[PPT] - March Ma ch 202 020 About t Invest estor or Relati lations PowerPoint Presentation

SLIDE 1

Ma March ch 202 020

Republic ublic of Indon

nesi

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

SLIDE 2

1

About t Invest estor

r Relati

lations

ns Uni

Unit t of the Repub ublic lic of Indonesi esia

Investor Relations Unit (IRU) of the Republic of Indonesia has been established as a joint effort between Coordinating Ministry of Economic Affairs, Ministry of Finance and Bank Indonesia since 2005. The main objective of IRU is to actively communicate Indonesian economic policy and to address concerns of investors, especially financial market investors. As an important part

f

its communication measures, IRU maintains a website under Bank Indonesia website which is administered by International Department of Bank Indonesia. However, day-to-day activities of IRU are supported by all relevant government agencies, among others: Bank Indonesia, Ministry of Finance, Coordinating Ministry for Economic Affairs, Investment Coordinating Board, Ministry of Trade, Ministry of State Owned Enterprises, Ministry of Energy and Mineral Resources and Financial Services Authority. IRU also convenes an investor conference call on a quarterly basis, answers questions through email, telephone and may arrange direct visit of banks/financial institutions to Bank Indonesia and other relevant government offices. Published by Investor Relations Unit – Republic of Indonesia Website: http://www.bi.go.id/en/iru/default.aspx Contact: Wiwit Widyastuti (International Department - Bank Indonesia, Phone: +6221 2981 8279) Evy Mulyani (Fiscal Policy Office - Ministry of Finance, Phone: +6221 345 0012) Subhan Noor (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Phone: +62213510714) Phone: +62213510714) E-mail: contactIRU-DL@bi.go.id This Presentation Book also can be downloaded from: http://www.bi.go.id/en/iru/presentation/red/Default.aspx

SLIDE 3

2

What’s New in This Edition

R&I Up Upgrade aded d Sover ereign eign Cred edit it Rating ing Indones donesia ia at BBB+/Ou /Outlo look

k

Stabl able

…page 7

Authorities’ Concerted Efforts towar ard Covi vid-19 19

…page 8

Bank k Indon

nes

esia ia Lower ered ed BI 7-Day Rever erse se Repo

Rate

e by 25 bps to 4.50%

…page 64

Outlo look of Domest mestic ic Econom nomy

…page 100

SLIDE 4

3

Overvie view

1 2 3 4 5 6

Instit ituti tional

nal and Govern

ernance nce Effec ecti tiven enes ess: : Accelera elerated ed Reform rms Agen enda da with Instit ituti tional

nal Improvem

emen ent Econom nomic ic Factor: Strong ng and Stable le Growth th Prospec ects ts Remain in Intac act External nal Factor: tor: Improved

ved Extern

rnal al Resilience lience Fiscal al Perform

rman

ance and Flexibi ibility lity: : More Fiscal al Stimulu ulus with Pruden ent t Fiscal al Managem gemen ent Monetary tary and Financi ncial al Factor: tor: Credib ible le Monetary tary Polic icy Track k Recor

rd

d and Favou

urab

rable le Financi ncial l Sector tor Progres ressiv ive Infras rastruct ructur ure e Develop velopmen ent: t: Strong ng Commit itmen ent t on Accelera elerati tion

n
f
f Infras

astr truct ucture ure Provis ision ion

SLIDE 5

Instit itution utional l and d Gover ernme ment t Effecti ectiven eness: ess: Accel celerat erated ed Ref eform

rms Age

gend nda a wit ith Instit itution utional l Impr mprovem emen ent

Se Sect ction ion 1

SLIDE 6

5

Improving ving Global al Percepti eption

n

…with recent impr mprovem ements ents on corrup upti tion n percept ption

n inde

dex x and governa rnanc nce e indica dicator

r

1. Source: World Economic Forum – The Global Competitiveness Report 2019; 2. Source: World Bank – Doing Business 2020 Report; 3. Source: World Bank – The Worldwide Governance Indicators 2019 Update; 4. Source: Transparency International – Corruption Perceptions Index 2019 Report

World ldwid ide Govern ernance e Indica icators tors3 Ease se of Doing ing Busine iness ss2 Globa

bal Competiti

petitiven enes ess s Index ex1 Corru ruption ption Perceptio ception Index ex4

Higher rank is better Higher score is better Higher rank is better (rankings at the time of annual report publication) Higher rank is better 41 36 45 50 20 30 40 50 60 70 80 90 Rank India Indonesia Philippines Bulgaria Colombia 91 72 73 73 20 40 60 80 100 120 140 160 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Indonesia India Philippines Bulgaria Colombia

*New Concepts by using the Global Competitiveness index 4.0 which captures the determinants of long-term growth.

52 28 59 51 43 46 15 30 45 60 2010 2011 2012 2013 2014 2015 2016 2017 2018 Voice and Accountability Political Stability/Absence of Violence Government Effectiveness Regulatory Quality Rule of Law Control of Corruption 38 40 41 41 36 34 42 43 36 37 30 32 34 36 38 40 42 44 2012 2013 2014 2015 2016 2017 2018 2019 Indonesia India Philippines Bulgaria Colombia

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6

Continuou tinuous s Improvem ement nt of Investmen estment t Clima imate e

…another

ther leap on Indonesia’s Rank on Ease of Doing

ng Busines ness (EODB)*

EoDB DB 2020 Rank EoDB DB 2019 Rank Change e in Rank EoDB DB 2020 Points ts EoDB DB 2019 Points ts Change e in Points ts

Ove verall rall 73 73 73 73 69.6 .6 68.0 .0 1.6 Startin ting g a busines ess 140 40 134 134 6 81.2 1.2 81.2 1.2 0.0 Dealing ling with Constr truct uction ion Pe Permit its 110 112 2 66.8 .8 66.6 .6 0.2 Gett tting ing Electri tricit ity 33 33 33 33 87.3 .3 86.4 .4 0.9 Registerin ering g Proper erty ty 106 100 6 60.0 .0 61.7 .7 1.7 Gett tting ing Credit it 48 48 44 44 4 70.0 .0 70.0 .0 0.0 Prot

tecti

ting ng Minor

rit

ity Inves vestor

rs

37 37 51 51 14 70.0 .0 63.3 .3 6.7 Paying ing Taxes 81 81 112 31 75.8 .8 68.0 .0 7.8 Trading ing Acros

ss Borders

116 116 67.5 .5 67.3 .3 0.2 Enfor

rcing

ing Contrac racts 139 139 146 7 49.1 47.2 .2 1.9 Resolvin lving g Insolv lven ency 38 38 36 36 2 68.1 67.9 .9 0.2

Government efforts to boost business growth through deregulations and de-bureaucratization have been recognized by the improvement of EODB
Structural reforms will continue including in the budget and real sectors

Source: World Bank * Higher rank is better, EoDB 2020 was published in October 2019

SLIDE 8

7

BBB / Stable Baa2 2 / Stable BBB / Stable

Feb 2020, Rating g Affi firm rmed at Baa2/St Stabl ble “The affirmation of the ratings is underpinned by a number of credit strengths – including Indonesia’s robust and stable growth rates and a low government debt burden, preserved by consistent fiscal discipline and emphasis on macroeconomic stability – as well as persistent credit challenges.” May 2019, Rating Upgra grade ded at BBB/St Stabl ble “We raised the ratings to reflect Indonesia’s strong economic growth prospects and supportive policy dynamics, which we expect to remain following the re-election of President Joko Widodo recently.” January ry 2020, Rating Affi firm rmed d at BBB/St Stable Indonesia's rating balances a favourable medium-term growth outlook and a small government debt burden compared with 'BBB’ category peers against challenges that include a strong dependence on external financing, low government revenue, and lagging structural indicators such as governance indicators and GDP per capita.

BBB+ BBB+ / Stable

January ry 2020, Rating Upgra grade ded at BBB+/St Stable “The ratings mainly reflect the country’s solid domestic consumption-led economic growth, restrained budget deficit and public debt, and resilience to external shocks supported by flexible exchange rate and credible monetary policies and accumulation of foreign exchange reserves. Since its previous rating review, JCR has been paying particular attention to the continuing reform initiatives pushed by the administration of President Joko Widodo and the content and progress of the economic policy taken by his second administration which took office in October

2019. Among the reform agenda, infrastructure development has continued to progress faster than JCR had

expected.”.

BBB+ / Stable

March 2020, Rating g Upgra graded ded at BBB+/St Stabl ble “The upgrade reflects the firm implementation of policies to strengthen economic growth potential on the back of a solidified political foundation. As the global spread of the novel coronavirus could strain growth in the Indonesia economy, the government and the central bank are working to shore up the economy and maintain macroeconomic stability. Given the country’s underlying economic strength which remains intact, R&I expects the economy to start to recover if the epidemic is brought under control”

Indone nesia sia Has s Been Rated ed as Investmen stment t Grade de Countr ntry sinc nce e 2017

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8

Con

nce

certed ed Effor

rts

ts to

Mitigat

tigate Covi vid-19 9 Risk

General al Measures ures

Establishment of a COVID-19 Task Force to Accelerate Coronavirus Disease 2019 (COVID-19) Handling Extension of the emergency status for COVID-19 until 29th May 2020 Permission for civil servants to work from home, while maintaining the continuity of public services Closing and limiting the mobility of Indonesian citizens abroad and foreigners to enter Indonesian territory with strict immigration and health protocols..

5 3 2 1

Evacuation of Indonesian citizens from affected countries and strict quarantine processes with complete medical facilities.

6

Promoting massive prevention of the spread of Covid-19; application of health protocols in public areas, public transportation, and offices; calls for carrying out social distancing and the prohibition of carrying out activities that involve large crowds.

4

Conducting Rapid Test in 17 provinces with positive patients

f Covid-19.

7

Decentralized tests by increasing the number of Covid-19 test laboratories throughout Indonesia. Providing Designated Hospitals, including additional designated hospital in Galang Island. Utilization of four (4) of ten (10) Wisma Atlet Kemayoran Towers (former Athletes Hotel) as emergency hospital. Establishment of Contingency Plans in the regions level.

12 10 9 8

Preparation of drugs that have been used for Covid-19 patients in China according to doctor's prescription. The drug has been distributed to designated facilities and its stock is continuously being augmented with domestic pharmaceutical production..

13

Preparation of 606 health workers and 192 non-health workers in Wisma Atlet Kemayoran and recruitment of 328 medical volunteers and 2590 non-medical personnel in the field of logistics and operations.

11

Speed up the procurement and distribution of personal protective equipment for designated hospitals and the provision of incentives for medical personnel.

14

SLIDE 10

9

Government ernment Measur asures es to

Mitigat

tigate e Covid vid-19 Risk

Fisc scal and Non Fisc scal al Stimuli muli

Brought forward the launch of the Pre-Employment Card in Bali, North Sulawesi and the Riau Islands Increased disbursements of the Noncash Food Assistance Program (BPNT) from Rp150,000 to Rp200,000 for a six- month period commencing March 2020 Provided incentives for domestic and international travellers Discounted the price of aviation fuel at airports located around nine travel destinations for March-May 2020

6 4 2 1

Reduced the air passenger service fee (PSF) by 20% for March-May 2020

5

Subsidised or provided grants totalling Rp3.3 trillion to local governments affected by lower tax revenues food service activities

7

Provided a stimulus package for housing in the form of an Rp800 billion subsidy as well as a subsidy on down payments totalling Rp700 billion

3

Non Non-Fisc iscal Stimuli li

Relaxation of Income Tax (PPh Article 21) Relaxation of Income Tax on Imports (PPh Article 22) Relaxation of Value Added Tax (VAT) Restitution

4 2 1

Relaxation of Income Tax (PPh Article 25)

3

Reduce and simplify restrictions on export activities to maintain export performance and competitiveness

1

Reduce and simplify restrictions on import activities to ensure the availability of raw materials

2

Fiscal l Stimul muli i Phase e 2 Fiscal l Stimuli li Phase e 1

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10

Bank Indonesia’s Meas easure ures to

Miti

tigat gate Covi vid-19 9 Risk

To mainta ntain n Monet etary y and Fina nanci ncial Mark rket t Stability

Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms Reducing the foreign currency reserve requirement ratio for conventional commercial banks from 8% to 4%, effective 16th March 2020. Reducing the rupiah reserve requirement ratio by 50bps for banks engaged in export-import financing activity in coordination with the Government. Expanding the types of underlying transactions available to foreign investors as hedging alternatives against rupiah holdings in Indonesia.

4 3 2

Measu asures s Launched hed on March 2, 2020 Measu asures s Launched hed on March 18-19, , 2020

1

Source: Bank Indonesia

Global investors may utilise global and domestic custodian banks for investment activity in Indonesia.

5

Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms. Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry. Increasing the frequency of FX swap auctions for 1, 3, 6 and 12- month tenors from three times per week to daily auctions in

rder to ensure adequate liquidity.

Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic NDF, thus increasing hedging alternatives against rupiah holdings.

5 3 2 1

Expanding the incentive of a 50bps looser daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors.

6

Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market.

4

Strengthening payment system policy to support COVID-19 mitigation efforts .

7

SLIDE 12

11

3,2 3,5 3,7 3,7 4,5 10,1 10,1 11,6 11,9 23,0 25,2 32,9 36,4 44,6 47,8 0,0 10,0 20,0 30,0 40,0 50,0 60,0 Australia Germany Singapore Korea Taiwan Malaysia Myanmar Mexico Philippines US Indonesia Thailand Vietnam China India 31,31 34,47 23,61 26,94 24,99 26,57 31,27 34,52 22,48 27,21 24,95 26,34 31,78 34,55 23,14 29,56 25,31 26,26 5 10 15 20 25 30 35 40 India Indonesia Malaysia Philippines Thailand Vietnam 2018 2019e 2020e

50 100 150 200 250 300 Billion USD 2018 2017 22,5 25,2 26,3 31,9 32,1 34,2 36,4 36,4 38,5 39,2 39,8 48,1 48,7 58,3 10 20 30 40 50 60 70 Myanmar Taiwan South Korea Philippines Hong Kong Malaysia Australia Japan Thailand Singapore Vietnam Indonesia India China

Indone nesia sia Remai mains ns the Investmen stment t Dest stinati ination

n of Choic

ice

1. Source: The Economist – Asia Business Outlook Survey 2019 2. Source: IMF World Economic Outlook, Database October 2019 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2019 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey)

Total Inve vestm tment / GDP DP (%)

Indonesi esia Enjoys

ys Large Invest

estment ents Relative e to Peers within the Region

n2

JBIC: Among g ASEAN countries, es, Indonesi esia is one of the most preferred place e for business ess invest estment (Decemb ember 2019)4 The Econom

mist: Indonesi

esia rounds out the top five of Asian economies es that can look forwar ward to increas eased ed invest estment ent spending.

g. (January

y 2019)1

% of surveyed who consider each country has promising prospects

UNCTAD: D: Indonesi esia is listed ed in the top 20 host economies es based ed on FDI inflo flows ws, 2017 and 2018 (June 2019) 2019)3

(x) = 2017 ranking

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12

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

n Mutual

ual Coopera rati tion". n".

Source: Coordinating Ministry for Economic Affairs

1

Improvin ing the Qualit ity of the Indon

nesia

esian Labou

ur

Force ce

2

Achie ieving ing Prod

ducti

ctive, , Indepen ependen ent t and Comp mpetit etitiv ive e Eco conomic mic Struct cture

3

Atta tain inin ing Equitabl quitable and Pros

sperou

perous Nati tion

nal

Develop elopme ment

4

Achie ieving ing Sust staina inable Enviro ironment mental Climat ate

5

Devel elop

ping

ing Cultu tural Prog

gres

ess Reflecti ting g the Nation ion's Personalit ity

6

Develop evelopin ing a a Dignified ed and Trust stwor worth thy y Lega egal Sys ystem em Free Free from

m Cor
rruption

7

Protect

tectio

ion of All All Nati tion

ns and

and Prov

vision

sion of Secu curit ity y to All Citizen ens

8

Attain ining Good

d,

, Ef Effecti ective, , and and Reliable Govern ernance

9

Achie ieving ing Synerg ergy y of Gov

vern

ernmen menta tal Framewo mework with the Region

nal Governmen

ent Stren ength then ening ing Econ conomi

mic

c Resi esilien ence ce to Achie ieve Superio perior Econ

nomi
mic Growth
wth

Devel elop

ping

ing Mor

re

e Remo mote Region gions to to Reduce e Econ

nomi
mic Gaps

ps and Improv

ve Equa

qualit ity Impr prov

vement

ment of Qualit ity and Compet mpetit itiv ivenes ess of the e Labour Force ce Enga gaging ing in Menta tal Revolu evoluti tion and Cultu ture e Devel elop

pmen

ment Stren ength then ening ing Infrastructu cture e to

Supp

pport

rt Econo

conomi mic Devel velopm pmen ent t and Improv prove Basi sic Services ces Conse servati tion

n of Enviro

ironmen ment, t, Supp pporti ting Clima mate te Change, e, and Enhanci cing Disa saster ter Resil silie ience ce Enhanci cing Polit itical, ical, Lega egal, Defen ense e and Stab ability ty and Transformi

rming Public

ic Servi vice ces

1

HR HR Develo lopmen ent

2

Infrastruc ucture Develo lopmen ent

3

Regulat lation ion Simp mplif ific ication

n

5

Econom

mic

c Tran ansformation

n

4

Simplifi lifica cation ion of Bureau aucr cracy cy

Presid esident‘s Miss ssions Top 5 Presid esidentia tial l Prio ioriti ities 7 7 RP RPJM JMN N De Development Agenda

SLIDE 14

13

Simplify plifying ing Regulat ulations ions throu

ugh

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.

1Under discussion

Source: Coordinating Ministry for Economic Affairs

Financial Sector1 T axes

Investment

Labour

Omni Omnibus Law Pri riori

rity Sect

ctors

rs

1) Simplification ofLicensing 2) Investment Requirements 3) Employment 4) Ease, Empowerment and Protection of MSMEs 5) Ease of Doing Business 6) Research and Innovation Support 7) Government Administration 8) Imposition of Sanctions 9) Land Acquisition 10) Government Investment and Projects 11) Economic Zone

11 Cluster ters s of Omnibu bus s Law Cipta Lapa pangan Kerja (Job Creati tion

n)

) 6 Pillars of Omnibus Law w Perpa pajakan (Taxa xati tion

n)

1) Investment Funding 2) Territorial System 3) Personal Taxpayer 4) Taxpayer Compliance 5) Equity of Business 6) Taxation Facility  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.

