Republic of Indonesia Presentation Book - June 2019 PDF

Republic of Indonesia
Policy Credibility and Macroeconomic Stability

to Support Reforms and Growth Momentum
June 2019
About Investor Relations Unit of the Republic of Indonesia
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 of 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)
I Gede Yuddy Hendranata (Directorate General of Budget Financing and Risk Management - Ministry of Finance,
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
1
What’s New in This Edition
Bank Indonesia
Lowered Rupiah
Reserve Requirement
by 50 bps.
…page 61
2
Overview
Institutional and Governance Effectiveness: Fiscal Performance and Flexibility:

1 Accelerated Reforms Agenda with
Institutional Improvement
4 More Fiscal Stimulus with
Prudent Fiscal Management
Economic Factor: Monetary and Financial Factor:

2 Strong and Stable Growth Prospects
Remain Intact
5 Credible Monetary Policy Track Record
and Favourable Financial Sector
Progressive Infrastructure Development:

3
External Factor:
Improved External Resilience 6 Strong Commitment on Acceleration
of Infrastructure Provision
3
Section 1
Institutional and Government Effectiveness:
Accelerated Reforms Agenda with
Institutional Improvement
Improving Global Perception
…with recent improvements on corruption perception index and governance indicator
Global Competitiveness Index1 Ease of Doing Business2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Rank 0
20 Higher rank is better (rankings at the time of annual report publication)
20
Higher rank is better 36 40
30
41 60
45 72
40 73
80
50 91
100
60
120
70 *New Concepts by using the Global 140
Competitiveness index 4.0 which
80 captures the determinants of long- 160
term growth.
90
India Indonesia Philippines Bulgaria Colombia Indonesia India Philippines Bulgaria Colombia
Worldwide Governance Indicators3 Corruption Perception Index4

55 55 44
52 Higher score is better
51
48 42 42
45 41
41 40
35 38 38
29 36 36
25
34
Higher rank is better
15 32
2010 2011 2012 2013 2014 2015 2016 2017
30
Voice and Accountability Political Stability/Absence of Violence 2012 2013 2014 2015 2016 2017 2018
Government Effectiveness Regulatory Quality
Rule of Law Control of Corruption Indonesia India Philippines Bulgaria Colombia
1. Source: World Economic Forum – The Global Competitiveness Report 2018;

2. Source: World Bank – Doing Business 2019 Report;
3. Source: World Bank – World Governance Indicators 2018;
4. Source: Transparency International – Corruption Perceptions Index 2018 Report 5
Continuous Improvement of Investment Climate
…another leap on Indonesia’s Rank on Ease of Doing Business (EODB)*
EoDB 2019 EoDB 2018 Change in EoDB 2019 EoDB 2018 Change in
Rank Rank Rank Points Points Points
Overall 73 72 1 67.96 66.54 1.42
Starting a business 134 144 10 81.22 77.93 3.29
Dealing with Construction Permit 112 108 4 66.57 66.08 0.49
Getting Electricity 33 38 5 86.38 83.87 2.51
Registering Property 100 106 6 61.67 59.01 2.66
Getting Credit 44 55 11 70.00 65.00 5.00
Protecting Minority Investors 51 43 8 63.33 63.33 0.00
Paying Taxes 112 114 2 68.03 68.04 0.01
Trading Across Borders 116 112 4 67.27 67.27 0.00
Enforcing Contracts 146 145 1 47.23 47.23 0.00
Resolving Insolvency 36 38 2 67.89 67.61 0.28
* Higher rank is better, EoDB 2019 was published in October 2018

- 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 6

Indonesia is Now Fully Rated as Investment Grade Country
BBB / Stable
March 2019, Rating Affirmed at BBB/Stable

The decision was supported by favorable GDP growth outlook
on the back of resilient domestic demand and a small
government debt burden compared with its peers. Indonesia’s
sovereign credit fundamentals should be resilient to
substantial exchange rate volatility.
BBB / Stable
May 2019, Rating Upgraded at BBB/Stable

“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.”
Baa2 / Stable
Apr 2018, Rating Upgraded at Baa2/Stable
“The upgrade to Baa2 is underpinned by an increasingly
credible and effective policy framework conducive to
macroeconomic stability. Together with a build-up of
financial buffers, prudent fiscal and monetary policy
strengthens Moody’s confidence that the sovereign’s
resilience and capacity to respond to shocks has improved.”
BBB / Stable BBB / Positive

April 2019, Rating Affirmed at BBB, Outlook Revised to Positive
April 2019, Rating Affirmed at BBB/Stable “The ratings mainly reflect Indonesia’s solid economic growth underpinned by domestic
“Indonesia’s economy is growing at a solid pace. The fiscal deficit to GDP ratio consumption, restrained level of budget deficit and public debt, and resilience to external
narrowed from a year earlier, and the government debt to GDP ratio remains low. shocks stemming from flexible exchange rate policies and accumulation of foreign exchange
While the CAD somewhat widened, foreign reserves are ample relative to short-term reserves. The administration led by President Joko Widodo has formulated a large-scale
external debts. Its economic resilience to external shocks is maintained, supported by infrastructure development plan and is vigorously promoting it to eliminate the infrastructure
the government and central bank’s policies emphasizing macroeconomic stability.” shortage. In addition, it has succeeded in expanding infrastructure expenditures and expenditures
on human capital, and has been curbing the budget deficit by reducing fuel subsidies.”
7
Indonesia Remains the Investment Destination of Choice
The Economist: Indonesia rounds out the top five of Asian economies that
can look forward to increased investment spending. (January 2019) 1 Indonesia Enjoys Large Investments Relative to Peers within the Region 2
40
China 58.3
35
Total Investment / GDP (%)

India 48.7
Indonesia 48.1
30
Vietnam 39.8
Singapore 39.2 25
Thailand 38.5
Japan
20
36.4
Australia 36.4 15
Malaysia 34.2
Hong Kong 32.1 10
Philippines 31.9
31.59
31.74
31.81
34.47
34.61
34.69
23.63
24.61
24.56
27.04
27.14
28.05
25.01
25.79
26.17
26.57
26.04
25.98
5
South Korea 26.3
Taiwan 25.2 0
Myanmar 22.5 India Indonesia Malaysia Philippines Thailand Vietnam
0 10 20 30 40 50 60 70 2018 2019e 2020e
UNCTAD: Indonesia is listed in the top 20 host economies based on FDI JBIC: Among ASEAN countries, Indonesia is one of the most preferred place
inflows, 2016 and 2017 (June 2018)3 for business investment (November 2018)4
500 China 52.2
450 India 46.2
400 2016 2017 Thailand 37.1
350 Vietnam 33.9
Billion USD
300 Indonesia 30.4

250 US 28.8
200 Mexico 13.7
150 (x) = 2016 ranking Philippines 10.0
100 Myanmar 8.6
50 Malaysia 8.4
0 Germany 5.8
Brazil 5.6
Korea 5.1
Taiwan 4.4 % of surveyed who consider each country has promising prospects
Russia 3.7
0.0 10.0 20.0 30.0 40.0 50.0 60.0

1. Source: The Economist – Asia Business Outlook Survey 2018 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2018
2. Source: IMF World Economic Outlook, Database April 2019 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey)
8
Indonesia Election Timeline
August 17th, 2017 – March 26th, 2018 –

April 14th, 2019 September 21st, 2018
Socialization Candidacy of Legislative Candidates,

President & Vice President
August 1st, 2017 – September 3rd, 2017 –

February 28th, 2019 February 20th, 2018
Preparation of Elections Registration and

September 23rd, 2018 –
Commission Regulation Verification of Presidential
April 13th, 2019
& Legislative Candidates
Campaign Period
April 17th, 2019
Election Day
April 14th, 2019 – April

April 18th, 2019 –
16th, 2019
May 22nd, 2019
Quiet Period
Voting Recapitulation
May 23rd – June 15th, 2019

Completion Period for President &
Vice President Election Disputes October 2019
Official Oath of President & Vice
President
Source: General Elections Commission (Komisi Pemilihan Umum) 9

Indonesia Election: Joko Widodo Wins Second Term
General Election Commission has announced the

official results of Indonesia Presidential Election in
the early hours of Tuesday morning, May 21st,
2019. The commission’s count showed that Joko
Widodo – Ma’aruf Amin had received 55,5% of
Jokowi - Ma'aruf Prabowo - Sandi
the vothes, compared with 44.5% for Prabowo 55.5% 44.5%
Subianto – Sandiaga Uno. By this result, Joko

Widodo wins the second term.
Moreover, Indonesia's Constitutional Court on
June 27, 2019 confirmed the victory of President
Joko Widodo.
Source: General Elections Commission (Komisi Pemilihan Umum) 10

National Strategic Development Plan (Nawa Cita)
The 3 Dimensions on Economic Development
Priority Sector
Human Development Development Equitable Development
Education Food Security

Inter- Income Group
Energy & Electrical Security
Health Inter-Region:
Maritime & Marine
(1) Rural Area,
Housing
Tourism & Industry (2) Periphery,
(3) Outside Java,
Character Water Security, Basic
Infrastructure & Connectivity (4) Eastern Area.
Necessary Condition
Legal Certainty & Politic & Democracy Governance
Security & Order
Law Enforcement
11
Economic Equality Policies
to support sustainable public welfare...
• Build a fair land distribution scheme

• Build a priority scale of Tanah Objek Reforma Agraria (TORA) recipient based on land gini ratio,
Agrarian Reform
Economic •
poverty, & land demand
Developing an agricultural industry by agglomeration or cluster method
Equality • Define Lahan Pertanian Pangan Berkelanjutan LP2B to prevent land usage for non-agriculture
Policies Agriculture (Landless •
purposes
Land consolidation for agriculture
Farmer) • Improve research on seeds and agriculture method, off-farm infrastructure, integrated logistic
system, build seeds market, tools and machinery
• Data collection & law enforcement on palm oil land area, including land bank data collection
Land Plantation • Building a database and arranging policy on planting non-agriculture commodities
• Improve cooperative performance by encouraging SOEs and private sectors involvement
• Research support, market synergies, off-takers, and supply chain on downstream business
• Social Housing
Urban Poor & Affordable • House financing
Housing • Land banks and affordable land prices
• Law enforcement on spatial policies
Fishermen & Seaweed • Integrating fishing and seaweeds sectors

• Improve and support aquaculture industry and fishery sector value chain
Cultivation • Encourage Private sector investment on seaweed sector (process and off-taker)
• Develop and improve progressive tax, capital gain tax and tax on unutilized asset
Fair Tax System • supporting fiscal spending
• Developing natural resources industries and value chains

Manufacture and ICT • Minimize interest gap between large companies and small companies
• Protect market share from integrated businesses and strong capital
Opportunity
• Regulate and build a database on traditional/modern market, traditional and modern shops
• Regulate the distances, location, and zone of the market and modern stores
Retail and Market • Compulsory mandates to maximize the usage of Local products
• Fair access to the logistic system
Financing & Government • Improving Kredit Usaha Rakyat (KUR) scheme to support non-bankable SME
Budget • Improving procurement scheme to support SME accessibility to finance
• Identified and built priority scale on sectors, sub-sectors of leading industries and profession
Vocational, • Improving link and match scheme between industries and vocation
Human Resource
Capacity
Entrepreneurship & Labor • Early childhood education
Market • Encourage education system to be more skill, collaborative, flexibility and impact oriented instead
of degree consideration
Source: Coordinating Ministry for Economic Affairs Priority 12

The Economic Policy Packages
“To improve national industry competitiveness, export and investment to generate significant economic growth”
Harmonizing Regulations Simplifying Bureaucratic Process Ensuring Law Enforceability
Phase I (9 Sept ’15) Phase IX (27 Jan ’16)

Improving national industry competitiveness Accelerating electricity generation, stabilizing meat prices and
Phase II (29 Sept ’15) improving rural–urban logistics sector
Easing permit requirement and simplifying export proceeds
Phase X (11 Feb ’16)
requirement
Revising the Negative investment List and improving
Phase III (7 Oct ’15) protection for SMEs
Financial services facilitation, export financing and elimination
of business unnecessary burden Phase XI (29 Mar ’16)
Phase IV (15 Oct ’15) Stimulating national economy through facilitation to SMEs
Social safety net and betterment of people welfare and industries
Phase V (22 Oct ’15) Phase XII (28 Apr’16)
Improving industry and investment climate through tax Improving Indonesia’s rank on Ease of Doing Business (EODB)
incentives and deregulation on sharia banking
Phase XIII (24 Aug ’16)
Phase VI (5 Nov ’15)
Low Cost Housing for Low-Income Communities
Stimulating economic activities in border areas and facilitating
strategic commodities availability Phase XIV (10 Nov ’16)
Phase VII (7 Dec ’15) Roadmap for E-commerce
Stimulating business activities in labor-intensive industries Phase XV (15 Jun ’17)
nation-wide through incentives in the form of accelerating Improving logistics
land certification process for individuals
Phase VIII (21 Dec ’15) Phase XVI (16 Nov ’18)
Resolving land acquisition disputes, intensifying domestic oil Improving the competitiveness and domestic economy
production, stimulating domestic parts and aviation industries
In addition to the 16 Policy Packages, on August 31, 2017 the Government has issued a Presidential Regulation
No.91/2017 for enhancing business license service standard
Source: Coordinating Ministry for Economic Affairs

13
Improving the Competitiveness and Domestic Economy
The 16th Economic Policy Package has been launched
TAX HOLIDAY EXPANSION EXPORT PROCEEDS (DHE) SCHEME
Background
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).
Objectives and benefits

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
Tax Rates on Deposit Tax Rates on Deposit Interest Income
Interest Income
and tax holiday facilities provision

14
Progress of the Economic Policy Packages*
TOTAL INITIAL
REGULATIONS 236 I–XVI
I–XII
Initially, there are 236 regulations which need to be
deregulated
11 I–XVI
Based on the further assessment, 11 regulations has been
I–XII
REVOKED
REGULATIONS revoked from deregulation process
TOTAL
REGULATIONS 225 I–XVI
I–XII
Total regulation subject to be deregulated: 225
regulations
SET 222 99%

As of January 23rd, 2019, deregulation of 222 regulations
98%
PRESIDENTIAL LEVEL
PRESIDENTIAL
54 are finished (99%), comprising 53 regulations at
47 TOTAL 42 53 FINISHED
SELESAI
Presidential level and 169 regulations at
Ministerial/Institutional level
MINISTERIAL/INSTITUTIONAL LEVEL
171
TOTAL 169 FINISHED 99%
ON GOING
DISCUSSION 3 1% Total regulation which are still discussed: 3
*as of January 23rd, 2019

15
Other Progress on Economic Policy Packages
Fair, Simplified & Development of

Projectable Wage System Spesial Economic Zone (SEZ)
29 Provinces have set 2016 Minimum Wage Investment commitments in SEZ up to
System in accordance to the Government 2017 reach 41 T, with 3 hour licenses
Regulation (GR) No. 78/2015 already applied in 4 SEZ’s Administrators in
2017
Industrial Zone Deregulation on

Logistics Sector
52 Bonded Logistic Center has been
• The Provinces of Central Java proposed 3
launched to support various industries
IZ’s: Kendal, Demak, and Ungaran
• Pharmaceutical IZ in Bitung (North
Sulawesi) in 2017
16
Investment Incentives to Boost Industry Sector
BUSINESS EXPANSION INDUSTRIAL ZONE

• Tax allowance
• Exemption or relief of import duty on capital goods, machinery or • VAT exemption on import or delivery of capital goods,
equipment for production purposes that can not be produced • Import Duty exemption on machineries/goods/materials,
domestically; • Tax Allowance and Tax Holiday
• Exemption or relief of import duty on raw materials or auxiliary
material for production purposes for a certain period of time and
certain conditions;
• Exemption or suspension of VAT on the import of capital goods FREE TRADE ZONES AND PORTS
or machinery or equipment for production purposes that have not
been produced domestically for a certain period of time; Exemption of:
• Accelerate depreciation or amortization (part of tax allowance); • Import Duty
and • VAT
• Property tax relief, especially for certain business sectors in • Luxury Goods Sales Tax (PPnBM)
certain regions; • Customs duty
• Combine with Online Single Submission (OSS)
PIONEER INDUSTRIES MICRO, SMALL, MEDIUM ENTERPRISES (MSMES)
Tax holiday of corporate income tax in a certain amount and time Decreasing MSMEs Tax from 1% to 0.5% of gross revenue
SPECIAL ECONOMIC ZONE E-COMMERCE

