other Po Polic icy  Controlling inflation: TPIP, TPID Authorit horities ies 4 Structural reforms: Government  5  Developing market instruments for financing  Financial deepening & stability: KSSK infrastructure Financ ncia ial l Market et (Financial System Stability  Developing financial market infrastructures Committee), OJK (Financial Services Deepening pening Authority) Rupiah Interest Rate Swaps (IRS) and Overnight Index  Coordinating efforts in reducing Swap (OIS)  Current Account Deficit  Domestic non-Deliverable Forward (DNDF)  Developing the Commercial Papers (Surat Berharga Komersial) Source: Bank Indonesia 81

  75. Bank k Indones esia ia Polic licy y Mix: : June 2020 The e BI Boar oard of Gove vernor rnors agree reed on 17th h and 18th June e 2020 20 to lowe wer r the BI 7-day day Rever everse e Repo o Rate te by 25 bps to 4,25%, , Depos osit it Facil ility ity (DF) rate tes low ower ered ed 25 bps to 3,50% % and Lending ding Facili ility (LF) rates tes low ower ered d 25 bps to 5,00% Strengthen its policy mix Consistently Continues to and synergise to Continues to improve maintain price Maintains an optimise monetary implement the follow-up the effectiveness of stability and accommodative operations in order policies required through payment system strengthen policy macroprudential policy to safeguard coordination with the Lower the BI policy in the New coordination with stance in line with the market Government and 7-day Normal era, the central and current policy mix and mechanisms and Financial System Stability Reverse Repo particularly in terms local governments national policy mix, preserve adequate Committee in order to Rate by 25 of digital economic to control low including various liquidity in the maintain macroeconomic bps to 4,25%. activity through inflation within the efforts to mitigate risk money market and and financial system broader QRIS 3.0% ± 1% target in the financial sector foreign exchange stability, while supporting implementation in corridor in 2020 caused by COVID-19. market. the national economic various sectors. and 2021. recovery. 82 Source: Bank Indonesia

  76. Bank k Indones esia ia Polic licy y Mix: : May 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmiss smissio ion Mechan anism ism for Bank k Indonesia onesia to purcha hase se SBN in the primar ary y market et to finan ance e the State Revenue and Expenditu the enditure e Budget et (APBN) – Ab Above e the Line  In accordance with the joint decree issued by the Minister of Finance and Bank Indonesia Governor, SUN/SBSN purchases by Bank Indonesia in the primary market are based on general practices through transparent market mechanisms to maintain good governance. The mechanism for Bank Indonesia to purchase SUN/SBSN in the primary market is divided into three stages as follows: (i) Phase I: As a non-competitive bidder, Bank Indonesia can purchase SUN/SBSN in the primary market based on the following provisions:  Yield commensurate with the weighted average yield of the auction on the same day  Maximum SUN bid of up to 25% of the target auction maximum and maximum bid on SBSN > 1 year of up to 30% of the target auction maximum. (ii) Phase II: A greenshoe option based on the following provisions:  Yield commensurate with the weighted average yield of the auction on the previous day.  If the incoming bid is lower than the auction target, the maximum offer is the same as the previous offer. (iii) Phase III: Private placements based on the following provisions:  Refer to the latest market price published by the Indonesia Bond Pricing Agency (IBPA).  Private placements are implemented if the Government seeks additional financing based on the agreed terms and conditions.  Bank Indonesia provide interest remuneration on the government account as a form of burden sharing to reduce the state budget burden.  SBN purchases by Bank Indonesia in the primary market as a follow-up action to Act No. 2 of 2020 currently stand at IDR23.98 trillion, with IDR166.21 trillion purchased in the secondary market for stabilisation purposes. Consequently, BI holdings of SBN were recorded at IDR443.48 trillion on 26th May 2020. 83