SLIDE 15

14

The Economic

mic Policy

icy Pa Packages ages

“To improve national industry competitiveness, export and investment to generate significant economic growth”

Phase e III I (7 Oct t ’15) Financial services facilitation, export financing and elimination of business unnecessary burden Phase e IV (15 Oct t ’15) Social safety net and betterment of people welfare Phase e V (22 Oct t ’15) Improving industry and investment climate through tax incentives and deregulation on sharia banking

Harmoni nizing ng Regul ulat ation

ns

Simplifying g Bureau eaucrat atic Proc

ces

ess Ensurin uring g Law Enfor nforceab eability

Phase e VI (5 Nov ’15) Stimulating economic activities in border areas and facilitating strategic commodities availability Phase e I (9 (9 Sept pt ’15) Improving national industry competitiveness Phase e II (29 Sept ’15) Easing permit requirement and simplifying export proceeds requirement Phase se VII I (7 De Dec ’15) Stimulating business activities in labor-intensive industries nation-wide through incentives in the form of accelerating land certification process for individuals Phase se VIII II (21 De Dec ’15) Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries Phase se IX (27 Jan ’16) Accelerating electricity generation, stabilizing meat prices and improving rural–urban logistics sector Phase e X (11 Feb ’16) Revising the Negative investment List and improving protection for SMEs Phase se XI (29 29 Mar ’16) Stimulating national economy through facilitation to SMEs and industries Phase e XII II (28 28 Apr’16) Improving Indonesia’s rank on Ease of Doing Business (EODB) Phase e XIII I (24 Aug ’16) Low Cost Housing for Low-Income Communities Phase e XI XIV (10 Nov ’16) Roadmap for E-commerce

Source: Coordinating Ministry for Economic Affairs

Phase e XV (15 Jun ’17) Improving logistics In addit ition

n 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 Phase e XVI (1 (16 Nov ’18) Improving the competitiveness and domestic economy

SLIDE 16

15

Improving ving the Compe peti titiv tiven eness ess and Domes esti tic c Econom

my

The 16th

th Econom

mic Policy

y Pac Packa kage has been launched hed

Source: Coordinating Ministry for Economic Affairs

TAX HOLIDAY DAY EXPANSI SION

Backgr groun

und

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 2) Increasing the process of convenience of filing process and tax holiday facilities provision

EXPORT PROCEEDS DS (DHE) SCHEME

Tax Rates es on Deposit Inter eres est Incom

me

Tax Rates es on Deposit Inter eres est Incom

me

SLIDE 17

16

Progr gress ess of the Economic

mic Policy

icy Pa Packages ages*

Initially, there are 236 regulations which need to be deregulated As of October 1st, 2019, deregulation of 223 regulations are finished (99%), comprising 53 regulations at Presidential level and 170 regulations at Ministerial/Institutional level Total regulation which are still discussed: 2

I–XII

223 23

SET SET

99% 99% 11 11

REVOKE OKED REGULA ULATIO IONS

2

ON GOIN ING DISCUS CUSSION ION

1%

171 171 TOTAL

170

MINISTERIAL/I AL/INSTITUTIONAL AL LEVEL EL

99% 99%

47 47 42 42

SELESAI AI

PRESIDE IDENTIA TIAL

54 TOTAL

53 53 FINISH

ISHED ED

PRES ESIDENTIAL AL LEVEL EL

99% 99% I–XVI

FINISH ISHED ED

I–XII

236 36

TOTAL INITIA IAL REGULA ULATIO IONS NS

I–XVI

I–XII

225 25

TOTAL REGULA ULATIO IONS NS

I–XVI

Based on the further assessment, 11 regulations has been revoked from deregulation process Total regulation subject to be deregulated: 225 regulations

Source: Coordinating Ministry for Economic Affairs *as of October 1st, 2019

SLIDE 18

17

Other er Progress

gress on Econom
mic

ic Polic licy y Pa Packages ages

29 Provinces have set 2016 Minimum Wage System in accordance to the Government Regulation (GR) No. 78/2015

Fair, , Simplified mplified & & Project ctable Wage Syst stem

The Provinces of Central Java proposed 3

IZ’s: Kendal, Demak, and Ungaran

Pharmaceutical IZ in Bitung (North Sulawesi)

in 2017

Indus ustrial trial Zone Developme pment nt of Spesial Economi mic Zone (SEZ)

Investment commitments in SEZ up to 2017 reach 41 T, with 3 hour licenses already applied in 4 SEZ’s Administrators in 2017 52 Bonded Logistic Center has been launched to support various industries

Deregul ulati ation n on Logist stics cs Sector

r

SLIDE 19

18

Investment estment Incentiv entives es to

Boo
ost

st Industr ustry y Sect ctor

r

BUSINESS INESS EXPAN ANSION ION

Tax all

llowa

wance

ce

Exem

emption ption or relief ief of import port duty ty on capita pital l goods, , machine inery ry or equip ipmen ent for production purposes that can not be produced domestically;

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 produced domestically for a certain period of time;

Accelerate depreci

reciation tion or amortiz

rtization

tion (part of tax allowance); and

Property

perty tax reli lief ef, especially for certain business sectors in certain regions;

Combine with Online Single Submission (OSS)

Tax holid

liday of corporate income tax in a certain amount and time

PIONEER NEER INDUS USTR TRIE IES SPECIA CIAL L ECONO ONOMIC MIC ZONE NE

No coll

llec ection tion of VAT and Luxury ry Goods

ds Sales

les Tax (PPnBM BM), ),

Custo

toms s tax exem emption ption,

Tax Allow

lowance ce and Tax Holi liday,

Suspe

spensio sion of Impo port t Duty ty,

0% Import

port Duty ty for goods produced using local components of a certain level

INDUS USTR TRIA IAL ZONE NE FREE EE TRAD ADE E ZONES NES AND D PORTS TS MICRO, O, SMAL ALL, L, MEDIUM IUM ENT NTERPRISES ERPRISES (MSMES MES) E-CO COMM MMERCE CE

VAT exem

emption ption on import or delivery of capital goods,

Impo

port t Duty ty exem emption ption on machineries/goods/materials,

Tax Allow

lowance ce and Tax Holi liday Exem emption ption of:

Impo

port t Duty ty

VAT
Luxury

ry Goo

ods

s Sales les Tax (PPnBM BM)

Custo

toms s duty ty Decrea creasing ing MSMEs Es Tax from 1% to 0.5 .5% of gross revenue

Sales from customs areas for non

non-small ll entrepren repreneu eurs rs through the market place will be subject to 0.5 .5% incom come e tax and 1% VAT

Sales from customs areas for small

ll entrepren repreneurs rs through the market place will be subject to 0.5 .5% incom come e tax

Source: Coordinating Ministry for Economic Affairs

SLIDE 20

19

New w Tax Hol

lida

iday y Pol

licy

icy*

to boost t indu dustr stry y sector

Taxpa payer er

Pioneer Industry with minimum investment value of 1 trillion Rupiah (minimum investment value of 500bn Rupiah for telecommunication sector) Corporat ate Incom

me Tax (CIT)

reduc uction ion rate

Conces cession ion perio iod Transiti ition

n

After Tax Holid iday ay Not available 100% (single rate)

5 – 15 years; or
Can be extended to 20 years; subject to MoF

discretion 1. 500Bn – 1Tn : 5 years 2. 1Tn – 5Tn : 7 years 3. 5Tn – 15Tn : 10 years Pioneer Industry with minimum investment value of 500bn Rupiah Applied to 8 industry groups: (i) upstream basic metal industry; (ii) oil and gas refinery industry; (iii) organic basic chemicals industry; (iv) machinery industry; (v) plantation, forest, and fishery products processing industry; (vi) telecommunication, information and communication industry; (vii) marine transportation; and (viii) economic infrastructure Applied to 17 industry groups: (i) upstream base metal; (ii) oil and gas refinery; (iii) petrochemical (oil, gas,

r coal based); (iv) non-organic base chemical; (v) organic base chemical;

(vi) pharmaceutical materials; (vii) semiconductor and other components; (viii) communication devices components; (ix) medical devices components; (x) machine manufacturing for industry; (xi) machine main components manufacturing; (xii) robotic components manufacturing; (xiii) ship components manufacturing; (xiv) airplane components manufacturing; (xv) train components manufacturing; (xvi) power plants; and (xvii) economic infrastructure

PROVIS VISIO ION BEFORE RE AFTER ER

5 – 20 years depends on the investment value (in IDR): 4. 15Tn – 30Tn : 15 years 5. ≥ 5Tn : 20 years 50% CIT reduction for the next 2 years 10 – 100% Tax allowance not provided Tax allowance for business expansion can be provided with terms and conditions applied

Source: Coordinating Ministry for Economic Affairs *) MoF has issued a new Tax Holiday policy through Regulation No. 35/PMK.010/2018 (PMK-35) dated 4 April 2018.

SLIDE 21

20

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

Source: Coordinating Ministry for Economic Affairs

Policy cy Goals

1 2 3 4 5 6

Improve efficient, streamlined, & integrated business license service standards Accelerate the business licensing process Provide business licensing process assurance in terms of the costs and lead times Increase coordination & synergy between central & regional government Overcome the barriers to doing business in Indonesia Implement integrated licensing process (single submission)

Main Policy cy

Forming a Task Force to identify &

vercome the end-to-end licensing

barriers Implementing a licensing checklist for Special Economic Zones (KEK), Free Trade Zones (FTZ), Industrial Zones & Tourist Zones Utilizing data sharing

Business license regulatory reforms Implementation of the Single Submission system

1st

st Phase

2nd

nd Phase

Note: 1st and 2nd Phase are implemented in parallel

SLIDE 22

21

Improving ing Invest estment ment Climat mate

Online e Single le Submiss missio ion (OSS) Has Been en Launched hed.. ...

Source: Coordinating Ministry for Economic Affairs

OSS is a web-based business licensing system intended to cut the red tape involved in obtaining business permits and integrated between the central government and regional administrations

Lorem Ipsum Suitable for all category, Enviro ironment ment & Forest stry ry Secto tor Electr tric icit ity Secto tor Public lic Works & Housing ng Sector tor Health th Sector

r

Indus ustry ry Sector tor Marine ne & Fishery ery Secto tor Medic icine ine & Food d Sector

r

Transporta

rtation

ion Secto tor Trade e Sector tor Infor

rmation

ation & Commun unic icati ation

n

Secto tor Other r Sector

r

Secto tors rs The Adva vanta tage ge of Using g OSS Business licenses can be secured in under an hour Standardized business licenses are available Ellectronically integrated The whole licensing process is monitored by the Task Force More practical Accessible at anytime and anywhere

SLIDE 23

22

(Pusat Logistik Berikat/PLB) is a facility provided by Ministry

f

Finance as part

f

the implementation of the 1st Economic Policy Package. PLB facility aims to improve efficiency and reduce the cost of transportation and logistics in Indonesia; support the growth of the domestic industry, including small and medium industries; increase investment; and to make Indonesia to become a logistics hub in Asia Pacific.

To To dat ate, e, 52 Bond

nded

ed Log Logis istic tic Cen enter er has has be been en lau launche hed to to suppor

rt var

ario ious us industries stries.

Improving ving Investmen stment t Clima imate

…Bonded Logistic Center to Improve Indonesia’s Competitiveness

Oil il and ga gas, s, and mining ing indus ustry Food d & beverages verages indus ustry Auto- motive ive indus ustry ry Pe Personal

nal

care/ home care e industry Textile ile (cott

tton
n)

indus ustry Small ll and mediu ium m indus ustry y Synthet thetic ic textile le (chem emic ical al substanc ances) industry. .

Bonded Logistic Center

Heavy vy Equip uipmen ent t indus ustry Defen ence indus ustry Aircraf raft t MRO RO indus ustry

SLIDE 24

23

Improving ving Investmen stment t Clima imate e

…revising the Negative Investment List

1 For total project value of IDR10bn and above

Before

Cold storage ge Restaurants, s, Bars Pharmace ceutica ical l Raw Materia ials ls Manufact cturing Sports Center, Film Proces essi sing g Lab, Crumb Rubber

Revision ision of "Partn tnership ip" catego egory y to refer to partn tners ership p with Micro,

, Small and

Medium m Ente terprises ses (MSMEs) s) Grandfath ther er Law: w: If a parti ticu cular sector tor is tightened tened in future, e, existi ting g foreign gn invest estor r does s not t need to compl ply y with tighter ter stake Key Reforms ms in Negative e Foreign ign Investmen estment t List st Stren ength then en implementa mentati tion

n of nega

gati tive investmen estment t law throu

ugh active

ive roles es from ministr strie ies, s, agen encie ies s and regiona ional gov

vernments

ments

100% 49% 100% 51% 100% 85% 100% 95% 100% 33% 67% 51% 67% 67% 55% 67% 65% 67%

Distrib ibutio ion, Warehousi sing Priva ivate e Museum, m, Caterin ing, g, apparel el Manufact cturing, g, Exhibit bitio ions s & Conventio ions Toll l Road Operator

r,

Teleco comm mmunica icatio ion Testin ing g Company Consult ltancy cy for Construct ctio ion1 Teleco comm mmunica icatio ion Provi vider er with Integrated ed Service ices Profess essio ional l Train inin ing, g, Golf Course Management, Air Transp spor

rt Support Service

ices, s, Travel el Bureau

After Before After Before After Before After Before After Before After Before After Before After Before After Before After 33% 49%

Introduc roduction tion of New Foreign reign Owners ership ip Regula lati tion

n for Stra

rategi tegic c Sectors ctors Source: Investment Coordinating Board (BKPM)

SLIDE 25

24 105,3 208,3

20 40 60 80 100 120 140 160 180 200 220 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 FDI DDI TOTAL

Investment estment Realization lization (Q4-2019) 9)

IDR tn

2013 2014 2015

Direct rect Inves estm tmen ents ts

2016

Mining ing Housing, g, Indu dustri trial l Esta tate, te, and Offic ice e Build lding ing Food

d Industry

try Electrici ectricity ty, , Gas, s, and Water ter Supply pply US$635.8 35.8 mn mn US$1,501.9 ,501.9 mn mn US$269.3 69.3 mn mn US$683.7 83.7 mn mn US$1,490.3 ,490.3 mn mn US$293.5 93.5 mn mn Transporta portation tion, , Wareh rehou

use,

e, and Telec ecom

mmunica

cation tion

72.4%

US$465.5 65.5 mn mn

9.4% 6.0% 15.3% 19.6% 17.8% 190.4% Investme stment nt Realizat zation

Top p 8 FDI I Reali lizatio zation by Sectors tors (Q4-2019 vs Q4-2018) 2018)

Source: Investment Coordinating Board (BKPM), compared to Q4-2018 period

2017

Rp145.4 5.4 T Rp159.4 9.4 T IDR10 105.3tn 5.3tn 434 434,463 463

9.6% 15.6% .6%

6.4% 18 18.5%

Q1-2016 Q1-2017 Q4-2018 Q4-2019 Q1-2016 Q1-2017 Q4-2018 Q4-2019

*

* * person 37 375,982 ,982 IDR20 208.3tn 8.3tn

12.0 .0%

Q4-2018 Q4-2019

IDR185 85.9tn .9tn IDR86 86.9tn .9tn IDR99 99.0tn .0tn IDR103. R103.0tn 0tn Chem emica cal l and Pharm rmaceu ceutic tical l Industry stry Meta tal, , Except ept Mach chine inery ry, , and Equipm ipmen ent Industry stry

2018 2019

Vehicle cle and d Oth ther r Transpo porta rtation tion Industry try US$256.9 56.9 mn mn

80.6%

SLIDE 26

Econom

nomic

ic Factor:

r:

Strong

ng and S

d Stable Growth wth Prospect spects Rem emain in Intact ct

Se Sect ction ion 2

SLIDE 27

26

Condu duciv cive e Envir ironmen

nment

t Und Under erpin pinning ning Stron

ng

g Growt wth Fundament amentals ls

Larges gest Economy in South h East Asia 4th Most Populous us count ntry in the World ld; 64% in produc uctiv ive age Manag ageab eable le Inflat flation ion Rate Rising ing Middle le Clas ass and Afflue luent nt Customer ers

From commod

dity

ty-based sed to manufactu cturing and service ce sectors tors via infrastr structu ture developme

pment

From consu sumpti mption

n-led to invest

estme ment-led growth

wth

via a stron

nge

ger manufactu cturin ing sector tor and more investmen estment t initiatives iatives Polici cies es to mainta tain in purch chasin sing g power er to stimu mulate te domesti estic c economy

my in the midst

t of weaken ening ing macroe

econ

conomic ic condit ition

ns

Budget et reform m as a a part t of larger ger economi

mic

c reform initiative iative Tax base e to be broadened ed from m

ne reduce

e dependen ency cy on commod moditi ties es Fuel subsi sidie ies s sign gnifican icantl tly y reduce ced and spen ending redirec ected ted to more prod

ducti

tive e alloca cati tion

n

Pruden ent t debt managem gemen ent

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 needs: s: State te and region

nal budget,

et, State te Owned ed Ente terprises ises and PPP Conti tinuing ing from 2015 15 polic icy, y, infrastr structu ture will be high gher than fuel subsid sidy Fiscal and non

n-fisca

iscal incenti tives es to attra tract ct infrastru tructu cture e investmen estment t and promote mote PPP Infra rastru tructure cture spend ending ing focuse sed on basic ic infrastru tructu cture e proj

jec

ects ts

Large e and Stable table Econ

nomy
my

Consis sisten tent Budget et Refor form New w Economic

nomic

Structure High Infrastructu astructure Inve vest stme ments ts

SLIDE 28

27

Indonesia’s Strong GDP

Grow

wth

th Prospe spect Stron

ng

g GDP DP Growt

wth1

%

Institution stitutions 2020 20 GDP P growth

wth (%YoY
Y)

2020 Budget 5.3 Bank Indonesia 4.2 – 4.6 IMF (WEO October 2019) 5.1 World Bank 5.1 ADB 5.2 Consensus Forecast (March 2020) 4.8

Favou

ura

rabl ble GDP P Growt

wth Compa

pared red to Peers rs2

1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption 2. Source: World Economic Outlook Database – October 2019; * indicates estimated figure %

Despite global economic moderation, resilient national economic growth has been

maintained in Indonesia. For the year, solid economic growth was recorded at 5.02% in 2019, albeit down slightly from 5.17% in 2018. The main driver of economic growth in 2019 was domestic demand, as export performance declined. In the fourth quarter of 2019, economic growth stood at 4.97% (yoy), down slightly from 5.02% (yoy) in the previous period.

Solid domestic demand was a key contributor to economic growth momentum in 2019 as

exports languished on dwindling global demand and sliding international commodity prices. Domestic demand was influenced by stable household consumption, which grew 5.04% in 2019, relatively unchanged from the 5.05% posted in 2018. Household consumption was maintained in line with controlled inflation and upbeat consumer confidence.

Furthermore, the general election held in 2019 edged up consumption by non-profit

institutions serving households (NPISH) to 10.62% from 9.10% in 2018. Domestic demand was also buoyed by strong investment performance, building investment in particular which grew 5.37% in the reporting period, similar to the 5.41% recorded in 2018. Services in the tertiary sector were the main locomotive of economic growth in 2019, led by communications and information, financial services and insurance as well as other services.

0,04 3,83 3,27 (2,07) (0,16) 3,74 3,31 (1,73) (0,36) 4,01 3,14 (1,81) (0,30) 4,01 3,19 (1,70) (0,41) 4,21 3,09 (1,69) (0,52) 4,20 3,06 (1,74) 5,12 4,94 4,93 5,05 4,82 4,74 4,77 5,17 4,92 5,18 5,01 4,94 5,01 5,01 5,06 5,19 5,065,275,175,185,075,055,024,97

3,0
1,0

1,0 3,0 5,0 7,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2019 QoQ YoY 3,7 3,2 3,4 3,6 6,1 7,0 5,0 5,1 5,7 6,2 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 2012 2013 2014 2015 2016 2017 2018 2019* 2020* Bulgaria Colombia India Indonesia Philippines

SLIDE 29

28

GDP Growt wth Brea eakdo kdown

GDP DP Growth th by Sector ctor (%, YoY)

By sectors rs 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t.

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t.

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t.

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t

Agriculture, forestry, and fishery 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 Mining and Quarrying 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 (1.3) 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 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 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 Wholesale and Retail Trade, Repair of Car and Motorcycle 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 Transportation and Storage 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 Information and communication 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 10.5 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 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 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 GDP 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 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008)

GDP DP Growth th Based sed on Expend endit itures ures (%, YoY)1

By expen enditure re 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t.

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t.

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t

Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot

t
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 Non profit HH. consumption (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 Government consumption 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 Gross Fixed Cap. Formation 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 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) 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) GDP 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 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption

SLIDE 30

29

Regio gional nal Econom

mic

ic Growt wth

Source: Central Bureau of Statistics of Indonesia (BPS)

Solid domestic demand is supported by increasing income from inter-regional trade, such as in Sumatra. Meanwhile, economic growth in Kalimantan and Bali-Nusa Tenggara has been maintained as exports of primary commodities improved.

SLIDE 31

Exter ernal l Factor: r: Impr mproved ed Exter ernal Res esil ilie ience ce

Se Sect ction ion 3

SLIDE 32

31

1,97 7 (8,35) 35) (2,06) 06) 0,31 1

2,84
4,5
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5

0,0

12
10
8
6
4
2

2 4 6 8 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** 2013 2014 2015 2016 2017 2018 2019** Goods Services Primary Income Secondary Income Current Account (%GDP) (rhs) US$bn

Ext xtern ernal al Balance nce under r Control ntrol Support ported ed by Adequate uate Reserves erves

Current ent Accoun unt Deficit within hin Safe Thresh eshold ld Balanc lance e of Payment nts Portrait ait Substant antial al FX Reserves es to Mitiga igate Externa nal l Challe alleng nges es Trade Balanc lance Portrai ait

Source: Bank Indonesia Source: Bank Indonesia Source: BPS * Preliminary Figure ** Very Preliminary Figure

2015: Surplus US$7.59bn 2013: Deficit (US$ S$4.10bn) n) 2014: Deficit (US$ S$2.37bn) n) 2016: : Surplus US$8.83b 3bn 2017: Surplus US$11.83bn bn

Source: Bank Indonesia FX Reserve ves as of February 2020: US$130.4 bn n (Equiv. to 7.4 month ths of imports ts + servicing of government debt) t) US$bn

2015: CA Deficit (US$ S$17.5bn) n) 2013: CA Deficit (US$29.1bn) n) 2014: CA Deficit (US$27.5bn) n) 2016: CA Deficit (US$17.0bn) n) 2017: CA Deficit (US$16.2bn) n)

2018: Deficit (US$ S$8.7bn) n)

2018: CA Deficit (US$30.6bn) n)

2019: Deficit (US$ S$3.2bn) n)

(8,12) 12) 12,38 38 4,28 8 129,18 18 40 80 120 160

15
10
5

5 10 15 20 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** 2013 2014 2015 2016 2017 2018 2019**

Indone nesia' ia's Balanc nce of Payment nts

Current Account Capital and Financial Account Overall Balance Reserve Asset (rhs)

US$bn US$bn 2019: CA Deficit (US$30.4bn) n)

3,00
2,00
1,00

0,00 1,00 2,00 3,00 4,00

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 2013 2014 2015 2016 2017 2018 2019 2020 OG Non-OG Total

1

2 3 4 5 6 7 8 9 10 11 12 13 14 15 50 60 70 80 90 100 110 120 130 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 2013 2014 2015 2016 2017 2018 2019 2020 FX Reserves (LHS) Month of Import & Debt Service (RHS)

Month US$bn bn

SLIDE 33

32

Exch change ange Rate e In Line e with h Fundame ament ntals als

Movem emen ent t of Rupia iah Rupia iah Exch change ge Rate te Fared red Rela lative tively Well ll Compared red to Peers ers

IDR/US$

The reba ebalan lancin ing of

f for
rei

eign gn capit ital al inf inflo lows ws to to dom

mest

estic fina financ ncial ial mar arkets ets aft after er the COVID-19 19 out

utbreak

eak ha has am amplified lified ex excha hang nge rat ate pr pres essures ures on

n the rup

upiah iah sinc ince the he mid iddle le of

f Februar

ebruary 2020

2020. Foreign capital inflows have ebbed due

to increasing global financial market uncertainty, which has exacerbated exchange rate pressures on the rupiah, leading to depreciation since the middle of February 2020. As of 18th March 2020, the rupiah had depreciated by an average of 5.18% compared to the average level in February 2020 and by 5.72% (ptp). Compared to the level recorded at the end of 2019, therefore, the rupiah has depreciated by around 8.77% in line with weaker currencies in other emerging markets. Bank Indonesia will continue to strengthen rupiah exchange rate stabilization policy in line with the currency's fundamental value and market mechanisms. To that end, Bank Indonesia will increase the intensity of stabilization policy in the DNDF and spot markets, while purchasing SBN in the secondary market. To support exchange rate policy effectiveness, Bank Indonesia will continue to

ptimize monetary operations in order to ensure market mechanisms and

adequate liquidity in the money and foreign exchange markets.