• No collection of VAT and Luxury Goods Sales Tax (PPnBM), • Sales from customs areas for non-small entrepreneurs through
• Customs tax exemption, the market place will be subject to 0.5% income tax and 1%
• Tax Allowance and Tax Holiday, VAT
• Suspension of Import Duty, • Sales from customs areas for small entrepreneurs through the
• 0% Import Duty for goods produced using local components of market place will be subject to 0.5% income tax
a certain level
Source: Coordinating Ministry for Economic Affairs 17
New Tax Holiday Policy*
to boost industry sector
PROVISION BEFORE AFTER
Pioneer Industry with minimum investment value of Pioneer Industry with minimum investment value of 500bn
1 trillion Rupiah (minimum investment value of Rupiah
500bn Rupiah for telecommunication sector) Applied to 17 industry groups:
Applied to 8 industry groups: (i) upstream base metal; (ii) oil and gas refinery; (iii)
(i) upstream basic metal industry; (ii) oil and gas petrochemical (oil, gas, or coal based); (iv) non-organic base
refinery industry; (iii) organic basic chemicals industry; chemical; (v) organic base chemical; (vi) pharmaceutical materials;
(iv) machinery industry; (v) plantation, forest, and (vii) semiconductor and other components; (viii) communication
Taxpayer devices components; (ix) medical devices components; (x)
fishery products processing industry; (vi)
telecommunication, information and communication machine manufacturing for industry; (xi) machine main
industry; (vii) marine transportation; and (viii) components manufacturing; (xii) robotic components
economic infrastructure manufacturing; (xiii) ship components manufacturing; (xiv) airplane
components manufacturing; (xv) train components manufacturing;
(xvi) power plants; and (xvii) economic infrastructure
10 – 100% 100% (single rate)

Corporate Income Tax
(CIT) reduction rate
5 – 20 years depends on the investment value (in IDR):
• 5 – 15 years; or
• Can be extended to 20 years; subject to MoF 1. 500Bn – 1Tn : 5 years 4. 15Tn – 30Tn : 15 years
Concession period discretion 2. 1Tn – 5Tn : 7 years 5. ≥ 5Tn : 20 years
3. 5Tn – 15Tn : 10 years
Not available 50% CIT reduction for the next 2 years

Transition
Tax allowance not provided Tax allowance for business expansion can be
provided with terms and conditions applied
After Tax Holiday
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.
18
Enhancing Business License Service Standard
Presidential Regulation to Accelerate Ease of Doing Business has been launched
Improve efficient, streamlined, Provide business licensing Overcome the barriers

& integrated business license process assurance in terms to doing business in
service standards of the costs and lead times Indonesia
Policy Goals
2 4 6
1 3 5
Accelerate the Increase coordination & Implement integrated
business licensing synergy between central & licensing process
process regional government (single submission)
1st Phase 2nd Phase

Forming a Task Force to Business license
identify & overcome the end- regulatory reforms
Main Policy
to-end licensing barriers
Implementing a licensing checklist Implementation of the

for Special Economic Zones (KEK), Single Submission
Free Trade Zones (FTZ), Industrial system
Zones & Tourist Zones
Utilizing data sharing

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

Improving Investment Climate
Online Single Submission (OSS) Has Been Launched...
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
Sectors
Environment Public Works Lorem Ipsum

Electricity Health Sector Industry
& Forestry & Housing Suitable for all
Sector Sector
Sector Sector category,
Marine & Medicine & Transportation Information &

Trade Sector Communication
Fishery Sector Food Sector Sector
Sector
Other Sector
The Advantage of Using OSS
Business licenses Standardized Ellectronically

can be secured in business licenses integrated
under an hour are available
Accessible at The whole licensing

More practical anytime and process is monitored
anywhere by the Task Force

…Bonded Logistic Center to Improve Indonesia’s Competitiveness
Bonded Logistic Center To date, 52 Bonded Logistic Center has been

launched to support various industries.
(Pusat Logistik Berikat/PLB) is a
facility provided by Ministry of
Finance as part of the Small and
Food &
implementation of the beverages medium
1st Economic Policy Package. industry
Personal
industry
Oil and
PLB facility aims to improve gas, and care/
mining home care
efficiency and reduce the cost of industry Synthetic
industry
transportation and logistics in Auto-
textile
Indonesia; support the growth of (chemical
motive
substances)
the domestic industry, including industry
Textile industry.
small and medium Heavy
(cotton)
Equipment
industries; increase industry
industry
investment; and to make Aircraft
Indonesia to become a logistics Defence MRO
industry industry
hub in Asia Pacific.
21
…revising the Negative Investment List
Introduction of New Foreign Ownership Regulation for Strategic Sectors
Cold storage Sports Center, Restaurants, Bars Pharmaceutical Raw Materials

Film Processing Lab, Crumb Rubber Manufacturing
Before After Before After Before After Before After
33% 100% 49% 100% 100% 85% 100%

51%
Toll Road Operator, Distribution, Warehousing Private Museum, Catering, apparel

Key Reforms in Negative Foreign Telecommunication Testing Company Manufacturing, Exhibitions &
Investment List Conventions
Before After Before After Before After
Revision of "Partnership" category to

refer to partnership with Micro,
Small and Medium Enterprises
100% 67% 67%
(MSMEs) 95% 33% 51%
Grandfather Law: If a particular

sector is tightened in future, existing Professional Training, Golf Course
foreign investor does not need to Telecommunication Provider
Management, Air Transport Support Services, Consultancy for Construction1 with Integrated Services
comply with tighter stake Travel Bureau
Before After Before After Before After
Strengthen implementation of
negative investment law through
active roles from ministries, agencies 49% 67% 55% 67% 67%
65%
and regional governments
1 For total project value of IDR10bn and above
Source: Investment Coordinating Board (BKPM)

22
Investment Realization (Q1-2019)
Direct Investments Top 8 FDI Realization by Sectors (Q1-2019 vs Q1-2018)

IDR tn
200 195.1
FDI DDI TOTAL
180
160 Metal, Except Machinery,
140 and Equipment Industry
120
100
US$611.6 mn
107.9
80
60
Transportation,
Warehouse, and
57.9%
Housing, Industrial Estate,
40
20
Telecommunication and Office Building
0 US$1,641.9 mn US$949.6 mn
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
400.7% 49.5%
2013 2014 2015 2016 2017 2018 2019 Food Crops,
Chemical and Plantation, and
Pharmaceutical Livestock
Rp159.4 T
IDR185.3tn IDR195.1tn Industry Investment US$217.1 mn
375,982 434,463
Rp145.4 T US$314.0 mn Realization 61.1%
* 40.4%
9.6% 5.3% 15.6% Electricity Food Industry
Q1-2018 Q1-2019 US$1,526.4 mn US$383.2 mn
Q1-2016 Q1-2017 Q1-2016Q1-2017
* person
IDR87.2tn
77.6% 69.9%
IDR108.9tn IDR76.4tn
IDR107.9tn Mining
Decreasing
US$614.8 mn
-0.9% 14.1% 4.0%

Q1-2018 Q1-2019 Q1-2018 Q1-2019
Source: Investment Coordinating Board (BKPM), compared to Q1-2018 period

23
Section 2
Economic Factor:
Strong and Stable Growth Prospects
Remain Intact
Conducive Environment
Underpinning Strong Growth Fundamentals
4th Most Budget reform as

Tax base to be
Largest Economy Populous country broadened from
a part of larger
in South East in the World; one reduce
economic reform
dependency on
Asia 64% in initiative
commodities
productive age
Large and Consistent Fuel subsidies
Rising Middle Stable Budget Reform significantly
Manageable Class and Economy reduced and Prudent debt
Inflation Rate Affluent spending redirected management
Customers to more productive
allocation
Reform-Oriented
Administration
From commodity-based to manufacturing Three main sources of financing for
and service sectors via infrastructure investment needs: State and regional
development budget, State Owned Enterprises and PPP
New High
Continuing from 2015 policy, infrastructure
From consumption-led to investment-led Economic Infrastructure will be higher than fuel subsidy
growth via a stronger manufacturing sector
and more investment initiatives Structure Investments
Infrastructure spending focused on basic
infrastructure projects
Policies to maintain purchasing power to
stimulate domestic economy in the midst
of weakening macroeconomic conditions Fiscal and non-fiscal incentives to attract
infrastructure investment and promote PPP
25
Indonesia’s Strong GDP
Strong GDP Growth1

% QoQ YoY
7.0 • Solid national economic growth was recorded at 5.07% (yoy) in the
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 5.195.06 5.27 5.17 5.18 5.07 first quarter of 2019, pointing to maintained domestic economic
5.0 performance despite retreating from 5.18% (yoy) in the fourth
4.21
3.83 3.74
4.01 4.01 quarter of 2018. Seasonal factors at the beginning of the year as
3.27 3.31 3.19
3.0
3.14 3.09
well as the impact of weaker-than-expected global economic gains
contributed to the moderate economic downturn in Indonesia.
1.0 0.04 • Economic growth in the first quarter of 2019 was primarily driven by
domestic demand on the back of consumption by non-profit
(0.16) (0.30)
-1.0 (0.36) (0.42)
(0.52) institutions serving households (NPISH) and households.
(1.73) (1.81) (1.69)
(2.07)
(1.70)
• Furthermore, domestic demand has also been supported by robust
-3.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
building investment. Net exports maintained a positive position as
imports declined, although exports also softened in line with global
2014 2015 2016 2017 2018 2019 economic moderation and sliding international commodity prices.
Favourable GDP Growth Compared to Peers2

% Growth Prospect
9.0
8.0 7.3 Institutions 2019 GDP growth (%YoY)
7.5
7.0
6.6 2019 Budget 5.3
6.0 6.5
5.0 5.2 Bank Indonesia 5.0 – 5.4
5.2
4.0 3.5 3.6
IMF (WEO April 2019) 5.2
3.0 3.3 3.0
2.0 World Bank 5.2
1.0
ADB 5.2
0.0
2012 2013 2014 2015 2016 2017 2018 2019* 2020* Consensus Forecast
5.1
(June 2019)
Bulgaria Colombia India Indonesia Philippines
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
2. Source: World Economic Outlook Database – April 2019; * indicates estimated figure 26
GDP Growth Breakdown
GDP Growth Based on Expenditures (%, YoY)1

2014 2015 2016 2017 2018 2019
By expenditure
Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1
HH. Consumption 5.2 5.2 5.1 5.1 5.1 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 4.9 5.2 5.0 5.1 5.0 5.0
Non profit HH.
23.2 22.4 5.8 (0.5) 12.2 (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 16.9
consumption
Government
6.1 (1.8) 1.2 0.9 1.2 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
consumption
Gross Fixed Cap. 5.4 4.0 4.4 4.1 4.4 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 5.9 7.0 6.0 6.7 5.0
Formation
Exports 3.1 1.5 4.9 (4.4) 1.1 (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.8) 4.1 (1.6) 8.4 2.7 16.5 8.4 8.9 5.9 7.6 8.1 4.3 6.5 (2.1)
Imports 5.1 0.4 0.2 3.0 2.1 (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.5) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.6 15.2 14.0 7.1 12.0 (7.8)
GDP 5.1 4.9 4.9 5.0 5.0 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
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
GDP Growth by Sector (%, YoY)

2014 2015 2016 2017 2018 2019
By sectors
Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot Q1
Agriculture, forestry, and
5.2 4.9 3.6 3.3 4.2 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 3.3 4.7 3.7 3.9 3.9 1.8
fishery
Mining and Quarrying -1.2 0.7 0.7 1.5 0.4 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
Manufacturing 4.5 4.9 5.0 4.2 4.6 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
Construction 7.2 6.5 6.5 7.7 7.0 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
Wholesale and Retail
Trade, Repair of Car and 6.1 5.1 5.2 4.4 5.2 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 5.3
Motorcycle
Transportation and
7.0 7.6 7.7 7.2 7.4 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 8.6 8.7 5.6 5.3 7.0 5.3
Storage
Information and
9.9 10.7 9.8 10.1 10.1 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 7.2 7.0 9.0
communication
Financial service 3.6 5.5 1.9 7.9 4.7 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 4.2 3.1 3.1 6.3 4.2 7.3
Other Services* 5.4 4.7 5.9 6.5 5.7 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
GDP 5.1 4.9 4.9 5.0 5.0 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
Source: Central Bureau of Statistics of Indonesia (BPS)

*Other services consist of 10 sectors (according to Standard National 2008)
27
Regional Economic Growth
Regional growth in Java, Kalimantan, and Papua was weighed down by restrained manufacturing
exports and minig sector performance.
Source: Central Bureau of Statistics of Indonesia (BPS)

28
Section 3
External Factor:
Improved External Resilience
External Balance under Control Supported by Adequate
Reserves
Balance of Payments Portrait Current Account Deficit within Safe Threshold
2013: 2014: 2015: 2016: 2017: 2018:
US$bn US$bn US$bn CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit
Current Account Capital and Financial Account (US$27.5bn)
(US$29.1bn) (US$17.5bn) (US$17.0bn) (US$16.2bn) (US$31.1bn)
20 160
Overall Balance Reserve Asset (rhs) 8
15 124.5 6
4
10.1 120
10 1.06
2
1.87
5 0
2.4
80 -2
0 -4 (8.10)
-6
-5 (6.97)
40 -8
-7.0 (1.79)
-10 -10
-12
-15 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*Q1**
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4*Q1**
2013 2014 2015 2016 2017 2018* 2019**
2013 2014 2015 2016 2017 2018* 2019**
Goods Services Primary Income Secondary Income Current Account
Source: Bank Indonesia Source: Bank Indonesia
Trade Balance Portrait Substantial FX Reserves to Mitigate External Challenges

2013: 2014: 2015: 2016: 2017: 2018:
US$bn Deficit Deficit Surplus Surplus Surplus Deficit FX Reserves as of May 2019: US$120.3 bn
3.00
(US$4.10bn) (US$2.37bn) US$7.59bn US$8.83bn US$11.83bn (US$8.57bn) (Equiv. to 6.7 months of imports + servicing of government debt)
US$bn Month
FX Reserves (LHS) Month of Import & Debt Service (RHS)
130 15
2.00 14
120 13
12
1.00 110 11
10
100 9
0.00 8
90
7
-1.00 6
80
5
70 4
-2.00 OG Non-OG Total 3
60 2
1
-3.00
50 -
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 3 5 7 9 11 1 3 5 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5
11 11 11 11 11 11
2013 2014 2015 2016 2017 2018 2019
2013 2014 2015 2016 2017 2018 2019
* Preliminary Figure ** Very Preliminary Figure
Source: Bank Indonesia
Source: BPS
30
Exchange Rate In Line with Fundamentals
Movement of Rupiah
IDR/US$ In general, rupiah exchange rate stability has been maintained. In May 2019,
15,500 IDR/USD
15,176 Quarterly Average
the rupiah depreciated 0.18% (ptp) compared with the position recorded at the
end of April 2019. The latest developments are linked to the recent furtherance
Monthly Average
of international trade tensions, which triggered risk-off sentiment in the global
15,000 14798 financial markets. The rupiah regained momentum in June 2019, however,
14,409 appreciating 0.04% (ptp) as of 19th June 2019 compared with the rate
14,282
14,381
recorded at the end of May 2019, or by an average of 0.69% compared with
14,500
14601 the May 2019 average. The rupiah strengthened in June 2019 on the back of a
14,207
solid domestic economic outlook, including the recent improvement in
14269 Indonesia’s sovereign rating affirmed by Standard & Poor’s (S&P), in addition to
14,000
14134 a global loosening of monetary policy. Such dynamics are expected to attract
13952 14270
13,378 foreign capital flows back to Indonesia and appreciate the value of the rupiah.
Moving forward, Bank Indonesia expects to maintain rupiah exchange rate
13,500
stability in line with market mechanisms. Meanwhile, to enhance the
13576 Data as of May June 19th, 2019
effectiveness of exchange rate policy and reinforce domestic financing, Bank
Indonesia will continue to accelerate financial market deepening, targeting the
13,000
money market and foreign exchange market in particular.
1-Jan 1-Feb1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb1-Mar 1-Apr 1-May 1-Jun
Rupiah Exchange Rate Fared Relatively Well Compared to Peers Rupiah Exchange Rate Volatilty
YTD 2019 vs 2018 %
point-to-point average 25 Data as of June 19th, 2019
TRY -9.77 22.1

-13.18
KRW -5.53
-3.71 19.5 19.3
20 May-19 Jun-19
EUR -2.16
-4.49
ZAR -1.09
-6.33
MYR -0.93 14.2
-1.91 15 13.2
SGD -0.38
-0.69
-0.37 12.0 11.0
CNY -2.26
0.06 9.4 9.4
INR -2.32 10
BRL 0.54
-4.73 6.6 6.8 6.5 6.4 6.2
IDR 0.77 5.2 5.0 5.6
0.37 4.8 5.3
1.28 5 4.4
PHP 0.83
JPY 1.51
Data as of June 19th, 2019 0.20
THB 3.51
2.08 %
-
-16.0 -14.0 -12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 BRL ZAR TRY IDR KRW THB MYR INR SGD PHP
Source: Bank Indonesia 31