  77. Bank k Indones esia ia Polic licy y Mix: : May 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmiss smissio ion Nation ional al Economi mic Recover ery y and state e budget et finan ancin ing g mechan anism ism – Below ow the Line  Bank Indonesia is providing liquidity to the banking industry through a repo mechanism for SBN in order to fund loan restructuring as part of the national economic recovery. If SBN purchases are insufficient, banks can apply to the government for fund placements, funded through SBN purchases by Bank Indonesia (below the line).  In accordance with Government Regulation No. 23 of 2020, government fund placements will only occur at participating banks if SBN available for repo to Bank Indonesia are insufficient, provided the participating bank is healthy based on a soundness assessment conducted by OJK and is holding tradeable government securities (SBN), Bank Indonesia certificates of deposit (CD), Bank Indonesia Certificates (SBI), Bank Indonesia Sukuk (SukBI) and Islamic Bank Indonesia certificates (SBIS) that have not been repo totaling more than 6% of third party funds.  Liquidity from Bank Indonesia to the banking industry for loan restructuring is provided through the following mechanisms: (i) Phase I: SBN Repo Total SBN held by the banking industry as of 14th May 2020 was recorded at IDR886.0 trillion. After meeting the Macroprudential Liquidity Buffer (MPLB) requirements for the banking industry, approximately IDR563.6 trillion must be repo to Bank Indonesia prior to applying for government fund placements. The current position of repo SBN to Bank Indonesia stands at IDR43.9 trillion. (ii) Phase II: Government fund placements in accordance with Government Regulation No. 23 of 2020 (iii) Phase III: Repo SBN - Macroprudential Liquidity Buffer (MPLB)  Pursuant to Bank Indonesia regulations (Macroprudential Liquidity Buffer - MPLB), banks are required to maintain minimum SBN totaling 6% of deposits (IDR330 trillion) for liquidity management in addition to the 3.5% reserve requirements  All SBN, totaling IDR300 trillion, can be repo through monetary operations in accordance with the Bank Indonesia Act before applying for short- term liquidity loan/financing facilities (PLJP/S).Bank Indonesia provide interest remuneration on the government account as a form of burden sharing to reduce the state budget burden. (iv) Phase IV: Short-term liquidity loan/financing facilities (PLJP/S)in accordance with Act No. 2 of 2020 Banks can apply for the short-term liquidity loan/financing facilities (PLJP/S)if the SBN already repoed are nearly depleted. Pursuant to Act No. 2 of 2020, short-term liquidity loan/financing facilities (PLJP/S) are only available to solvent and healthy banks based on OJK requirements and assessments, with adequate repayment capacity and guaranteed by current loans registered at Bank Indonesia. 84

  78. Bank k Indones esia ia Polic licy y Mix: : April il 2020 The e BI Boar oard of Gove vernor rnors agree reed on 13th h and 14th Apri ril l 2020 20 to hold ld the BI 7-Day ay Rev ever erse se Repo o Rate te at 4.50%, , while le also so main inta tainin ing the Deposit osit Facili ility (DF) and Lending ding Facili ility ty (LF) rates tes at 3.75% % and 5.25%. . Rupiah iah Reserv serve Requ quir irem emen ent Lowe wered d by 200 bps 1) To stabilize and strengthen rupiah exchange rates, Bank Indonesia has strengthened the intensity of triple intervention policy through the spot and Domestic Non-Deliverable Forward (DNDF) markets, as well as purchasing SBN in the secondary market. 2) To support national economic recovery efforts from the deleterious COVID-19 impact, Bank Indonesia will increase monetary easing through quantitative easing as follows: a. Expand monetary operations by providing banks and the corporates a term-repo mechanism with SUN/SBSN underlying transactions of tenors up to one year. b. Lower the rupiah reserve requirement ratios by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units, effective from 1st May 2020. c. Relax the additional demand deposit obligations to meet the Macroprudential Intermediation Ratio (MIR) for conventional commercial banks as well as Islamic banks/Islamic business units for a period of one year, effective from 1st May 2020. 3) To strengthen liquidity management in the banking industry and in relation to the lower rupiah requirements, Bank Indonesia has raised the Macroprudential Liquidity Buffer (MLB) by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units, effective from 1st May 2020. The banking industry is required to meet the additional MLB through purchases of government issued SUN/SBSN in the primary market. 4) To increase the uptake of non-cash payment instruments in order to mitigate the COVID-19 impact, Bank Indonesia is increasing various payment system policy instruments as follows: a. Supporting government programs to accelerate non-cash social aid program (bansos) disbursements to members of the public in conjunction with payment system service providers by expediting the electronification of relevant social programs, including the Family Hope Program (PKH), Noncash Food Assistance Program (BPNT), Pre-Employment Card and Smart Indonesian Card (KIP). b. Increasing public socialization activities in collaboration with payment system service providers to increase the uptake of non-cash payment instruments through digital banking, electronic money and broader QRIS acceptance. c. Relaxing credit card policy by lowering the upper limit for credit card interest, minimum payment requirements and the penalties for late payments, while supporting credit card issuer policy to extend the due date for customers. 85