Source: Bank Indonesia

Rupia iah Exch change ge Rate te Volati latilt lty

YTD 20 2020 20 vs vs 201 019

1,89 1,55 0,21 0,02

0,11
0,76
0,88
1,28
1,70
2,05
3,70
6,04
9,44
0,84
8,77

1,14

8,28
6,46
1,19
6,40
1,97
7,18
3,84
17,32
7,95
19,63
25,0
20,0
15,0
10,0
5,0

0,0 5,0 PHP IDR JPY THB MYR CNY SGD EUR KRW INR ZAR TRY BRL point-to-point average

%

*data as of March 18th, 2020 18,1% 17,0% 16,1% 7,0% 5,4% 6,5% 6,1% 4,7% 22,3% 26,0% 14,2% 14,7% 3,6% 6,0% 11,5% 5,1%

12,9% ZAR BRL TRY IDR THB PHP INR MYR 2019 YTD 2020 Average YTD 2020

*data as of March 18th, 2020

15218 13952 14601 14798 14134 14254 14120 14064 13924 14.141 14.381 14.220 14.031 14.232 14.113 14.006 13.714 13.767 14.520

13.000 13.500 14.000 14.500 15.000 15.500 18-Mar 18-Apr 18-May 18-Jun 18-Jul 18-Aug 18-Sep 18-Oct 18-Nov 18-Dec 18-Jan 18-Feb 18-Mar 18-Apr 18-May 18-Jun 18-Jul 18-Aug 18-Sep 18-Oct 18-Nov 18-Dec 18-Jan 18-Feb 18-Mar IDR/USD Quarterly Average Monthly Average data as of March 18th, 2020

SLIDE 34

33

Ample le Line nes of De Defense nse Against nst Ext xtern ernal al Shocks ks



Ample level of FX reserves to buffer against external shock



FX Reserves as of February 2020: US$130.4 billion

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 2017

Australia ralia



Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018

Chiang ng Mai i Initiativ iative e Mult ltilater ilaterali liza zation ion (CMIM IM) ) Agreeme eement nt



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 agreement



Came into effect in 2010 with a pool of US$120 bn



Doubled to US$240 bn effective July 2014

Japan



Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2018



The facility is available in USD and JPY

IMF Global al Financ ancial ial Safety ety Net t - GSFN



Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem



Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)

Bilat ateral eral Region ional al Global al FX Reserve

Ampl ple e Reserv erves es Swap p Arra range gemen ent

Source: Bank Indonesia

ASEAN Swap p Arrangemen ngement (ASA)



Entitled to a maximum swap amount of USD600 million under ASA



The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million



Doubled to USD2 billion in 2005

Singap gapore

re



Renewed a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2019

China



Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in November 2018

Malaysia ia



Established a 3 year RM/IDR swap arrangement with a size up to USD2 billion (equivalent) in September 2019

SLIDE 35

34

Solid lid Polic licy y Coordination dination

In Managing ging Financi ncial al Markets ts Volat atility ility

Source: Ministry of Finance Firs rst t Line of Defense State’s Budget Buyback fund at DG of Budget Financing and Risk Management Investment fund at Public Service Agency (BLU) (min. level Aware) State te Owned ed Enterp terprises ises (BUMN)’s Budget Related SOEs (min. level Aware) Social cial Secu curit ity y Orga ganizin izing g Agency (BPJS)’s Budget BPJS (min. level Aware) Second Line of Defense State’s Budget

State General Treasury Account (Rekening KUN) (min. level Alert) Accumulated cash surplus (SAL) (min. Level Crisis)

Gov’t Securities Crisis is Managem agemen ent t Protoc

col
l (CMP)
Indicato

tors rs:

Yield of benchmark series;
Exchange rate;
Jakarta Composite Index;
Foreign ownership in government securities
Policie

licies s to address the crisis at every level :

Repurchase the government securities at secondary market
Postpone or stop the issuance

Bond Stabil iliz izati ation

n Framew

ewor

rk

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 for the government to serves at the time of financial crisis in the form of Financi cial l Syst stem em Stabil bility Commi mmittee ee (KSSK SK) KSSK K member mbers: the Ministry of Finance, Bank Indonesia, the Financial Services Authority, and the Deposit Insurance Corporation Swap facility arrangements based on international cooperation Enhancing coordination between government institutions and continuous dialogue with market participants Implementing Crisis Management Protocol (CMP)

CMP

Implementing Bond Stabilization Framework (BSF)

BSF

SLIDE 36

35

Stren rengt gthen ened d Priv ivat ate e Ext xter ernal al Debt t Risk sk Managem ement nt

Regu gulati tion

n Key Points

ints Phase 1 Jan 1,2015 2015 – Dec 31,20 2015 15 Phase 2 Jan 1,2016 2016 – Dec 31,20 2016 16 Phase 3 Jan 1, 2017 17 & & beyond

Object ect of Regul egulation

n

Governs all Foreign Currency Debt Hedgi dging g Ratio < 3 months 20%* 25%** > 3 – 6 months 20%* 25%** Liqu quidity y Ratio (< 3 months) 50% 70% Credi edit Rating Not applicable Minimum rating of BB- Hedgi dging g transaction

n to meet

eet hedge ge ratio not necessarily be done with a bank in Indonesia Must be done with a bank in Indonesia Sanction

n

As of Q IV-2015 Applied Extern ernal Debt ebt/GDP (%)

Debt Burden n Indic icat ator (Externa nal l Debt/GDP) Remains ains Compar arab able le to Peers Rating ing

Encou coura ragi ging Corpora porates tes Compli pliance ce on Hedgi ging Ratio tio & Liquid quidity ity Ratio tio

Source: Bank Indonesia

Liquid uidit ity Ratio io* Hedgin ging Ratio io*

*Data as of Q3 2019, with total population 2.602 corporates

Regulat ulation n on Prudentia ential l Principle le in Manag aging ing External nal Debt

Source: Bank Indonesia

Source: Moody’s Statistical Handbook, November 2019

23,9 36,2 20,0 39,9 57,3 23,0 36,7 20,9 42,9 56,5 21,9 37,0 21,4 42,3 54,3 10 20 30 40 50 60 70 Philippines Indonesia India Colombia Bulgaria 2020F 2019F 2018

2.341 ; 90% 261 ; 10%

≤ 3 months

2.443 ; 94% 159 ; 6%

> 3 - 6 6 months nths

2.294 ; 88% 308 ; 12% Comply Not Comply

SLIDE 37

36

Health althy Ext xternal ernal Debt t Composition

sition

Extern ernal l Debt bt Structure cture

Source: Bank Indonesia, External Debt Statistics of Indonesia, March 2020 *Provisional Figures

The e Structure cture of Extern ernal l Debt bt is Dom

min

inated ted by Long-Term erm Debt bt 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

Million USD % % % 11,5 17,1 11,3 12,0 5,4 10,2 5,9 3,0 10,1 6,5 8,2 10,1 10,4 7,7 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000 450.000 External Debt External Debt Growth (rhs) 121,8 114,9 101,0 113,8 123,1 139,5 168,4 176,1 168,0 160,8 168,7 172,4 177,4 183,7 31,8 26,5 25,0 27,4 29,1 32,9 36,1 34,3 34,7 36,0 36,8 36,6 36,2 36,1 5 10 15 20 25 30 35 40 80 100 120 140 160 180 200 External Debt / Export Ratio External Debt / GDP Ratio (rhs) 18,3 21,2 20,7 21,7 21,2 20,2 17,9 17,1 15,6 16,0 16,2 15,8 14,1 15,7 14,6 81,7 78,8 79,3 78,3 78,8 79,8 82,1 82,9 84,4 84,0 83,8 84,2 85,9 84,3 85,4 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share Short Term External Debt Long Term External Debt 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 49,4 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 50,6 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Share Private External Debt Public External Debt

SLIDE 38

37

Managea geable ble Ext xtern ernal al Debt t Profile ile

Shor

rt term non-ban

ank corp rpor

rat

ate e debt (non

n affiliation)

) represe sents only ly 8.6% 6% of tot

tal private externa

nal l debt

Privat ate Short-Term1 Privat ate Non-Ba Bank nk External nal Debt Positio ion

Af Affiliati tion

n

Non Af Affiliati tion

n

US$154.3bn

r

76%

f Private Ext.

Debt US$19.2bn

r

9.4%

f Private
Ext. Debt

US$12.1bn

r
r

6% 6%

f Private

e

Ext. Debt

US$17.5bn

r
r

8.6%

f Private

e

Ext. Debt

Public lic Long g Term 1 Privat ate Bank nk

US$29 29.6bn

r

14.6% 6%

f Private
Ext. Debt

US$2 $203 03.0b 0bn

r

49 49.4%

f total
Ext. Debt

US$48.8bn

r

24% 24%

f Private
Ext. Debt

External Debt Position as of December 2019

1 Based on remaining maturity

Source ce: External Debt Statistics of Indonesia, March 2020

US$410.8bn bn

US$207.8bn

r

50.6%

f Total Ext.

Debt

SLIDE 39

Fi Fiscal Per erforma

rmance

nce and F d Flexib ibil ilit ity: More e Fi Fiscal al Stim imulus ulus wit ith Pr Prud uden ent t Fi Fiscal al Policy icy

Se Sect ction ion 4

SLIDE 40

39

Integrat egrated ed Refor

rm

m to Provide ide Higher her Qualit lity y of Economi

mic Growth

wth

Structura ructural reforms rms to enhanc nce pot

tenti

ential growth th and navigat ate through ugh challeng nges es

Source: Ministry of Finance

 Successful execution of the Tax Amnesty Program improving tax compliance and widening tax base  Implementation of Automatic Exchange of Information  0% VAT on service exports to encourage Indonesian service exports  Deduction in tax for vocational training and research and development activities  Introduction of Omnibus bill, revision on tax allowance and Indonesia Special Economic Zone laws to encourage investment, job creation and small business empowerment  Non-tax policies aim to improve regulations, create fair and flexible tariff arrangements, strengthening supervision and inspection, optimizing management of state assets and improving services and quality of public services

 Maintaining prudent fiscal policy  Strengthening tax incentives scheme, including Tax Holiday  Strengthening export proceeds scheme  Ease investment licensing  Increase threshold

f

foreign share ownership across a broad range of business categories  Negative List

f

Investment relaxation  Infrastructure acceleration  Monetary policy to support macroeconomic stability  Price stability and sustainable current account deficit  Efficient and credible financial sector

STRENGTHENING POLICYMI MIX FI FISCAL AL MON ONETARY RY RE REAL SE SECTOR OR

 Issuance

f

16 economic policy packages to maintain purchasing power and to drive investment  Enhancement

f

competitiveness and productivity by accelerating infrastructure development, improving investment climate, raising human capital quality and encouraging industrialization  Encouraging the development of potential productive sectors such as tourism and the digital industry.  Establishment of a PPP Unit  Active support for PPP (Viability Gap Fund, Project Development Facility, Guarantees, Infrastructure Financing Fund, Availability Payment)  Establishment of special State Asset Management Agency (LMAN) to expedite land acquisition process  Reformulation of the Monetary Policy Operational Framework through: (1) Implementation of BI 7 Day Reverse Repo Rate; (2) Implementation of Reserve Requirement (RR) Averaging; (3) Implementation of Financial Market Deepening Program  Continue to orient monetary operations towards maintaining adequate liquidity and supporting the transmission of an accommodative policy mix.  Maintain accommodative macroprudential policy to stimulate economic financing with respect to the suboptimal financial cycle, while also adhering to prudential principles.  Continue to strengthen payment system policy towards fostering economic growth through the expansion of QRIS (Quick Response Code Indonesian Standard) acceptance and electronification of social aid program (bansos) disbursements and local government financial transactions.

Streng ngthe heni ning ng Polic icy Mix to Enhanc ance Econom

mic

ic Stabil ilit ity Amid id Glo lobal Volat atil ilit ity

Fisc iscal Polic icy Struc uctural Reform

rm Policy

icy

Commit itment ent to Infr fras astruc uctur ure

Mon

netary

y Policy licy

SLIDE 41

40

Cred edible ible and Healthi althier er Budge get

…providing more certainty to all stakeholders

Indicator 2018 2018 2019 2019 2019 2019 2020 2020 Budge get Budge get Outloo

ok

Budge get Econom

nomic grow

rowth (%, yoy)

5.4 5.3 5.2 5.3

Inflation

n (%, yoy)

3.5 3.5 3.1 3.1

3-Mont

nth Trea

easu sury ry Bill (SPN) N) (%)

5.2 5.3 5.6 5.4

Excha hange Rate e (Avera verage ge, IDR/USD)

13,400 15,000 14,250 14,400

ICP (USD SD/ba barr rrel)

48 70 63 63

Oil Oil Prod

duction
n (thou
usand barr

rrel el/day)

800 775 754 755

Gas Produ duction

n (millions
ns barre

rel/da day)

1.20 1.25 1.07 1.19 Macr croe

eco

conomi

mic

c Assu sumpti mption

n for 2018,

8, 2019, 19, and 2020 20 Budget et

*Preliminary Source: Ministry of Finance

Desc scri ription

n (IDR

R Trillion)

n)

2018 2018 Audited Realization

n

2019* 19* 2020 20

Budge get Realization

n

(a.o.

. Dec 31)

% Realization

n

to Budge get Budge get Realization

n

(a.o.

. Feb

b 29) % % Realization

n

to Budge get

A. A.

Revenu nues and Grants ts 1,943.7 .7 2,165.1 .1 1,957.2 .2 90.4 2,233.2 .2 216.6 9.7

I. Domestic Revenue

1,928.1 2,164.7 1,950.4 90.1 2,232.7 216.6 9.7

1. Tax Revenue

1,518.8 1,786.4 1,545.3 86.5 1,865.7 178.0 9.5

2. Non Tax Revenue

409.3 378.3 405.0 107.1 367.0 38.6 10.5

II. Grants

15.6 0.4 6.8 1,560.7 0.5 0.0 5.7

B.

Expend nditur ture 2,213.1 .1 2,461.1 .1 2,310.2 .2 93.9 2,540.4 .4 279.4 11.0

I. Central Government Expenditure

1,455.3 1,634.3 1,498.9 91.7 1,683.5 161.7 9.6

1. Ministerial Spending

846.5 855.4 876.4 102.4 909.6 83.9 9.2

2. Non Ministerial Spending

608.8 778.9 622.6 79.9 773.9 77.9 10.1

II. Transfer to Region and Village Fund

757.8 826.8 811.3 98.1 856.9 117.7 13.7

C. C.

Primary Balance

11.5
20.1
77.5

385.3

12.0
28.5

237.4

D.

Surplus us (Deficit) t)

269.4

.4

296.0

.0

353.0

.0

307.2

.2

62.8

20.4 % of GDP

1.81
1.84
2.20
1.76
0.37

E.

Fina nanc ncing 305.7 296.0 399.5 134.9 307.2 112.9 36.8

2020 2020-2030 2030 Improving Competitiveness

STRENGTHENING THE FUNDAMENTAL TRANSITION ADVANCE CED INDONESIA

2031 2031-2035 2035 Strengthening Competitiveness 2036 2036-2045 2045 Sovereign, Advanced, Just, and Prosperous Country Indon

nes

esia ia 2045: Bec ecomin

ming

g a Devel eloped

ped Countr

ntry

Fiscal Competitiveness Theme 2020 “State Budget to Accelerate Competitiveness through Innovation and Strengthening Quality of Human Resources”

Reven enue e Mobi bili liza zation tion Effec ective tive sta tate te spen ending ing Crea eativ tive e financing ing FISCA CAL POLIC LICY STRA RATEG EGY FOR R 2020

SLIDE 42

41

New and Strat rategic egic Programs

grams

The polici cies s and ini niti tiativ atives es in State Budget t 2020 0 for Imp mprovem ement ent in human n resour urce qu quality y and comp mpeti etiti tiveness. ness.

Source: Ministry of Finance

Tax Incen centive tives s for supportin pporting g human reso sources rces develop elopmen ent t & compe petit titive ivenes ess

Super deduction for vocational program and R&D
Mini tax holiday for investment commitment under

500 billion rupiah

Investment allowance for human intensive industry

Kuliah

Improv provem emen ent t In Human Reso source rce Quality ity and Socia cial l Assist sistance ce Indon

nes

esian Smart rt Card rd Coll llege/ ege/KIP KIP Kulia iah Pre Workers rkers Card rd

Improving the job seekers’ productivity

Food

d Aid Card

Supporting the poor people to achieve the higher education level Protecting the food access for poors

Accelera celerate ted completi letion

n of 4 super

per priority iority tourism rism destina stination tions

The development of Danau Toba, Borobudur, Labuan Bajo and Mandalika, synergy among line ministries and local government

Stren engt gthening ing The e Transfer er to Regi gion

ns

s and Vill llage ge Funds

Strengthening The Physical Specific Allocation

Fund for social and marine transportation sectors;

Additional General Allocation Fund DAU for

equalization village officials’ fixed income and remuneration of Government Employees with Work Agreements (PPPK)

Endowm

wmen

ent Fund for Human Resou

urce

rce and Cult lture re  Culture Endowment Fund  Higher Education Endowment Fund  Significant additional endowment fund for research and development The Utilization of endowment fund investment to improve the the quality of higher education and promotion of national culture, through:

Supporting the reducing current account deficit in the short and long term

Stren engt gthening ing The e Curren rent t Accou count t Balance ce

SLIDE 43

42

In 2020, Budget t Deficit it will l be Maintai taine ned at level l 1. 1.76% GDP Dire

rect cted d to be h healthie thier r and adapti tive e to fa face the economic mic risks sks

Source: Ministry of Finance

Deficit to GDP ratio in 2020 will be the lower

deficit in the past five years

Primary balance deficit will be decreased

gradually to positive direction

Tax revenue for supporting the

competitiveness with the realistic and

ptimal target
Budget spending will be prioritized for

productive spending

Budget financing will be decreased and will

be utilized for competitiveness improvements

11,6 10,8 10,7 11,4 11,1 11.6 2015 2016 2017 2018 2019 Outlook 2020 Budget

TAX RATIO IO

(298,5) (308,3) (341,0) (269,4) (310,8) (307,2) (142,5) (125,6) (124,4) (11,5) (34,7) (12,0) (2,59) (2,49) (2,51) (1,82) (1,93) (1,76) (3,00) (2,50) (2,00) (1,50) (1,00) (0,50) 0,00 (400,0) (350,0) (300,0) (250,0) (200,0) (150,0) (100,0) (50,0) 0,0 2015 2016 2017 2018 2019 Outlook 2020 Budget Budget Deficit (Trillion IDR) Primary Balance % Deficit to GDP

SLIDE 44

43

Stat ate e Revenue ue Optim imization ization

Followed d by t tax reforms

rms for suppo

pporti ting ng the economy and business ss climat ate.

Source: Ministry of Finance

Impr mproveme ment t to Suppor

rt

t Taxation tion

Increasing the tax compliance
Service quality improvement, counseling, and

supervision through the strengthen IT system and tax and administration

Equalizing the level playing field
Improving the business process especially for VAT

refund

Implementing the AEoI
Extensification of excise goods
Adjusting the excise duty rates on tobacco

1.240,4 1.285,0 1.343,5 1.518,8 1.643,1 1.861,8 1.865,7 8,2 3,6 4,6 13,0 8,2 12,6 5,8 2,9 13,4 10,5 13,5 14,8

200

400 600 800 1.000 1.200 1.400 1.600 1.800 2.000 2015 2016 2017 2018 2019 Outlook 2020 RAPBN 2020 APBN PPh Migas Pajak nonmigas Kepabeanan dan Cukai Pertumbuhan Penerimaan Perpajakan (%) Pertumbuhan Pajak nonmigas (%)

Tax Revenue e (Trill illio ion Rupiah) iah)

(35,9) 2,5 18,8 31,5 (5,6) (40,0) (30,0) (20,0) (10,0)

10,0

20,0 30,0 40,0

50,0

100,0 150,0 200,0 250,0 300,0 350,0 400,0 450,0 2015 2016 2017 2018 Outlook 2019 RAPBN 2020 APBN 2020

PNBP Migas (Triliun Rp) PNBP Nonmigas (Triliun Rp) Pertumbuhan (%)

(7,0) (5,0) 255,6 262,0 311,2 409,3 386,3 359,3 370,0

Non Tax Revenue e (Tril illio lion IDR)

Management and Utilization of Optimal, Effective

and Efficient Natural Resources

Service Improvement and Tariff Adjustment
Improvement of BUMN Efficiency and BLU

Performance

Improving Governance

The e role le of the non-oi

il

l and d gas s PNBP sector

r

continu inues es to be stren engthen hened ed accom

mpan

anie ied d by increa eased sed servi vices s to the commu

mmunity

ity

Oil & Gas Custom & Excises Non Oil & Gas Tax Revenue Growth (%) Non Oil & Gas Tax Tax Revenue Growth (%) Oil & Gas (Trillion Rp) Non Oil & Gas(Trillion Rp) Growth (%) 2020 Budget Plan 2020 Budget 2020 Budget Plan 2020 Budget

SLIDE 45

44

Govern ernment ment expen endit diture ure in 2020

A bet better r spending nding to suppor pporti ting ng developme pment nt to be e effici cient nt and effecti ctive. e.