Bank Indonesia’s Policy Direction
To maintain Rupiah stability and support growth
Measures To Stabilize Rupiah Exchange Rate Measures To Support Growth
1 A pre-emptive, front- To stabilise the rupiah 1 Further easing of

loading and ahead-of- exchange rate, while macroprudential To bolster the growth of the
the-curve policy consistently controlling inflation policy property sector which has positive
response within the 2018-2019 target impact to the economy
range of 3.5±1%
2 Dual intervention in
2 Coordination with the Coordinating
the foreign exchange To stabilise the rupiah Policy Ministry of Economic Affairs, the
market and exchange rate, adjust fair coordination to Ministry of Finance, and the
government securities prices in the financial markets accelerate Financial Services Authority to
(Surat Berharga Negara and maintain adequate liquidity financial market accelerate financial market
– SBN) market in a in the money market deepening deepening, particularly in private
measured way financing for infrastructure.
3 3
Strengthening the Payment system Electronification to support social
To maintain adequate liquidity
monetary operations in development to assistance disbursement and
in the rupiah money market
the foreign exchange and support digital financial transcation of the central
and interbank swap market
money markets economy and regional government
4 Intensive communication,
To form rational expectations,
4 Sharia economy and finance
Sharia economy development to create halal value
especially to market
thus helping to mitigate the and finance chain, sharia financal sector
players, banks,
rupiah overshooting its development development both for commercial
businesses, and
fundamental level. and social purposes, including its
economists
education and communication

32
Ample Lines of Defense Against External Shocks
Ample Reserves
 Ample level of FX reserves to buffer against external shock

FX Reserve
 FX Reserves as of May 2019: US$120.3 billion
Swap Arrangement
 Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2018
Japan  The facility is available in USD and JPY
South Korea  Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2017
Bilateral
Australia  Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018
Singapore  Established a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2018
 Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in
China November 2018
 Entitled to a maximum swap amount of USD600 million under ASA

ASEAN Swap
 The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million
Arrangement (ASA)
Doubled to USD2 billion in 2005
Regional
Chiang Mai  Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool
Initiative created under the agreement
Multilateralization  Came into effect in 2010 with a pool of US$120 bn
(CMIM) Agreement  Doubled to US$240 bn effective July 2014
IMF Global
Global
 Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem
Financial Safety
 Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)
Net - GSFN

33
Solid Policy Coordination
In Managing Financial Markets Volatility
The enactment of Law No. 9/2016 regarding

Prevention and Mitigation of Financial System Crises
as a legal foundation for the government to serves Gov’t Securities Crisis Management Protocol (CMP)
at the time of financial crisis in the form of Financial  Indicators:
System Stability Committee (KSSK) - Yield of benchmark series;
- Exchange rate;
- Jakarta Composite Index;
- Foreign ownership in government securities
KSSK members: the Ministry of Finance, Bank
Indonesia, the Financial Services Authority, and the  Policies to address the crisis at every level :
Deposit Insurance Corporation - Repurchase the government securities at secondary market
- Postpone or stop the issuance
Swap facility arrangements based on international

Bond Stabilization Framework
cooperation First Line of Defense
Buyback fund at DG of Budget
State’s Budget Financing and Risk Management
Investment fund at Public Service
Enhancing coordination between government Agency (BLU) (min. level Aware)
institutions and continuous dialogue with market State Owned Enterprises
participants (BUMN)’s Budget Related SOEs (min. level Aware)
Social Security
Organizing Agency BPJS (min. level Aware)
(BPJS)’s Budget
CMP Implementing Crisis Management Protocol (CMP) Second Line of Defense

State General Treasury Account (Rekening
KUN) (min. level Alert)
State’s Budget
Accumulated cash surplus (SAL) (min. Level
Crisis)
BSF Implementing Bond Stabilization Framework (BSF)
Source: Ministry of Finance 34

Strengthened Private External Debt Risk Management
Debt Burden Indicator (External Debt/GDP) Remains Comparable to Peers Rating Encouraging Corporates Compliance on Hedging Ratio & Liquidity Ratio
External Debt/GDP (%) Hedging Ratio*

62.7
Bulgaria 63.5
68.8 260 , 181 ,
Colombia
39.6
9.5% 6.6%
40
39.6
21.5
India 19.5
20.3
Indonesia
34.4
35.2 ≤ 3 months > 3 - 6 months
34.8
20.8 2,466
Philippines 21.9 2,545
23.3 , , 93.4%
0 10 20 30 40 50 60 70 80 90.5%
2019F 2018F 2017
Source: Moody’s Statistical Handbook, November 2018
Liquidity Ratio*
Regulation on Prudential Principle in Managing External Debt
308 ,
Phase 1 Phase 2 Phase 3
Regulation Key Points Jan 1,2015 – Jan 1,2016 – Jan 1, 2017 11.3%
Dec 31,2015 Dec 31,2016 & beyond
Object of Regulation Governs all Foreign Currency Debt
Hedging Ratio
< 3 months 20%* 25%**
> 3 – 6 months 20%* 25%** 2,418 ,
Liquidity Ratio (< 3 months) 50% 70% 88.7%
Credit Rating Not applicable Minimum rating of BB-
Must be done
Hedging transaction to meet not necessarily be done with a
with a bank in Comply Not Comply
hedge ratio bank in Indonesia
Indonesia
Sanction As of Q IV-2015 Applied *Data as of Q4 2018, with total population 2.726 corporates
Healthy External Debt Composition
External Debt Structure The Structure of External Debt is Dominated by Long-Term Debt
Private Debt Government and Central Bank Debt Short Term External Debt Long Term External Debt
100% 100%
90% 90%
80% 80%
46.4 44.2 45.9 49.3 49.1 48.7
52.6 50.0 49.5 51.2 49.6 50.0
70% 57.4 58.6 70%
60% 60% 81.7 78.8 79.3 78.3 78.8 79.8 82.1 82.9 84.4 84.2 84.2 85.1 84.6 83.9
50% 50%
40% 40%
30% 30%
53.6 55.8 54.1 50.7 50.9 51.3
47.4 50.0 50.5 48.8 50.4 50.0
20% 42.6 41.4 20%
10% 10% 18.3 21.2 20.7 21.7 21.2 20.2 17.9 17.1 15.6 15.8 15.8 14.9 15.4 16.1
0% 0%
External Debt Remains Manageable External Debt to GDP Ratio & Debt to Export Ratio
Million USD External Debt External Debt Growth (rhs) %
450,000 20.0 % External Debt to Export Ratio External Debt / GDP Ratio (rhs) %
200 36.1 36.2 36.9 40
400,000 18.0 34.3 34.7
17.1 32.9
16.0 31.8 35
350,000 180 29.1
14.0 26.5 27.4 30
300,000 25.0 176.1
12.0 160
12.0 168.4 168.0 168.4 25
250,000 11.5 11.3 164.0
10.2 10.1 10.0
200,000 7.9 140 20
8.0
139.5 15
150,000 7.1 120
5.9 6.0
5.4 123.1
100,000 121.8 10
4.0 114.9
100 113.8
3.0
50,000 2.0 5
101.0
0 0.0 80 0
*Provisional Figures
Source: Bank Indonesia, External Debt Statistics of Indonesia, May 2019
36
Manageable External Debt Profile
Short term non-bank corporate debt (non affiliation) represents only 8.4% of total private external debt
Public Long Term 1 Private Bank
Affiliation
US$189.7bn US$145.2bn US$26.7bn
or or or
48.7% 72.8% 13.4% US$10.9bn
of Total Ext. of Private Ext. of Private or
Debt Debt Ext. Debt 5.5%
External Debt of Private
Position Ext. Debt
US$199.6bn US$54.4bn US$27.7bn

or or or
US$389.3bn 51.3% 27.2% 13.9%
of total of Private of Private
Ext. Debt Ext. Debt Ext. Debt
Private
Non-Bank US$16.8bn
Short-Term1 or
8.4%
Private of Private
Ext. Debt
External Debt Position as of April 2019
1 Based on remaining maturity
Non Affiliation
Source: External Debt Statistics of Indonesia, June 2019
37
Section 4
Fiscal Performance and Flexibility:
More Fiscal Stimulus with Prudent Fiscal Policy
Integrated Reform to Provide Higher Quality of Economic Growth
Structural reforms to enhance potential growth and navigate through challenges
• Fair State Budget that declines

poverty and income inequality
Fiscal
Synergy in reform to
boost the more
sustainable
and
inclusive
Monetary & • Monetary policy to support
• Efficient, competitive, and Real Sector growth
Financial macroeconomic stability
innovative real sectors
Sector • Price stability and sustainable
• Job-creation
current account deficit
• Trade and investment
• Efficient and credible
policies that support growth,
financial sector
efficiency, and stability
Source: Ministry of Finance

39
Growth Momentum is Expected to Continue
Several key drivers and strategies to accelerate growth
Key Drivers Strategies to Encourage Growth
• Maintaining purchasing power, boosting domestic

• Consumption remains robust among others demand and supporting business activity.
supported by benign inflation
 Improve distribution channels
• Investment grows stably supported by  Increased shopping events, creative industries
infrastructure acceleration, business climate and festivals in tourism areas
improvement, rating upgrades, economic  Incentives for manufacture
packages  Developing e-commerce industry
• Export and Import keeps improving driven by
increasing demand and improving prices • Encouraging private sector's role in investment
 Strengthening and deepening financial
• Support from several important events such as markets
Asian Games, Regional Elections, and IMF-WB  Making a stable investment climate through
annual meeting political stability
• Expand services sector, especially tourism

 Increasing foreign tourists arrival through
Risks & Challenges cooperation with other countries by
increasing the direct flight schedule
Global economic uncertainties: China economic rebalancing
 Encouraging national creative industry growth
and its financial vulnerability, advanced countries policy
normalization, geopolitic, and climate change
40
2019 State Budget (APBN 2019)
Healthier, More Equitable, Self-Sufficient
Healthier Macroeconomic
• Deficit 1.84% of GDP, the Assumption Growth Inflation 3 months T-bills Exchange Rate
lowest since 2013 5.3% 3.5% 5.3% 15,000/US$
• Towards positive primary
balance ICP Oil Lifting Gas Lifting
• Debt to GDP ratio below
70/barrel 775 thousands barrel/day 1,250 thousands barrel/day
30% of GDP
More equitable Development Unemployment Poverty Gini ratio HDI

• Strengthening Target 4.8% – 5.2% 8.5 – 9.5 0.38 – 0.39 71.98
decentralization
(increasing fiscal transfer
to regions) REVENUE EXPENDITURE
• Strengthening social Rp2,461.1 T
protection programs
Rp2,165.1 T
 Tax  Central Government
• Focusing on human capital
quality improvement Rp1,786.4 T Rp1,634.3T
(inter-generational  Non Tax  Transfer to Region
fairness) Rp378.3 T Rp756.8 T
 Grant  Village Fund
Self sufficient Rp0.4T Rp70.0 T
• Increasing tax revenue
• Increasing the share of
local currency bond Deficit Primary Balance
issuance Rp296.0 T (1.84% of GDP) (Rp20.1 T)
• Domestic financial
deepening Debt Financing Investment
• Driving export Rp359.3 T Rp75.9T
Credible and Healthier Budget
…providing more certainty to all stakeholders
Macroeconomic Assumption for 2018 & 2019 Budget
2017 2017 2018 2019

• 2018 Budget realization showed healthy and credible
Indicator performances:
R-Budget Realization Budget Budget
- with tax revenues grew relatively high
Economic growth (%, yoy) 5.2 5.1 5.4 5.3
- improving tax ratio
Inflation (%, yoy) 4.3 3.6 3.5 3.5
- optimal level of expenditure
3-Month Treasury Bill (SPN) (%) 5.2 5.0 5.2 5.3
• 2019 Budget is healthier, more equitable, and self-sufficient
Exchange Rate (Average, IDR/USD) 13,400 13,384 13,400 15,000 - towards positive primary balance
ICP (USD/barrel) 48 51.2 48 70 - strengthening decentralization
Oil Production (thousand barrel/day) 815 804 800 775 - increasing tax revenue
Gas Production (millions barrel/day) 1.15 1.14 1.20 1.25
2018 2019
2016 2017
% %
Description (IDR Trillion) Audited Audited Realization Proposed Realization
Budget Realization Budget Realization
Realization Realization (a.o. Dec 31) Budget (a.o. May 31)
to Budget to Budget
A. Revenues and Grants 1,555.9 1,666.4 1,894.7 1,942.3 102.5 2,142.5 2,165.1 728.5 33.6
I. Domestic Revenue 1,546.9 1,654.8 1,893.5 1,928.4 101.8 2,142.1 2,164.7 727.7 33.6
1. Tax Revenue 1,285.0 1,343.5 1,618.1 1,521.4 94.0 1,781.0 1,786.4 569.3 31.9
2. Non Tax Revenue 262.0 311.2 275.4 407.0 147.8 361.1 378.3 158.4 41.9
II. Grants 9.0 11.6 1.2 13.9 1161.4 0.4 0.4 0.7 162.3
B. Expenditure 1,864.3 2,007.3 2,220.7 2,202.2 99.2 2,439.7 2,461.1 855.9 34.8
I. Central Government Expenditure 1,154.0 1,265.3 1,454.5 1,444.4 99.3 1,607.3 1,634.3 530.8 32.5
1. Ministerial Spending 684.2 765.1 847.4 836.2 98.7 840.3 855.4 288.2 33.7
2. Non Ministerial Spending 469.8 500.2 607.1 608.2 100.2 767.1 778.9 242.6 31.1
II. Transfer to Region and Village Fund 710.3 742.0 766.2 757.8 98.9 832.3 826.8 325.1 39.3
C. Primary Balance -125.6 -124.4 -87.3 -1.8 2.1 -21.7 -20.1 -0.4 1.9
D. Surplus (Deficit) -308.3 -340.9 -325.9 -259.9 -297.2 -296.0 -127.5
% of GDP -2.49 -2.51 -2.19 -1.76 -1.84 -0.79
E. Financing 334.5 366.6 325.9 300.4 106.2 297.2 296.0 157.9 53.3
42
Increasing Tax Revenue Over The Years
Tax revenue in 2019 is expected to grow by 15,4% from 2018’s outlook, supported by
continuous tax reform
Tax Revenue (in IDR trillion) 2019 TAXATION POLICY
Ratio to GDP (%) - RHSa Strengthening the taxation service

2000 13.7% 15% a. Simplifying registration and expanding number of service center
b. Expanding e-filling coverage, and
1800 12.2%
11.6% 11.6% 13% c. Simplifying refund system
1600 10.8% 10.7%
11% Law enforcement
1400 a. Conducting fair law enforcement
1200 9% b. Improving audit quality by reforming governance
1,786.4
1000 7%
Tax compliance supervision
1,548.5
1,343.5
800 a. Implementing the AEol and financial information access
1,285.0
1,240.4
5%
1,146.9
600 b. Extensification and enhancing supervision as a follow-up

3% to tax amnesty
400 c. Handling SMEs end-to-end by Business Development
200 1% Services (BDS) approach
d. Establishing DG Tax-DG Customs and Excise joint program
0 -1% e. Improving tax database
2014 2015 2016 2017 2018 2019 Budget f. Implementing the Compliance Risk Management (CRM)
Outlook
2019 CUSTOM AND EXCISE POLICY

• The contribution of tax revenues
to total revenue is increasing Improving the dwelling time:
 Accelerating the service of Bonded Logistics Continuing the control of importers, exporters,
From 74% in 2014 to 82.5% in Centre (Pusat Logistik Berikat) and high risk excise policy (PIBT, PEBT and
2019  Simplifying the import procedure PCBT)  synergy with DG Tax, army, police,
 Import duty and tax payment 24x7 (with MPN G2) and public prosecutor
• Fiscal incentives (tax holiday, tax  including customs service 24x7
allowance, etc) are provided to
maintain the sustainability of the Continuing the prevention of smuggling and Developing/expanding Kemudahan Impor Tujuan
investment climate and increase controlling illegal excise goods (cigarettes, alcohol) Ekspor (KITE) facility for SMEs
competitiveness
Efficiency of logistic costs Adding new excise goods (plastic packaging)
aTax ratio derived from tax revenue + revenue from natural resources/GDP
Non-Tax Revenue
Encouraged by rising in oil prices, increasing quality and volume of services, and improving
governance (non-tax revenue in 2019)
Non-Tax Revenue (in IDR trillion)

450
400
398.6
350 378.3
349.2
300
311.2
250
255.9 262.0
200
150
100
50
0
2014 2015 2016 2017 2018 Outlook 2019 Budget
Non-Tax Revenue General Policy
Product Optimization Use of Integrated Technology with Non-tax income payment

• Followed by cost efficiency effort, downstream industry system.
expansion, environment sustainability, and business continuity.
Following-up the amendment of non tax revenue law
Improving Services and Adjusting Tariffs
• Simplifying non-tax revenue tariff, particularly related to
• While still considering purchasing power, expanding business, service.
and optimizing state property management.
• Executing non-tax revenue tariff policy up to Rp 0.0 (zero
percent)
Increasing State-Owned Enterprises (BUMN) Dividend
• Strengthening the non-tax revenue supervision and inspection
• While still considering BUMN cashflow and financial ability by
expanding business and executing government assignment. • Implementing objection, remission, and reimbursement option.

