THE REPUBLIC OF INDONESIA GOVERNMENT REGULATION

NUMBER 7 YEAR 2010

CONCERNING
JASA TIRTA II PUBLIC CORPORATION
THE REPUBLIC OF INDONESIA GOVERNMENT REGULATION
NUMBER 7 YEAR 2010

CONCERNING
JASA TIRTA II PUBLIC CORPORATION
 TABLE OF CONTENTS

CHAPTER I GENERAL PROVISIONS.......................................................................- 2 -

CHAPTER II CORPORATION ESTABLISHMENT.....................................................- 4 -

Part One Legal Basis of Establishment..............................................................- 4 -

Part Two Working Area........................................................................................- 4 -

Part Three Task and Responsibility.......................................................................- 5 -

Part Four Water Resources Management Cost...................................................- 8 -

Part Five Special Task..........................................................................................- 8 -

Part Six Execution of SPAM Development.....................................................- 10 -

CHAPTER III CORPORATION STATUTES...............................................................- 11 -

Part One Name, Location and Time Period......................................................- 11 -

Part Two Purpose and Objective.......................................................................- 11 -

Part Three Capital.................................................................................................- 12 -

Part Four Corporation Management..................................................................- 14 -

Paragraph 1 Appointment and Discharge of Member of the Board of

Directors..............................................................................................- 14 -

Paragraph 2 Tasks, Rights and Obligations of the Board of Directors................- 23 -

Paragraph 3 Meetings of the Board of Directors...................................................- 31 -

Paragraph 4 Member of the Board of Directors’s Conflict of Interest..................- 34 -

Part Five Supervision.........................................................................................- 35 -

Paragraph 1 Appointment and Discharge of the Board of Supervisors..............- 35 -

Paragraph 2 Tasks, Rights and Obligations of the Board of Supervisors...........- 43 -

Paragraph 3 Meeting of the Board of Supervisors................................................- 47 -

Part Six Long Term Plan..................................................................................- 50 -

Part Seven Work Plan and the Corporation Budget............................................- 51 -

Part Eight Reporting............................................................................................- 52 -

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Part Nine Internal Supervision Unit...................................................................- 56 -

Part Ten Audit Committee and Other Committees..........................................- 57 -

Part Eleven Expenditure of Income and Spare Budget........................................- 58 -

Part Twelve Joint Venture, Merger, Taking Over, and Changing of the Legal
Entity of the Corporation...................................................................- 59 -

Part Thirteen Liquidation of the Corporation..........................................................- 60 -

Part Fourteen The Corporation Fiscal Year..............................................................- 61 -

Part Fifteen The Corporation Employees..............................................................- 61 -

Part Sixteen Issues of Obligations and Other Debt Securities.............................- 62 -

Part Seventeen Procurement of Goods and Services................................................- 63 -

Part Eighteen Income of the Board of Directors and the Board of Supervisors..........-
63 -

Part Nineteen The Corporation Documents.............................................................- 64 -

Part Twenty Writing Off and Handing Over the Corporation Assets...................- 64 -

Part Twenty One Bankruptcy........................................................................................- 64 -

Part Twenty Two Compensation..................................................................................- 65 -

CHAPTER IV CLOSING PROVISIONS......................................................................- 65 -

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 THE REPUBLIC OF INDONESIA GOVERNMENT REGULATION
NUMBER 7 YEAR 2010

CONCERNING
JASA TIRTA II PUBLIC CORPORATION

WITH THE GRACE OF ALMIGHTY GOD

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering: a. whereas by the legislation of Law no.19 Year 2003 concerning

State Owned Company and the Government Regulation no. 45
Year 2005 concerning the Establishment, Management, Control
and Liquidation of State Owned Company, the Government
Regulation no. 94 Year 1999 concerning Jasa Tirta II Public
Corporation has to be adjusted;
b. whereas to support the national development,
business development is considered necessary by increasing the
tasks and activities of Jasa Tirta II Public Corporation;
c. whereas based on the consideration as stated in a
and b, and to execute the provision of Article 41 clause (2) Law
no. 19 Year 2003 concerning State Owned Company, the
promulgation of Government Regulation concerning Jasa Tirta II
Public Corporation is considered necessary;