Source: Ministry of Finance

SLIDE 46

45

Centr tral al Governm rnment nt Expe penditure nditure

Dire rect cted d to suppo pport Human n Capita tal impr mproveme ment nt and severa eral strat rategi gic program rams

Source: Ministry of Finance

 Human an Resou source Quality ity Impr mproveme ment

Smart Indone

nesian

ian Card (KIP IP) for Higher er Ecuat ation ion Supporting the poors to continue their education to higher education Pre-Em Emplo loymen ent t Card To Improve the productivity of job seekers

Sustainab

inabilit ility of healt lth h servic vice e provis ision ion (increased premium aid by Government)

 Soc

cial

ial Prot

tection

tion Stren engthen henin ing

Food

d acces ess improvem emen ent (Food Card)

 Infrastructu astructure Developm lopment

Equalizing inter-region development
Accelerating development of 4 destination of

super-priority tourism

SLIDE 47

46

Budge get t for Improving ving the Human man Resour source e Qualit lity

Highe her r qu quality of human an resour

urces

es for achievi ving ng the welfare fare and just t society ety.

Source: Ministry of Finance

Investment estment Financing ancing

Rp Rp29,0 29,0 T

National

ional Educat cation

n Development

elopment (DPPN) PN)

Rp18,

18,0 T

scholarships for 5.000 new students (higher

degree level)

scholarships for 12.333 students (higher

degree level)

Financing 104 researches
Cultu

ture re Endowmen wment t Fund Rp1, 1,0 0 T

Ensure the continuity of culture promotion for the next generation

Resea

earch ch Endowm wment nt Fund Rp5,0 0 T

Increasing the human resource quality

and competitiveness

Increasing the research which supported

the university stakeholders

Incresing the research contribution to

economic growth

Hi

Higher r Educati tion

n

Endowment wment Fund d

Rp5,0

0 T

Human resources and education infrastructure for achieving the World Class University

SLIDE 48

47

The Nation ional al Budge get t is to Prep epar are the Younger ger Generation ration to Improve the e Quality lity of

f Human

man Resour sources es

Source: Ministry of Finance

Ed Educ ucati tion

n Bud

udge get

Rp5 p508, 08,1 1 T

SLIDE 49

48

The Nation ional al Budge get t is Prepari paring ng the Youth th throu

ugh

gh Job Training ining

Source: Ministry of Finance

Total al Bud udget get Rp1 p10 0 T Target get 2 Bil illio ion pa partic icip ipan ants ts

Digital: 1.5 Mill Regular: 0.5 Mill

Definit inition ion of Pre-Emplo ployme ment nt Card

“It is a card given to job seekers or workers to get vocational training (skilling illing and re re-skilling) killing) and / or job competency certification"

Skilli lling ng Targets : Fresh graduate job seekers Objectives : skill adjustment, vocational skill to work Outcome : reduce unemployment Re Re-Sk Skill illin ing Targets : Workers who are laid off or potentially laid off Objective : to equip new/different vocational skills for new profession/entrepreneur Outcome : prevent unemployment from returning

Design gn of Imp mpleme ment ntati tion n of Digita gital and Regular ar Ac Access

Participants

choose the type of training through a digital platform (GoJek, Tokopedia, Jobstreet etc.).

Private training *

Online (e-learning) and Offline (Class) Digita ital Training + Incentives

Training and

Certification in Government Job training Center (LPK) (including Vocational Center/BLK), Private LPK, and Industrial Taining Center Offline training (class) Regular lar Training + Certification + Incentives

SLIDE 50

49

Source: Ministry of Finance

Total Budg dget et Rp4 p423,3 23,3 T

Infrast rastructure cture Budget

To build d infrastructur nfrastructure and remot

te areas

Investme stment nt for accelera rati ting ng infr frast structure ructure developme pment nt (SOE and PSA):

PT HK Rp 3.5 T for building toll road Pekanbaru- Dumai and Terbanggi Besar- Pematang

Panggang – Kayu Agung

PT PLN Rp 5.0 T for fulfilling electrification target 100 % by 2020
PT SMF Rp 2.5 T to support financing for building house for low income society
PSA LMAN Rp 10.5 T for land clearing to support national strategic project
PPPDP Rp 9.0 T for financing credit housing FLPP

18, 18,758 km

Bridges ges

3

Airp rpor

rts

ts

19,879 ha

Irrigati gations

ns

238.8 km

Railr lroads

ads

Interne rnet t Connec ecti tivit vity Develop elopmen ent t (Palap lapa a Ring)

Development of drinking water pipelines
Development of domestic wastewater treatment

systems

Provision of infrastructure for processing waste

Clean an Water er &Sani nita tation ions

6,346 km

Roads

Housi using ng for r Low w Incom come Soci ciety ty

49 49

Dams

SLIDE 51

50

Source: Ministry of Finance

Subsid sidy y is Direct ected ed to Improve e Effectivi ctivity ty and Effic iciency iency throu

ugh

gh Attem empts pts in n Accur uracy cy Improvemen ement

En Energy rgy Sub ubsi sidy dy

Budget 2020 Outlook 2019 125.3 T 142.6 T

Continuing fix subsidy for diesel of Rp1.000/litre
Price differential subsidy for kerosene and LPG 3 kg

canister

Electricity subsidy is given to certain

in tariff groups.

Electricity subsidy is given accurately for household

customer of 450 VA and 900 VA

Improving electricity ratio and reducing inter-regions

disparity

Polic icy :

Non

n En

Energy rgy Sub ubsi sidy dy

62.3 T 69.8 T Budget 2020 Outlook 2019

Data validation of beneficiaries and their needs of subsidized

fertilizer  e-RDKK (Definitive Plan of Group Needs)

Expanding the use of Farmer Card to buy subsidized fertilizer
Improving public service in transportation and public information

Polic icy :

Expanding capit

ital al acces ess of Micro, , Small, ll, Mediu ium Enterp rpris rises es through interest subsidy of KUR

Allocating down payment and interest differential

subsidy to encourage house ownership of low income people

SLIDE 52

51

Source: Ministry of Finance

Transf ansfer er to Region ion and Village lage Fund

Increased by Rp42.5 triliun from the Outlook 2019 that is directed to:

Impr mprovin ing basic ic public ic servic ice e deliv liver ery Ac Acceler leratin ating com

mpetit

titiv ivenes ess Promo

motin

ting productiv

ductive

spendin ding

Rp8 p856.9 56.9 T

Accelerate

the provision

f

public infrastructure and strengthen the quality of human resources, especially through education, health, drinking water, social protection, and inter- regional connectivity.

Increase

competitiveness through innovation, ease of doing business, governance, and incentive policies that support the investment climate.

Increase productivity, especially export-
riented through the development of

regional economic potential.

SLIDE 53

52

Source: Ministry of Finance

Debt t Financi ncing ng Polic licy y 2020 2020

Debt fina nanci ncing ng that t is productiv ductive, e, effici cient nt, fulfills prude udent ntial al aspects cts and suppor pported d by good governance nance and risk sk management nt syst stems. s.

Debt bt Financing ncing Dire recti tion

n

Pruden dent

debt ratio control within the safe limit ranges from

29.4 - 30.1 percent of GDP to support fiscal sustainability

Main

intainin taining macro

bala

lance e by maintain intainin ing the composition of domestic and foreign debt in a controlled limit and deepening the financial markets

Debt Fina nanci ncing ng Strat ategy gy

Optimizing community participation in the

domestic bond market (financial deepening)

Active debt management through liability and

asset management.

SLIDE 54

53

Indonesia’s Tax Amnesty Program – A Suc uccess ess Stor

ry

With th more than 965, 965,900 00 taxpayers parti tici cipati pating ng in the progra gram

Tax Amnesty sty Result lt (as s of the e end of March rch 31st

st,

, 2017) Redemption tion Money Asse sets ts Decla eclared red

114,2 18,8

1,7 Preliminary Evidence Payment 1% Redemption Money 85% Tax Arrears Payment 14%

Reven venue IDR R 134.8tn (~1.1% GDP)

3.323, 23,36 36 861,81 594,99 85,59 59 Individuals 68% Individual SMEs 18% Companies 12% SMEs 2%

Com

mposi
sition
n of Participants

s Based ed on Asset et Declared red

0,04 0,15 0,20 0,62 1,10 0,58 0,17 0,12 0,04 Germany (2004) Belgium (2004) Italy (2009) Chile (2015) Indonesia (2016) India (1997) South Africa (2003) Spain (2012) Australia (2014) % of GDP 2,1 3,9 8,3 39,3 5,2 3,6 0,3

India (1997) Spain (2012) Chile (2015) Indonesia (2016) Italy (2009) South Africa (2003) Australia (2014)

% of GDP 3,698 98 1,036 36 147,1

Onshore Declaration 76% Offshore Declaration 21%

Repatriation 3%

Asset Declared IDR 4,881tn (~39.4% of GDP) Source: Ministry of Finance

SLIDE 55

54

2020 Finan ancin cing g Needs

Fulfilled d from m Government nment Securi urities es IDR 690.5 .51 1 tn tn (93.10%) 0%) and Loan IDR51.32 1.32 tn tn (6.90%) 0%)

Source: Ministry of Finance

Financi ancing need ed IDR7 R741.84 .84T

Budget Deficit IDR307.22T

Non-Debt Financing(nett) IDR44.62T

Investment Financing IDR74.23T Lending (IDR5.19 T) Liability IDR0.59 T Other Financing (IDR25.0T)

Matured Debt IDR389.98T

GS IDR301.19T 77.23% Loan IDR88.79T 22.77%

Financi ancing Sources es IDR7 R741.84 .84T

Domestic Debt 77.95%

Domestic GS Domestic Loan

Foreign Denominated Debt 22.05%

Foreign Denominated Bonds Foreign Loan

2019 Matured T-Bills Issuance

Gross ss GS

GDS GDS 70 70 – 75% 75% Sukuk uk 25 25 – 30% 30%

(Through auction & non-auction)

Projection

2019 2020 29.9%* 29.7%

Debt to GDP Ratio Realization

Note: *preliminary result

SLIDE 56

55

Govern ernment ment Securi riti ties es

Indi dicati ative Fina nanci ncing ng Plan for 2020

Source: Ministry of Finance

Governme ernment t Secu curities rities

Issuance

Composition

GS Rupiah piah Domestic [82% - 86%]

Auction [76% – 80%] Non-auction [6% - 8%]

Forei eign gn Deno nomina minated ed GS GS International [14% - 18%]

Auction:
Conventional Securities – 24x
Islamic Securities – 24x
Non-auction:
Retail

GDS (tradable/ORI & non-tradable), Retail Sovereign Sukuk (tradable/Sukri & non-tradable);

Private Placement – based on request.
Foreign denominated GS as co

comple plementary ry  Avo Avoid id crowding ing out

ut in domestic market.
Th

The targ rget et amo moun unt can be be adjusted justed to the potential of

ther financing sources and financing needs.

*in IDR Trillion

SLIDE 57

56

Government ernment Secur curit itie ies Finan anci cing g Realiz ealizat ation ion

As of Januar ary 31, 1, 2020 0 – in Million

n IDR

Source: Ministry of Finance

*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)

(Million IDR)

Government Securities (GS) 154,271,076 20.97% Government Debt Securities (GDS) 124,271,076 22.86% IDR Denominated GDS 81,755,246

Coupon GDS

67,500,000

Conventional T-Bills

12,000,000

Private Placement
Retail Bonds

2,255,246 Foreign Denominated Bonds 42,515,830

SEC USD-EUR REG SHELF TAKE-DOWN*

42,515,830

Samurai Bond
SEC EURO REG SHELF
USD Onshore Bonds
Sovereign Sharia Securities (Sukuk)

30,000,000 15.64% Domestic Sovereign Sharia Securities 30,000,000 IFR/PBS/T-Bills Sukuk (Islamic Fixed Rate Bond/Project Based Sukuk) 30,000,000 Retail Sukuk

Private Placement
Global Sukuk
Realization

(ao. Feb 28,2020)

SLIDE 58

57

Disciplin ciplined ed and Sophistic histicat ated ed Debt t Portf tfolio

lio Managemen

gement

Weig ighted ted Avera erage ge Debt bt Maturity turity of ~8. 8.5 Years rs Pruden ent t Fisc scal l Defic icit it

Source: Ministry of Finance

Well ll Divers ersif ified ied Acros ross Differen erent t Curren rencie cies

% of Yearl rly y Issuance Source: Ministry of Finance Source: Ministry of Finance Source: Ministry of Finance

Stabl ble Debt bt to GDP DP Ratio tio Over er the e Years rs

IDR Tn Government Debt / GDP (%) Note: *as of endo of December by using GDP assumption (interpolation) 265 265 362 362 407 407 442 442 358 358 (9) 19 19 (4) (20) 14 14 (7) (58) (69) (56) (66) (227) (298) (308) (341) (269)

2,2%
2,6%
2,5%
2,5%
1,8%
3,0%
2,5%
2,0%
1,5%
1,0%
0,5%

0,0% (400) (300) (200) (100)

100

200 300 400 500 2014 2015 2016 2017 2018 SBN (neto) Pinjaman DN & LN (neto) Non Utang (neto) Surplus (Defisit) APBN Rasio Defisit APBN thd. PDB (RHS) Non Debt (Net) Bonds (Net) Loans (Net) Budget Surplus/Deficit Fiscal Deficit (%GDP, RHS)

1.931,2 2.410,0 2.780,6 3.248,6 3.612,7 4.014,8 4.151,30 714,4 677,6 755,1 734,8 746,2 810,7 764,5 24,7% 27,4% 28,3% 29,4% 29,8% 30,2% 30,8% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0%

1.000,0

2.000,0 3.000,0 4.000,0 5.000,0 2014 2015 2016 2017 2018 2019 Feb-2020 *) Bond Loan Debt/GDP Ratio [RHS]

9,8 9,4 9,1 8,7 8,4 8,5 8,5

2014 2015 2016 2017 2018 2019 Feb-20 ATM (in years)

57% 59% 58% 62% 62% 61% 31% 30% 30% 27% 27% 27% 4% 4% 4% 4% 4% 5% 7% 6% 6% 5% 5% 5% 1% 1% 1% 1% 1% 1% 0% 20% 40% 60% 80% 100% 2016 2017 2018 2019 Jan' 20 Feb-20 IDR USD EUR JPY OTHER

SLIDE 59

58

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 Debt bt Maturity turity Profil ile Decl clinin ining g Exch change ge Rate te Risks ks Upcom coming ing Maturities turities (Next t 5 Yea ears) rs)

IDR tn tn

Note: using GDP assumption

Source: Ministry of Finance

14,8 13,7 12,1 10,6 10,6 9,8 9,7 21,0 20,7 17,5 19,2 19,7 16,1 15,5 2014 2015 2016 2017 2018 2019 Feb-20 Variable rate ratio [%] Refixing [%]

227 265 213 211 282 121 139 141 133 208 122 143 96 94 150 42 99 27 89 62 26 23 20 29 28 -

18 35 -

133 153 169 165 159 154 121 122 123 83 50 44 27 23 17 34 8 27 32 3 2 2 34 23 30 30 19 37 26 55,5

50

100 150 200 250 300 350 400 450 500 IDR Denominated (Triliun Rp) Other Currencies (Triliun Rp) 10,7 12,2 12,1 12,1 12,3 11,3 11,9 43,4 44,5 42,6 41,3 41,0 37,9 38,5

2014 2015 2016 2017 2018 2019 Feb-20 FX Debt to GDP ratio (%) FX Debt to total debt ratio (%)

7,7 8,4 6,5 9,9 10,6 8,1 7,7 20,1 21,4 22,7 25,0 25,5 24,3 23,9 33,9 34,7 36,0 39,3 40,4 41,0 40,8

2014 2015 2016 2017 2018 2019 Feb-20 in 1 year (%) in 3 year (%) in 5 year (%)

SLIDE 60

59

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

Forei eign gn Owners ership ip of Gov’t Domestic Debt Securit ritie ies s by Tenor

r

Hold lders ers of Tradable Gov’t Domestic Debt Securities

Source: Ministry of Finance

23,9% 22,5% 23,4% 20,3% 21,1% 28,5% 37,8% 39,9% 36,8% 42,0% 40,3% 34,4% 38,2% 37,5% 39,8% 37,7% 38,6% 37,1% Dec- ec-15 Dec- ec-16 Dec- ec-17 Dec- ec-18 Dec- ec-19 Fe Feb-20 Domestic Banks Domestic Non-Banks Foreign Holders

3,2% 3,5% 5,0% 4,3% 2,4% 2,1%

1,3% 5,3% 5,1% 1,9% 6,7% 7,7% 11,8% 17,8% 17,3% 18,4% 22,0% 22,5% 39,0% 37,4% 35,6% 36,8% 34,1% 33,4% 44,7% 36,0% 37,0% 38,6% 34,8% 34,3% 38,2% 37,5% 39,8% 37,7% 38,55% 37,09%

0% 20% 40% 60% 80% 100% Dec 15 Dec-16 Dec-17 Dec-18 Dec-19 28-Feb-20

0-1 ≥1-2 ≥2-5 ≥5-10 ≥10 %Foreign Ownership of Total

SLIDE 61

60

Ownership ership of IDR Trada dable ble Centr tral al Governmen rnment t Securitie urities

as of Februar ary y 28, 2020

1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company and Pension Fund. 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.

(IDR tn)

Source: Ministry of Finance Descr cripti ption

n

Dec-15 15 Dec-16 16 Dec-17 17 Dec-18 18 Dec-19 19 Feb -2020 020 Banks* 350. 0.07 07 23.95% 95% 399.46 22.53% 53% 491. 1.61 61 23.41% 41% 481. 1.33 33 20.32% 32% 581. 1.37 7 21.12% 12% 804. 4.41 1 28.47% 47% Govern ernme ment t Insti stitu tuti tion

ns (Bank

Indon

nesia

esia**) **) 148. 8.91 91 10.19% 19% 134.25 7.57% 57% 141. 1.83 83 6.75% 75% 253. 3.47 47 10.70% 70% 262. 2.49 49 9.54% 54% 115. 5.13 13 4.07% 07% Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 273.21 9.93% 350.23 12.39% GS used for Monetary Operation 23.63 1.33% 38.01 1.81% (36.15) (1.52%) 10.72 0.39% 235.10 8.32% Non-Banks 962. 2.86 86 65.87% 87% 1,239. 239.57 57 69.90% 90% 1,466. 466.33 33 69.83% 83% 1,633. 633.65 65 68.98% 98% 1,908. 908.88 88 69.34% 34% 1,906. 906.40 40 67.46% 46% Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 130.86 4.75% 130.19 4.61% Insurance Company and Pension Fund 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 471.67 17.13% 482.50 17.07% Foreign ign Holders 558. 8.52 52 38.21% 21% 665.81 37.55% 55% 836. 6.15 15 39.82% 82% 893. 3.25 25 37.71% 71% 1,061. 061.86 86 38.57% 57% 1,048. 048.16 16 37.09% 09% Foreign Govt's & Central Banks 110.32 7.55% 120.84 6.81% 146. 6.88 8 6.99% 99% 163. 3.76 6 6.91% 91% 194. 4.45 5 7.06% 06% 189. 89.98 98 6.72% 72% Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 81.17 2.95% 78.65 2.78% Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 163.32 5.93% 166.89 5.91% Tota tal 1,461. 461.85 5 100% 0% 1,77 773. 3.28 28 100% 0% 2,099. 099.77 77 100. 0.00 00% 2,368. 368.45 45 100. 0.00 00% 2,752. 752.74 74 100. 0.00 00% 2,825. 825.93 93 100. 0.00 00%

SLIDE 62

Monet etary y and d Fi Financia ial Factor:

r:

Cred edib ible e Monet etary y Polic icy y Track k Rec ecor

rd

d an and d Favoura urable ble Financial Sector

r

Se Sect ction ion 5

SLIDE 63

62

Bank Indonesia’s Policy Mix

To Maint ntain in Macroeco

econo

nomi mic c and Financi ncial System em Stabil bilit ity

Source: Bank Indonesia

 Implementing Macro prudential Intermediation Ratio (RIM)  Implementing Macro prudential Liquidity Buffer (MLB)  Electronification: Social program, e- payment for Government  Financial technology  National Payment Gateway (NPG)  QRIS (QR Indonesia Standard)  Expanding National Clearing System (SKNBI) services  Developing market instruments for financing infrastructure  Developing financial market infrastructures  Rupiah Interest Rate Swaps (IRS) and Overnight Index Swap (OIS)  Domestic non-Deliverable Forward (DNDF)  Developing the Commercial Papers (Surat Berharga Komersial)  Controlling inflation: TPIP, TPID  Structural reforms: Government  Financial deepening & stability: KSSK (Financial System Stability Committee), OJK (Financial Services Authority)  Coordinating efforts in reducing Current Account Deficit  Accommodative monetary policy consistent with controlled inflation in the target corridor, while serving as a pre-emptive measure to maintain domestic economic growth momentum  Stabilize exchange rate consistent with fundamentals  Optimize monetary operations in

rder to ensure market

mechanisms and adequate liquidity in the money and foreign exchange markets

Monetar etary Po Polic icy Coordina dinati tion

n

with ot

ther

Authorit horities ies Financ ncia ial l Market et Deepening pening Macro- pruden enti tial al Po Polic icy Paymen ent System em Po Polic icy

1 2 3 4 5

SLIDE 64

63

Bank k Indones esia ia Polic licy y Mix: : March h 2020

The BI Board rd of Governo rnors s agreed on 18th and 19th March 2020 0 to lower the BI 7-Day y Reverse e Repo

Rate

by 25 bps to 4.50%, %, Deposi

sit Facility

y (DF) ) rates lowere red 25 bps to 3,75% 5% and Lending ng Facili lity y (LF) ) rates lowere red 25 bps to 5,25%. 5%.