  79. Bank k Indones esia ia Polic licy y Mix: : April il 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmission smission As a f follo low-up measure e to strength engthen en monet etar ary y and finan ancial ial market et stabil ility ity in conjunct junction ion with h the Coordin dinat atin ing g Ministr istry y of Econom omic ic Affair irs, s, Ministr istry y of Finan ance, e, Indon onesian sian Finan ancia ial l Service ices s Authori ority ty (OJK) and Deposit sit Insuran ance e Corporat oration ion (LPS), th the e Govern ernor or of Bank k Indonesia, onesia, Perry y Warjiy iyo, , on April il 1st 2020 deliv iver ered d The policy icy mix imp mpleme emented d by Bank k Indonesia onesia to mitiga gate e the COVID ID-19 imp mpact is as follo lows ws: 1) Lower the BI 7-Day (Reverse) Repo Rate in February and March by 25bps respectively; 2) Intensify triple intervention policy in the spot and DNDF markets and purchasing SBN in the secondary market; 3) Reduce the foreign currency reserve requirements for conventional commercial banks from 8% to 4%; 4) Extend the SBN repo tenor and provide daily auctions to loosen rupiah liquidity as well as increase the frequency of FX Swap auctions to daily in order to ensure adequate liquidity; 5) Expand the types of underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia; 6) Lower the rupiah reserve requirements by 50bps for banks that are engaged in export-import financing, as well as the financing of MSMEs and other priority sectors; 7) Loosen the Macroprudential Intermediation Ratio (MIR); 8) Provide hygienic currency fit for circulation, reduce the costs of the National Clearing System (SKNBI), maintain a QRIS Merchant Deposit Rate (MDR) of 0% for micro-merchants, and support non-cash disbursements of various government programs, including the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), as well as the Pre-Employment Card and College Smart Indonesia Card. Bank Indonesia reiterated that rupiah exchange rates are currently adequate and the outlook scenario formulated for the main macroeconomic indicators is a form of forward-looking anticipatory measure towards prevention through joint efforts, while Bank Indonesia continues to maintain rupiah stability. 86

  80. Bank k Indones esia ia Polic licy y Mix: : April il 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmission smission As a f follo low-up measure e to strength engthen en monet etar ary y and finan ancial ial market et stabil ility ity in conjunct junction ion with h the Coordin dinat atin ing g Ministr istry y of Econom omic ic Affair irs, s, Ministr istry y of Finan ance, e, Indon onesian sian Finan ancia ial l Service ices s Authori ority ty (OJK) and Deposit sit Insuran ance e Corporat oration ion (LPS), th the e Govern ernor or of Bank k Indonesia, onesia, Perry y Warjiy iyo, , on April il 1st 2020 deliv iver ered d The policy icy mix imp mpleme emented d by Bank k Indonesia onesia to mitiga gate e the COVID ID-19 imp mpact is as follo lows ws: Bank Indonesia also backs promulgation of the Government Regulation in Lieu of Law in order to relax prevailing laws to mitigate the COVID-19 • impact as an anticipatory measure in conjunction with the Government, OJK and LPS. COVID-19 handling requires extraordinary measures, unconventional policies and policies that exceed previous jurisdiction. • To that end, Bank Indonesia has reiterated its authority in accordance with Government Regulation in Lieu of Law (Perppu) No. 1 of 2020 as follows: 1) Expansion of BI authority to purchase long-term government securities (SBN) and government Islamic securities (SBSN) in the primary market in order to assist the Government finance the handling of the COVID-19 impact on financial system stability. 2) SBN will be purchased in the primary market by Bank Indonesia as a last resort if the market is unable to fully absorb the SBN issued by the Government. Further provisions will be regulated in conjunction with the Minister of Finance and the Governor of Bank Indonesia based on the following considerations: financial market conditions and the impact on inflation. 3) As an anticipatory measure, Bank Indonesia will purchase repo securities held by the Deposit Insurance Corporation (LPS) in order to finance the handling of solvency issues at systemic and non-systemic banks; 4) Provision of short-term liquidity loan or short-term liquidity financing facilities in compliance with sharia principles to systemic and non-systemic banks; 5) Foreign exchange flow management for residents. The use of foreign exchange by residents, including provisions for the surrender, repatriation and conversion of foreign exchange to maintain macroeconomic and financial system stability as follows: 6) Bank Indonesia would like to stress that this measure is not a form of foreign exchange control but policy to manage foreign exchange applicable only to residents (excluding non-residents/foreign investors). Foreign portfolio investment and foreign direct investment (FDI) are still required for the Indonesian economy, thus existing policy permitting the free flow of foreign exchange by foreign investors remains effective. 7) Regulating foreign exchange amongst residents is consistent with international prudential principles for macroeconomic management, particularly under economic distress, such as the current COVID-19 pandemic. 87