Commitment to Continue Strengthening Productive Spending
Allocating budget to a more productive spending
Central Government Spending Line Ministries Rp. 855,4 T

• Improving the quality of state apparatus
by strengthening bureaucratic reform
2016 • Strengthening social assistance
• Capital Expenditure optimization
Rp1,154.0 T 2019 • Goods Expenditure management
2015 Rp1,634.3 T
Rp1,183.3 T
Non Line Ministries Rp.778,9 T
2018
Outlook
2017 Rp1,453.6 T
Rp1,259.6 T
Energy Subsidy Non Energy Subsidy Debt Interest
• Focused on more • Focused on • Maintain
targeted subsidy policies accountability of
• Supporting competitiveness improvement, exports subsidies. that are more debt
and investment increase, followed by • Towards non- targeted. management.
strengthening value for money. cash distribution. • Optimal choice of
• Continuing the debt composition
limited subsidies and utilization of
• Accommodating strategic initiatives (i.e. natural of diesel. hedging.
disaster reconstruction rehabilitation, democratic • Increasing the • Decreasing the
agenda). use of renewable growth of debt
energy. financing.

Investments in Human Capital Has Been Ramped Up
20% of national budget is allocated for education and another 5% for health
Budget for Education Program Budget for Health Program
IDR tn IDR tn
123.1
600 125
107.4
492.5
500 435.0 100 91.4 92.4
390.3 406.0
400 353.4 370.8
75 65.9
59.7
300
50
200
25
100
0 0
2014 Real 2015 Real 2016 Real 2017 Real 2018 2019 Budget 2014 Real 2015 Real 2016 Real 2017 Real 2018 2019
Outlook Outlook Budget
Some Improvements are made for 2019 Education Program Some Improvements are made for 2019 Health Program
Quality and Access Improvement: Quality and Access Improvement:
a. Increasing the effectiveness of BOS (School Operations Aid) a. Expansion of Contribution Aid Recipients (PBI) in the
 BOS is based on performance and affirmation. framework of National Health Insurance (JKN) (2015: 86.4
b. The continuity of Program Indonesia Pintar is followed by million people; 2019: 96.8 million people) followed by an
the increasing of target accuracy. increase in target accuracy.
c. Acceleration of the construction of school and university b. Improving services at first-level health facilities.
facilities (part of which is carried out by the Ministry of c. Strengthening the stunting handling by specific and sensitive
Public Works and DAK supervised by the Ministry of Public nutrition intervention in 160 regencies/cities (2018: 100
Works). regencies/cities).
d. Expansion of the affirmation/Bidik Misi Scholarship program. d. Continuing the optimalization of BPJS health deficit handling
e. Allocating the endowment research. policy:
f. Enforcement fulfills the education budget by the Regional • Cigarette tax policy
Government. • Improvement of referral system
g. Link and match vocational education. • Improvement of claim management.
46
Subsidy Policy is Directed to be Better Targeted and
Toward Non-cash Distribution
through various policies in energy and non-energy subsidy
Energy Subsidy increases, 2019 Subsidy Budget 224.3 (Tn IDR)

Partly due to the change of exchange rate assumption
Tn IDR
Energy Subsidy Oil and gas
200.0
3.5% subsidy • Continuing diesel limited subsidy
163.5 160.0
67.4% • Improving the target of gas beneficiaries:
100.7
150.0
119.1 10.3% households, micro businesses, and low-
106.8 8.6% 97.6
100.0 income fisherman
Electricity
subsidy • Improving the target subsidy accuracy
50.0
for 450 and 900 VA users
-
59.3 • Increasing of electrification ratio
2015 2016 2017 2018 Outlook APBN 2019
BBM
Oil dan
and LPG
Gas 33Kg
Kg Listrik
Electricity
Non-energy subsidy amount is the same with

government’s proposal in RAPBN 2019 Fertilizer subsidy 29.5
Tn IDR Non-energy Subsidy Supporting food Housing interest
80.0
66.9 68.8 security is fitted to the subsidy 3.5
0.8% 67.4 64.7 64.3
1.9% 6.0%
0.5% land area For low-income
60.0
population with
Business credit 100 thousand
40.0
(KUR) subsidy 12.0
units publishing
20.0
KUR distribution target is
-
Rp120 T with 7% interest rate
2015 2016 2017 2018 Outlook APBN 2019 for SMEs and Indonesian
Pupuk
Fertilizer Pangan
Food Benih
Crops PSO Bunga Kredit Program
Credit interest Pajak DTP
Tax borne workers

Increasing Transfer to Regions and Village Fund (TKDD)
to support public service in the region
%
Increasing allocation of Transfer to Regions Trilion IDR
and Village Fund (TKDD) Budget 900 16
proportionally (fits to the region’s needs and 14.0 826.8
capacity, and also state financial 800 763.6
742.0 14
capabilities) 11.8
710.3
700
12
Supporting the regions financing needs (to 623.1
provide services and developments) 600 573.7
10
Focus on decreasing service inequality 500
between-region 08
Synchronizing planning and budgeting of 400
8.6 8.3
TKDD dengan belanja K/L 4.5 06
300
Maintaining the 5 years sustainability 2.9
04
development program (human resource 200
development, connectivity, tourism
02
destination, poverty reduction, village fund 100
strengthening)
- -
Encourage effective, efficient, and productive 2014 2015 2016 2017 2018 2019
use of region’s budget with value for money Outlook APBN
as its principle. DBH DAU DTK DID
Village
Otsus & DIY Dana Desa Growth (%)
Fund

2017 Achievements of State Budget
Value creation on various projects and country development
15.5% 101.7% 118.5% 7.4% 23.0% 27.8%
• Tax revenue growth vs. • Revenue of customs • Non-tax revenue over • Growth of realized • Capital expenditure • Growth of transfer
2016 (excluding Tax and excise over 2017 2017 revised Budget, a government spending growth vs. 2016, a to village vs. 2016,
Amnesty and Asset revised Budget, a growth of 17.7% vs vs. 2016 92.8% over 2017 99.6% over 2017
Revaluation) 7.4% increase vs. 2016 revised Budget. revised Budget
2016
Local Government Achievements Central Government Milestones
Infrastructure:
• 794 km road development
Bridges: 3,749 m bridge • 9,072 m bridge development
in development, 291 m • 3 airports completed
maintenance, and • 618.3 km railways
2,916m improvement Classroom: 1,351 new
Roads: 1,033 km in classrooms, 11,006
development, 1,503 km rehabilitation, 11,758
maintenance, 9,789 km rural library collection Education:
improvement • Distributed Indonesian Smart Card to 19.8
million students
Tuition: Reduced tuition • School Operational Benefit for 8.0 million
costs for 46.6 million • Scholarship for 364.4 students
students and 5.6
million kindergarten- Welfare: Increased welfare
aged children and work ethics of 1.7
Medical: Improved
million civil teachers in rural Healthcare and Social Security:
facilities in 347
areas and compensated • Distribution of Indonesian Health Card to
hospitals and 3,873
41,000 teachers in special 92.1 million people
clinics
regions
Rural: 107,9 village roads,
89,200 health clinics,
178,800 toilets, and
107,700 connected clean
water and 25,903 Ha
irrigated lands

Indonesia’s Tax Amnesty Program – A Success Story
With more than 965,900 taxpayers participating in the program
Tax Amnesty Result (as of the end of March 31st, 2017)
Preliminary Repatriation
Evidence Payment 3% SMEs
1% 2%
Tax Arrears Offshore Companies
Payment 147.1 12%
14% 1.7 Declaration 85.59
21%
18.8 1,036 594.99
Individual
SMEs
18% 861.81
Onshore 3,323.36
114.2 3,698 Declaration
Individuals
Redemption 76% 68%
Money
85%
Revenue Asset Declared Composition of Participants

IDR 134.8tn (~1.1% GDP) IDR 4,881tn (~39.4% of GDP) Based on Asset Declared
Redemption Money Assets Declared
39.3
1.10
% of GDP
% of GDP
0.62 0.58
8.3
0.20 0.17 5.2
0.15 0.12 3.9 3.6
0.04 0.04 2.1
0.3
Germany Belgium Italy Chile Indonesia India South Spain Australia India Spain Chile Indonesia Italy South Australia
(2004) (2004) (2009) (2015) (2016) (1997) Africa (2012) (2014) (1997) (2012) (2015) (2016) (2009) Africa (2014)
(2003) (2003)

2019 Financing Needs
Fulfilled from Government Securities IDR 771.7 tn (92.5%) and Loan IDR62.2 tn (7.5%)
Investment
Lending
Other GS Loan Financing Sources
Financing Financing IDR382,74 T IDR91,94 T
IDR2,35 T
IDR75,9 T (IDR15,0 T) 80,63% 19,37% IDR833,94 T
Budget
Non-Debt Financing (nett) Matured Debt Foreign Denominated Debt Domestic Debt
Deficit
IDR296,0 T
IDR63,25 T IDR474,68 T IDR180,28 T (21,62%) IDR653,66 T (78,38%)
Financing need Foreign Loan

Foreign Denominated
Bonds
Domestic Loan Domestic GS
IDR60,28 T (7,23%) IDR1,96 T (0,24%) IDR651,70 T (78,15%)
IDR120,0 T (14,39%)
IDR833,94 T
Gross GS (Through auction &

Debt to GDP ratio Projection non-auction) 2019 Matured
IDR825,70 T T-Bills Issuance
IDR54,0 T
2018 2019
30,3% 30,0% GDS Sukuk
70 – 75% 25 – 30%

Government Securities
Indicative Financing Plan for 2019
• Auction:
• Conventional Securities – 24x
• Islamic Securities – 24x
• Non-auction:
SBN Neto • ORI, Retail Sukuk, Online Retail Bonds;
[388,96] • Private Placement – based on request.
SBN Rupiah Auction

Domestic [74% – 76%]
[83% - 86%]
SBN Non-auction
SBN Issuance Issuance [9% - 10%]
Matures
Need Composition
[382,74]
[825,70] Foreign
Denominated SBN
International
[14% - 17%]
*in triliun IDR
SBN Cash
Management • Foreign denominated SBN as complementer 
• The issuance target for Semester I - 2019
[54,00] = 50% -60% of the gross target of SBN; Avoid crowding out in domestic market.
• Especially for financing in IDR, issuance in • The target amount can be adjusted to the
Semester I = 52% of the IDR SBN gross potential of other financing sources and financing
target. needs.

Government Securities Realization
As of End of May 31, 2019 – in Trillion IDR
Government Securities realization as of May 31, 2019 IDR475.12 T or 57,54% from the target
From IDR475,12 T consist of:
475.12 29.52
(57.54%) 6%
Isuance Need for 2019
825.7
127.76
27%
251.25
53%
187.53
(48.21%) 66.59
Government Securities Net
14%
388.96
IDR Government Debt Securities FX Government Debt Securities

0 200 400 600 800 1,000
Realization as of May 31, 2019 Budget 2019 IDR Sovereign Sharia Securities FX Sovereign Sharia Securities

2018 Financing Needs
Fulfilled from Government Securities IDR 730.2 tn (92%) and Loan IDR63.1 tn (8%)
Domestic GS
IDR591.0 tn
Deficit
Domestic Debt
Rp325,9 T
Debt IDR595.5 tn
matures (75%)
Rp394,1 T
(include
Domestic Loan
Rp10,1 T of
IDR4.5 tn
Private
Placement)
Investment
Financing Lending Financing
Rp65,7T Rp6,7T Needs
IDR793.3 tn Foreign
Other Denominated
financing Bonds
(Rp0,2T) (JPY, EUR, USD)
IDR139.3 tn
Government
Guarantee Foreign Debt
Obligation IDR197.8 tn
Rp1,1T (25%) Foreign Loan
(Program &
Project)
IDR58.5 tn

Disciplined and Sophisticated Debt Portfolio Management
Stable Debt to GDP Ratio Over Recent Years Deficit Productivity***

US$ bn Government Debt / GDP (%) 9.0
350.0 35.0%
29.4% 29.8% 29.72% 4.8 5.6
28.3%
300.0 27.4% 30.0% 2.7 3.3 3.3 3.8
24.9% 24.7% 54.4 2.1 2.1
55.6 1.3 0.5 1.1 1.0
55.1
250.0 25.0%
54.7
200.0 54.7 20.0% -0.6 -1.1
54.5 -2.1 -1.6
58.6 -3.1 -3.1 -2.8
150.0 15.0% -4.3
263.4 -6.7 -6.4 -6.2
239.8 249.5
Japan
Italy
Australia
S Africa
UK
Indonesia
USA
Brazil
China
Turkey
Saudi Arabia
Korea
100.0 207.0 10.0%
155.2 174.7
136.3
50.0 5.0%
- 0.0%
2013 2014 2015 2016 2017 2018 *) 2019**)
Bond Loan Debt/GDP Ratio Fiscal Deficit (% GDP) GDP Growth
Source: Ministry of Finance Source: MOF, World Economic Outlook – IMF October 2017
Weighted Average Debt Maturity of ~8.5 Years Well Diversified Across Different Currencies
% of Yearly Issuance
9.8
ATM (in years) 3% 2% 2% 1% 1% 1% 1%
100%
3% 3% 3% 4% 4% 4% 4%
9.4 9% 8% 7% 6% 6% 6%
12%
9.1 80%
29% 32% 31% 30% 30% 29%
29%
60%
8.7
8.5
8.4 40%
53% 57% 55% 57% 59% 59% 60%
20%
0%
2013 2014 2015 2016 2017 2018 May-19
2014 2015 2016 2017 2018 May 2019 IDR USD JPY EUR OTHER
Note: *Preliminary Data (unaudited) **as of end of May by using GDP assumption (interpolation), ***GDP growth and fiscal deficit numbers are average of 10 years (2007-2016) 55
Well Balanced Maturity Profile With Strong Resilience
Against External Shocks
Declining Interest Rate Risks Declining Exchange Rate Risks
Variable rate ratio [%] Refixing [%] FX Debt to GDP ratio (%) FX Debt to total debt ratio (%)
21.0 20.7 43.4 44.5

19.7 42.6 41.3
19.2 41.0 39.9
17.5
16.4
14.8
13.7
12.1
10.6 10.6 10.3
12.2 12.1 12.1 12.3 11.9

10.7
2014 2015 2016 2017 2018 May 2019 2014 2015 2016 2017 2018 May 2019
Debt Maturity Profile Upcoming Maturities (Next 5 Years)

IDR tn
in 1 year (%) in 3 year (%) in 5 year (%)
450
IDR Denominated (Triliun Rp) Other Currencies (Triliun Rp)

42.1
400 39.3 40.4
34.7 36.0
350 33.9
156
151
300
130
168 25.0 25.5 25.6
250 161 22.7
21.4
120 68 20.1
200 105
102
150 71 253 25 15
238
151 9.9 10.6
100 191 24 21 8 32 7.7 8.4 7.6
217 191 144 6.5
187 135 145 143
116 140
50 29 96 91 99 27 88 3 2 2 37
52
34 34 23 30 26
33 42 12 19.8
-
4 27 21 18 15 28 30 19 10 13
- - -
2014 2015 2016 2017 2018 May 2019
Note: using GDP assumption

Holders of Tradable Central Government Securities
More Balance Ownership In Terms of Holders and Tenors
Holders of Tradable Gov’t Domestic Debt Securities Foreign Ownership of Gov’t Domestic Debt Securities by Tenor
100%
37.5% 32.0%
38.1% 38.2% 37.7% 37.9% 36.0% 37.0% 38.6%
39.8% 80%
42.8% 44.7%
60%
30.8% 39.8%
37.8% 39.9% 36.8% 38.1% 38.2% 37.5% 37.7% 38.0%
42.0% 42.0% 40%
35.3%
37.4% 35.6%
33.6% 36.8%
20% 39.0% 17.3%

17.8% 29.7%
31.0% 15.2% 18.4%
23.9% 22.5% 23.4% 20.3% 20.1% 11.8%
3.7% 5.1%
1.3% 5.3% 1.9%
3.2% 3.5% 5.0% 4.3% 1.8%
0% 4.6% 1.3%
Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 May-19 Dec 14 Dec 15 Dec-16 Dec-17 Dec-18 May-19
0-1 ≥1-2
Foreign Holders Domestic Non-Banks Domestic Banks ≥2-5 ≥5-10
≥10 %Foreign Ownership of Total
Ownership of IDR Tradable Central Government Securities
(IDR tn)
Description Dec-15 Dec-16 Dec-17 Dec-18 May-19
Banks* 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 503.90 20.10%
Govt Institutions (Bank Indonesia**) 148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 252.30 10.07%
Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 233.44 9.31%
GS used for Monetary Operation 23.63 1.33% 38.01 1.81% (36.15) (1.52%) (18.85) -0.75%
Non-Banks 962.86 65.87% 1,239.57 69.90% 1,466.33 69.83% 1,633.65 68.98% 1,750.24 69.83%
Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 107.08 4.27%
Insurance Company and Pension
221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 449.13 17.92%
Fund
Foreign Holders 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 949.56 37.88%
Foreign Govt's & Central Banks 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 159.58 6.37%
Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 84.20 3.36%
Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 160.27 6.39%
Total 1,461.85 100.00% 1,773.28 100.00% 2,099.77 100.00% 2,368.45 100.00% 2,506.44 100.00%
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.