Bearing in mind:
1. Article 5 clause (2) of the 1945 Constitution of the Republic of Indonesia;
2. Law no. 19 Year 2003 concerning State Owned
Company (State Gazette of the Republic of Indonesia Year 2003 no. 70,
Additional State Gazette of the Republic of Indonesia no. 4297);
3. Government Regulation no. 45 Year 2005
concerning the Establishment, Management, Audit and Liquidation of State
Owned Company (State Gazette of the Republic of Indonesia Year 2005 no.
117, Additional State Gazette of the Republic of Indonesia no. 4556);

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 DECIDED:
to promulgate:

GOVERNMENT REGULATION
CONCERNING JASA TIRTA II PUBLIC CORPORATION

CHAPTER I
GENERAL PROVISIONS

Article 1

As used in this Government Regulation:

1. Jasa Tirta II Public Corporation further addressed as Corporation means the
State Owned Company as stipulated under the Law no. 19 Year 2003
concerning State Owned Company, which whole financial capital is owned by
the State in the form of State treasures, separated and not divided into shares.
2. Management means activities carried out by the Board of Directors in their
effort to obtain the means and objective of the Corporation.
3. Supervision means activities carried out by the Board of Supervisors to
appraise the Corporation by comparison between real situation and supposed
situation, in financial aspect and/or operational technique aspect.
4 . Liquidation means the closing of the Corporation promulgated under
Government Regulation.
5 . Water resources exploitation means the effort of water resources utilization to
fulfill business needs.
6 . Minister means the minister assigned and/or authorized to represent the
Government as the financial capital owner of the Corporation, in accordance
with the legislated stipulations.
7 . Technical Minister means the minister authorized to stipulate water resources
sector policy.
8 . Board of Directors means part of the Corporation responsible for the
Corporation management for the necessity and purpose of the Corporation and
represents the Corporation within or outside the court.

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9 . Auditor means part of the Corporation which task is to audit and advice the
Board of Directors in carrying out the Corporation management activities.
1 0 . Maintenance means activities to take care of water sources and water
resources facilities to ensure the sustainable function of water sources and
water resources facilities.
1 1 . Water resources mean water, water source and the water force in it.
1 2 . Water source means natural or artificial water bucket in, on or under
the land surface.
1 3 . Water resources management means efforts to plan, execute, monitor
and evaluate the activities of water resources conservation, water resources
utilization and control of water destructive force.
1 4 . River basin means the unity of water resources management in one
or more river catchment areas and/or small islands with an area less than or
equal to 2,000 km2.
1 5 . River catchment area means a land area as the unity of river and its
tributaries, function to naturally catch, store and flow the water originated from
rainfall to lakes or sea, where its boundary on land is the topographical
boundary and its boundary on sea is the wet area which is still affected by land
activities.
1 6 . River means the flow of water starting from spring till the estuary,
bounded on the right and left side and along the flow by boundary line.
1 7 . Power supply means power generation starting from the generating
point to the consumption point.
1 8 . Drinking water supply system, further addressed as SPAM means the
unity of physical (technical) and non-physical system of drinking water facilities
and infrastructure.

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 CHAPTER II
CORPORATION ESTABLISHMENT

Part One
Legal Basis of Establishment

Article 2
The Corporation established under Government Regulation no. 20 Year 1970
concerning Jatiluhur Authority Public Corporation, as has been repeatedly modified
and rearranged, the last under Government Regulation no. 94 Year 1999 concerning
Jasa Tirta II Public Corporation, the establishment will be continued based on this
Government Regulation.

Part Two
Working Area

Article 3

(1) Under this Government Regulation, the Government continues to assign the
Corporation to carry out tasks and responsibilities in the exploitation of water
resources in the river basin and part of tasks and responsibilities in water
resources management aspect in the Corporation working area.
(2) The Corporation working area as mentioned in clause (1) consists part of
Cidanau, Ciliman, Ciujung, Ciliwung, Cisadane and Citarum river basins.
(3) Part of river basins as mentioned in clause (2) consists of some river
catchment areas comprises Bekasi, Cikeas, Cileungsi, Cikarang,
Cijambe, Cisadang,. Cikarang-Bekasi-Laut, Cilemahabang, Citarum, Citarik,
Ciharus, Ciharuman, Cirasea, Cipamokolan, Cidurian, Cikapundung,
Citepus, Cisangkuy, Cijalupang, Ciwideuy, Cibeureum, Cimahi,
Cicangkawung, Ciminyak, Cijeruk, Cilanang, Cijambu, Cihea, Cibodas,
Cisokan, Cibalagung, Cikundul, Cibadak, Cilalawi, Cisomang, Cileuleuy,
Cimeta, Cibeet, Cikao, Cisubah, Ciherang, Cibeber, Citaraje, Cijure,
Cigangsa, Cikaranggelam, Cilamaya, Cijengkol, Lamaya, Cikeruh,
Cilandak, Ciasem, Cibarubus, Cimuja, Cinangka, Cikamiri,
Cibolang, Cihujung, Citapen, Cijengkol Asem, Cipunagara, Cipabelah,
Cicenang, Cileat, Cikembang, Cineramas, Cijere, Cijurey, Cikandung,