  81. Bank k Indones esia ia Polic licy y Mix: : April il 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmission smission Bank k Indonesia onesia has agree eed d a repurchase ase agree eement ment line e (repo o line) e) with h the US Federal al reser erve wo worth th USD60 billion ion • The agreement may be used by Bank Indonesia to fulfil US dollar liquidity if required. The repo line facility for Foreign and International Monetary Authorities (FIMA) has only been extended to a few central banks, thus indicating confidence in Indonesia's economic outlook and the macroeconomic policies implemented. In addition, Bank Indonesia has also established repo line facilities with several other institutions, namely the Bank for International Settlements (BIS), worth USD2.5 billion, the Monetary Authority of Singapore (MAS), USD3 billion, as well as other central banks in the region valued at USD500 million-USD1 billion. • The agreements will strengthen Bank Indonesia’s second line of defence, encompassing Bilateral Currency Swap Arrangements (BCSA) with several other central banks, namely the People’s Bank of China (PBoC), worth CNY200 billion (equivalent to USD30 billion), the Bank of Japan (BOJ), USD22.76 billion, Bank of Korea, KRW10.7 trillion (equivalent to IDR115 trillion), and the Monetary Authority of Singapore (MAS), USD10 billion. 88

  82. Bank k Indones esia ia Polic licy y Mix: : April il 2020 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmission smission Bank k Indonesia onesia Issued ed Imp mpleme ementin ting g Provisi isions ons for Auction on of Govern ernmen ent Debt Securitie ities s (SUN) and/or /or Govern ernment ment Islam amic ic Securities ities (SBSN) in the Primar mary y Market et • Bank Indonesia issued Board Member of Governors Regulation No. 22/5/PADG/2020 on Auction of Government Debt Securities and/or Government Islamic Securities in the Primary Market to Maintain State Financial Management Sustainability as Implementation of Government Regulation in Lieu of Law Number 1 of 2020 on State Financial Policy and Stability of Financial Systems for the Management of Corona Virus Disease 2019 (Covid-19) and/or Encounter the Threat to National Economy and/or Stability of Financial Systems. The regulation starts to take effect on 20 April 2020. • The regulation serves as a follow-up to Government Regulation in Lieu of Law Number 1 of 2020, granting authority to Bank Indonesia among others to purchase Government Debt Securities (SUN) and/or Government Islamic Securities (SBSN) in the primary market . It is necessary as a funding source for the government to recover the national economy including maintaining state financial management sustainability including SUN and/or SBSN issued in response to COVID-19 pandemic. Purchase of SUN and/or SBSN in the primary market is based on principle that Bank Indonesia is a last resort if the market capacity is unable to purchase them and/or result in high yield increase. Further, this regulation specifies the following: 1) Bank Indonesia holds auction of SUN and/or SBSN and auction of additional SUN and/or SBSN for long-term SUN and/or SBSN in the primary market as a follow-up to the implementation of Government Regulation in Lieu of Law Number 1 of 2020. 2) Provisions for offer quote and participants of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the applicable Finance Minister Regulation on auction of SUN and/or SBSN in the domestic primary market. 3) Bank Indonesia may quote an offer to purchase long-term SUN and/or SBSN in auction of SUN and/or SBSN and auction of additional SUN and/or SBSN in the following manners: a. directly without using the main dealer and/or SBSN main dealer; b. non-competitive bid. 4) Implementation of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the applicable Bank Indonesia provisions for auction of Government securities in the primary market provided that they are not in contravention of this regulation. 89