Section 5
Monetary and Financial Factor:
Credible Monetary Policy Track Record
and Favourable Financial Sector
Bank Indonesia’s Policy Mix
To Maintain Macroeconomic and Financial System Stability
 Pre-emptive, front loading and  Implementing Macro prudential

ahead-of-the-curve policy rate Intermediation Ratio (RIM)
response
 Implementing Macro prudential Liquidity
 Stabilize exchange rate Buffer (MLB)
2
consistent with fundamentals
 Accelerate implementation of
reserve requirement averaging 1 Macro-
prudential
 Maintaining a monetary Monetary  Electronification: Social
operations strategy oriented Policy Policy program, e-payment for
towards increasing available Government
liquidity (FX swap)  Financial technology
3  National Payment Gateway

(NPG)
Payment  QRIS (QR Indonesia Standard)
Coordination
System  Expanding National Clearing
with other
 Controlling inflation: TPIP, TPID Policy System (SKNBI) services
Authorities
 Structural reforms: Government
 Financial deepening & stability: 5 4  Developing market instruments for financing
infrastructure
KSSK (Financial System Stability Financial Market
Committee), OJK (Financial Deepening  Developing financial market infrastructures
Services Authority)  Rupiah Interest Rate Swaps (IRS) and Overnight
 Coordinating efforts in reducing Index Swap (OIS)
Current Account Deficit  Domestic non-Deliverable Forward (DNDF)
 Developing the Commercial Papers (Surat
Berharga Komersial)
60
Bank Indonesia Policy Mix: June 2019
The BI Board of Governors agreed on 19th and 20th June 2019 to hold the BI 7-Day Reverse
Repo Rate at 6.00%* and to lower Rupiah Reserve Requirement by 50bps.
Bolsters payment system

Has decided to lower the Constantly monitors policy and financial
rupiah reserve global financial market deepening efforts
Continues to
requirement for market dynamics to support economic
focus the Maintains an
conventional and Islamic and the external growth, while
monetary accommodative
banks by 50bps to 6.0% stability of the strengthening
Holds the operations macroprudential
and 4.5% respectively, national economy coordination with the
BI 7-Day strategy policy stance to
with the average reserve when considering Government and other
Reverse towards catalyse bank
requirements remaining reductions to the relevant authorities to
Repo Rate ensuring lending and
at 3.0%, to ensure policy rate in line sustain economic
at 6.00%. adequate expand
adequate liquidity in the with low inflation stability, stimulate
liquidity is economic
banking industry in order and the current domestic demand,
available in the financing.
to finance economic need to stimulate increase exports and
money market.
activity, effective from domestic economic tourism as well as
1st July 2019. growth. attract foreign capital
flows.
*while also maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 5.25% and 6.75%, respectively.
Principles of Average Reserve Requirement Ratios Improvement
Considerations for the Average Reserve Requirement Effective

Substance Old New
Ratios Improvement Date
a. Additional rupiah
• Improvement in average reserve requirement is a average reserve Fixed RR: 5% Fixed RR: 4.5% 16th July
follow up to the monetary policy operational requirement for Average RR: 1.5% Average RR: 2% 2018
framework reform implemented by Bank Indonesia conventional RR: 6.5% RR: 6.5%
since 2016. commercial banks
• Monetary policy operational framework reform
b. Annulment of 16th July
started in August 2016 as BI7DRR replaced BI Rate 2.5% (from 1.5%
demand deposit 0% 2018
as policy rate. This was then strengthened in 1st RR)
renumeration
July 2017, by the implementation of the average
reserve requirement in rupiah for conventional c. Implementation of
commercial banks at 1.5% out of the total 6.5% of foreign exchange
GDP reserve requirement in Rupiah. The Fixed RR: 8% Fixed RR: 6% 1st
average reserve
reformulation is also backed by various efforts in Average RR: 0% Average RR: 2% October
requirement for
financial market deepening. RR: 8% RR: 8%* 2018
conventional
• The current improvement aims to elevate flexibility in commercial banks
banking liquidity management, enhance banking
intermediation function, and support efforts in d. Implementation of 1st
Fixed RR: 5% Fixed RR: 3%
financial market deepening. This multiple targets will average reserve October
Average RR: 0% Average RR: 2%
in turn improve the effectiveness of monetary policy requirement for 2018
RR: 5% RR: 5%*
transmission in maintaining economic stability. Islamic banks
* Complemented by harmonisation feature to align with the average reserve requirement

in rupiah feature for conventional commercial banks (e.g. Calculation period, lag
period, and Maintenance period of 2 weeks)

62
Principles of Macroprudential Intermediation Ratio (MIR) and
Macroprudential Liquidity Buffer (MLB)
Considerations for Macroprudential Instruments

Macroprudential Intermediation Ratio (MIR) and
Macroprudential Liquidity Buffer (MLB)
1 2 3 4
Striving to stimulate the bank The regulation is The policy is expected to This
intermediation function and effective for stimulate the bank macroprudential
liquidity management, Bank conventional intermediation function to the policy instrument is
Indonesia issued Bank Indonesia commercial banks from real sector congruent with countercyclical and
Regulation (PBI) No. 16th July 2018 and for sectoral capacity and the can be adjusted in
20/4/PBI/2018 and Board of sharia banks from 1st economic growth target in line with prevailing
Governors Regulation (PADG) No. October 2018. compliance with prudential economic and
20/11/PADG/2018 concerning principles, while also financial dynamics.
the Macroprudential overcoming the issue of
Intermediation Ratio (MIR) and liquidity procyclicality.
Macroprudential Liquidity Buffer
(MLB) for Conventional
Commercial Banks, Sharia Banks
and Sharia Business Units.

63
Principles of Macroprudential Intermediation Ratio (MIR)
MIR Sharia (Sharia Banks and Sharia

Regulation MIR (Conventional Commercial Bank)
Business Units)
1 MIR Accounting Formula Credit + Owned Bond Financing + Owned Sharia Bond
Deposit + Issued Bond Deposit + Issued Sharia Bond
2 Rate and Parameters  Ceiling 92%  94%*  Ceiling 92%  94%*
 Floor 80%  84%*  Floor 80%  84%*
 Minimum Capital Adequacy Requirement  Minimum Capital Adequacy Requirement 14%
14%
 For Sharia business units, the Minimum Capital
 Upper disincentive parameter 0.2 Adequacy Requirement is the same as that of the
parent conventional commercial bank
 Lower disincentive parameter 0.1
 Upper disincentive parameter 0.2
 Lower disincentive parameter 0.1
3 Scope of credit/financing  Credit: rupiah and foreign currency  Financing: rupiah and foreign currency
and deposits to calculate
 Deposits in rupiah and a foreign currency:  Deposits in rupiah and a foreign currency: (i)
MIR / MIR Sharia
(i) demand deposits, (ii) savings deposits; wadiah savings; and (ii) unrestricted investment
and (iii) term deposits, excluding interbank funds, excluding interbank funds
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
*Effective on July 1st, 2019
64
Principles of Macroprudential Intermediation Ratio (MIR)
Regulation MIR (Conventional Commercial Bank) MIR Sharia (Sharia Banks and Sharia
Business Units)
6 Percentage of the
100%
securities held
7 Criteria for securities  medium-term notes (MTN), floating rate notes  sharia-compliant medium-term notes (MTN)
issued (FRN) and/or bonds other than subordinated and/or sukuk other than subordinated sukuk
bonds
 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  Average daily total deposits in rupiah at all  Average daily total deposits in rupiah at all
meet DD MIR /DD MIR branch offices in Indonesia branch offices and sharia business units in
Sharia Indonesia
 Including rupiah liabilities to a resident and
non-resident third-party nonbank, consisting  Including rupiah liabilities to a resident and non-
of: (i) demand deposits, (ii) savings deposits; resident third-party nonbank, consisting of: (i)
(iii) term deposits, and (iv) other liabilities wadiah savings; (ii) unrestricted investment funds,
and (iii) other liabilities
10 Relaxation of DD  Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing
MIR/Sharia DD MIR 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
65
Principles of Macroprudential Liquidity Buffer (MLB)
Regulation MLB (Conventional Commercial Bank) MLB Sharia (Sharia Banks)

1 Rate 4% of rupiah deposits (including Sharia Business Units 4% of rupiah deposits
deposits)
2 Components  Securities denominated in rupiah held by a  Sharia-complaint securities denominated in
conventional commercial bank that may be used rupiah held by an Sharia bank that may be
for monetary operations (including SBI/SDBI/SBN); used for sharia-compliant monetary operations
and (including SBIS/SBSN)
 Sharia-complaint securities denominated in rupiah
held by an Sharia business unit that may be used
for sharia-compliant monetary operations (including
SBIS/SBSN)
3 Calculation Formula Percentage of rupiah securities held by a conventional Percentage of sharia-compliant rupiah securities
commercial bank to rupiah deposits held by an Sharia bank to rupiah deposits
4 Flexibility Under certain conditions, the securities used to meet Under certain conditions, the securities used to
the MLB may be used for repo transactions to Bank meet the sharia MLB may be used for repo
Indonesia for open market operations, totalling no transactions to Bank Indonesia for open market
more than 2% of rupiah deposits operations, totalling no more than 2% of rupiah
deposits
5 Sources of Data on  Monthly Commercial Bank Reports  Monthly Sharia Bank Reports
Deposits
 Rupiah deposits to calculate MLB are the average  Rupiah deposits to calculate sharia MLB are
daily total deposits at all branches in Indonesia 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  Rupiah deposits include: (i) wadiah savings; (ii)
liabilities unrestricted investment funds, and (iii) other
liabilities
66
Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios
The LTV/FTV relaxation is conducted while taking into account aspects of prudential and consumer protection
1. Increasing opportunities of first time buyers to fulfill their housing 2. Relaxing the amount of loan/financing facility through indent
needs through housing loan, specifically by adjusting the LTV ratio mechanism to a maximum of 5 facilities without taking
for property loan and the FTV ratio for property financing for the account of the orders
1st facility, 2nd facility, etc., making the largest LTV ratio for 3. Adjusting the arrangement of stages and amount of property
property credit and FTV ratio for property financing as shown in the loan/financing disbursement of indent property:
table below.
“-“= The LTV rate depends on each bank’s risk management

67
Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios
Prudential aspects of Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios
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 / FTV Exemptions
Central government or local government loan / financing programs are exempt from this regulation.

68
Principles of Domestic Non Deliverable Forward (DNDF)
Transaction
Purposes General Provisions

 Domestic Non-Deliverable Forward Transaction (DNDF Transaction)
1. To support the effort of Plain vanilla derivatif transaction of foreign exchange against rupiah in the form
stabilizing the Rupiah exchange of forward transaction with fixing mechanism in the domestic market
rate through the additional of
alternative hedging instruments  Forward Transactions
Forward Transactions are sell/purchase foreign currencies againts rupiah
whereas the delivery of funds shall be performed in more than 2 days after the
2. To support the development and transaction date
deepening of the domestic
financial market  Fixing Mechanism
Transaction settlement mechanism without full movement of funds by
3. To increase the confidence of calculating the difference between rate on the transaction date and reference
exporters, importers, and rate in JISDOR on a specified future time agreed in the contract (fixing date)
investors in conducting
 Other Definitions
economic and investment
The definition of derivative transaction of foreign exchange againts rupiah,
activities through the flexibility of
Forward Transaction, Spot Transaction, Customers, Foreign Party is referring to
hedging transactions against
Bank Indonesia regulations regarding foreign exchange transaction againts
Rupiah currency risk
rupiah
69
Transaction
Bank can perform DNDF Transactions as follows:

1. Must have Underlying Transactions:
Transaction between: Including all following activities :
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)
Can only be
Bank – Customer performed to Excluding following activities:
hedge rupiah a. Bank Indonesia certificates;
exchange rate b. Placement of funds with bank;
risk. 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.
Bank – Foreign Party
2. Nominal of DNDF Transactions ≤ Nominal of

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

Transactions
Bank – Bank
70
Transaction
Transaction Settlement
• 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 over and early termination for DNDF is prohibited

However, unwind can be done by opening the reverse DNDF transactions
Cover Hedging
Bank may conduct DNDF Transactions with Bank Overseas for cover hedging purpose.
• Underlying Transactions: DNDF Transaction between Bank and Customer/Foreign
• Purpose: Hedging
Customer / Cover Overseas

Hedging Bank
Foreign Party Hedging Bank
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.
71
Overnight Index Swaps (OIS) & Interest Rate Swaps (IRS)
As hedging instruments against Rupiah interest rate changes IRS is a contract between two parties to
periodically exchange rupiah interest rate
4 flows during the contract period or at the
completion of the contract based on certain
notional amount. IRS pricing is based on
JIBOR.
OIS is an interest rate swap agreement based

3 on a daily overnight reference rate (IndoNIA)
Improvement of
IRS transaction
2 liquidity
Alignment
between JIBOR
and OIS interest  Encourage price transparency in the
rate rupiah money market
OIS transaction
1 with IndoNIA as
 Strengthen monetary policy
transmission
benchmark rate  Provide alternative hedging instruments
IndoNIA & JIBOR against rupiah interest rate changes
 Support securities market deepening in
Indonesia
Strengthening
reference rate
based on real
transactions
72
OIS and IRS Transactions: General Provisions
Market Players. Banks, bank clients, both individual

and non-bank institutions, and also foreign parties. Market Conventions
Transaction Needs Analysis. A bank performing an

IRS or OIS transaction with a customer and/or
foreign party on behalf of the customer and/or Calculation OIS Quotation rates
Interest Payment
foreign party is required to have an analysis on the Base based on 2
based on Netting
need of rupiah interest rate derivative transactions. ACT/360 decimals
IndONIA Notional of Net

Market Conventions. When performing IRS and OIS interest payment in Quotation : 1W,
Index
transactions, the respective bank is bound by IDR with 0 2W, 1M, 2M, 3M,
with 5
market conventions agreed upon by market players decimals 4M, 5M, 6M
decimals
through industry association including the
Indonesian Foreign Exchange Market Committee.
Compound At the 1st phase,
Settlement Date =
Floating Rates OIS settlement will
Settlement. Settlement can be performed as a 1 business days
(CFR) based only be done at the
netting payment and every transaction has to be after Maturity Date
on 5 end of the OIS
settled in Rupiah. Close-out netting can be applied (MD)
decimals tenor (MD+1bd).
under predetermined conditions.