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 Cilamatan, Cigadung, Cilalanang, Cipancuh, Cibinuang rivers and their
tributaries, including the water resources infrastructures which operationally
have been turned over to the Corporation.
(4) Modification of tasks as mentioned in clause (1) either increase or decrease,
will be stipulated in accordance with the legislated regulation.

Part Three
Task and Responsibility

Article 4

(1) Task and responsibility to carry out exploitation of water resources as meant in
Article 3 clause (1) consist of:
a. service and guaranty the water availability to fulfill the interest of water
resources exploitation by constantly prioritizing the fulfillment of water
demand for daily basic needs and irrigation for public agriculture in the
existing irrigation system;
b. surface water resources utility to fulfill hydropower generation needs, and
fulfillment of other exploitation needs; and
c. assistance in the issuance of permit consideration (recommendation) by the
Government regarding the utilization and exploitation of water resources.
(2) Task and responsibility to carry out part of task and responsibility in water
resources management aspect in the river basin as meant in Article 3 clause
(1) consist of:
a. operation and maintenance of water resources infrastructures comprising
water regulation effort including water drain and activities arrangement of
the closing and opening of water resources infrastructure gates, calibration
of discharge/gate/ structure measuring device, data collection, monitoring
and evaluation;
b. operation of primary irrigation system in North Jatiluhur and South Jatiluhur
Irrigation Areas consisting main structures, primary canals, its drainage
canals, diversion structures, intakes, offtakes and their appurtenant
structures;
c. operation of secondary canals consisting secondary canals, its drainage

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 canals, diversion structures, intakes, offtakes and their appurtenant
structures;
d. maintenance of water source consisting efforts to conserve and protection
water source to maintain its conservation;
e. conduct maintenance of primary irrigation canals in North Jatiluhur and
South Jatiluhur Irrigation Areas;
f. carry out monitoring, calibration of discharge measurement device,
evaluation of water quantity and quality of the water sources under the
Corporation responsibility;
g. disseminate the monitoring and evaluation result as meant in letter f to
water resources consumers, community and water resources Board of
Directors;
h. assist the Government in the execution of water resources conservation
and control of water destructive force in accordance with the Corporation
ability;
i. flushing for river maintenance; and
j. provide guidance and information to the community to improve the
community empowerment.
(3) The Corporation will conduct its business activities based on the stipulation
stipulated under this Government Regulation and other legislated regulations.
(4) Exploitation of water resources as meant in clause (1) will be carry out by
constantly prioritizing the harmonious management principles between social
function, environmental function, and water resources economy function.
(5) Operation and maintenance as meant in clause 2 letter a to f will be carried out
in accordance with operation standard promulgated by the Technical Minister.
(6) Guidance to the Board of Directors and Board of Supervisors in carrying out
their task and responsibility as meant in clause (1) and clause (2) will be
stipulated by the Technical Minister.

Article 5

(1) Government’s Assets other than meant in Article 4 clause (2) which have been
turned over by the Technical Minister to the Corporation preceding the
effectiveness of this Government Regulation, will be reported by the Technical

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 Minister to the Minister of Finance.
(2) The Government will forward the task to the Corporation to operate and carry
out the maintenance of the Government’s Assets as meant in clause (1) to be
operated by the Corporation in carrying out public service as the Government’s
task in the river catchment areas of part of Cidanau, Ciliman, Ciujung, Ciliwung,
Cisadane and Citarum river basins.
(3) The Corporation will get the authority to take benefit of the Government’s
assets as meant in clause (1) in which outcome will be used by the Corporation
for the operation and maintenance cost of the assets.
(4) Operation and maintenance cost as meant in clause (3) is the total cost to be
expended by the Corporation to manage and to optimize the benefit of
Government’s assets which have been turned over to the Corporation.