  83. Bank k Indones esia ia Polic licy y Mix: : March h 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmiss smissio ion To o stren engthen then coor oordinat inatio ion and d the va vario ious s polic icy meas easures s alrea eady dy taken en, , Bank Indones onesia ia on March nd 2020 introduce 2 nd oduced a var arie iety of five e follo low-up polic icy meas easures s to main intain tain monetar tary and d financ ancial ial market t stabili ility as well ll as mitigat igate e the COVID ID-19 risk sks 1) Intensify triple intervention policy to ensure rupiah exchange rates move in line with the currency's fundamental value and market mechanisms. To that end, Bank Indonesia will optimize its intervention strategy in the DNDF market, spot market and SBN market in order to minimize the risk of increasing rupiah exchange rate volatility. 2) Lower the FX reserve requirements for commercial banks from 8% to 4%, effective 16th March 2020, which will increase FX liquidity in the banking industry by around USD3.2 billion and simultaneously alleviate foreign exchange market pressures. 3) Lower the rupiah reserve requirements by 50bps for banks financing export-import activity in coordination with the Government. Effective from 1st April 2020 for a period of nine months before a further review, this policy is expected to facilitate export-import activity through lower costs/fees. 4) Expand the range of underlying transactions available to foreign investors in order to provide alternative hedging instruments against rupiah holdings. 5) Reaffirm that global investors can utilize global and domestic custodian banks to conduct investment activity in Indonesia. 90

  84. Bank k Indones esia ia Polic licy y Mix: : March h 2020 Mitiga igating ting the ri risk of COVID ID-19 tra ransmission smission th and th March 2020 has rein onesia on the Boar ard of Governor nors s Meeti eting g 18 th d 19 th Bank k Indonesia infor orced ed its policy icy mix towar owards ds mitiga gatin ting g the risk sk of COVID ID-19 9 transm smis issi sion on, , while le mainta tain ining ing money y market et and finan ancia ial l syst stem em stabil ility ity and cataly lyzi zing g econom omic ic growth wth momentum tum through gh the follo lowi wing g policy icy measures es: 1) Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms, including the spot and DNDF markets as well as purchasing SBN in the secondary market. 2) Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry, effective from 20th March 2020. 3) Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate liquidity, effective from 19th March 2020. 4) Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market, while encouraging the banks to utilize the foreign currency reserve requirements lowered by Bank Indonesia for domestic purposes. 5) Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia, which has been brought forward from 1st April 2020 to no later than 23rd March 2020. 6) Expanding the incentive of a 50bps daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors, effective from 1st April 2020. 7) Strengthening payment system policy to support COVID-19 mitigation efforts by: • providing hygienic currency fit for circulation, alternative cash and backup services, and urging the public to prioritize non-cash payment transactions; • encouraging the use of non-cash payment channels by reducing the cost of the National Clearing System (SKNBI) from the banking industry to Bank Indonesia from IDR600 to IDR1 and from customers to the banking industry from a maximum of IDR3,500 to IDR2,900, effective from 1st April 2020 until 31st December 2020; and • supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), Pre-Employment Card and College Smart Indonesia Card. 91