Continue to optimize monetary

perations in order

to ensure market mechanisms and adequate liquidity in the money and foreign exchange markets Lowers the BI 7- Day Reverse Repo Rate by 25 bps to 4.5% Continue to strengthen coordination by carefully monitoring the dynamics of COVID-19 transmission and its impact on Indonesia over time, as well as the coordinated follow-up policies of the Government, Bank Indonesia and OJK required to maintain macroeconomic and financial system stability, while preserving economic growth momentum

Source: Bank Indonesia

Maintain an accommodative macroprudential policy stance and strengthen coordination with other relevant authorities in order to maintain financial system stability and catalyze the bank intermediation function Reinforced its policy mix towards mitigating the risk of COVID-19 transmission, while maintaining money market and financial system stability and catalyzing economic growth momentum Monetary policy remains accommodative and is consistent with controlled inflation in the target corridor, while serving as a pre-emptive measure to maintain domestic economic growth momentum.

SLIDE 65

64

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

stren

engthen then coor

ordinat

inatio ion and d the va vario ious s polic icy meas easures s alrea eady dy taken en, , Bank Indones

nesia

ia on March 2nd

nd 2020 introduce

duced 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.

SLIDE 66

65

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

Bank k Indonesia

nesia on the Boar

ard of Governor nors s Meeti eting g 18th

th and

d 19th

th March 2020 has rein

infor

rced

ed its policy icy mix towar

wards

ds mitiga gatin ting g the risk sk of COVID ID-19 9 transm smis issi sion

n,

, 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

mic

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

f 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 Rp600 to Rp1 and from customers to the banking industry from a maximum of Rp3,500 to Rp2,900, 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.

SLIDE 67

66

Pri rinc ncipl iples s of Avera rage Reserv rve Requir irem ement nt Ratios

s Impr

provement vement

Substance nce Old New Effectiv ective e Date a. Additional rupiah average reserve requirement for conventional commercial banks Fixed RR: 5% Average RR: 1.5% RR: 6.5% Fixed RR: 4.5% Average RR: 2% RR: 6.5% 16th July 2018 b. Annulment of demand deposit renumeration 2.5% (from 1.5% RR) 0% 16th July 2018 c. Implementation of foreign exchange average reserve requirement for conventional commercial banks Fixed RR: 8% Average RR: 0% RR: 8% Fixed RR: 6% Average RR: 2% RR: 8%* 1st October 2018 d. Implementation of average reserve requirement for Islamic banks Fixed RR: 5% Average RR: 0% RR: 5% Fixed RR: 3% Average RR: 2% RR: 5%* 1st October 2018

* 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)

Improvement in average reserve requirement is a follow up

to the monetary policy

perational

framework reform implemented by Bank Indonesia since 2016.

Monetary policy operational framework reform started in

August 2016 as BI7DRR replaced BI Rate as policy rate. This was then strengthened in 1st July 2017, by the implementation of the average reserve requirement in rupiah for conventional commercial banks at 1.5% out of the total 6.5% of GDP reserve requirement in Rupiah. The reformulation is also backed by various efforts in financial market deepening.

The current improvement aims to elevate flexibility in

banking liquidity management, enhance banking intermediation function, and support efforts in financial market deepening. This multiple targets will in turn improve the effectiveness

f

monetary policy transmission in maintaining economic stability.

Consid iderati erations

ns for the Average

rage Reserve ve Requir uirem emen ent Ratios ios Improve

vemen

ent t

Source: Bank Indonesia

SLIDE 68

67

Princ inciples iples of Macroprud pruden entia tial Interm ermed ediation iation Rati tio

(MIR)

R) and Macropruden prudenti tial al Liquid uidity ity Buffer er (MLB) B)

Striving to stimulate the bank intermediation function and liquidity management, Bank Indonesia issued Bank Indonesia Regulation (PBI) No. 20/4/PBI/2018 and Board

f Governors Regulation (PADG) No.

20/11/PADG/2018 concerning the Macroprudential Intermediation Ratio (MIR) and Macroprudential Liquidity Buffer (MLB) for Conventional Commercial Banks, Sharia Banks and Sharia Business Units. The policy is expected to stimulate the bank intermediation function to the real sector congruent with sectoral capacity and the economic growth target in compliance with prudential principles, while also overcoming the issue of liquidity procyclicality. The regulation is effective for conventional commercial banks from 16th July 2018 and for sharia banks from 1st October 2018.

Conside ideratio rations ns for r Mac acrop

pru

rude dential ntial Instru truments ments Mac acropr

prude

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

This macroprudential policy instrument is countercyclical and can be adjusted in line with prevailing economic and financial dynamics.

Source: Bank Indonesia

SLIDE 69

68

Principles inciples of Macroprud pruden ential tial Int nterm ermed ediation iation Ratio tio (MIR)* )*

Regulati lation

n

MIR (Con

nventional

tional Comm mmercial ial Bank) MIR Shar aria ia (Shar aria ia Banks and d Sharia ia Business ess Un Units) s)

1 MIR Accounting Formula Credit + Owned Bond Deposit + Issued Bond Financing + Owned Sharia Bond Deposit + Issued Sharia Bond 2 Rate and Parameters  Ceiling 94%  Floor 84%  Minimum Capital Adequacy Requirement 14%  Upper disincentive parameter 0.2  Lower disincentive parameter 0.1  Ceiling 94%  Floor 84%  Minimum Capital Adequacy Requirement 14%  For Sharia business units, the Minimum Capital Adequacy Requirement is the same as that of the parent conventional commercial bank  Upper disincentive parameter 0.2  Lower disincentive parameter 0.1 3 Scope of credit/financing and deposits to calculate MIR / MIR Sharia  Credit: rupiah and foreign currency  Deposits in rupiah and a foreign currency: (i) demand deposits, (ii) savings deposits; and (iii) term deposits, excluding interbank funds  Financing: rupiah and foreign currency  Deposits in rupiah and a foreign currency: (i) wadiah savings; and (ii) unrestricted investment funds, excluding 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

*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019

SLIDE 70

69

Principles inciples of Macroprud pruden ential tial Int nterm ermed ediation iation Ratio tio (MIR)* )*

Regulati lation

n

MIR (Con

nventional

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 held 100% 7 Criteria for securities issued  medium-term notes (MTN), floating rate notes (FRN) and/or bonds other than subordinated bonds  sharia-compliant medium-term notes (MTN) and/or 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 DD MIR /DD MIR Sharia  Average daily total deposits in rupiah at all branch

ffices in Indonesia

 Including rupiah liabilities to a resident and non- resident third-party nonbank, consisting

f:

(i) demand deposits, (ii) savings deposits; (iii) term deposits, and (iv) other liabilities  Average daily total deposits in rupiah at all branch

ffices and sharia business units in Indonesia

 Including rupiah liabilities to a resident and non- resident third-party nonbank, consisting of: (i) wadiah savings; (ii) unrestricted investment funds, and (iii)

ther liabilities

10 Relaxation of DD MIR/Sharia DD MIR  Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing disbursement 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

*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019

SLIDE 71

70

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)*

In response to global and domestic economic

developments, BI is maintaining an accommodative policy mix to maintain the economic growth while also maintaining macroeconomic and financial system stability.

BI relaxed MIR/sharia MIR policy in March

2019, which stimulated bank lending. Nevertheless, the macroprudential intermediation ratio (MIR) is again approaching the upper bound, thus necessitating efforts to increase bank lending capacity.

Considering the potential of bank funding

sources that are not included in the MIR ratio, for example the expanding share of loans/financing received by banks, BI decides to adjust MIR/sharia MIR policy in order to

ptimize loans/financing received for bank

lending.

This policy to stimulate credit growth will

comply with prudential principles. Therefore, BI is only encouraging banks with low non- performing loans and adequate capital resilience to expand credit/financing.

Polic icy Backgrou kgrounds nds

Source: Bank Indonesia

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.

Including loan received by conventional commercial banks and financing received by Islamic banks and Islamic

business units as a source of bank funding in the calculation of MIR/sharia MIR.

The criteria for loans/financing received by banks that are eligible to be included in MIR/sharia MIR calculation

are as follows: 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 banks, Islamic banks and Islamic business units; c. Loans/financing excludes interbank loans/financing. d. Loans/financing received with a maturity of no less than 1 year; and e. Loans/financing received based on a loan agreement.

Based on points a and b, the adjusted MIR/sharia MIR formula is as follows:
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).

Main Regulatory latory Points ts

Credit it + Owned Bond Deposit it + Issue ued Bond + Loan/ n/Financ Financing ing Receiv ived ed Lower disinc incent ntiv ive param ameter er

MIR/sh R/sharia ia MIR MIR RR RR= Lower Disincentives Parameter x (Lower Bound of MIR/Sharia MIR Target – Bank’s MIR/Sharia MIR) x Deposit

Upper disinc incent ntiv ive param ameter er

MIR/sh R/sharia ia MIR MIR RR RR= 0.2 x (Bank’s MIR/sharia MIR - Upper Bound of MIR/Sharia MIR Target – ) x Deposit

*This disincentive applies for banks with CAR below 14%. *This adjustment will be effective from December 2nd, 2019

SLIDE 72

71

Principles inciples of Macroprud pruden ential tial Liquidit uidity Buf uffer er (MLB) LB)

Regulati lation

n

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 deposits) 4% of rupiah deposits 2 Components  Securities denominated in rupiah held by a conventional commercial bank that may be used for monetary

perations (including SBI/SDBI/SBN); and

 Sharia-complaint securities denominated in rupiah held by an Sharia business unit that may be used for sharia- compliant monetary operations (including SBIS/SBSN)  Sharia-complaint securities denominated in rupiah held by an Sharia bank that may be used for sharia- compliant monetary operations (including SBIS/SBSN) 3 Calculation Formula Percentage of rupiah securities held by a conventional commercial bank to rupiah deposits Percentage of sharia-compliant rupiah securities held by an Sharia bank to rupiah deposits 4 Flexibility Under certain conditions, the securities used to meet the MLB may be used for repo transactions to Bank Indonesia for open market operations, totalling no more than 2% of rupiah deposits Under certain conditions, the securities used to meet the sharia MLB may be used for repo transactions to Bank Indonesia for open market operations, totalling no more than 2% of rupiah deposits 5 Sources

f

Data

n

Deposits  Monthly Commercial Bank Reports  Rupiah deposits to calculate MLB are the 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  Monthly Sharia Bank Reports  Rupiah deposits to calculate sharia MLB are the average daily total deposits at all branches in Indonesia  Rupiah deposits include: (i) wadiah savings; (ii) unrestricted investment funds, and (iii) other liabilities

SLIDE 73

72

Relaxing ing the Loan-to to-Value alue (LTV) and d Financi nancing-to to-Value alue (FTV) Ratio ios* s*

The e LTV/F V/FTV relaxa axation tion is cond nduct ucted while le taking aking into

account
unt aspects

spects of prude udential ntial and consu nsume mer r protect ectio ion* n*

1. Increasing opportunities of first time buyers to fulfill their housing needs

through housing loan, specifically by adjusting the LTV ratio for property loan and the FTV ratio for property financing for the 1st facility, 2nd facility, etc., making the largest LTV ratio for property credit and FTV ratio for property financing as shown in the table below.

“-“= The LTV rate depends on each bank’s risk management

2. Relaxing the amount of loan/financing facility through indent

mechanism to a maximum of 5 facilities without taking account of the orders

3. Adjusting the arrangement of stages and amount of property

loan/financing disbursement of indent property:

Source: Bank Indonesia

*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019

SLIDE 74

73

Prude denti ntial aspects cts of Relaxing xing the Loan-to to-Value ue (LTV) and Fina nanci ncing ng-to to-Value ue (FTV) Ratios

s

1. The requirements of the LTV ratio for property credit and FTV ratio for property financing are as follows: i. The net ratio of NPL to total credit or NPF to total financing must not exceed 5%; and ii. The gross ratio of property NPL to total property credit or property NPF to total financing must not exceed 5%. 2. Banks must make sure that there is no loan transfer to another borrower at the same bank or different bank for tenors of less than 1 year. The requirements are valid for banks that will disburse pre-order property loan/financing. 3. Banks are required to comply with prudential principles when disbursing loans. 4. Gradual loan liquidation is only allowed for developers that comply with bank’s risk management policy (e.g.the business feasibility of the developer). 5. Banks are required to ensure that transactions to disburse loans (including down payment) and gradual liquidation must be processed through the debitor and developer/seller’s bank account.

LTV / F FTV Exempt mptions

ns

Central government or local government loan / financing programs are exempt from this regulation.

Relaxing ing the Loan-to to-Value alue (LTV) and d Financi nancing-to to-Value alue (FTV) Ratio ios* s*

Source: Bank Indonesia

SLIDE 75

74

Adjustment ustment of LTV Ratio for Property ty Loans, ns, FTV Ratio io for Proper erty ty Financ nancing ing, , and Do Down Pa Payments ments on Automot motive Loans/Fin ns/Financ ancing* ing*

1. Adjustment of LTV Ratio for Property Loans and FTV Ratio for Property Financing.
a. BI decides to relax the LTV ratio for property loans and FTV ratio for property

financing by 5% from current ratio as follows:

Source: Bank Indonesia

Bank Indonesia adjusts macroprudential policy in the property and automotive sectors by: (i) relaxing the LTV ratio for property loans and the FTV ratio for property financing; (ii) providing additional incentive on LTV ratio for green property loans and FTV ratio for green property financing; (iii) relaxing down payments on automotive loans/financing; (iv) providing additional incentive on down payments on green automotive loans. Polic icy Backgrou kgrounds nds Main n Regulatory latory Points ts

*This adjustment will be effective from December 2nd, 2019

In

response to global and domestic economic developments, BI is maintaining an accommodative policy mix to maintain the economic growth while also maintaining macroeconomic and financial system stability. This effort will be targeted to several potential sectors.

Considering the ongoing needs to stimulate the property

and automotive sectors which have a huge backward and forward linkages to other sectors in the economy, BI decides to relax LTV/FTV policy for property loans/financing and down payments on automotive loans in compliance with prudential principles.

Additional incentives are also given to support sustainable

development through green financing in order to reduce potential disruptions to financial system stability stemming from environmental degradation.

As a prudential mitigation, those relaxations will be given to

borrower with strong repayment capacity and low credit/financing risk.

BI will regularly evaluate this policy at least once a year.

SLIDE 76

75

2. Additional incentive on the LTV ratio for green property loans and

FTV ratio for green property financing.

a. The Green Property criteria refers to the standards/certificates

issued by a nationally

r

internationally recognized environmental institution.

b. Green property that is granted for the incentive has to meet the

following standards: i. For residential areas/buildings in certified green belt areas, each unit in the residential area/building is considered to meet the criteria. ii. In case that the residential area/building is not a certified green belt area, an evaluation will be conducted on each unit as follows:

For buildings < 2500m2, the bank may conduct a self-

assessment using the tools/applications provided by a recognized institution.

For buildings > 2500m2,

the assessment must be conducted by a recognized institution;

For new buildings constructed in an area by one

developer or group of developers, the assessment must be conducted by a recognized institution and the certificate must be submitted by the developer i. Additional incentive for green property on LTV ratio for property loans and FTV ratio for property financing is 5% from the LTV/FTV ratio presented in Table 2 as follows:

Adjustment ustment of LTV Ratio for Property ty Loans, ns, FTV Ratio io for Proper erty ty Financ nancing ing, , and Do Down Pa Payments ments on Automot motive Loans/Fin ns/Financ ancing* ing*

Source: Bank Indonesia

Main n Regulatory latory Points ts

3. Adjustment of Down Payments on Automotive Loans/Financing
a. Down Payments on Automotive Loans/Financing is adjusted as

follows: i. Relaxation on the down payments of automotive loans or automotive financing 5%-10% from current regulations; ii. The relaxation should consider the gross NPL/NPF ratios and gross NPL/NPF ratios on automotive loans/financing; iii. The adjustment

f

down payments

f

automotive loans/financing in points a and b is as follows:

*This adjustment will be effective from December 2nd, 2019

SLIDE 77

76

4. Adjustment of Down Payments on Green Automotive Loans/Financing
a. The green vehicles criteria refers to the Presidential Regulation No. 55 of 2019 concerning Battery Electric Vehicles.
b. The down payments on green automotive loans or green automotive financing is adjusted as follows:

i. Additional incentive of 5% on green vehicles from the down payment presented in Table 5; ii. The down payment incentives considers the gross NPL/NPF ratios and gross NPL/NPF ratios on automotive loans/financing; iii. The down payment regulation for green automotive loans or green automotive financing in points a and b is as follows:

Adjustment ustment of LTV Ratio for Property ty Loans, ns, FTV Ratio io for Proper erty ty Financ nancing ing, , and Do Down Pa Payments ments on Automot motive Loans/Fin ns/Financ ancing* ing*

Source: Bank Indonesia

Main n Regulatory latory Points ts

Note: Adjustments of the LTV ratio for property loans, FTV ratio for property financing and down payments on automotive loans or financing will be effective from December 2nd, 2019

*This adjustment will be effective from December 2nd, 2019

SLIDE 78

77

Princ inciples iples of Domest estic ic Non Deliv iver erable ble Forwar ard (DNDF NDF) ) Transa ansaction ction

Purposes ses

1. To support the effort of stabilizing the Rupiah exchange rate through the additional of alternative hedging instruments 2. To support the development and deepening of the domestic financial market 3. To increase the confidence of exporters, importers, and investors in conducting economic and investment activities through the flexibility of hedging transactions against Rupiah currency risk

Genera eral Provisi sions

ns

 Domes mestic tic Non-De Deliv liverable ble Forwar ard d Tran ansa saction tion (DNDF Trans ansac actio ion)

Plain vanilla derivatif transaction of foreign exchange against rupiah in the form of forward transaction with fixing mechanism in the domestic market

 Forward Trans ansac actio ions

Forward Transactions are sell/purchase foreign currencies againts rupiah whereas the delivery of funds shall be performed in more than 2 days after the transaction date

 Fixing Mec echan hanism sm

Transaction settlement mechanism without full movement of funds by calculating the difference between rate on the transaction date and reference rate in JISDOR on a specified future time agreed in the contract (fixing date)

 Other er Definit initio ions

The definition of derivative transaction of foreign exchange againts rupiah, Forward Transaction, Spot Transaction, Customers, Foreign Party is referring to Bank Indonesia regulations regarding foreign exchange transaction againts rupiah

Source: Bank Indonesia

SLIDE 79

78

Princ inciples iples of Domestic estic Non Deliv iver erable ble Forwar ard (DNDF NDF) Transa ansaction ction

Bank can perform

rm DNDF Transa

nsacti ctions ns as follows: ws:

Bank – Customer Bank – Foreign Party

Bank – Bank

Tran ansac saction tion bet etween en:

Can only be performed to hedge rupiah exchange rate risk.

1. Must have Underly

lyin ing Transac sactions tions:

Includ cluding ing all foll llow

wing

ing activ ivit ities ies : a. Trade of goods and services b. Investments, loans, capital, and other investements. c. Banks credit or financing in foreign currencies (specifically for transactions between bank and customers) Excludi luding g foll llowi wing g activ ivit ities ies: a. Bank Indonesia certificates; b. Placement of funds with bank; c. Unwithdrawn credit facilities; d. Documents of foreign currencies sales againts rupiah; e. Money transfer by fund transfer companies f. Intercompany loan g. Money changer activities.

2. Nominal of DNDF Transactions ≤ Nominal of Underlying Transactions 3. Tenor of DNDF Transactions ≤ Tenor of Underlying Transactions

Source: Bank Indonesia

SLIDE 80

79

Princ inciples iples of Domestic estic Non Deliv iver erable ble Forwar ard (DNDF NDF) Transa ansaction ction

Transac nsacti tion

n Set

ettl tlement ent

Use Fixing mechanism
Reference rate: JISDOR for USD/IDR and BI FX Transaction MidRate for non-USD/IDR
Settlement currency : IDR
Roll over and early termination are not allowed

Roll ll over er and d early ly termi

mina nati tion for DNDF is proh

hib

ibit ited ed However, unwind can be done by opening the reverse DNDF transactions

Cover He Hedging ng

Bank may conduct DNDF Transactions with Bank Overseas for cover hedging purpose.

Underlying Transactions: DNDF Transaction between Bank and Customer/Foreign
Purpose: Hedging

Custom

mer

er / / Foreign eign Party ty

Bank Overseas seas Bank

Hedging

Notes: Customer A conduct DNDF transactions with Bank B, and so Bank B can conduct DNDF transactions with overseas Bank for the purpose of cover hedge.

Cover Hedging

Source: Bank Indonesia

SLIDE 81

80

Amendmen ndment t on DNDF F Regulation ulation

*to provide de more flexib ibilit ity in DNDF F transact saction

n

*to increase rease liquidi idity ty and efficiency iciency in domesti estic c forei reign gn excha hange ge market

BI Regula lati tion n No. 20/10/ 0/PBI/20 2018

Source: Bank Indonesia

BI Regulati tion n No. 21/7/PBI BI/20 2019

AMENDMENT

Artic icle le 3

1. DNDF transactions must have Underlying

Artic icle le 3

1. Sell FX/IDR through DNDF up to $ 5 mio can be done without

underlying documents Artic icle le 6

2. Not Regulated;

Artic icle le 6

2. DNDF can be terminated (unwind);

Artic icle le 11

3. Underlying documents must be final (firm) with additional

supporting documents Artic icle le 11

3. Underlying documents for buy FX/IDR for DNDF is :
Final (firm commitment) + Supporting documents
4. Underlying documents for sell FX/IDR for DNDF above

threshold $ 5 mio can be:

Final (firm commitment) + Supporting documents
Projection (anticipatory basis) + Supporting documents

Artic icle le 11

4. Not Regulated;

Artic icle le 11

5. In using estimate underlying transaction documents in the

form of cash flow projection, Bank must evaluate the appropriateness through:

a. Supplementary documents;
b. Historical data within at least 1 year before; and
c. Track record of the Customer or Foreign Party.