Article 6

For the assets as meant in Article 4 clause (2), letter a, letter b, letter c and letter e
and Article 5 clause (1), the Corporation may propose objection and/or deduction of
Land and Building Tax in accordance with the stipulation under the tax legislated
regulation.

Part Four
Water Resources Management Cost

Article 7

(1) The Corporation is authorized to collect, receive and use the water resources
management service cost to finance all the task and responsibility activities as
meant in Article 3 clause (1)
(2) The tariff of water resources management service cost for surface water
utilization for drinking water business, industry business, and hydropower
generation business will be determined by the Technical Minister based on the
Board of Director’s proposal.
(3) The determination of tariff other than meant in clause (2) will be determined by
the Board of Directors by taking into account the utilization cost formulation
according to the stipulation under the legislated regulations.

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(4) Further stipulations regarding the method of collection activities and the
revenue of water resources management service cost as meant in clause (1)
will be arranged by the Board of Directors.

Part Five
Special Task

Article 8

(1) The Government may grant emergency special task to the Corporation in
carrying out part of the Government task to conduct public benefit function.
(2) In the case where the task as meant in clause (1) is reviewed as financially not
feasible, the Government will be obliged to compensate all expenditures
including its expected margin to compensate required indirect cost to carry out
the meant task, finance under the State Income and Expenditure Budget
(APBN).
(3) Emergency special task as meant in clause (1) will be granted by the Technical
Minister in the activities related to public safety.
(4) Tasks other than meant in clause (3) shall be subject to the Minister’s approval.
(5) In carrying out the Government’s special task as meant in clause (1), the
Corporation has to strictly separate the accountancy.

Article 9

(1) The Corporation will conduct the general benefit of qualified and appropriate
water resources to fulfill the community living needs for public social service,
welfare and safety within the Corporation working area.
(2) Social service, welfare and public safety as meant in clause (1) comprises:
a. surface water supply for basic daily needs;
b. irrigation water supply for public agriculture in the
existing irrigation system;
c. flood control;
d. water resources conservation; and

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 e. execute SPAM and sanitation development for
house holds.
(3) Execution of SPAM and sanitation development as meant in clause (2) letter e
shall be carried out outside of the service area of local government company
where the execution is taking place and shall be based on the approval of the
local government.
(4) The tariff determination for SPAM and sanitation development as meant in
clause (3) will be determined by the chief of the local government based on the
Board of Directors’s proposal, upon approval from the Board of Supervisors.
(5) For social service, welfare and public safety as meant in clause (2), the
Government within certain limits may provide management financial support to
the Corporation, which budget source is the State Income and Expenditure
Budget (APBN).
(6) In the financing for the execution of water resources public benefit as meant in
clause (1), the Corporation has to strictly make separation in the working plan
and the Corporation budget.

Part Six
Execution of SPAM Development

Article 10

(1) The Corporation shall execute SPAM development locally and / or regionally.
(2) The execution of SPAM development as meant in clause (1) will be carried out
by the Corporation down to the production unit, including its operational
equipments and facilities to fulfill the flow drinking water demand drinking water
regional company and/or other SPAM executors, based on the SPAM
development masterplan promulgated by the Government and/or local
government.
(3) The implementation of SPAM development execution as meant in clause (1)
will be carried out by the Corporation upon the cooperation agreement with the
regional drinking water company and/or other SPAM executors.
(4) The execution of SPAM development as meant in clause (3) and its operation
will be under the responsibility of the Corporation.

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(5) The Corporation may manage the SPAM infrastructures constructed by the
Government and/or as the cooperation result between the Government and the
company.
(6) The Corporation may execute SPAM development for drinking water service
directly to the consumer’s group outside of the service area of the local
government’s company where the SPAM development is taking place, in the
working area of the Corporation upon the approval of the local government.
(7) The tariff determination for drinking water supply service as meant in clause (6)
will be determine by the local government’s chief based on the Board of
Directors’s proposal, upon approval by the Board of Supervisors.

CHAPTER III
CORPORATION STATUTES

Part One
Name, Location and Time Period

Article 11

(1) The name of the corporation in Perusahaan Umum (Perum) Jasa Tirta II or
abbreviated as Perum Jasa Tirta II.
(2) The Corporation is located in Purwakarta, West Java, with its head office in
Jatiluhur, Purwakarta, West Java.
(3) The Corporation may establish branch or representative office in other place,
inside or outside Republic Indonesia as agreed by the Manager upon approval
by the Board of Supervisors.