  85. Pri rinc ncipl iples s of Avera rage Reserv rve Requir irem ement nt Ratios os Impr provement vement Consid iderati erations ons for the Average rage Reserve ve Requir uirem emen ent Ratios ios Effectiv ective e Substance nce Old New Date Improve ovemen ent t a. Additional rupiah 16 th July • Improvement in average reserve requirement is a follow up average reserve Fixed RR: 5% Fixed RR: 4.5% to the monetary policy operational framework reform requirement for Average RR: 1.5% Average RR: 2% 2018 implemented by Bank Indonesia since 2016. conventional RR: 6.5% RR: 6.5% commercial banks • Monetary policy operational framework reform started in August 2016 as BI7DRR replaced BI Rate as policy rate. This 16 th July b. Annulment of was then strengthened in 1st July 2017, by the demand deposit 2.5% (from 1.5% RR) 0% 2018 implementation of the average reserve requirement in renumeration rupiah for conventional commercial banks at 1.5% out of the total 6.5% of GDP reserve requirement in Rupiah. The c. Implementation of reformulation is also backed by various efforts in financial foreign exchange Fixed RR: 8% Fixed RR: 6% market deepening. average reserve 1 st October Average RR: 0% Average RR: 2% requirement for 2018 • The current improvement aims to elevate flexibility in RR: 8% RR: 8%* conventional banking liquidity management, enhance banking commercial banks intermediation function, and support efforts in financial market deepening. This multiple targets will in turn improve d. Implementation of the effectiveness of monetary policy transmission in Fixed RR: 5% Fixed RR: 3% 1 st October average reserve maintaining economic stability. Average RR: 0% Average RR: 2% 2018 requirement for RR: 5% RR: 5%* Islamic banks * Complemented by harmonisation feature to align with the average reserve requirement in rupiah feature for conventional commercial banks (e.g. Calculation period, lag period, and Maintenance period of 2 weeks) Source: Bank Indonesia 92

  86. Relaxing laxing Reserve erve Require uirement nt Ratios ios Lower reserve requirements, effective 1 st May 2020 Regulati ulation 1 200bps for conventional commercial banks INELIGIBLE for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3% 2 50bps for Islamic banks and Islamic business units INELIGIBLE for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3% 3 200bps for conventional commercial banks eligible for looser daily reserve requirements as per macroprudential policy to support export- import and MSME financing, effective from 1 st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3% 4 50bps for Islamic banks and Islamic business units eligible for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3% Source: Bank Indonesia 93

  87. Princ inciples iples of Macroprud pruden entia tial Interm ermed ediation iation Rati tio o (MIR) R) and Macropruden prudenti tial al Liquid uidity ity Buffer er (MLB) B) Conside ideratio rations ns for r Mac acrop opru rude dential ntial Instru truments ments Mac acropr oprude udentia ntial Interme ermedia diatio tion n Rat atio io (MIR IR) and d Macropr prude udential ntial Liquidit uidity y Buffer er (MLB) B) 1 2 3 4 Striving to stimulate the bank The policy is expected to This The regulation is effective intermediation function and liquidity stimulate the bank macroprudential for conventional management, Bank Indonesia intermediation function to the policy instrument is commercial banks from 16 th July 2018 and for issued Bank Indonesia Regulation real sector congruent with countercyclical and (PBI) No. 20/4/PBI/2018 and Board sectoral capacity and the can be adjusted in sharia banks from 1 st of Governors Regulation (PADG) No. economic growth target in line with prevailing October 2018. 20/11/PADG/2018 concerning the compliance with prudential economic and Macroprudential Intermediation principles, while also overcoming financial dynamics. Ratio (MIR) and Macroprudential the issue of liquidity Liquidity Buffer (MLB) for procyclicality. Conventional Commercial Banks, Sharia Banks and Sharia Business Units. Source: Bank Indonesia 94