*Effective on May 17th, 2019; English version of the regulation is available in BI website.

SLIDE 82

81

Overn rnig ight ht Index x Swaps ps (OIS) IS) & I Interest erest Rate e Swaps ps (IRS RS)

Source: Bank Indonesia

As hedg dging ing instr trume ments ts agains ainst t Rupiah ah inter erest est rate te chang anges es

IR IRS is a contract between two parties to periodically exchange rupiah interest rate flows during the contract period or at the completion

f

the contract based

n certain notional
amount. IRS pricing is based on JIBOR.

OIS IS is an interest rate swap agreement based on a daily overnight reference rate (IndoNIA)  Encourage price transparency in the rupiah money market  Strengthen monetary policy transmission  Provide alternative hedging instruments against rupiah interest rate changes  Support securities market deepening in Indonesia

1 2 3 4

IndoNIA & JIBOR OIS transaction with IndoNIA as benchmark rate Alignment between JIBOR and OIS interest rate Improvement of IRS transaction liquidity

Strengthening reference rate based on real transactions

SLIDE 83

82

OIS and IRS Transa ansactions: ctions: General eral Provisi visions

ns

Source: Bank Indonesia

Mar arket Pl Player

ers. Banks, bank clients, both individual

and non-bank institutions, and also foreign parties. Trans ransacti tion

n Nee

Needs ds Analys nalysis

is. A bank performing an IRS
r OIS transaction with a customer and/or foreign party
n behalf of the customer and/or foreign party is

required to have an analysis on the need of rupiah interest rate derivative transactions. Mar arket Con

nventio

entions

ns. When performing IRS and OIS

transactions, the respective bank is bound by market conventions agreed upon by market players through industry association including the Indonesian Foreign Exchange Market Committee. Se Sett ttlem ement

ent. Settlement can be performed as a netting

payment and every transaction has to be settled in Rupiah. Close lose-out

ut

ne nett tting ing can be applied under predetermined conditions.

Market Conventions

Calculat lation ion Base ACT/360 IndONIA ONIA Index x with 5 5 decimals mals Comp mpou

und

d Floatin ting Rates s (CFR) based d

n 5 decima

mals ls Interest rest Payment based d on Net etting ing Not

tion
nal

al of Net et inter erest st paymen ent in IDR with 0 d decim imals als Set ettlem emen ent Date e = 1 busin ines ess s days s after Maturity ity Date (MD) OIS Quot

tation

ion rates s based d on 2 d decim imals als Quot

tation

tion : 1W, 2W, 1M, 2M, 3M, 4M, 5M, 6M At the 1st phase, e, OIS set ettle lement ment will l only ly be done at the end

f the OIS tenor
r

(MD+1bd) bd).

SLIDE 84

83

3,00 4,00 5,00 6,00 7,00 8,00

Stable able Monetar tary y Envir ironmen

nment

t Despit pite Chall lleng nges es

Rupia iah Exch change ge Rate te Remains ins Compa para rable le to Peers ers Well ll Maint intaine ined Infla lation tion Ensu sured red Price ice Stabi bility ity Stren engt gthened ed Moneta etary ry Poli licy cy Framew ework

rk

Credit it Growt

wth Profil

ile

BI 7Day RR Rate: e: 4.50

(%)

LF Rate: e: 7.00 LF Rate: e: 5.25 25 BI Rate: e: 6.50 DF Rate: e: 3.75

19 Augu gust 2016

The New Moneta tary ry Opera ratio tion Framework Source: Bank Indonesia

YTD 20 2020 20 vs vs 201 019

8,38 38 8,36 36 3,35 35 3,02 02 3,61 61 3,13 13 2,72 72 2,68 68 2,98 98

0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00

2

2 4 6 8 10 12 14 16 18 20 2013 2014 2015 2016 2017 2018 2019 Jan-2020 Feb-2020 (%) CPI (%, yoy) - rhs Volatile Food (%, yoy) - lhs Administered (%, yoy) - lhs Core (%, yoy) - lhs 1,89 1,55 0,21 0,02

0,11
0,76
0,88
1,28
1,70
2,05
3,70
6,04
9,44
0,84
8,77

1,14

8,28
6,46
1,19
6,40
1,97
7,18
3,84
17,32
7,95
19,63
25,0
20,0
15,0
10,0
5,0

0,0 5,0 PHP IDR JPY THB MYR CNY SGD EUR KRW INR ZAR TRY BRL point-to-point average

%

*data as of March 18th, 2020 6,1 3,6 10,5 6,1 2 4 6 8 10 12 14 16 18 20 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 2015 2016 2017 2018 2019 2020 %,yoy

y

Total Growth Working Capital Loans Investment Loans Consumption Loans

SLIDE 85

84

Regio gional nal Inflation ation Remai mains ns under r Contr ntrol

l

Source: Central Bureau of Statistics of Indonesia (BPS), calculated

Inflation in most regions remain within the 2020 national inflation target range of 3.0% ± 1%. However, inflation in West Java (3.7%) and Lampung (3.8%) was still quite high which was contributed by rising commodity prices of garlics.

Aceh 3 North Sumatra 2 Riau 2,1 West Sumatra 2,3 Lampung 3,8 Riau Island 1,5 Bengkulu 2,6 Babel lsland 1,5 South Sumatra 3,1 Jambi 3,6 SUMATE TERA RA KALIMANTA NTAN Gorontalo 3 North Sulawesi 3,4 Central Sulawesi 2,8 West Sulawesi 2,8 South Sulawesi 2,8 South-East Sulawesi 1,1 SULAWESI Maluku 3 North Maluku2,7 Papua 2,1 West Papua 2,7

MA MALUKU-PA PAPUA

Banten 3 Jakarta 3 West Java 3,7 Central Java 3,5 East Java 2,5 Yogyakarta 3,1 Bali 3,5 NTB 1,8 NTT 2,3

BALI-NUSA TENGGARA RA

West Kalimantan 3,4 South Kalimantan 3,3 East Kalimantan 2,1 Central Kalimantan 2,4 North Kalimantan 0,2

Inf ≥ 4,5% 3,5% ≤ Inf < 4,5% 2,5% ≤ Inf < 3,5% Inf < 2,5% JA JAWA

NATI TIONA ONAL L INF NFLA LATI TION ON FEBRU RUARI RI:2,98% % (yoy)

2,45 2,47 2,70 3,2 2,87 2,55

SLIDE 86

85

4 Strat ategies gies to

Achie

hieve e the he Inflat ation ion Targe get

Achieving inflation at 3,5%±1%

Maintaining core inflation
Maintaining volatile food stability at 4-5%
Controlling administered price inflation

2018-2019 Target

Stabilizing the price

1. Price

e Affordabil dabilit ity Achieving inflation at 3,0%±1%

Maintaining core inflation
Maintaining volatile food inflation less than 4%
Controlling administered price inflation

20 2020 20-20 2021 Targe get

Managing demand side Strengthening production, Government food reserves and food export- import management

2. Supply

ly Availabi lability lity

Strengthening institution Encouraging trade cooperation between regions

3. Well

l Managed ged Distr trib ibution ion

Improving trade infrastructure Improving data quality

4. Effec

ectiv ive e Communic ication ation

Strengthening central-regional coordination

Source: Bank Indonesia

4 Strat ateg egies ies

SLIDE 87

86

Improving ving the Effecti ctiveness eness of Monetar etary y Policy icy Transmi ansmissi ssion

n

Bank nk Indon

nes

esia ia has instit ituted uted a Reformulation

rmulation of Monetary

netary Policy icy Operations ions Framewo mework k which ich consists of 3 pill llars; ; (1) (1) impleme lement ntation

n of BI 7day Reverse Repo
Rate;

e; (2) (2) impleme lement ntation

n of reser

erve e requir uiremen ement averaging ging; ; and (3) (3) continue inue to impl plemen ement money ey market ket deepening epening progr

gram.

Enhancement of monetary policy signal Enhancement of banking liquidity management Implem lemen entat tation ion of BI 7 Day Rever verse e Repo Rate Implem lemen entat tation ion of Reserve e Requiremen quirement t (RR) Aver veragin aging Reform rmula ulati tion

n of

Moneta etary Po Polic icy Operat ational ional Framewor

rk

Enhancement of instruments and transactions Implem lemen entat tation ion of Money Market et Deepen ening ing Program ram

Source: Bank Indonesia

SLIDE 88

87

Enhan ancemen cement t of Monetar tary y Operation ations s Frame mewor

rk
Can be traded among contributor banks for 10

minutes.

Up to the amount of Rp10 billion.
Up to 1-month tenor.
Can be traded among contributor banks for 20

minutes.

Up to a total of Rp20 billion.
Up to 3-month tenor.

CURR RRENT ENT JIBOR OR (as per June 1st, 2016) PREVIOU VIOUS JIBOR OR

Source: Bank Indonesia

SLIDE 89

88

Finan ancial cial Interm ermed ediation iation Managed ged to Mainta ntain in Its s Stable able Growth th

In early 2020, banking and multi-finance intermediation still experience moderate growth level, as well as the capital markets and insurance premium.

Source: Financial Service Authority (OJK)

Financ ancing ing distrib ibut uted ed by multi-fina financ nce compani anies still ill regis ister growt wth h at 2.42% yoy as of Jan-20 20 Life fe insur uran ance gross premium ium revenue ue remain ains stab able le as of Jan-20, with h an increas ase in general al & reins nsur uranc ance premium iums Compar ared to December er 2019, as of 24 Februar uary 2020, capit ital al rais ising ing throug ugh h corporat ate issuanc uance has reached hed IDR 13.95 Tn Tn Bank nking ing intermedia iatio ion n can n still ll maint intain ain its moderat ate growth at 6.10% % in Jan-20 20

6,10% 0% 2% 4% 6% 8% 10% 12% 14% 16% 1.000 2.000 3.000 4.000 5.000 6.000 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 IDR Tn yoy Bank Loans YoY Growth (rhs) IPO ; 0,92 IPO ; 0,03 Rights Issue; 13 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 2016 2017 2018 Jan-20 until 24 Feb-20 IDR Tn IPO Rights Issue Corporate Bond & Sukuk 2,42% 0% 2% 4% 6% 8% 10% 100 200 300 400 500 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 yoy IDR tn Financing Growth (rhs)

0,63

28,57

20
10

10 20 30 40 50 60 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Life Insurance Premium Growth General & Reinsurance Premium Growth

SLIDE 90

89

Stable able Financ ancial ial Instituti titutions ns

CAR of the bank nking ng sector remains ains high gh and stab able le at 22.83% % with h Tier 1 capit ital l at 21.20% % as of Jan-20. 20. RBC of the insur uranc nce indus ustry remains ains high gh and well l above e the minim nimum um thresh eshol

ld

(120%) %) Gearing ing ratio io of mult lti-finan finance companies anies is stead adil ily maint intained ined at level l around und 3-tim imes Profit itab abili ility of the bank nking ng sector is stead adily ily maint intai aine ned at a stab able le level of around und 5%

Domes mestic ic fina nancia ncial l instit itutions utions exhib ibit it a relativ ively ely stable le cond ndition.

ion. The capit

pital l is consis istentl ently well ll above e the minimum imum requi uiremen ements, , while ile prof

fit

itabili ility y and lever erage ge remain in to be at a suf ufficient icient level. el.

Source: Financial Service Authority (OJK) 22,83 21,20

10 12 14 16 18 20 22 24 26 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 CAR Tier 1

4,96 2,70

1 2 3 4 5 6 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Net Interest Margin Return on Assets

789 789 345 345

50 100 150 200 250 300 350 400 100 200 300 400 500 600 700 800 900 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Life Insurance (Lhs) General Insurance (rhs)

2,53

1 2 3 4 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

SLIDE 91

90

Managea geable ble Cred edit it Risks sks with h Adequat ate e Liquid uidity ity

Banks anks are are eq equip ippe ped wit ith suf sufficient cient li liqui uid ass sset

ets. Insurance

nsurance in industr ustry also also demonstr emonstrates ates a su sufficient icient level el of

f inv

investme estment nt ad adeq equacy acy rati

atio. Credit

edit risk isk is is al also so managed ged at at a low level as as non non-per performing

rming loan and non

non-per performing

rming fina

nanci ncing ng remains ins below low the thres eshold

ld.

The ratio io of liquid uid assets to deposit it and non-core deposit its of the bank nking ing sector are maint intained ained well above the thresh eshold ld As of Jan-20, the gross & net NPL ratio ios of the bank nking ng sector are 2.77% & 1.04% according ingly and well l maint intain ained below w the thresh eshold ld NPF ratio io of the mult lti-fi financ nance indus ustry constant ntly ly remains ains low at 2.56% % as of Jan-20 20 Invest estment nt adequac uacy ratio io in the insur uran ance indus ustry is maint intai aine ned above 100%

Source: Financial Service Authority (OJK) 101,49 21,47

5 10 15 20 25 30 40 50 60 70 80 90 100 110 120 130 140 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-… Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-… Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

% %

Liquid Assets to Non-Core Deposits Liquid Assets to Deposits threshold LA to Deposit (rhs) = 10% threshold LA/ NCD= 50%

1,04 2,77

1 2 3 4 5 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

%

NPL Net NPL Gross

116,14 185,44

50 100 150 200 250 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Life Insurance General Insurance

2,56

1 2 3 4 5 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

% %

SLIDE 92

91

Managea geable ble Mark rket t Risks sks

Amid midst st the he incr increas easing ing mark arket et volat

latil

ilit ity, y, the he risk isk pr prof

fil

ile of

f financia

inancial insti institut utions ions rem emains ins mana managea eable

le. Net

et open

pen posit

position ion of

f the

he bank anking ing se sect ctor

r wa

was maintained ntained at at a low level, l, while le the inves estmen ment value ue of

f domes

mestic ic instit itutiona utional inves estors

rs was still

ll relativ ively ely stable le.

Net et open en pos posit ition ion in in the he bank ankin ing sect ector is is maint intained ined sign gnifi ificant antly ly far far bel elow

w the

he maxim imum um limit it (20 20%) Insur uranc ance & pensio ion fund nd invest estment nt value ue is is growin wing stead adily ly. The exposur ures es of mult lti-fi financ nance companies anies to foreign ign debt have e large gely ly been mitiga igated ed by compan any hedgi ging ng meas asur ures es Mutual ual funds’ ne net as asset valu alue (NAV) is is manage naged to to be be mai aint ntaine ained wi with lo low to to moderat ate volatili ility

Source: Financial Service Authority (OJK) 2,21

1 2 3 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 % 1166,5 282 282 200 250 300 350 400 300 600 900 1.200 1.500 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 IDR Tn IDR Tn Insurance Pension Funds (rhs) 4.000 4.500 5.000 5.500 6.000 6.500 7.000 260 310 360 410 460 510 560 610 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 IDR Tn NAV Mutual Funds JCI (rhs)

As of 6 March, 2020 170,94 97,86

25 50 75 100 125 150 175 200 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Domestic Debt Foreign Debt

SLIDE 93

92

Domest estic ic Capital ital Mark rket t Perfor

rma

manc nce e Amid d Global al Challenges llenges

Source: Bloomberg and Ministry of Finance

In dom

mes

estic tic capita pital l markets, rkets, bond and stock

ck perform
rmances

es are e contra tracti cting g as s the e resu sult lt of plungi ging oil prices ces and heigh eighten tened ed COVID VID-19 fears rs

Altho houg ugh lessen en in March h compar ared ed to Februar uary, foreign ign portfoli lio is experienci encing ng net

utflo

flow w due to the global al financ nancial ial challe alleng nges es In line e with h global al Indic ices, es, JCI is also under pressur ure of COVID-19 econom

mic

ic effect. Indones nesian ian Governm nment nt and Regula ulator have taken n certain ain actio ions ns to minim nimiz ize e the effect.

The government’s bond yields are showing an increase, following rupiah’s deprec recia iation tion

Stock

ck Index

ex Perf rfor

rmance 10 March 2020 (Com
mpare

red to 31 Decem embe ber r 2019)

11,68
20,26
12,34
18,76
16,02
9,96
1,75
19,15
12,11
9,92
17,12
10,68
19,53
13,05
25
20
15
10
5

TURK BRAZ US EU JPN MAL CHIN PHIL SIN HKN INDO S KOREA THAI WORLD

18,06
1,54
40
30
20
10

10 20 30 40 50 60 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Gov't Debt Securities Equity

281 281 5.221

3000 3500 4000 4500 5000 5500 6000 6500 7000 200 210 220 230 240 250 260 270 280 290 300 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Comp Bond Index Comp Stock Index (rhs)

As of 9 March, 2020 As of 10 March, 2020

12500 13000 13500 14000 14500 15000 15500 5 6 7 8 9 10 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Yield (%) 5-yr Yield 10-yr Yield 20-yr Yield IDR (rhs)

As of 10 March, 2020

SLIDE 94

93

Strat rategic egic Polic licies ies in Finan ancial cial Sector

r

Source: Financial Service Authority (OJK)

Providing financing alternatives for Goverment Priority Sectors Supporting acceleration of national economic growth Providing financial access to MSMEs especially in remote areas Preparing financial services industry to cope with Industrial Revolution 4.0 Improvement of business process in the industry

SLIDE 95

94

Continuou tinuous s Progr gram am on Capital ital Mark rket t Deepen ening ing

…continuously strengthened, including through capital market deepening ini niti tiativ atives es

Stren engthen thening ing market t infras astr tructure

Development of Integrated Licensing (SPRINT).
Enhancement of electronic reporting system.
Development of electronic public offering.
Integrated data warehouse and supervisory system.

Enhanci ancing the supply-side side

Product: QIB offering and private placements, private

fund, asset-backed securities, REITs, infrastructure fund, IGBF (Indonesia Government Bonds Future) & equity crowdfunding.

Issuer: Financial conglomerates, big bank debtors, local

government, IDX incubators, SMEs, SOEs & big tax payers.

Enhanci ancing the deman mand-side side Stren engthen thening ing governance ance & c cust stom

mer

er protec ectio ion

Development of market players’ capacity
Enhancement of GCG for publicly-listed companies
Establishment of disgorgement fund

Source: Financial Service Authority (OJK)

Enhancing the role of the domestic institutional investors

(insurers & pension funds) in capital markets .

Development of the domestic investor base (conducting

investor education programs).

Simplification in opening securities account.
Development of regional securities companies.
Development of e-bookbuilding.
Online marketing initiative

SLIDE 96

95

Enhan ancing cing Financi ncial al Literac eracy y & Inclusion usion

Source: Financial Service Authority (OJK)

OJ OJK striv strives s to

buil

build a a str strong foun

unda

dation for

r fina

inancial l incl inclusi sion prog

grams,

, to

en

ensu sure ac access to

finan

inancial products ts & & ser ervices by In Indo donesians of

f all

all soc

cial

l cla

lasses. Such

Such in initia itiati tives als also in include th the e en enha hancement t of

f fin

inan ancial lit liter eracy an and d finan inancial cons

nsumer protecti

tion. Developing financial education models utilizing various delivery channels Enhancing the role of the “Investment Alert Taskforce” The result of OJK’s 2019 national survey demonstrated an improvement in financial literacy & inclusion among Indo donesian ans com

mpared

ed to that t of 2016.

Fina inanc ncial Lit iter eracy cy Fina inanc ncial Inclu clusio ion

21.8%

2013

Developing micro-credit products with additional business support (“KUR Klaster”) Promoting the establishment

f Islamic

microfinance institutions (“Bank Wakaf Mikro”) Strengthening the role of Financial Access Acceleration Taskforce (TPAKD) in local areas 29.7%

2016

38.03 .03%

2019

2019 Targ rget: 35%

59 59.7%

2013

67 67.8%

2016

76.19%

2019

2019 Targ rget: 75%

SLIDE 97

96

A A Comprehen prehensiv sive e Financ ncia ial l Deepe pening ning Program

gram

…strat

trategy gy to tackle challenges in deepening Indonesia’s financial markets

Source: Bank Indonesia

In Apr-2016 2016, the Minis nister er of Fina nance nce, , the Gover erno nor of Bank nk Indon

nes

esia, ia, and the Chair irma man n of the Board of Commi missione ioners of the Financi ncial l Service ices Authorit

rity

launc nched ed a Coordina ination ion Forum um for Developme elopment nt Financin ncing throug ugh Financia ncial Market ket (FK-PPPK). K). The e three ee authorit

rities

ies have e agreed eed to formula mulate e “The Natio ional l Strategy egy of Fina nancia ncial l Market ket Development elopment”

Vision: To Establish Deep, Liquid, Efficient, Inclusive, and Safe Financial Market

ECONOMIC FUNDING & RISK MANAGEMENT MARKET INFRASTRUCTURE DEVELOPMENT POLICY COORDINATION, HARMONIZATION & EDUCATION Benchmark Rate & Standardization Instrument Fund Regulatory Framework Market Infrastructure Intermediaries Coordination & Education

Mission: Financial Market as Sources of National Development Financing

1 2 3

Money Market FX Market Bond Market Stock Market Syariah Market Structure Product Market

3 Pilars 6 Markets 7 Elements

f Financial

Market Ecosystem

TARGET KEY PERFORMANCE INDICATOR STRATEGIC ACTION PLAN

SLIDE 98

97

BI’s Roles in Supporting Distribution of Non-Cash Cash Soc

cial

ial Assistance stance (NCS CSA) A)

BI suppor

rts

ts gover ernme ment’s progra

gram

m of shiftin ing socia ial l assista istanc nce to targeted ed non cash sh soc

cial

ial assistan istance disbu sburse seme ment t throu

ugh

h the elec ectr tronic ic paymen ent system

em. In the future,

re, elec ectr tronic ic mechan hanism ism disbu bursem rsement t will l be also

applie

ied d to LPG subsidy sidy. . NCSA A Programs ams

Family ily Hope Program ram (Program gram Keluarga uarga Harapan an -PKH KH) Smart Indone

nesia

ia Program ram (Program gram Indon

nes

esia ia Pintar tar-PIP PIP) Non Cash Food d Assistan tance e (Bantuan tuan Pangan gan Non Tunai ai – BPNT)

2016-20 2020 20

Pilot Proj

jec

ect Gradu adual al Impl mpleme ementatio tation

Inter erconne

nnected

ed & inter eroperable

perable

paymen ent t syst stem em

LPG Subsidy idy

Full Imp mpleme lementati tation

XXYYZZ 1234567 678

9876543210

Source: Bank Indonesia

SLIDE 99

98

Prog

gres

ress of

f NCSA

A Prog

grams

ms

Family ly Hope e Program

gram

(Program ram Kelu luarga rga Harap rapan an - PKH) Non

n Cash Food
d Assistance

istance (Ban antuan Pangan gan Non

n Tunai -

BPNT)

The Family Hope Program (PKH) is a program that

provides cash to very poor households. Rp 1,89 million /year will be granted for each

household. PKH will be granted every February,

May, August, and November.