73
Bank Indonesia Policy Mix: 2015 – 2017
2015 2016 2017
1. Monetary Policy • BI Rate cut of 25bps (Feb)  Policy Rate cuts of 150bps • BI 7-day RR Rate cut of
 Moving from BI Rate (12 25bps to 4.50% (Aug)
month) to BI 7-day Reverse • Further BI 7-day RR Rate
Policy Rate Repo Rate (Aug) cut of 25 bps to 4.25%
(Sept)
Reserve • Lowering RR by 50bps to • Further lowering RR by • Implementation of RR

Requirement 7.5% (Nov) 100bps to 6.5% (Feb) Averaging (Aug): RR fixed
5%; RR Averaging 1.5%
2. Exchange Rate  Market-based exchange rate stability consistent with fundamental

Policy  Dual intervention in the FX market and purchases of government bonds from secondary market in
time of distress (capital reversal) or large mis-alignment
• Relaxation of LTV for  Further relaxation of LTV for  Initiative to issue

property and automotive property loans (Sept) macroprudential regulation
3. Macroprudential
loans (June)  Strengthening systemic on Financing to Funding
Policy
surveillance & Crisis Ratio (FFR)
Management Protocol (April)
 Obligation to use IDR in  E-money for social transfer  National Payment Gateway
4. Payment domestic transaction (Nov) (June)
System Policy (March)  Financial Technology  Modernized cash
 Non-cash movement (FinTech) Office (Nov) management underway
(GNNT)  New Rupiah issuance (Dec)

74
Stable Monetary Environment Despite Challenges
Well Maintained Inflation Ensured Price Stability Strengthened Monetary Policy Framework
(%) (%) 19 August 2016
20 8.38 8.36 9.00 8.00
CPI (%, yoy) - rhs The New
18 8.00 LF Rate: 7.00 Monetary
Volatile Food (%, yoy) - lhs Operation
16 7.00 LF Rate: 6.75
Administered (%, yoy) - lhs 7.00 Framework
14
Core (%, yoy) - lhs 6.00 BI Rate: 6.50 BI 7Day RR Rate: 6.00
12
6.00
10 5.00
DF Rate: 5.25
8 3.61 3.32 4.00
3.35 3.02 5.00
3.13 2.82 2.83
6
2.57 3.00
2.48
4
2.00 4.00
2
0 1.00
3.00
-2 0.00
2013 2014 2015 2016 2017 2018 Jan-19 Feb-19 Mar-19 Apr-19 May-19
Rupiah Exchange Rate Remains Comparable to Peers Credit Growth Profile

YTD 2019 vs 2018 %,yoy
20
point-to-point average Total Growth
18 Working Capital Loans
TRY -9.77
-13.18 Investment Loans
KRW -5.53 16 Consumption Loans
-3.71
EUR -2.16 14.3
-4.49 14
ZAR -1.09
-6.33
MYR -0.93 12 11.0
-1.91
SGD -0.38 10.5
-0.69 10
CNY -0.37 9.1
-2.26
0.06 8
INR -2.32
BRL 0.54 6
-4.73
IDR 0.77
0.37 4
PHP 1.28
0.83
1.51 2
JPY
Data as of June 19th, 2019 0.20
THB 3.51
2.08 % 0
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
-16.0 -14.0 -12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0
Source: Bank Indonesia 2015 2016 2017 2018 2019
75
Regional Inflation under Control
On May 2019, all provinces recorded inflation (yoy) within national inflation target corridor and lower than the historical
average of the past three years. Lowest inflation was recorded in Bali-Nusa Tenggara (2.74%, yoy), Java (3.27%, yoy), and
Sumatra (2.28%, yoy).

76
4 Strategies to Achieve the Inflation Target
2018-2019 Target 2020-2021 Target
Achieving inflation at 3,5%±1% Achieving inflation at 3,0%±1%

• Maintaining core inflation • Maintaining core inflation
• Maintaining volatile food stability at 4-5% • Maintaining volatile food inflation less than 4%
• Controlling administered price inflation • Controlling administered price inflation
4 Strategies
1. Price Affordability 2. Supply Availability 3. Well Managed Distribution 4. Effective Communication
Strengthening
production, Encouraging
Government trade Improving Strengthening
Stabilizing Managing Strengthening Improving data
food reserves cooperation trade central-regional
the price demand side institution quality
and food between infrastructure coordination
export-import regions
management

77
Improving the Effectiveness of Monetary Policy Transmission
Bank Indonesia has instituted a Reformulation of Monetary Policy Operations Framework which consists of 3 pillars;
(1) implementation of BI 7day Reverse Repo Rate;
(2) implementation of reserve requirement averaging; and
(3) continue to implement money market deepening program.
Reformulation of
Monetary Policy Operational Framework
Implementation of Reserve Implementation of Money

Implementation of BI 7 Requirement (RR) Market Deepening
Day Reverse Repo Rate Averaging Program
Enhancement of monetary policy Enhancement of banking liquidity Enhancement of instruments

signal management and transactions

78
Enhancement of Monetary Operations Framework
PREVIOUS JIBOR
• Can be traded among contributor banks for 10
minutes.
• Up to the amount of Rp10 billion.
• Up to 1-month tenor.
CURRENT JIBOR (as per June 1st, 2016)

• Can be traded among contributor banks for 20
minutes.
• Up to a total of Rp20 billion.
• Up to 3-month tenor.

79
Intermediation is Expected to Continue Expanding in 2019
Banking intermediation is relatively stable, while multifinance financing grows 4.52% (yoy) in April 2019. At the same period, domestic
capital markets capital is raising (particularly right issues and corporate bond issuance).
Financing distributed by multifinance companies grows at 4.52%

Banking intermediation grows 11.05% (yoy) as of April 2019. (yoy).
IDR Tn 5306 IDR tn 441 yoy
6,000 Bank Loans Growth (yoy) - rhs 16% Financing Growth (rhs)
11.05% 450 4.52% 10%
14%
5,000
12% 8%
425
4,000
10%
6%
3,000 8% 400
6% 4%
2,000
4% 375
1,000 2%
2%
0 0% 350 0%
Jan-17
May-17
Jun-17
Aug-17
Aug-18
Nov-17
Jan-18
May-18
Jun-18
Nov-18
Jan-19
Feb-17
Sep-17
Dec-17
Sep-18
Dec-18
Apr-17
Oct-17
Feb-18
Apr-18
Oct-18
Feb-19
Apr-19
Mar-17
Jul-17
Jul-18
Mar-18
Mar-19
May-17
May-18
Aug-17
Sep-17
Aug-18
Sep-18
Jan-19
Jan-17
Apr-17
Jun-17
Nov-17
Jan-18
Apr-18
Jun-18
Nov-18
Dec-18
Apr-19
Dec-17
Feb-17
Oct-17
Feb-18
Oct-18
Feb-19
Jul-17
Jul-18
Mar-17
Mar-18
Mar-19
Capital raising through rights issues and corporate bond issuance is The gross premium revenue of the domestic insurance industry
picking up. maintains its growth.
IDR Tn IPO IDR Tn
180
Rights Issue 500
160 450
Corporate Bond & Sukuk
140 400
120 350
100 300
80 250
60 31 200 148
150 110
40 5.49
100 71
20 1.3 36
50
0
0
2012 2013 2014 2015 2016 2017 2018 May 2019
2012 2013 2014 2015 2016 2017 2018 Jan'19 Feb'19 Mar'19 Apr'19
Source: Financial Service Authority (OJK) 80
Financial Institutions Remain Robust
Domestic financial institutions maintained a generally robust condition capital is steadily well above the minimum requirements, while
profitability and leverage are still constantly at a sufficient level.
CAR of the banking sector remained stable at a high level. As of Apr-19, Risk-based capital (RBC) of the insurance industry slightly increased, well
CAR & Tier-1 Capital was 23.78% & 21.98% respectively. above the minimum threshold (120%).
21.98 550% Life Insurance (Lhs) General Insurance (rhs) 350%

26.0
CAR Tier 1 23.78
24.0 310%
320%
22.0 500%
437%
20.0 290%
18.0 450%
260%
16.0
14.0 400%
230%
12.0
10.0 350% 200%
Aug-17
Nov-17
Aug-18
May-17
Jun-17
Sep-17
Jan-18
May-18
Jun-18
Nov-18
Jan-17
Sep-18
Jan-19
Feb-17
Apr-17
Jul-17
Oct-17
Dec-17
Feb-18
Apr-18
Jul-18
Oct-18
Dec-18
Feb-19
Apr-19
Mar-17
Mar-18
Mar-19
Aug-17
Dec-17
Aug-18
Dec-18
Jan-17
May-17
Jun-17
Nov-17
Jan-18
May-18
Jun-18
Nov-18
Jan-19
Sep-17
Sep-18
Apr-17
Apr-18
Oct-18
Apr-19
Feb-17
Oct-17
Feb-18
Jul-18
Feb-19
Jul-17
Mar-17
Mar-18
Mar-19 Gearing ratio of multifinance companies was 2.82 times, providing ample
Profitability of the banking sector was relatively stable. room for future growth.
% 4.0
6.0 Net Interest Margin Return on Assets
4.87 3.5
5.0
3.0 2.82
4.0
2.5
3.0 2.42
2.0
2.0
1.5
1.0
1.0
May-17
May-18
Aug-17
Aug-18
Jan-17
Jun-17
Nov-17
Jan-18
Jun-18
Nov-18
Jan-19
Sep-17
Dec-17
Sep-18
Dec-18
Apr-17
Apr-18
Apr-19
Feb-17
Oct-17
Feb-18
Oct-18
Feb-19
Jul-17
Jul-18
Mar-17
Mar-18
Mar-19
May-18
Aug-17
Aug-18
Jan-17
May-17
Jun-17
Nov-17
Jan-18
Jun-18
Nov-18
Jan-19
Sep-17
Sep-18
Apr-17
Apr-18
Feb-17
Oct-17
Dec-17
Feb-18
Oct-18
Dec-18
Apr-19
Feb-19
Jul-17
Jul-18
Mar-18
Mar-17
Mar-19
Manageable Credit Risks with Sufficient Liquidity
Banks are equipped with sufficient liquid assets. Meanwhile, insurance industry also demonstrates adequate level of investment. Credit
risk is also managed at a low level as non-performing loan and non-performing financing remains below the threshold.
The ratio of liquid assets to deposit and LA/NCD in the banking Investment adequacy ratio in the insurance industry was steadly above
sector was maintained at a sufficient level. 100%.
% % %
140 Liquid Assets to Non-Core Deposits (lhs) 30 Life Insurance General Insurance
Liquid Assets to Deposit (rhs) 210
130 26
120 20.15 190
173.76
110 22
170
100 18
90 150
14
80 96.51
130 116.94
70 10
110
60 6
Aug-17
Aug-18
Jan-17
May-17
Jun-17
Nov-17
Jan-18
May-18
Jun-18
Nov-18
Jan-19
Sep-17
Sep-18
Apr-17
Apr-18
Oct-18
Apr-19
Feb-17
Oct-17
Dec-17
Feb-18
Dec-18
Feb-19
Jul-17
Jul-18
Mar-17
Mar-18
Mar-19
90
Jun-18
Nov-18
May-18
Aug-18
Jan-18
Sep-18
Jan-19
Feb-18
Apr-18
Dec-18
Feb-19
Apr-19
Jul-18
Oct-18
Mar-18
Mar-19
As of Apr-19, the gross & net NPL ratios of the banking sector were
2.57% & 1.15% respectively, still well maintained below the threshold. NPF ratio of the multifinance industry remained low at 2.76% as of Apr-19.
% 4.0%
3.5 NPL Net NPL Gross
2.57
3.5%
3.0
1.15
3.0% 2.76%
2.5
2.5%
2.0
2.0%
1.5 1.5%
1.0 1.0%
0.5 0.5%
0.0 0.0%
Jun-17
Aug-17
Aug-18
Apr-17
May-17
Nov-17
May-18
Jun-18
Nov-18
Jan-17
Sep-17
Jan-18
Sep-18
Jan-19
Apr-18
Feb-17
Oct-17
Dec-17
Feb-18
Oct-18
Dec-18
Apr-19
Feb-19
Mar-17
Jul-17
Mar-18
Jul-18
Mar-19
Aug-17
Aug-18
Jan-17
May-17
Jun-17
Nov-17
Jan-18
May-18
Jun-18
Nov-18
Jan-19
Sep-17
Dec-17
Feb-18
Sep-18
Dec-18
Apr-17
Apr-18
Apr-19
Feb-17
Oct-17
Oct-18
Feb-19
Jul-17
Jul-18
Mar-17
Mar-18
Mar-19

Manageable Market Risks
Financial institutions’ risk profile are still manageable. Investment value of domestic institutional investors (mutual funds, insurers, and
pension funds) is relatively stable, and the Net Open Position of Banks are maintained at a safe level.
Net open position in the banking sector kept far below the maximum Mutual funds’ net asset value (NAV) was at a steady level with low
limit (20%). volatility.
% IDR Tn
NAV Mutual Funds IDX (rhs) 6,800
4 530
6,600
500
6,400
3 470
2.04 6,200
440
6,000
2 410
380 5,800
350 5,600
1
320 5,400
290 5,200
0 260 5,000
Aug-18
Aug-17
Nov-17
May-18
Jun-18
Nov-18
May-17
Jun-17
Sep-17
Jan-18
Apr-18
Sep-18
Jan-19
Jan-17
Apr-17
Oct-17
Dec-17
Feb-18
Oct-18
Dec-18
Apr-19
Feb-17
Jul-18
Feb-19
Jul-17
Mar-18
Mar-17
Mar-19
Nov-18
Jun-19
Aug-18
May-19
Sep-18
Jan-19
Dec-18
Feb-19
Apr-19
Oct-18
Jul-18
Mar-19
The investment value of insurance & pension funds were still in Multifinance companies’ exposures to foreign debt has generally been
increasing trend. mitigated through company hedging measures.
IDR Tn IDR Tn IDR tn 174.483
1,100 Insurance Pension Funds (rhs) 300 180
1,050 1072.1 160
275
1,000 140 Domestic Debt Foreign Debt
268.2
950 250 120 102.849
900 100
225
850 80
800 200 60 May-17
May-18
Aug-17
Aug-18
Jan-17
Apr-17
Jun-17
Nov-17
Jan-18
Apr-18
Jun-18
Nov-18
Jan-19
Apr-19
Sep-17
Dec-17
Sep-18
Dec-18
Feb-17
Oct-17
Feb-18
Oct-18
Feb-19
Jul-17
Jul-18
Mar-17
Mar-18
Mar-19
Aug-17
Aug-18
May-17
Jun-17
Nov-17
May-18
Jun-18
Nov-18
Apr-19
Jan-17
Sep-17
Jan-18
Sep-18
Jan-19
Apr-17
Apr-18
Feb-17
Oct-17
Dec-17
Feb-18
Oct-18
Dec-18
Feb-19
Jul-17
Jul-18
Mar-18
Mar-17
Mar-19

Domestic Capital Markets Maintained Positive Growth
Capital markets is still growing despite the ongoing global pressure.
The IDX Stock Composite Index has maintained positive growth since Domestic capital markets performance is contracted, due to global
early 2019 pressure, but maintain to stabilize
Stock Index Performance 10 Jun 2019 (compared to 31 Dec’18) Comp Bond Index Comp Stock Index (rhs)
WORLD 12.44
260 7,000
THAI 6.45
KOREA 2.87 6,500
INDO 1.54 240
HKN 6.70
SIN 3.89 6,000
PHIL 7.76 220
CHIN 14.36 5,500
MAL -2.08
JPN 5.59 200
EURO 13.28 5,000
AS 11.73
RUS 15.76 180 4,500
BRAZ 10.90
Aug-18
Nov-18
May-19
Jun-19
Sep-18
Dec-18
Jan-19
Apr-19
Oct-18
Feb-19
Mar-19
TURK 3.10
%
-4 -2 0 2 4 6 8 10 12 14 16 18
Nonresident recorded net inflow in the market started from

beginning of June 2019 after the public holiday While government bond yields remains stable
IDR Tn Yield (%) 15,500

Gov't Debt Securities Equity
40 10
0.480
15,000
20 9
0.360
0 14,500
8
-20 14,000
7
-40
6 5-yr Yield 10-yr Yield 20-yr Yield IDR (rhs) 13,500
10 June-19
Aug-18
Jan-18
May-18
Jun-18
Nov-18
Jan-19
May-19
Sep-18
Apr-18
Apr-19
Feb-18
Jul-18
Oct-18
Dec-18
Feb-19
Mar-18
Mar-19
5 13,000
Aug-18
Apr-19
May-19
Sep-18
Nov-18
Jan-19
Jun-19
Dec-18
Feb-19
Mar-19
Oct-18
Jul-18
Source: Bloomberg, IBPA, Indonesia Stock Exchange, Ministry of Finance

84
Strategic Policies in Financial Sector
Supporting infrastructure financing and Supporting innovations in digital

deepening the capital market finance
Enhancing variability of financing

instruments
 Perpetual bonds, green bonds, municipal bonds
 Investment products for mortgage Issuing the guiding principles for the
providers of digital financial services,
including for registering, licensing, and the
Simplification of issuance process in crowdfunding scheme
the capital market
 Simplifying issuance process of debt securities
and sukuk for professional investors Directing financial institutions to synergize
with the fintech sector or to establish a
Expanding the investor base fintech business line
 Expanding the access of domestic retail
investors to the capital market
 Promoting the participation of local financial Promoting the role of fintech lending in
institutions through the establishment of local supporting government programs, including
securities companies in online retail sales of government debt
securities
Strengthening the role of NBFIs
in infrastructure development
 The provision of credit guarantee products by
credit guarantee companies & insurers

Strategic Policies in Financial Sector
Enhancing financial literacy & inclusion
OJK has also built a strong foundation for financial inclusion programs, to ensure access to financial
products & services by Indonesians of all social classes. Such initiatives also include the enhancement of
financial literacy and financial consumer protection.
Promoting the
Developing Developing Strengthening
establishment
financial Enhancing the micro-credit the role of
of Islamic
education role of the products with Financial Access
microfinance
models utilizing “Investment additional Acceleration
institutions
various delivery Alert Taskforce” business support Taskforce (TPAKD)
(“Bank Wakaf
channels (“KUR Klaster”) in local areas
Mikro”)
The result of OJK’s 2016 national survey demonstrated an improvement in financial literacy & inclusion
among Indonesians compared to that of 2013, but there is still room for further improvement.
21.8% 29.7% 59.7% 67.8%