  88. Principles inciples of Macroprud pruden ential tial Int nterm ermed ediation iation Ratio tio (MIR)* )* MIR Shar aria ia (Shar aria ia Banks and d Sharia ia Business ess Regulati lation on MIR (Con onventional tional Comm mmercial ial Bank) Units) Un s) 1 MIR Accounting Formula Credit + Owned Bond Financing + Owned Sharia Bond Deposit + Issued Bond Deposit + Issued Sharia Bond   2 Rate and Parameters Ceiling 94% Ceiling 94%   Floor 84% Floor 84%   Minimum Capital Adequacy Requirement 14% Minimum Capital Adequacy Requirement 14%   Upper disincentive parameter 0.2 For Sharia business units, the Minimum Capital Adequacy Requirement is the same as that of the parent  Lower disincentive parameter 0.1 conventional commercial bank  Upper disincentive parameter 0.2  Lower disincentive parameter 0.1   3 Scope of credit/financing and Credit: rupiah and foreign currency Financing: rupiah and foreign currency deposits to calculate MIR / MIR   Deposits in rupiah and a foreign currency: (i) Deposits in rupiah and a foreign currency: (i) wadiah Sharia demand deposits, (ii) savings deposits; and (iii) savings; and (ii) unrestricted investment funds, excluding term deposits, excluding interbank funds interbank funds 4 Source of Data Monthly Commercial Bank Reports Monthly Sharia Bank Reports  5 Criteria for securities held Corporate bonds and/or corporate sukuk Corporate bonds and/or corporate sukuk  Issued by a nonbank corporation and by a resident  Offered to the public through a public offering  Equivalent to investment grade rating affirmed by a rating agency  Administrated by an authorised securities institution 95 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  89. Principles inciples of Macroprud pruden ential tial Int nterm ermed ediation iation Ratio tio (MIR)* )* Regulati lation on MIR (Con onventional tional Comm mmercial ial Bank) MIR Shar aria ia (Shar aria ia Banks and d Sharia ia Business ess Un Units) s) 6 Percentage of the securities 100% held Criteria for securities issued   7 medium-term notes (MTN), floating rate notes (FRN) sharia-compliant medium-term notes (MTN) and/or and/or bonds other than subordinated bonds sukuk other than subordinated sukuk  Issued by a nonbank corporation and by a resident  Offered to the public through a public offering  Equivalent to investment grade rating affirmed by a rating agency  Administrated by an authorised securities institution 8 Securities Reporting Offline delivery mechanism (email)   9 Scope of deposits to meet Average daily total deposits in rupiah at all branch Average daily total deposits in rupiah at all branch DD MIR /DD MIR Sharia offices in Indonesia offices and sharia business units in Indonesia   Including rupiah liabilities to a resident and non- Including rupiah liabilities to a resident and non- resident third-party nonbank, consisting of: (i) resident third-party nonbank, consisting of: (i) wadiah demand deposits, (ii) savings deposits; (iii) term savings; (ii) unrestricted investment funds, and (iii) deposits, and (iv) other liabilities other liabilities  10 Relaxation of DD Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing disbursement MIR/Sharia DD MIR and fund accumulation  The provisions may be relaxed based on a request from a conventional commercial bank, Sharia bank or Sharia business unit or a recommendation from the Financial Services Authority (OJK)  Conventional commercial banks, Sharia banks or Sharia business units that receive the relaxed policy are exempt from sanctions 96 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  90. Adjustment ustment of Macropr prudent udential ial Interme ermediat diatio ion n Ratio io (MIR)/ )/Sharia Sharia Macropru prude dent ntial ial Intermed ermediation ation Ratio io (Sharia aria MIR)* Bank Indonesia strengthens accommodative macroprudential policy through an adjustment to the Macroprudential Intermediation Ratio by including the loan/financing received by banks as a component of funding in MIR/sharia MIR. Polic icy Backgrou kgrounds nds Main Regulatory latory Points ts Including loan received by conventional commercial banks and financing received by Islamic banks and Islamic • In response to global and domestic economic • business units as a source of bank funding in the calculation of MIR/sharia MIR. developments, BI is maintaining an accommodative policy mix to maintain the The criteria for loans/financing received by banks that are eligible to be included in MIR/sharia MIR calculation • economic growth while also maintaining are as follows: macroeconomic and financial system stability. a. Loans/financing received in Rupiah and foreign currency; b. Loans/financing received in the form of bilateral loans and/or syndicated loans for conventional commercial BI relaxed MIR/sharia MIR policy in March • banks, Islamic banks and Islamic business units; 2019, which stimulated bank lending. c. Loans/financing excludes interbank loans/financing. Nevertheless, the macroprudential d. Loans/financing received with a maturity of no less than 1 year; and intermediation ratio (MIR) is again e. Loans/financing received based on a loan agreement. approaching the upper bound, thus necessitating efforts to increase bank lending Based on points a and b, the adjusted MIR/sharia MIR formula is as follows: • capacity. Credit it + Owned Bond Considering the potential of bank funding • Deposit it + Issue ued Bond + Loan/ n/Financ Financing ing Receiv ived ed sources that are not included in the MIR ratio, for example the expanding share of Lower disinc incent ntiv ive param ameter er Upper disinc incent ntiv ive param ameter er loans/financing received by banks, BI decides MIR/sh R/sharia ia MIR MIR RR RR= MIR/sh R/sharia ia MIR MIR RR RR= to adjust MIR/sharia MIR policy in order to Lower Disincentives Parameter x (Lower Bound of MIR/Sharia MIR 0.2 x (Bank’s MIR/sharia MIR - Upper Bound of optimize loans/financing received for bank Target – Bank’s MIR/Sharia MIR) x Deposit MIR/Sharia MIR Target – ) x Deposit lending. This policy to stimulate credit growth will • *This disincentive applies for banks with CAR below 14%. comply with prudential principles. Therefore, BI is only encouraging banks with low non- performing loans and adequate capital resilience to expand credit/financing. The reference rate used to calculate penalties for banks that do not meet MIR/sharia MIR policy will be adjusted • from the Jakarta Interbank Offered Rate (JIBOR) to the Indonesia Overnight Index Average (IndONIA). *This adjustment will be effective from December 2 nd , 2019 97 Source: Bank Indonesia