As of December 2017, PKH has been distributed

to 6,0 million households on non-cash basis.

In 2018, PKH has been distributed to 10 million

households on non-cash basis.

BPNT is a poverty alleviation and social protection

program that is managed by the central

government. It provides subsidized rice and eggs

to low-income households. Rp 110 thousand/month will be granted for each household as BPNT that can be used in certain stores which called e-warong.

As of December 2017, BPNT was distributed to

1,2 million households in 44 cities.

In 2018, BPNT has been distributed to 10.1 million

households (65.1% of the target of 15.5 million households target).

Source: Bank Indonesia

As of Sept-2019, PKH has been distributed to 9.8

million households

n

non-cash basis with realization of 82.52% of the 2019 budget.

As
f

Sept-2019, BPNT has been distributed to 13.0 million households with realization of 68.04% of the 2019 budget.

SLIDE 100

99

8,77
35
197

18-Mar-20 2008 1998

Strong

nger

er Fundamentals amentals Facing ng the Headwi dwind nds

82,4 12,1 6,8 1998 2008 Sep-15 30 30 3.8 2,8 1998 2008 Aug-15 17,4 50,2 1998 2008 Sep-15

Inflation tion Rate te (%) IDR R Movem emen ent t (%) Non Non-Perf Perform

rmin

ing g Loa

an/NPL

PL (% (%) Government ent Debt/G t/GDP Forei eign gn Reserv rves (USD D bn)

100.0% 1998 98 27.4% 2008 08 29.8% Q4 - 201 2019 8.6x 1998 98 3.1x 2008 08 3.1x Q4 - 201 2019 116.8% 1998 98 33.2% 2008 08 36.1% Q4 - 2019

More e Liquid quid Market rket (%) Extern ernal l Debt bt (Publ blic ic & Priva ivate) te) to FX Reserv erve e Ratio tio Extern ernal l Debt bt/G /GDP

Inflat ation contro trolled d withi thin the target t range IDR depreciate ted d year-to to-date date in March h 2020 NPL NPL level (gross) is below w the maximum um thresho hold of 5% Consiste tentl tly y well-mai ainta tained Significan antl tly y highe her than n 1998 & 2008, ample to cover 7.5 months ths of import t and exte ternal al debt t repaym yment Significan antl tly y lower than n 1998 crisis Slightl tly higher than n 2008, but significan antl tly y lower than 1998 Mar ’20 130.4

Feb ’20

2.98 98 (yoy)

Jan ‘20 62 62 10,5 5,7 1998 2008 Jul-15

Overnight ht interbank k money y market t rate is relati tively y lower

Tw IV ‘19

4.8 (ytd)

SLIDE 101

100

Outlook look of Domest mestic ic Econom

my

y Remai mains ns Robust st

...d ...dome mestic stic economic mic growth th is predi dict cted ed to be moderat ated d in 2019 9 and rebound und in 2020

2019 and 2020 Economic

nomic Outloo
ok

 Bank Indonesia projects economic growth in 2020 at 4.2-4.6%, revised down from 5.0-5.4%,.  Bank Indonesia projects inflation in 2020 within the target range, namely 3.0%±1%.  Bank Indonesia projects growth of outstanding loans disbursed by the banking industry in 2020 in the 6-8% range, revised down from

9-11% previously, in line with the revised economic growth projection in 2020. Econom

nomic

ic Grow rowth Inflat lation ion CAD D (% (% of

f GDP)

DP) Cred redit it Growt

wth

Source : Bank Indonesia

2018 Real aliza izatio ion 5.17% 3.13% 2.98% 11.75 .75% 201 2019 9 Real aliza izatio ion 5.02% 2.72% 2.72% 6.08% 20 2020 20 4.2–4.6 % 3. 3.0±1% 2.5-3.0 .0 % 6.0-8.0 .0%

SLIDE 102

Pr Progres gressiv sive e Inf nfras astruc tructure ture Devel elopmen pment: Strong

ng Commi

mmitme tment t on Accel celer eration ation of Infrastructure structure Provi vision ion

Se Sect ction ion 6

SLIDE 103

102

IIGF has the potential to provide project guarantee for non-PPP projects

The Governmen rnment t has Enact cted ed Various ious Reform rms s to Accelerat erate e Inf nfrastructur rastructure e Provis ision ion

Fiscal l Refor

rms

ms Instit itutio ional al Refor

rms

Regulat lator

ry Refor
rms

ms

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

Viabil ilit ity Gap p Fund nding ing (VGF) F) KPPIP IP Direct ect Lend nding ing Increase project financial feasibility by contributing up to 49% of the construction cost (MoF Reg. No. 223/2012) Avail ilab abil ilit ity y Payment ent Land nd Revolv

lving

ing Fund nd Issuance of regulatory framework to allow annuity payment by the Government during concession period to concessionaire since project operation based on infrastructure service availability (MoF

Reg. No. 190/2015 for Central Gov’r and MoHA
Reg. No. 96/2016 for Regional Gov’t.)

A revolving-fund sourced from State Budget, to accelerate land acquisition (MoF Reg. No. 220/2010) KPPIP is actively involved in accelerating delivery

f priority infrastructure projects
PT. Sarana

na Mult lti Infrastruk uktur ur Merging between PT. SMI and Gov’t Investment Center (PIP) to become an infrastructure funding company Indon

nes

esia ia Infras. . Guarantee ntee Fund nd (IIG IGF) F) PPP Unit it Provide facilities to help GCA on preparing PPP project (PDF/TA) BLU LU LMAN The State Asset Management Agency (BLU LMAN) is mandated to provide land fund for National Strategic Projects to ensure timely land acquisition process Allow guarantee for direct lending to SOE to accelerate financial close process for infrastructure projects (Presidential Reg. No. 82/2015) Land nd Acquis uisit itio ion Stipulate land acquisition acceleration based on Law No. 2/2012 (Presidential Reg. No. 148/2015) and land acquisition fee payment for impacted community (Presidential Reg. No.56/2017) Econo nomy my Packa kages ges Conduct deregulation for issues hindering infrastructure delivery and develop a task force under CMEA to ensure the effectiveness of economic packages implementation Risk-sha haring ing Guid ideli elines nes IIGF has issued risk allocation and mitigation guidelines for PPP project Tax x Incent entiv ives es (Tax ax Holid iday ay) MoF Reg. No.35/2018 allowed 100% Tax Holiday for 17 Pioneering Industries for 5 – 20 years depending on the investment value Indon

nes

esia ia Infrastructur ucture e Guarantee ntee Fund nd (IIGF) F) IIGF has the potential to provide project guarantee for non-PPP projects

SLIDE 104

103

Some me of Most t Recen ent t Reforms

rms

Policy y reforms rms are aiming ming to create a more conduci ducive e invest stment ent climat mate e for infrast frastructure ructure deliver ery

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

Presid ident entia ial l Reg. No. 20/2 /2018 on Use of Foreig eign Labor

r – released on March 2018

This regulation aims at t simp mplif ifying ng the e perm rmit it appl plic icati tion

n proce

cess ss for foreig eign n workers kers, hence making the process more efficient and faster, in order to rise foreign direct investment in Indonesia

Presid ident entia ial l Reg. No. 56/2 /2017 on Socia ial l Imp mpact t Handling ling in Land Acquis uisit itio ion n Proces ess for PSN – released on June 2017

This Presidential Reg. allows the Execu cuting ting Agency cy to pay land d acqu cquisi isition tion compe pensation tion to the impac pacted ted community ity who does not have officia icial l righ ghts ts

ver

r the land d required ired for PSN. . This regulation helps to solve the land acquisition problem due to community objection over the land use.

MoF MoF No. 60/20 2017 on Proced edures res for the Provis isio ion of Central ral Govern rnmen ent t Guaran rantee ee for the Ac Accele elerat ration ion of the Nation ional al Strateg egic ic Projec ects ts Imp mplem lement entati tion

n – released on May 2017

The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic Projects Implementation. This is regula gulation tion regulates tes the scope pe and d genera ral l requirem irements ts and d proce cedu dure res to propo pose and d gra rant t guara rante tees, , as well l as all llocate cate state te budget dgetob

bli

liga gatio tion on govern rnment t guara rantee tees to all ll PSN. . The guarantee provision is expected to increase the feasibility and trust of investors to participate in the implementation of PSN.

Gover ernment nment Reg. . No. 13/2 /2017 on Natio iona nal l Spatia ial l Plan n (RT RTRW RWN) – released on April 2017

The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure projects listed in the annex of Government Reg.

No. 13/2017. A number of breakthroughs were developed, and one of them is that the Minister

ister of Agra raria rian and Spatia tial can issu sue e a recom commen endation tion of spa patia tial l util iliz ization tion; ; so that t the proce cess of obta tain inin ing g projec ject t perm rmiss issio ion can be done.

MoF MoF No. 21/2017 on Procedur edures es for Land d Acquis uisit ition ion for National ional Strategic egic Projec ects and Asset t Managem agemen ent t of Land d Acquis uisit ition ion by State e Asset t Management gement Agenc ncy – released on February 2017

The implementing regulation of Presidential Reg. No. 102/2016 on Financing of Land Acquisition for the Development of Public Interest in the Framework of the National Strategic Implementation. This regulation becomes the legal basis for the financing of the procurement of National Strategic and Priority Projects by BLU LMAN.

SLIDE 105

104

Reforms Along the Project’s Life Cycle

...to

encoura

urage and accelerat rate infrastructur nfrastructure project ect usi sing ng PPP sche heme me Government nment of Indonesi nesia

Proj

jec

ect Develop lopment t Facili ility ty (PDF) Viabi ability lity Fundin ing Gap (VGF) Guarantee e Fund Tax x Facili ilitie ies Avail ailab abili ility Paymen ment Land d Ac Acquisition ition Preparation Bidding Process Construction

Project development facility contributing to assist GCA on PPP project preparation (PDF&TA) Managing entity: KPPIP, PT SMI PT IIF, and Ministry of Finance A facility with contribution to construction cost to increase project financial viability Managing Entitiy: Ministry of Finance based

n GCA proposal

Gov’t. commitment: 49% max. Per project cost

Guaranteeing

Govt. contractual
bligations under

infrastructure concession agreements and Mof Regulation No 130/PMK. 08/2016 re: Govt guarantee for electricity project acceleration Managing entity: IIGF and MoF Govt’s comitment: US$ 450 mn

MoF Reg. No. 159/PMK. 010/2015 re: tax holiday for pioneer sector, such as base metal, oil refinery, basic petrochemical, machinery, renewable energy, & telco equipment industries. Sector will be further expanded Managing entitiy: Ministry of Finance A scheme in which concessionaires receive sum of money periodically from central or regional government after the completion

f an asset.

MoF Regulation, and MoHA Regulation on Availability Payment has been ratified. Managing entity: Ministry of Finance & Ministry of Home Affairs A facility to support land acquisition for infrastructure projects particularly projects that involve private sector Managing enitiy: Ministry of Finance, Ministry of Agrarian and Land Spatial/BPN and BLU-LMAN Gov’t. commitment: US$ 12 mn (2016) Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

SLIDE 106

105

Effor

rts

ts to Accelerat erate e Infrastru astructure cture Provisi vision

n

Regulat ation ion imp mprovem emen ent to to accele elerat ate land procurem emen ent proces ess

The Government of Indonesia issued Law No. 2 of 2012 on Land Acquisition for Public Interest, with a purpose to provide certainty about the land

acquisition duration for the Government Contracting Agencies and the Investors. The Law sets an estimated 583 days maximum time to complete the land acquisition process.

For its implementation, the Law No. 2 of 2012 was supported by the Presidential Regulation
No. 71 of 2012 on Land Acquisition Implementation for Developing Public Facilities, which

has been revised into the Presidential Regulation No. 30 of 2015. The Amendment to the Regulation allows a Business Entity to allocate funding for a land acquisition which can be reimbursed by the Government following the completion of land acquisition process. With this Regulation, the land acquisition process is expected not to be delayed by the unallocated budget or the delay on the budget disbursement.

Land nd Procurem

curement

t Process as Stipul ulate ated d in Law No. 2 of 2012

Law No

No. 2/201

012 was succe ccessfully ully applied lied in in: 1.

1. Palemb

lembang ng – Ind Indralaya laya section ection of

f the Trans

ns Sumater era Toll Road Project ject 2.

2. Java North Line Doub

uble le Track ck Rail Projec ject

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

SLIDE 107

106

Effor

rts

ts to Accelerat erate e Infrastru astructure cture Provisi vision

n

…the establishment of Indone

nesia

sia Asset et Management ent Agency (LMAN)

Source: Ministry of Finance

Government nment has establish shed ed Stat ate Asset set Management nt Unit t (LMAN) as a s soluti ution n to accelera rate e the land acqu quisiti tion n through ugh the provisi vision n of land d acqu quisiti tion n fund

1. Unutilized fund can be allocated for the following year 2. Non-project-specific land acquisition fund allocation. Unused allocated fund can flexibly be made available for the

ther project

3. Land acquisition fund for PSN projects is managed under one agency

1. LMAN was established in December 2015

through the issuance of MoF Reg. 219/2015 concerning State Assets Management

2. In 2016, BLU LMAN was mandated to provide

land acquisition fund as a support to Ministry

f Public Works due to US$ 1,081 Mio

shortage of fund to acquire land for priority toll roads

3. The scope of support is broaden for all

National Strategic Projects through the issuance of MoF Reg. 21/2017 concerning land acquisition financing guideline for PSN

4. In January 2018, LMAN has disbursed up to

US$ 881.48 Million (IDR 11.9 Trillion) through bridging finance scheme for 27 toll road projects, and planned to start the implementation of direct payment scheme

Land Ac Acqui quisitio tion n Budgeting ting Scheme LMAN at a Glance This LMAN initiativ nitiative provi vides des bet etter r flexibil xibility ty, coordi dina nati tion n and management ent of land acqu quisit sition

n fund

nd provisi vision n for National

nal Strat

rategic gic Projects cts (PSN)

SLIDE 108

107

New ew Fundame ament ntal al Regulations ulations Have Been een Initiat tiated ed in 2017

to accelerat rate infrastru frastructu ture re projects cts deliver ery

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

1

Gover ernm nmen ent Reg. . No. 13/2017 on National ional Spatial ial Plan n (RT RTRWN RWN) The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure projects listed in the annex of Government Reg. No. 13/2017. A number of breakthroughs were developed, and one of them is that the Minister of Agrarian and Spatial can issue a recommendation of spatial utilization; so that the process of

btaining project

permission can be done.

2

MoF MoF No. 60/2017 on Proced edure ures for the Provisio ision n of Central ral Governm rnmen ent t Guarant rantee ee for the Ac Accele elera ration tion of the Nation ional al Strateg egic Projects ects Implem emen enta tation tion The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic Projects

Implementation. This regulation regulates the scope and general requirements and procedures to propose and

grant guarantees, as well as allocate state budget obligation on government guarantees to all PSN. The guarantee provision is expected to increase the feasibility and trust of investors to participate in the implementation of PSN.

3

Presid iden enti tial al Reg. No. 56/2017 on Social ial Impact t Handling ling in Land d Acquis uisit ition ion Proces ess for PSN PSN This Presidential Reg. allows the Executing Agency to pay land acquisition compensation to the impacted community who does not have official rights over the land required for PSN. This regulation helps to solve the land acquisition problem due to community objection over the land use.

4

MoF MoF No. 21/2017 on Procedur edures es for Land d Acquis uisit ition ion for National ional Strategic egic Projec ects and Asset Managem gemen ent t of Land d Acquisit isition ion by State e Asset t Managem gemen ent Agen ency The implementing regulation of Presidential Reg. No.102/2016 on Financing of Land Acquisition for the Development of Public Interest in the Framework of the National Strategic Implementation. This regulation becomes the legal basis for the financing of the procurement of National Strategic and Priority Projects by BLU LMAN

SLIDE 109

108

Und Under er Preside esident ntial ial Reg. . No.56/2 6/2018 18, , PSN N list st has been revised ised int nto

223 Proje
jects

cts and nd 3 P Progr grams ams

projects

27

Projects

53 53

Projects

17

Projects

12 12

Projects

Sulawe awesi

US$23.4 B

Kalim limant ntan

US$35 35.7 B

Sumat atra

US$43.6 B

Maluk luku & Papua ua

US$34. 34.5 B

89 89 3

Programs

Projects

National ional

Projects

1 2

Projects

Java

US$72.7 B US$100 100.7 7 B

13 13

Bali & Nusa sa Tengga ggara ra US$0. 0.7 7 B

Exchange rate: US$ 1 = IDR 13,500

Road 69 Projects Dams 51 Projects SEZs & IEs 29 Projects Railway 16 Projects Energy 11 Projects Ports 10 Projects Clean Water & Sanitation 8 Projects Airports 7 Projects Irigation 6 Projects Smelter 6 Projects Electricity 1 Program Technology 4 Projects Housing 3 Projects Fisheries/Farming 1 Projects Sea Dike 1 Projects Education 1 Projects Economic Equality 1 Program Aeroplane Industry 1 Program

Projec ect Program ram

PSN incl clud udes s 15 sector

rs

s at project ct level and 3 sector

rs at progra

gram m level

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

Projects

SLIDE 110

109

PSN may y rece ceiv ive e privil vileges eges as s stipulat ipulated ed in the e Presidential sidential Reg.

g. No.

. 3/20 2016 j.o j.o. . the e Pr Presid sidential ential Reg.

g. No. 58/20

/2017

01 01 02 03

Determination of National Strategic Projects

04 05 06 07 08 09 10 10 11 12

Permit & Non-permit Completion Spatial Planning Land clearing acceleration Local Content Utilization Government Guarantee Provision Projects Monitoring via KPPIP IT System SOE’s Assignment Problems and Hindrance Completion Accelerate Goods and Service Procurement Settlement of Legal Issues Acceleration of Non- State Budget Projects

Additional Facilities Existing Facilities Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

SLIDE 111

110

Progr gress ess on 223 Projects jects and 3 P Program

grams

s PSN

The e Estimated ated Invest estment t Value lue for 223 3 Proj rojec ects s + 3 Program

grams

s PSN1

1Exclude 7 projects which investment value are still unknown

Exchange rate : US$ 1 = IDR 13,500

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

State Budget 10% SOEs/ RSOEs 31% Private 59% Total tal Inves estment t Value lue2

US$ 307.4 Billion llion

State Budget US$ 31.6 .6 Bn Bn SOEs/RSOEs US$ 96.6 .6 Bn Bn Private US$ 179.2 .2 Bn Bn

5 Sectors rs with th Highe hest st Invest stment ent Value

Energy gy 11 Projects US$ 89.8 Bn Electr tric icit ity 1 Program US$ 76.7 Bn Roads 69 Projects US$ 49.7 Bn Railw lways 16 Projects US$ 29.2 Bn SEZs and IEs 31 Projects US$ 31 Bn

SLIDE 112

111

Progr gress ess on 223 Projects jects and 3 P Program

grams

s PSN

Progress ess of Natio ional al Strategic ategic Proj

jec

ects s (as of Decemb mber er 2018)

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

32 projects already completed 32 projects, 1 electricity program, and 1 economic equality program in construction and partial-operation phase 48 projects in construction and will start operating in 2019 52 projects in construction and will start operating after 2019 14% 14% 15% 15% 21% 21% 23% 23% 3% 3% 24% 24% 6 projects in transaction 53 projects and 1 Aircraft Industry Program in preparation phase

Progress ess of Natio ional al Strategic ategic Proj

jec

ects s (as of Septem tembe ber 2019)

51 projects already completed 27 projects, 1 electricity program, and 1 economic equality program in construction and partial-operation phase 22 projects in construction and will start operating in 2019 80 projects in construction and will start operating after 2019 4 projects in transaction 39 projects and 1 Aircraft Industry Program in preparation phase

22% 13% 12% 33% 3% 18%

SLIDE 113

112

In 2016 6 - 2018 18, , 62 PSNs have e been een Comple

mpleted

d wi with th Total al Estimat imated Investme estment nt Value ue of

f USD23.7

23.7 Billio llion

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

SLIDE 114

113

Progr gress ess on 37 P Prior iorit ity y Projects jects

From

m the revi

vise sed d Natio ional al Strat ategic egic Proje jects, ts, the Government nment has select lected ed a list t of 37 Prior

rity

ity Proje jects s to be the focus s of

f

infrastructure astructure provisio sion.