Financial Financial
Literacy 2013 2016 Inclusion 2013 2016
Source: Financial Service Authority (OJK), June 2017 86

A Comprehensive Financial Deepening Program
…strategy to tackle challenges in deepening Indonesia’s financial markets
In Apr-2016, the Minister of Finance, the Governor of Bank Indonesia, and the Chairman of the Board of Commissioners of the Financial
Services Authority launched a Coordination Forum for Development Financing through Financial Market (FK-PPPK). The three authorities
have agreed to formulate “The National Strategy of Financial Market Development”
Vision:
To Establish Deep, Liquid, Efficient,
Inclusive, and Safe Financial Market
Mission: Financial Market as Sources of National Development Financing
TARGET KEY PERFORMANCE INDICATOR STRATEGIC ACTION PLAN
1 2 3 POLICY COORDINATION,
ECONOMIC FUNDING & MARKET INFRASTRUCTURE
3 Pilars HARMONIZATION &
RISK MANAGEMENT DEVELOPMENT
EDUCATION
Money Bond Stock Syariah Structure Product

6 Markets FX Market
Market Market Market Market Market
7 Elements Fund Market Regulatory

of Financial Infrastructure Framework
Market Instrument Benchmark Rate & Coordination &
Ecosystem Standardization Education
Intermediaries

Continuous Program on Capital Market Deepening
…continuously strengthened, including through capital market deepening initiatives
Enhancing the supply-side Strengthening market infrastructure
 Simplification of public-offering requirements and  Expansion of Single Investor Identification (SID) coverage
procedures  Development of electronic trading platform (ETP) in the
 Development of debt market debt market
 Development of mutual fund industry  Development of Integrated Investment Management
 Development of other products, including those to System (S-INVEST)
support infrastructure development (private equity  Enhancing the clearing and settlement process
funds, REITs, ABS)  Enhancement of capital market data warehouse
 Development of Islamic capital market  Development of Extensible Business Reporting Language
 Development of municipal bonds (XBRL) for issuers
Enhancing the demand-side Strengthening governance
 Enhancing the role of the domestic institutional  Development of market players’ capacity
investors (insurers & pension funds) in capital  Enhancement of GCG for publicly-listed companies
markets  Development of repo regulations and infrastructure
 Development of the domestic investor base
(conducting investor education programs)
 Expansion of distribution channels of market
products

BI’s Roles in Supporting Distribution of Non-Cash Social
Assistance (NCSA)
BI supports government’s program of shifting social assistance to targeted non cash social assistance
disbursement through the electronic payment system. In the future, electronic mechanism disbursement will be
also applied to LPG subsidy.
NCSA Programs
Pilot Project
Family Hope Program Smart Indonesia

(Program Keluarga Program (Program
Harapan -PKH) Indonesia Pintar-PIP)
Gradual
Implementation
2016-2020
9876543210
XXYYZZ
12345678
Full
Non Cash
Food Assistance Implementation
(Bantuan Pangan
Non Tunai – BPNT) LPG
Subsidy
Interconnected &
interoperable
payment system

89
Progress of NCSA Programs
Family Hope Program Non Cash Food Assistance

(Program Keluarga Harapan - (Bantuan Pangan Non Tunai -
PKH) BPNT)
• BPNT is a poverty alleviation and social
• The Family Hope Program (PKH) is a program
protection program that is managed by the
that provides cash to very poor households.
central government. It provides subsidized rice
Rp 1,89 million /year will be granted for each
and eggs to low-income households. Rp 110
household. PKH will be granted every February,
thousand/month will be granted for each
May, August, and November.
household as BPNT that can be used in
certain stores which called e-warong.
• As of December 2017, PKH has been
• As of December 2017, BPNT was distributed to
distributed to 6,0 million households on non-
1,2 million households in 44 cities.
cash basis.
• In 2018, BPNT has been distributed to 10.1
• In 2018, PKH has been distributed to 10 million households (65.1% of the target of 15.5
million households on non-cash basis. million households target).
• As of Q1-2019, BPNT has been
• As of Q1-2019, PKH has been distributed to
distributed to 10 million households
10 million households on non-cash basis with
with realization of 20.43% of the
realization of 37.41% of the 2019 budget.
2019 budget.

90
Stronger Fundamentals Facing the Headwinds
Inflation Rate (%) IDR Movement (%) Foreign Reserves (USD bn)
Significantly higher than 1998 & 2008, ample to cover
Inflation controlled within the target range IDR appreciated year-to-date in June 2019
6.7 months of import and external debt repayment
1998 82.4 1998 -197 1998 17.4
2008 -35
2008 12.1 2008 50.2
19-Jun-19 0.77
(ytd)
Sep-15
May ‘19 3.32
6.8 (yoy) Sep-15
May ‘19 120.3
Non-Performing Loan/NPL (%) More Liquid Market (%)

NPL level (gross) is below the maximum threshold of 5% Overnight interbank money market rate
is relatively lower
62
1998 30
2008 3.8 10.5

5.7
5.9
Aug-15
Apr ‘19 2.6
2.8
1998 2008 May ‘19
Jul-15
External Debt (Public & External Debt/GDP

Government Debt/GDP
Private) to FX Reserve Ratio Slightly higher than 2008, but
Significantly lower than 1998 crisis Consistently well-maintained significantly lower than 1998
8.6x 3.1x 27.4%

3.1x 100.0% 30.1% 116.8% 33.2%
1998 2008 36.9%
1998 2008 1998 2008
Q1 - 2019 Q1 - 2019 Q1 - 2019
91
Outlook of Domestic Economy Remains Robust
...domestic economic growth is predicted to be higher in 2019
2019 Economic Outlook
 Bank Indonesia projects national economic growth in the 5.0-5.4% range in 2019, buoyed by domestic demand and
improvements in terms of net exports.
 Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the Central Government and
Local Administrations to maintain low and stable inflation, which is projected within the inflation target of 3.5±1% in 2019.
 Bank Indonesia projects credit growth in 2019 at 10-12% (yoy), while predicting deposit growth in the 8-10% (yoy) range.
Bank Indonesia will continue to monitor liquidity adequacy and distribution in the banking system in conjunction with the
other relevant authorities consistent with efforts to help maintain financial system stability.
Economic Growth Inflation CAD (% of GDP) Credit Growth
2018
5.17% 3.13% 2.98% 11.75%
Realization
2019 5.0–5.4 % 3.5±1% ±2.5% 10.0-12.0%
Source : Bank Indonesia

92
Section 6
Progressive Infrastructure Development:
Strong Commitment on
Acceleration of Infrastructure Provision
The Government has Enacted Various Reforms to Accelerate
Infrastructure Provision
Fiscal Reforms Institutional Reforms Regulatory Reforms
Viability Gap Funding (VGF) KPPIP Direct Lending
Increase project financial feasibility by KPPIP is actively involved in accelerating Allow guarantee for direct lending to SOE
contributing up to 49% of the construction delivery of priority infrastructure projects to accelerate financial close process for
cost (MoF Reg. No. 223/2012) infrastructure projects (Presidential Reg. No.
PT. Sarana Multi Infrastruktur 82/2015)
Availability Payment
Merging between PT. SMI and Gov’t Land Acquisition
Issuance of regulatory framework to allow Investment Center (PIP) to become an
annuity payment by the Government during infrastructure funding company Stipulate land acquisition acceleration
concession period to concessionaire since based on Law No. 2/2012 (Presidential Reg.
project operation based on infrastructure Indonesia Infras. Guarantee Fund (IIGF) No. 148/2015) and land acquisition fee
service availability (MoF Reg. No. 190/2015 payment for impacted community
for Central Gov’r and MoHA Reg. No. IIGF has the potential to provide project
(Presidential Reg. No.56/2017)
96/2016 for Regional Gov’t.) guarantee for non-PPP projects
PPP Unit Economy Packages

Land Revolving Fund
Provide facilities to help GCA on preparing Conduct deregulation for issues hindering
A revolving-fund sourced from State Budget, PPP project (PDF/TA) infrastructure delivery and develop a task
to accelerate land acquisition (MoF Reg. No. force under CMEA to ensure the
220/2010) BLU LMAN effectiveness of economic packages
implementation
Risk-sharing Guidelines The State Asset Management Agency (BLU
LMAN) is mandated to provide land fund for
IIGF has issued risk allocation and mitigation National Strategic Projects to ensure timely
guidelines for PPP project land acquisition process
Tax Incentives (Tax Holiday) Indonesia Infrastructure Guarantee Fund
MoF Reg. No.35/2018 allowed 100% Tax (IIGF)
Holiday for 17 Pioneering Industries for 5 – IIGF has the potential to provide project
20 years depending on the investment value guarantee for non-PPP projects
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 94

Some of Most Recent Reforms
Policy reforms are aiming to create a more conducive investment climate for infrastructure
delivery
Presidential Reg. No. 20/2018 on Use of Foreign Labor – released on March 2018
This regulation aims at simplifying the permit application process for foreign workers, hence making the process more efficient and
faster, in order to rise foreign direct investment in Indonesia
Presidential Reg. No. 56/2017 on Social Impact Handling in Land Acquisition Process for PSN – released on June 2017
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.
MoF No. 60/2017 on Procedures for the Provision of Central Government Guarantee for the Acceleration of the National
Strategic Projects Implementation – released on May 2017
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.
Government Reg. No. 13/2017 on National Spatial Plan (RTRWN) – 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 of Agrarian and
Spatial can issue a recommendation of spatial utilization; so that the process of obtaining project permission can be done.
MoF No. 21/2017 on Procedures for Land Acquisition for National Strategic Projects and Asset Management of Land
Acquisition by State Asset Management Agency – 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.

Reforms Along the Project’s Life Cycle
...to encourage and accelerate infrastructure project using PPP scheme
Government of Indonesia
Project Viability
Guarantee Availability Land
Development Funding Tax Facilities
Fund Payment Acquisition
Facility (PDF) Gap (VGF)
Preparation Bidding Process Construction

A facility with Guaranteeing A scheme in which
contribution to Govt. concessionaires
contractual MoF Reg. No.
construction receive sum of A facility to support
obligations 159/PMK.
cost to money periodically land acquisition for
under 010/2015 re: tax
Project increase from central or infrastructure
infrastructure holiday for pioneer
development project regional projects particularly
concession sector, such as
facility contributing financial government after projects that involve
agreements and base metal, oil
to assist GCA on viability the completion of private sector
Mof Regulation refinery, basic
PPP project an asset.
No 130/PMK. petrochemical,
preparation Managing MoF Regulation, Managing enitiy:
08/2016 re: machinery,
(PDF&TA) Entitiy: and MoHA Ministry of Finance,
Govt guarantee renewable energy,
Ministry of for electricity Regulation on Ministry of Agrarian
& telco equipment
Managing entity: Finance based project Availability and Land
industries. Sector
KPPIP, PT SMI PT on GCA acceleration Payment has been Spatial/BPN and
will be further
IIF, and Ministry of proposal ratified. BLU-LMAN
Managing entity: expanded
Finance
Gov’t. IIGF and MoF Managing entity: Gov’t. commitment:
Managing entitiy:
commitment: Govt’s Ministry of Finance US$ 12 mn (2016)
Ministry of Finance
49% max. Per comitment: & Ministry of
project cost US$ 450 mn Home Affairs
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

96
Efforts to Accelerate Infrastructure Provision
Regulation improvement to accelerate land procurement process

 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 Law No. 2/2012 was successfully applied in:
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 1. Palembang – Indralaya section of the Trans
funding for a land acquisition which can be reimbursed by the Government Sumatera Toll Road Project
following the completion of land acquisition process. With this Regulation, the 2. Java North Line Double Track Rail Project
land acquisition process is expected not to be delayed by the unallocated
budget or the delay on the budget disbursement.
Land Procurement Process as Stipulated in Law No. 2 of 2012

97
Efforts to Accelerate Infrastructure Provision
…the establishment of Indonesia Asset Management Agency (LMAN)
Government has established State Asset Management Unit (LMAN) as a solution to

accelerate the land acquisition through the provision of land acquisition fund
LMAN at a Glance Land Acquisition Budgeting

Scheme
1. LMAN was established in December 2015
through the issuance of MoF Reg. 1. Unutilized fund can be allocated for
219/2015 concerning State Assets
the following year
Management
2. In 2016, BLU LMAN was mandated to 2. Non-project-specific land acquisition
provide land acquisition fund as a support fund allocation. Unused allocated
to Ministry of Public Works due to US$ fund can flexibly be made available
1,081 Mio shortage of fund to acquire land for the other project
for priority toll roads
3. Land acquisition fund for PSN projects
3. The scope of support is broaden for all is managed under one agency
National Strategic Projects through the
issuance of MoF Reg. 21/2017 concerning
land acquisition financing guideline for
PSN This LMAN initiative provides better
4. In January 2018, LMAN has disbursed up flexibility, coordination and
to US$ 881.48 Million (IDR 11.9 Trillion) management of land acquisition
through bridging finance scheme for 27 toll fund provision for National Strategic
road projects, and planned to start the Projects (PSN)
implementation of direct payment scheme

New Fundamental Regulations Have Been Initiated in 2017
to accelerate infrastructure projects delivery
Government Reg. No. 13/2017 on National Spatial Plan (RTRWN)
1
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 obtaining project
permission can be done.
MoF No. 60/2017 on Procedures for the Provision of Central Government Guarantee for the
Acceleration of the National Strategic Projects Implementation
2
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.
Presidential Reg. No. 56/2017 on Social Impact Handling in Land Acquisition Process for PSN
3 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.
MoF No. 21/2017 on Procedures for Land Acquisition for National Strategic Projects and Asset
4
Management of Land Acquisition by State Asset Management Agency
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
99
Under Presidential Reg. No.56/2018, PSN list has been
revised into 223 Projects and 3 Programs
26
53 18
Projects
12
Projects Projects
Projects
Sulawesi
Sumatra Kalimantan US$22.8 B
Maluku & Papua
US$40.4 B US$35.6 B
US$34.4 B
89
Projects 3 Programs
National projects Projects
12 Projects
Java
US$99.7 B
US$73.8 B 13
Projects
Bali &
Nusa Tenggara
US$0.7 B Exchange rate: US$ 1 = IDR 13,500
PSN includes 15 sectors at project level and 3 sectors at program level

Project Program
Electricity
1 Program
Road Dams SEZs & IEs Railway Ports Clean Water & Airports
Energy
69 Projects 51 Projects 29 Projects 16 Projects 10 Projects Sanitation 7 Projects
11 Projects Aeroplane Industry
8 Projects
1 Program
Sea Dike Irigation Economic Equality

Smelter Technology Housing Fisheries/Farming Education
1 Projects 6 Projects 1 Program
6 Projects 4 Projects 3 Projects 1 Projects 1 Projects

PSN may receive privileges as stipulated in the Presidential Reg.
No. 3/2016 j.o. the Presidential Reg. No. 58/2017
Acceleration of Non- Determination of National

State Budget Strategic Projects
Projects
Settlement of Permit & Non-

Legal Issues
12 01 permit Completion
11 02
Accelerate Goods and
Spatial Planning
Service Procurement
10 03
Problems and 09 04 Land clearing

Hindrance Completion acceleration
08 05
SOE’s Assignment 07 06 Local Content
Utilization
Projects Monitoring Government

Additional Facilities
via KPPIP IT System Guarantee Provision
Existing Facilities

Progress on 223 Projects and 3 Programs PSN
The Estimated Investment Value for 223 Projects + 3 Programs PSN1

5 Sectors with Highest
State
State Budget
Investment Value
Budget
10% Total Investment US$ 31.6 Bn
Value2
SOEs/RSOEs Energy
11 Projects
US$ 307.4 US$ 96.6 Bn
SOEs/
RSOEs US$ 89.8 Bn
Private
Private
Billion
31%
59%
US$ 179.2 Bn
Electricity
1Exclude7 projects which investment value are still unknown
1 Program
Exchange rate : US$ 1 = IDR 13,500 US$ 76.7 Bn
Progress of National Strategic Projects + 3 Programs (per December 2018)2
Roads
32 projects already completed 69 Projects
US$ 49.7 Bn
14% 32 projects and 1 electricity program are in
24% construction and partial-operation phase
48 projects are in construction and will start Railways
14% operating in 2019 16 Projects
3% 52 projects are in construction and will start US$ 29.2 Bn
operating after 2019
6 projects in transaction SEZs and IEs