  91. Principles inciples of Macroprud pruden ential tial Liquidit uidity Buf uffer er (MLB) LB) Regulati lation on MLB (Conventional tional Comm mmercial ial Bank) MLB Shar aria ia (Shar aria ia Banks) 1 Rate 4% of rupiah deposits (including Sharia Business Units 4% of rupiah deposits deposits)   2 Components Securities denominated in rupiah held by a conventional Sharia-complaint securities denominated in rupiah commercial bank that may be used for monetary held by an Sharia bank that may be used for sharia- operations (including SBI/SDBI/SBN); and compliant monetary operations (including SBIS/SBSN)  Sharia-complaint securities denominated in rupiah held by an Sharia business unit that may be used for sharia- compliant monetary operations (including SBIS/SBSN) 3 Calculation Formula Percentage of rupiah securities held by a conventional Percentage of sharia-compliant rupiah securities held by commercial bank to rupiah deposits an Sharia bank to rupiah deposits 4 Flexibility Under certain conditions, the securities used to meet the MLB Under certain conditions, the securities used to meet the may be used for repo transactions to Bank Indonesia for open sharia MLB may be used for repo transactions to Bank market operations, totalling no more than 2% of rupiah Indonesia for open market operations, totalling no more deposits than 2% of rupiah deposits   5 Sources of Data on Monthly Commercial Bank Reports Monthly Sharia Bank Reports Deposits   Rupiah deposits to calculate MLB are the average daily Rupiah deposits to calculate sharia MLB are the total deposits at all branches in Indonesia average daily total deposits at all branches in Indonesia  Rupiah deposits include: (i) demand deposits, (ii) savings  deposits; (iii) term deposits, and (iv) other liabilities Rupiah deposits include: (i) wadiah savings; (ii) unrestricted investment funds, and (iii) other liabilities 98

  92. Macropru prude dent ntial ial Liquidi uidity ty Buffer r (MLB) ) Policy y and d Cre redit it card policy cy Policy to increase the Macroprudential Liquidity Buffer (MPLB), effective 1 st May 2020. Regulati lation on Befor ore After er 1 Increase in the Macroprudential Liquidity Buffer (MLB) 4% of rupiah deposits 6% of rupiah deposits for conventional commercial banks 2 Increase in the Macroprudential Liquidity Buffer (MLB) 4% of rupiah deposits 4.5% of rupiah deposits for Islamic banks and Islamic business units Credit card policy, effective 1 st May 2020. Regulati lation on Befor ore After er Effec ectiv tive Perio iod 1 st May 2020 1 Lower upper limit on credit card interest 2.25% per month 2% per month 1 st May 2020 – 31 st 2 Temporary reduction of minimum payment 10% 5% requirements December 2020 1 st May 2020 – 31 st 3 Temporary reduction of late payment 3% or maximum of IDR150,000 1% or maximum of IDR100,000 penalties December 2020 1 st May 2020 – 31 st 4 Supporting credit card issuer policy to extend Issuer discretion the due date for customers December 2020 99

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