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

1. Balikpapan-Samarinda Toll Road 2. Manado-Bitung Toll Road 3. Panimbang-Serang Toll Road 4. 15 Segments of Trans – Sumatera Toll Road 5. Probolinggo – Banyuwangi Toll Road 6. Yogyakarta – Bawean Toll Road 7. SHIA Express Railway 8. MRT Jakarta South-North Line 9. Makassar-Parepare Railway 10. Light Rail Transit (LRT) of Jakarta-Depok- Bogor-Bekasi 11. LRT of South Sumatera 12. East Kalimantan Railway 13. LRT of DKI Jakarta 14. Kuala Tanjung International Hub Seaport 15. Bitung International Hub Seaport 16. Patimban Port 17. Inland Waterways Cikarang-Bekasi-Laut (CBL) 18. Palapa Ring Broadband 19. Batang, Central Java Power Plant (CJPP) 20. Central – West Java Transmission Line 500 kV 21. Indramayu Coal-fired Power Plant 22. Sumatera 500 kV Transmission (4 Provinces) 23. Mulut Tambang Coal-fired Power Plant (6 Provinces) 24. PLTGU (16 Provinces) 25. Bontang Oil Refinery 26. Tuban Oil Refinery 27. RDMP/Revitalization of the Existing Refineries (Balikpapan, Cilacap, Balongan, Dumai, Plaju) 28. Abadi WK Masela Field 29. Unilization Field Has Jambaran-Tiung Biru 30. Indonesian Deepwater Development (IDD) 31. Tangguh LNG Train 3 Development 32. West Semarang Drinking Water Supply System 33. Jakarta Sewerage System 34. National Capital Integrated Coastal Development (NCICD) Phase A 35. Jatiluhur Drinking Water Supply 36. Lampung Drinking Water Supply 37. Waste to Energy Program in 8 cities

SLIDE 115

114

Progr gress ess on 37 Prior iorit ity y Projects jects

Recent ent Milestones ilestones Progr gres ess of 37 Priorit

rity

y Project jects (as of September ember, , 2019) Fund nding ing Scheme eme of 37 Priorit

rity Projec

jects

Loan Agreement has been signed on 15 November 2017. On March 2018, pre-qualification stage has resulted 4 shortlisted bidders Allocation of repayment liability on additional-loan for Phase I and Phase II has been decided in the KPPIP Ministerial meeting – 49% will be borne by Central Government and 51% will be borne Provincial Government of DKI Jakarta.

Patimba ban Port

West Semarang rang Water Supply ly System em:

Mass Rapid d Tran ansit sit (MRT RT) Jaka karta ta South-Nor North

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

66% 66% 26% 26% 8% 8%

US$120.7 billion from Private/ PPP US$47.7 billion from SOE/ Regional SOE US$15.5 billion State/ Regional Budget (including G-to-G loan)

Exchange rate : US$ 1 = IDR 13,500

Total Investment Value US$ 183.9 Billion

West package has been fully operasional since April 2018.

Pa Palapa a Ring

Note: This data is still going to be verified by The Executive Office of President (KSP) and Indonesia’s National Government Internal Auditor (BPKP)

Outline Business Case has been done on December 2017.

Yogyakar akarta ta-Ba Bawen en Toll Road

6% 6% 16% 16% 30% 30% 24% 24% 8% 8% 16% 16% 3 projects in transaction 6 projects in preparation 6 projects in construction and partial operation phase 2 project is completed 11 projects in construction and will start operating in 2019 9 projects in construction and will start operating after 2019

SLIDE 116

115

Energy ergy Sector

r:

: the Progres gress s of 35.000 MW Progr gram am

No No Phase MW MW % 1 Operating 3,792 11 2 Construction 22,739 62 3 Signed Power-purchase Agreement 6,923 21 4 Procurement 1,279 4 5 Planning 734 2

17 Dec ‘14

Cabine inet Meeting ing “There’s electricity crisis in Indonesia, requires construction of large capacity plant "

Jan ‘15

Average econom

mic

ic growth of 6.7% % requir ires 7,000 MW / year or 35,000 MW / 5 years (Kepmen ESDM No. 0074/2015 on RUPTL 2015-2024)

Jan ‘15

Debottle leneck neckin ing g through

ugh regula

latio ion: n:

1. Regulation

No.1/2015 concerning electricity supply cooperation & joint utilization

f

the electrical network among license holders.

2. Regulation No.3/2015, concerning Procedures of

Purchasing Electrical Power and benchmark prices for Electrical Power through the Direct Selection & Appointment.

16 Mar ‘15 4 May ‘15 June‘17

Cabine inet Meeting ing Progress of 35,000 MW Launc unching hing 35.00 000 0 MW by the President in Goa Beach Sanden DIY The progress so far:

Sulawesi PLN: 2,000 MW Private: 1,470 MW Transmission: 5,275 ckt.km Substation: 4,390 MVA Maluku ku PLN: 260 MW Private: 12 MW Transmission: 653 ckt.km Substation: 620 MVA Papu pua PLN : 220 MW Private: 0 MW Transmission: 364 ckt.km Substation: 460 MVA Kalimantan PLN: 900 MW Private: 1,735 MW Transmission: 5,604 ckt.km Substation: 3,500 MVA Nusa Tenggara PLN: 670 MW Private: 0 MW Transmission: 2,347 ckt.km Substation: 1,410 MVA Sumate tera PLN: 1,100 MW Private: 8,990 MW Transmission: 18,729 ckt.km Substation: 35,521 MVA Jawa wa & Bali PLN: 5,000 MW Private: 13,697 MW Transmission: 9,185 ckt.km Substation: 66,265 MVA

35,00 000 0 MW Progr

gram

m Dist istrib ibution ution

Source: PLN

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

Note : Progress of 35,000 MW Electricity Program as of August 2019

SLIDE 117

116

Energy ergy Sector

r:

: the Progres gress s of 35.000 MW Progr gram am

Decemb mber er 2016

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

706 MW in operating phase 10,141 MW in construction phase 8,478 MW sighned Power-purchase Agreement 10,560 MW in procurement phase

2% 2% 28% 28% 24% 24% 30% 30% 16% 16%

5,824 MW in planning phase

3% 3% 44% 44% 38% 38% 9% 9% 6% 6% 8% 8% 52% 52% 32% 32% 5% 5% 3% 3% 14% 14% 62% 62% 20% 20% 2% 2% 2% 2%

998 MW in operating phase 15,676 MW in construction phase 13,782 MW sighned Power-purchase Agreement 3,163 MW in procurement phase 2,228 MW in planning phase 2,899 MW in operating phase 18,207 MW in construction phase 11,467 MW sighned Power-purchase Agreement 1,683 MW in procurement phase 954 MW in planning phase 5,071 MW in operating phase 21,824.8 MW in construction phase 6,877.6 MW sighned Power-purchase Agreement 829 MW in procurement phase 734 MW in planning phase

Nove vemb mber er 2017 Decemb mber er 2018 Nove vemb mber er 2019

SLIDE 118

117

Acceleratio eration n of 35.000 MW Progr gram am

Governme ment PT PLN

EPC Power werpl plant nt and Trans nsmis missio ion PLN Subsid idia iary (Joint int Ventur ure) e) Independ ependent ent Power wer Produc ucer er

Streng ngthe then n Equity uity 2B 2B 1

Gover ernme nment nt Suppor port (outsid ide e Guarantee) ntee)

Provision of Primary Energy
Provision of Renewable Energy
Simplicity of Permits and non-Licensing
Spatial Planning
Land acquisition
Resolution on Legal Matters

Loca cal l Content ent Obligation on the usage of local content through an open book system, price guideline, reverse engineering or other methods to maximise the local content.

2A 2A

Assign ignmen ent SJKU KU* * Minis nistry y

f Financ

nce

Strengthe gthen PLN‘s Balance e Sheet et

*)SJKU=Surat Jaminan Kelayakan Usaha/ Business Viability Guarantee Letter The Gover ernme nment nt has issued ued Presid idential ential Regul ulation ion No. 4/201 016 6 on Electr ectricit icity y Infrastructur ucture e Accel eler eratio ion n to accel eler erate e power er projec ects

Provis ision ion of Elect ectric icit ity Refina inancin ncing Hedging ging Financ ncial ial Asset et Optimiza imization ion Direct Lending Direct Lending Bond issuance by PT PLN Company Tax Holiday PT PLN’s divident allocation Loan from independent lenders Asset Revaluation Other types of funding Equity Injection by the Government

Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

SLIDE 119

118

Sign gnif ific icant ant Progress

gress on Infrast

rastructure cture Proje

jects

cts

Datab abas ase Project information such as map, track, existing study and latest project status. An integrat grated ed IT system with monitoring capacity for stakeholders, so that they can have real l time data. Platf tform rm data outlook that is efficient and functional using a user- friendly framework. Record decisions related to projects and synchr hroniz nize e the implementation schedule that can be utilized by stakeholders.

KPPIP developed an integrated IT System for monitoring of national strategic and priority projects, providing database on projects’ latest status which can be effectively utilized for monitoring and decision- making purposes. Improvi

ving

ng Monitor nitoring ing System em on Infrastructur ucture e Projects jects1 Roads

Trans-Sumatr tra Toll Road Merah Puti tih Bridge, Ambon

Dams

Jati tigede Dam (Operati ational)

Transporta portation tion

Jakar karta ta MRT Project ct2

Drinking inking Water ter Proce

cess

ssing ing

Umbulan Drinking Wate ter Provision System, East t Java va

1 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 2 Not funded from National Budget

Terminal 3 Ultimate Soekarno-Hatta ta2 New Tanjung Priok k Port t Project ct2 Nop Goliat t Dekai, kai, Papu pua

SLIDE 120

119

Infrast rastructure cture Projects jects and Financ ancing ing Schemes mes

Promoti

tion

n of Infra frast structure ructure Developme pment nt to Ac Accelerat ate Economi mic Growth th

Establis ishment ent of PPP PPP Unit it

Broa

ad

Objecti tive  Champion project preparation and acceleration of the PPP agenda in Indonesia Core e Mandates tes  Improve quality of project selection under KPPIP – OBC criteria  Support project preparation through PDF support and highlyqualified transaction advisors  Act on behalf the Minister of Finance in providing government support and approvals for projects Additiona ional Mandates es  Coordinate all public financeinstruments  Provide input for PPP Policy program Development and Regulations  Implement capacity building forGovt. Contracting Agency(GCAs)  One stop shop for PPP promotion & Information

Bud udget get Publi lic Private Partner nership ip SOE & Private Sector

r

 Cen entr tral & regio gional budge get (speci special alloc

cati

tion fund & rural transfer) er)  Pr Prim imaril ily to to supp pport basic sic infrastruct cture project ects: – Food secu security ty: Irrigation, dams etc. – Marit itim ime: e: Seaports, shipyards etc. – Connecti ectivit ity: Village roads, public transportation etc.  Certa tain in infrastr truct cture e proj

ject

ects to be funded ed and opera perated ted throu

ugh

gh a pa partner ership ip between en the Indon

nes

esian ian gov

vern

ernment ment and the e priv ivate secto ctor – Projects ready for auction under the PPP Scheme: – Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung – Railway projects such as an express line into Soekarno-Hatta International Airport – Water supply projects such as the West SemarangProject  Vario ious gov

vern

ernmen ment t suppo port t for PPP: P: – Proje

ject

ct Devel elopmen pment t Facil cilit ity (PDF): ): Helps Government Contracting Agencies (GCAs) in project preparation and transaction – Viabil ilit ity y Gap p Fund: improves financial viability of PPP projects – Gov

ver

ernmen ment Guarantees ees: Supports PPP projects’ bankability by providing sovereign guarantees – Infrastructu cture e Financin cing Fund: Provided through PT SMI and IIGF – Availabilit ity Payme yment t (AP): P): GCA pays private partner based of availability of infrastructure services  Gov

ver

ernme ment to inject ect capi pita tal into to SOEs Es: Intended multiplier effect to develop more infrastructure projects  Key y focu cus area eas: – Infrastructure and maritime development – Transportation and connectivity – Food security  Medi dium m term infrastruct cture e develop elopme ments ts to focu cus on: – Water Supply – Airports – Seaports – Electricity and power plants – Housing – Mining

Source : Ministry of Finance; Bappenas; KPPIP: “Komite Kebijakan Percepatan Penyediaan Infrastruktur” or National Committee for the Acceleration of Infrastructure Delivery Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity

 Infrastru tructu cture e Develop

pmen

ent t in order to:

1. Accelerate growth particularly in rural areas
2. Support industrial development and tourism
3. Reduce unemployment and poverty

 Infrastru tructu cture e fundraisin sing needs: s: $357. 57.9 9 bn bn (or equivalent to IDR4,796.2 tn)  245 5 Nati tion

nal Strategy

gy Proje

jects

cts under National Medium Term Plan for 2015 – 2019 with an estimated total cost of IDR 4,197 tn (USD 313 bn)  37 prior

rity

ty infrastru tructu ture proj

jects

ects with an estimated cost of IDR 2,490 tn (USD 180 billion)  Majority of 37 priority projects are expected to commence commercial operation by 2018 - 2022

Infrastruc uctur ure Development nt is a Key Priorit ity

SLIDE 121

120

Govern ernment ment Guara rant ntee ee For Basic sic Infrast rastructure cture Development lopment

Reflec ects ts strong

ng commitm

tment ent to nati tiona nal developme pment nt planning nning

Source: Ministry of Finance No. Central Govern ernme ment t Guarantee tee for Infrastru tructu cture Prog

grams

ms Expos posure/ Outsta tstanding ing (USD bn bn) 1 Coal Power Plant 10,000 MW Fast Track Program (FTP 1) 1.75 2 Clean Water Supply Program 0.01 3 Direct Lending from International Financial Institution to SOEs 1.46 4 Sumatra Toll Road 1.53 5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) 6.78 6 Public-Private Partnerships (PPP) 3.35 7 Regional Infrastructure Financing 0.19 8 Public Transportation (Light Rail Transit) 0.07 9 Electricity Infrastructure Fast Track Program (35GW) 0.06 Tota tal 15.20 20

Conting tingen ent t Lia iabi bili liti ties es from

m Gov
vern

ernmen ent t Guara rantee tees Governmen ent t Guarantee ntee Progra gram

Credit it Guaran antee PPP Guarant antee

Busines iness Viability ty Guarante tee (BVG)  Power (Elec ectric tricit ity) – Full credit guarantee for PT PLN’s debt payment obligation under FTP 1 10,000MW and 35GW programs*.  Cl Clean Water – Guarantee for 70% of PDAM’s debt principal payment obligations.  Toll road – Full credit guarantee for PT Hutama Karya’s debt payment obligations for the development of Sumatra Toll Roads.  Infrastru tructu cture - Full credit guarantee on SOE’s borrowing from international financial institution & guarantee for PT SMI’s local infrastructure financing.  Public ic Transp spor

rta

tati tion

n (Ligh

ight t Rail Transit) t) – Full credit guarantee for PT Kereta Api Indonesia’s debt payment

bligations for the development of LRT Jabodebek.

 Powe wer (Elec ectric tricit ity) ) – Guarantee for PT PLN’s obligations under Power Purchase Agreements with IPPs (off-take and political risk) under FTP-2 10.000MW and 35GW programs*  Infrastru tructu cture – Guarantee for Government-related entities obligations (line ministries, local governments, SOEs, local SOEs) under PPP contracts/agreements  From 2008 to Q3-2019, the Government has issued 84 guarantee documents with total value of USD35.44 billion, 23 of which (worth USD3.44 billion) have expired.  The Maximum Guarantee Limit for the period 2018 – 2021 is set at 6% of GDP. P.  The space for guarantee issuance for the period 2018-2021 is approximately IDR 1,200 trillion (cumulative). As of end of September 2019; currency conversion of IDR 14,147/USD1 (Sept 30, 2019)

Politic ical l Risk Guarantee

 Infrastru tructu cture – Guarantee against infrastructure risks for National Strategic Projects (Presidential Decree No.58/2017) which are not covered by other type of guarantees *) MOF provides both credit guarantees and BVGs for 35GW program

SLIDE 122

121

Go Govern ernmen ment t Fina nancial ncial Facilit ilities es for PPP PP Projects jects

Financ ancial ial Facilit ilities ies to to Attrac tract More e Privat vate Parti ticip ipati ation

Those financial facilities were instrumental in supporting the execution of PPP projects, indicated by the signing of financial close

f the following PPP projects:

Viabilit ility Gap Fund d (VGF) Projec ect t Develop elopmen ent t Facilit ility (PDF) Gover ernm nmen ent Guar arant antees ees (direc rectly tly by MoF MoF or throug ugh h IIGF) F) Finan ancing ing from PT

PT. SMI and PT. IIF

Availa vailabil ilit ity Paymen ent t Schem emes es More Funding ing Schem emes es are on the Pipelines elines

Project Financing fund nded by the privat ate sector

r through

the granting of concessions for an operating asset

wned by the Government/SOE (based on the policy
f the Government) to the private sector to be
perated & managed.

Project Financing fund nded by any source of funds

ther than Government’s budget, e.g. long term

management funds (insurance, repatriated funds from tax amnesty, pension funds, etc.), private equity investors and infrastructure funds. Supported & facilitated by National Development Planning Ministry/Bappenas.

Asset is owned by public sector
Operating asset, not greenfield project
Records positive cash flow for the last several

years

Predicted revenue
Asset is owned by private sector
Greenfield / brownfield / operating projects

Scheme e Charac acteris istic ics Scheme e Charac acteris istic ics

LCS (Limit ited ed Concession ion Schem eme) e) PINA (Non-Gover ernm nmen ent Budget get Infras astruc tructure ure Financ ancing) ing)

Source: Ministry of Finance

SLIDE 123

122

Progr gress ess of PPP P Inf nfrastru rastructure ture Project

jects

No No Project Name Project Cost (IDR tn tn) Financ ancial ial Facilit ilities Status us 1 Central Java Power Plant 40 Guarantee (MoF & IIGF) FC on June 6th, 2016; Construction 30%; COD Target: May 2020 2 Palapa Ring – West Package 1.28 PDF, IIGF Guarantee & AP FC on August 11th, 2016; COD target: February 2018 3 Palapa Ring – Central Package 1.38 PDF, IIGF Guarantee & AP FC on September 29th, 2016; COD target: March 2018 4 Palapa Ring – East Package 5.13 PDF, IIGF Guarantee & AP FC on March 29th, 2017; COD target: September 2018 5 Umbulan Water 2.1 PDF, VGF & IIGF Guarantee FC on August 30th, 2016; COD target: July 2019

Succes essful ful Projec ects ts Reaching hing Financi ncial l Close e in 2016 and 2017

No No Project ct Name Project Cost (IDR tn tn) Financ ancial ial Faciliti ilities Status us 1 Batang–Semarang Toll Road 11 IIGF Guarantee PPP & guarantee contracts signed on April 27th, 2016 2 Manado–Bitung Toll Road 5.1 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 3 Samarinda–Balikpapan Toll Road 9.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 4 Pandaan–Malang Toll Road 5.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016 5 Serpong–Balaraja Toll Road 6.0

PPP contracts signed on June 8th, 2016

6 Jakarta–Cikampek Elevated Toll Road 14.8 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and February 22nd, 2017 7 Krian–Legundi-Krian Toll Road 9.0 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and February 22nd, 2017 8 Serang–Panimbang Toll Road 5.3 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017 9 Cileunyi–Sumedang-Dawuan Toll Road 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017

Signed ed PPP Projects ects in 2016 and 2017

Source: Ministry of Finance, as of July 2017

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123

New Guarant antee e Schemes emes for Non-PP PPP P Proj

ject

ects

The Government had issued Presidential idential Regu egulati lation No No 82 82/2015 and Mini Ministry of

f Fi

Finan nance Regu egulati lation No No 189 189/2015 to provide guarantee for SOE Direct Lending from IFIs for the Development of Infrastructure Projects. Guarant rantee ee on SOE Direc ect Lending ding from Internat rnational ional Financ ancial ial Instit itutions utions (IFIs Is) Guarant rantee ee for Regiona ional l Infras rastruct ructur ure e Financ ancing ing Provis ision ion State e financ ance e soundne ness Fiscal al sustainab inabiliy iliy Best practi tice e of fiscal al risk managem gemen ent The objective of this guarantee is to to provid vide e credit dit enhancem ncemen ent in terms of low

w intere

rest rate and long g tenor fina nanci ncing ng, with 3 main princi nciples les:

The Government had issued Minis inistry of

f

Fin Finance nce Regulation egulation No No 174 174 of

f 2016

2016 to provide guarantee to PT SMI on the assignment

f

regional infrastructure financing provision, by loan to local governments that is transferred from PIP to PT SMI, and new loan channeled by PT SMI to the local government. Based

n

Gover

vernme

nment nt Regulation egulation No

No. 95

95/2015 2015 and Min inis istry of

f Fin

Finance ce Regulation egulation No

No. 232

232/2015 2015, Minister of Finance assigns PT SMI (Sarana Multi Infrastruktur) to carry out functions in providing loan to local government, as previously carried

ut

by PIP (Government Investment Center). The objective is to giv give stimulus imulus to to the acc accele elerat ation ion

f
f

lo local cal infrastr infrastruct uctur ure dev evelopment elopment through the ease of access to infrastructure financing and to boost local economic growth, as well as to provide alternative financing schemes in

rder

to meet local infrastructure development needs and to reduce reliance on state/local budget.

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March Ma ch 202 020 About t Invest estor or Relati lations - - PowerPoint PPT Presentation

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Investment estment Financing ancing

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