23% 22%
31 Projects
53 projects and 1 Aircraft Industry Program in
preparation
US$ 31 Bn
2) Excluding the economic equality program that will be reported separately

In 2016 - 2018, 62 PSNs have been Completed with Total
Estimated Investment Value of USD23.7 Billion

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

Progress on 37 Priority Projects
Progress of 37 Priority Projects (per March 5, 2019) Recent Milestones
1 project is completed
Palapa Ring
3% 4 projects in construction and West package has been fully operasional since April 2018.
19% 11%
partial operation phase
16 projects in construction and
8% will start operating in 2019 Yogyakarta-Bawen Toll Road
6 projects in construction and Outline Business Case has been done on December 2017.
will start operating after 2019
16% 43%
3 projects in transaction
West Semarang Water Supply System:
7 projects in preparation On March 2018, pre-qualification stage has resulted 4 shortlisted
bidders
Funding Scheme of 37 Priority Projects
Mass Rapid Transit (MRT) Jakarta South-North
Total Investment Value Allocation of repayment liability on additional-loan for Phase I
US$ 183.9 Billion and Phase II has been decided in the KPPIP Ministerial meeting –
8% 49% will be borne by Central Government and 51% will be borne
US$120.7 billion from Private/ Provincial Government of DKI Jakarta.
PPP
Patimban Port
26% US$47.7 billion from SOE/
Loan Agreement has been signed on 15 November
Regional SOE
2017.
66% US$15.5 billion State/
Regional Budget
(including G-to-G loan)
Exchange rate : US$ 1 = IDR 13,500

Note: This data is still going to be verified by The Executive Office of President (KSP)
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) and Indonesia’s National Government Internal Auditor (BPKP)
105
Energy Sector: the Progress of 35.000 MW Program
Debottlenecking through regulation:

Average economic growth of 6.7%
requires 7,000 MW / year or 1. Regulation No.1/2015 concerning electricity Launching 35.000 MW
35,000 MW / 5 years supply cooperation & joint utilization of the by the President in
electrical network among license holders. Cabinet Meeting
(Kepmen ESDM No. 0074/2015 on Goa Beach Sanden
Progress of
RUPTL 2015-2024) 2. Regulation No.3/2015, concerning DIY
35,000 MW
Procedures of Purchasing Electrical Power
and benchmark prices for Electrical Power
through the Direct Selection & Appointment.
17 Dec ‘14 Jan ‘15 Jan ‘15 16 Mar ‘15 4 May ‘15
Cabinet Meeting
“There’s electricity crisis in The progress so far: June‘17
Indonesia, requires construction
of large capacity plant " 35,000 MW Program Distribution
Kalimantan Sulawesi No Phase MW %
PLN: 900 MW PLN: 2,000 MW
Papua
Private: 1,735 MW Private: 1,470 MW
PLN : 220 MW 1 Operating 3,009 8
Transmission: 5,604 ckt.km Transmission: 5,275 ckt.km
Private: 0 MW
Substation: 3,500 MVA Substation: 4,390 MVA
Transmission: 364 ckt.km 2 Construction 20,416 58
Substation: 460 MVA
Sumatera 3 Signed Power-purchase Agreement 9,507 27
PLN: 1,100 MW
Private: 8,990 MW 4 Procurement 1,383 4
Transmission: 18,729 ckt.km
Substation: 35,521 MVA 5 Planning 954 3
Maluku
Nusa Tenggara PLN: 260 MW
Note : Progress of 35,000 MW Electricity Program as of January 2019
Jawa & Bali
PLN: 670 MW Private: 12 MW
PLN: 5,000 MW
Private: 0 MW Transmission: 653 ckt.km
Private: 13,697 MW
Transmission: 2,347 ckt.km Substation: 620 MVA
Transmission: 9,185 ckt.km
Substation: 1,410 MVA
Substation: 66,265 MVA
Source: PLN

Acceleration of 35.000 MW Program
The Government has issued Presidential Regulation No. 4/2016 on Electricity Infrastructure Acceleration to accelerate power projects
Government Support (outside Guarantee) Local Content

• Provision of Primary Energy Obligation on the usage of local content
• Provision of Renewable Energy Government through an open book system, price
• Simplicity of Permits and non-Licensing guideline, reverse engineering or other
• Spatial Planning methods to maximise the local content.
• Land acquisition Assignment
• Resolution on Legal Matters
PT PLN
Provision of Electricity
1 2A 2B
EPC Powerplant SJKU*

PLN Subsidiary Independent
and Transmission Ministry of
(Joint Venture) Power Producer
Finance
Strengthen Equity
Strengthen PLN‘s Balance Sheet
Loan from Equity Injection by PT PLN’s divident
independent lenders the Government allocation
Refinancing Hedging
Bond issuance Asset Direct Company
by PT PLN Revaluation Lending Tax Holiday *)SJKU=Surat Jaminan
Financial Asset Optimization Kelayakan Usaha/
Direct Other types Business Viability
Lending of funding Guarantee Letter
Significant Progress on Infrastructure Projects
Roads Improving Monitoring System on Infrastructure Projects1
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.
Trans-Sumatra Toll Road Merah Putih Bridge, Ambon Database Platform data outlook
Dams Drinking Water Processing
Project information that is efficient and
such as map, track, functional using a
existing study and user-friendly
latest project status. framework.
Jatigede Dam (Operational) Umbulan Drinking Water Provision System, East Java
Transportation
An integrated IT Record decisions related

Jakarta MRT Project2 Terminal 3 Ultimate Soekarno-Hatta2 system with to projects and
monitoring capacity synchronize the
for stakeholders, so implementation schedule
that they can have that can be utilized by
real time data. stakeholders.
1 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

2 Not funded from National Budget
New Tanjung Priok Port Project2 Nop Goliat Dekai, Papua 108
Infrastructure Projects and Financing Schemes
Promotion of Infrastructure Development to Accelerate Economic Growth
Infrastructure Development is a Key Priority Establishment of PPP Unit

 Infrastructure Development in order to: Broad  Champion project preparation and acceleration of the PPP
1. Accelerate growth particularly in rural areas Objective agenda in Indonesia
2. Support industrial development and tourism
 Improve quality of project selection under KPPIP – OBC criteria
3. Reduce unemployment and poverty
Core  Support project preparation through PDF support and highly
 Infrastructure fundraising needs: $357.9 bn (or equivalent to IDR4,796.2 tn) Mandates qualified transaction advisors
 245 National Strategy Projects under National Medium Term Plan for 2015 –  Act on behalf the Minister of Finance in providing government
2019 with an estimated total cost of IDR 4,197 tn (USD 313 bn) support and approvals for projects
 37 priority infrastructure projects with an estimated cost of IDR 2,490 tn (USD  Coordinate all public finance instruments
180 billion) Additional  Provide input for PPP Policy program Development and Regulations
 Majority of 37 priority projects are expected to commence commercial operation Mandates  Implement capacity building for Govt. Contracting Agency (GCAs)
by 2018 - 2022  One stop shop for PPP promotion & Information
Budget Public Private Partnership SOE & Private Sector

 Central & regional budget  Certain infrastructure projects to be funded and operated through a  Government to inject capital into SOEs:
(special allocation fund & partnership between the Indonesian government and the private sector Intended multiplier effect to develop more
rural transfer) – Projects ready for auction under the PPP Scheme: infrastructure projects
 Primarily to support basic – Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung  Key focus areas:
infrastructure projects: – Railway projects such as an express line into Soekarno-Hatta – Infrastructure and maritime development
– Food security: International Airport – Transportation and connectivity
Irrigation, dams etc. – Water supply projects such as the West Semarang Project – Food security
 Various government support for PPP:
– Maritime: Seaports,  Medium term infrastructure developments to
shipyards etc. – Project Development Facility (PDF): Helps Government focus on:
Contracting Agencies (GCAs) in project preparation and
– Connectivity: Village transaction – Water Supply
roads, public – Viability Gap Fund: improves financial viability of PPP projects – Airports
transportation etc. – Government Guarantees: Supports PPP projects’ bankability by – Seaports
providing sovereign guarantees – Electricity and power plants
– Infrastructure Financing Fund: Provided through PT SMI and IIGF – Housing
– Availability Payment (AP): GCA pays private partner based of availability – Mining
of infrastructure services
Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity
Source : Ministry of Finance; Bappenas; KPPIP: “Komite Kebijakan Percepatan Penyediaan Infrastruktur” or National Committee for the Acceleration of Infrastructure Delivery
109
Government Guarantee For Basic Infrastructure Development
Reflects strong commitment to national development planning
Government Guarantee Program Contingent Liabilities from Government Guarantees
 Power (Electricity) – Full credit guarantee for

PLN’s debt payment obligation under FTP 1 Exposure/
10,000 MW and 35GW No. Central Government Guarantee for Infrastructure Programs Outstanding
(USD bn)
 Celan Water – Guarantee for 70% of PDAM’s
debt principal payment obligations 1 Coal Power Plant 10,000 MW Fast Track Program (FTP 1) 2.49
 Infrastructure - Full credit guarantee on SOE’s
2 Clean Water Supply Program 0.01
borrowing from international financial institution
Credit & guarantee for PT SMI’s local infrastructure 3 Direct Lending from International Financial Institution to SOEs 0.56
Guarantee financing
 Toll road – Full credit guarantee for PT Hutama 4 Sumatra Toll Road 0.48
Karya’s debt payment obligation (Sumatra Toll Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP
Road Development) 5 1.59
2)
 Public Transportation (Light Rail Transit) – Full 6 Public-Private Partnerships (PPP) 1.42
credit guarantee for PT Kereta Api Indonesia’s
debt payment obligations for the development of 7 Regional Infrastructure Financing 0.09
LRT Jabodebek
8 Light Rail Transit (LRT) Jakarta Bogor Depok Bekasi -
 Power (Electricity) – Guarantee for PT PLN’s
Business Viability obligations under Power Purchase Agreements Total 6.63
Guarantee (BVG) with IPPs (off-take and political risk) under FTP-2 As of end of March 2018; currency conversion of IDR 13,756/USD1 (March 29, 2018)
10.000MW and 35GW programs*
 From 2008 to Q1-2018, the Government has issued 75 guarantee documents
 Infrastructure – Guarantee for Government-related with total value of USD28.84 billion, 5 of which (worth USD0.05 billion) have
PPP entities obligations (line ministries, local expired.
Guarantee governments, SOEs, local SOEs) under PPP  The Maximum Guarantee Limit for the period 2018 – 2021 is set at 6% of GDP.
contracts/agreements  The space for guarantee issuance for the period 2018-2021 is approximately IDR
1,200 trillion (cumulative).
 Infrastructure – Guarantee against infrastructure
Political Risk risks for National Strategic Projects (Presidential
Guarantee Decree No.58/2017) which are not covered by
other type of guarantees
*) MOF provides both credit guarantees and BVGs for 35GW program
110
Government Financial Facilities for PPP Projects
Financial Facilities to Attract More Private Participation More Funding Schemes are on the Pipelines
Project Financing funded by the private sector

through the granting of concessions for an
operating asset owned by the
Viability Gap Fund Project Development Government/SOE (based on the policy of the
Facility (PDF) LCS
(VGF) Government) to the private sector to be
(Limited operated & managed.
Concession
Scheme) Scheme Characteristics
• Asset is owned by public sector

• Operating asset, not greenfield project
Government Guarantees • Records positive cash flow for the last
(directly by MoF or through IIGF) several years
• Predicted revenue
Project Financing funded by any source of

funds other than Government’s budget, e.g.
PINA long term management funds (insurance,
Availability Payment Financing from repatriated funds from tax amnesty, pension
Schemes PT. SMI and PT. IIF (Non-Government funds, etc.), private equity investors and
Budget infrastructure funds. Supported & facilitated by
Infrastructure National Development Planning
Financing) Ministry/Bappenas.
Those financial facilities were instrumental in supporting the execution of Scheme Characteristics
PPP projects, indicated by the signing of financial close
of the following PPP projects: • Asset is owned by private sector
• Greenfield / brownfield / operating projects
111
Progress of PPP Infrastructure Projects
Successful Projects Reaching Financial Close in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
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
Signed PPP Projects in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
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 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
Road
Source: Ministry of Finance, as of July 2017 112
New Guarantee Schemes for Non-PPP Projects
Guarantee on SOE Direct Lending from International Financial Institutions (IFIs)
The Government had issued Presidential Regulation No 82/2015 and Ministry of Finance Regulation No 189/2015 to provide
guarantee for SOE Direct Lending from IFIs for the Development of Infrastructure Projects.
The objective of this guarantee is to provide credit enhancement in terms of low interest rate and long tenor financing,
with 3 main principles:
Best practice of fiscal risk

State finance soundness Fiscal sustainabiliy
management
Guarantee for Regional Infrastructure Financing Provision
The objective is to give stimulus to

The Government had issued the acceleration of local
Based on Government Regulation infrastructure development through
Ministry of Finance Regulation No
No. 95/2015 and Ministry of the ease of access to infrastructure
174 of 2016 to provide guarantee
Finance Regulation No. 232/2015,
to PT SMI on the assignment of financing and to boost local
Minister of Finance assigns PT SMI
regional infrastructure financing economic growth, as well as to
(Sarana Multi Infrastruktur) to carry
provision, by loan to local provide alternative financing
out functions in providing loan to
governments that is transferred schemes in order to meet local
local government, as previously
from PIP to PT SMI, and new loan infrastructure development needs
carried out by PIP (Government
channeled by PT SMI to the local
Investment Center). and to reduce reliance on
government.
state/local budget.
113

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Republic of Indonesia

Policy Credibility and Macroeconomic Stability

Published by Investor Relations Unit – Republic of Indonesia

This Presentation Book also can be downloaded from: http://www.bi.go.id/en/iru/presentation/red/Default.aspx

Institutional and Governance Effectiveness: Fiscal Performance and Flexibility:

Economic Factor: Monetary and Financial Factor:

Progressive Infrastructure Development:

Global Competitiveness Index1 Ease of Doing Business2

Worldwide Governance Indicators3 Corruption Perception Index4

1. Source: World Economic Forum – The Global Competitiveness Report 2018;

Overall 73 72 1 67.96 66.54 1.42

Starting a business 134 144 10 81.22 77.93 3.29

Dealing with Construction Permit 112 108 4 66.57 66.08 0.49

Getting Electricity 33 38 5 86.38 83.87 2.51

Registering Property 100 106 6 61.67 59.01 2.66

Getting Credit 44 55 11 70.00 65.00 5.00

Protecting Minority Investors 51 43 8 63.33 63.33 0.00

Paying Taxes 112 114 2 68.03 68.04 0.01

Trading Across Borders 116 112 4 67.27 67.27 0.00

Enforcing Contracts 146 145 1 47.23 47.23 0.00

Resolving Insolvency 36 38 2 67.89 67.61 0.28

* Higher rank is better, EoDB 2019 was published in October 2018

Source: World Bank 6

March 2019, Rating Affirmed at BBB/Stable

May 2019, Rating Upgraded at BBB/Stable

BBB / Stable BBB / Positive

Total Investment / GDP (%)

300 Indonesia 30.4

0.0 10.0 20.0 30.0 40.0 50.0 60.0

August 17th, 2017 – March 26th, 2018 –

Socialization Candidacy of Legislative Candidates,

August 1st, 2017 – September 3rd, 2017 –

Preparation of Elections Registration and

April 14th, 2019 – April

May 23rd – June 15th, 2019

Source: General Elections Commission (Komisi Pemilihan Umum) 9

General Election Commission has announced the

Subianto – Sandiaga Uno. By this result, Joko

Source: General Elections Commission (Komisi Pemilihan Umum) 10

The 3 Dimensions on Economic Development

Education Food Security

• Build a fair land distribution scheme

Fishermen & Seaweed • Integrating fishing and seaweeds sectors

• Developing natural resources industries and value chains

Source: Coordinating Ministry for Economic Affairs Priority 12

Harmonizing Regulations Simplifying Bureaucratic Process Ensuring Law Enforceability

Phase I (9 Sept ’15) Phase IX (27 Jan ’16)

Source: Coordinating Ministry for Economic Affairs

TAX HOLIDAY EXPANSION EXPORT PROCEEDS (DHE) SCHEME

Objectives and benefits

and tax holiday facilities provision

Source: Coordinating Ministry for Economic Affairs

SET 222 99%

*as of January 23rd, 2019

Source: Coordinating Ministry for Economic Affairs

Fair, Simplified & Development of

Industrial Zone Deregulation on

BUSINESS EXPANSION INDUSTRIAL ZONE

PIONEER INDUSTRIES MICRO, SMALL, MEDIUM ENTERPRISES (MSMES)

SPECIAL ECONOMIC ZONE E-COMMERCE

PROVISION BEFORE AFTER

10 – 100% 100% (single rate)

Not available 50% CIT reduction for the next 2 years