Article 12

The Corporation is established for a period without limitation of time.

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 Part Two
Purpose and Objective

Article 13

(1) The purpose and objective of the Corporation are to participate and support the
Government’s policy and program in economy aspect and national
development in general especially in field of Exploitation and Management of
Water Resources, and optimize the Corporation capability to produce material
and service based on the Corporation healthy management principles.
(2) To obtain the purpose and objective as meant in clause (1), the Corporation will
conduct the following business:
a. raw water supply for drinking water, industry, agriculture, flushing, ports,
hydropower generation, and fulfillment of other water requirements;
b. hydropower supply to State Electrical Company (PLN) and/or other than
PLN in accordance with the stipulation under the legislated regulation;
c. hydropower generation and distribution, drinking water, consultant service
in water resources technology, leasing of heavy equipment, and water
quality laboratory service; and
d. SPAM development.
(3) Other than the business activities as meant in clause (2), the Corporation will
conduct efforts on optimizing the Corporation’s capability potency for offices,
warehouses, tourism, hotels and resorts, sport and recreation, hospital,
telecommunication and energy power infrastructures, leasing and exploitation
of the Corporation’s facilities and infrastructures.

Part Three
Capital

Article 14

(1) The Corporation’s capital is a separated state asset and not divided into
shares.

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(2) The amount of Corporation’s capital is the total value of joined
state capital in the Corporation as meant in Article 2 where the total amount is
Rp164.547.635.935,00 (one hundred sixty four billion five hundred forty seven
million six hundred thirty five thousand and nine hundred thirty five rupiah) with
the following details:
a. an amount of Rp. 46,000,000,000.00 (forty six billion rupiah) based on
Government Regulation no. 42 Year 1990 concerning Perusahaan Umum
(Perum) Otorita Jatiluhur j.o Minister of Finance Decree no.
202/KMK.13/1992;
b. an amount of Rp 60,287,829,310.00 (sixty billion two hundred eighty seven
million eight hundred twenty nine thousand three hundred ten rupiah),
based on Government Regulation no. 78 Year 1998 concerning the
Increase of Joint State Capital of the Republic of Indonesia to the Capital
of Perusahaan Umum (Perum) Otorita Jatiluhur;
c. an amount of Rp18,439,506,625.00 (eighteen billion four hundred thirty
nine million five hundred six thousand six hundred twenty five rupiah),
based on the Government Regulation no. 90 Year 2000 concerning the
Increase of Joint State Capital of the Republic of Indonesia to the capital
of Perusahaan Umum (Perum) Jasa Tirta II; and
d. an amount of Rp 39,820,300,000.00 (thirty nine billion eight hundred twenty
million three hundred thousand rupiah), based on the Government
Regulation no. 4 Year 2009 concerning the Increase of Joint State Capital
of the Republic of Indonesia to the capital of Perusahaan Umum (Perum)
Jasa Tirta II.
(3) Any changes in the joint State capital in the Corporation, either addition from
the State Income and Expenditure Budget (APBN) or the deduction of State
capital will be stipulated under a Government Regulation
(4) Any changes in the joint State capital in the Corporation as an addition of State
capital from spare capitalization and other sources will be promulgated by the
Minister.

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 Part Four
Corporation Management

Paragraph 1
Appointment and Discharge of Member of the Board of Directors

Article 15

The management of the Corporation will be carried out by a Board of Directors.

Article 16
(1) The member of Board of Directors will be appointed and discharged by the
Minister.
(2) In appointing a member of Board of Directors, the Minister may search for the
Technical Minister’s advice.

Article 17

(1) Distribution of tasks and rights of the member of Board of Directors will be
determined by the Minister.
(2) The Minister may delegate the rights as meant in clause (1) to the Board of
Supervisors.

Article 18

(1) Candidate of the Board of Directors member to be appointed as member of the

Board will be the candidate who has passed the fit and proper test done by
professional team and/or institution established by the Minister.
(2) The stipulation as meant in clause (1) will not be applied to the reappointment
of the similar position for the Board member which is considered capable to
carry out his/her task properly during his/her appointment period.
(3) The candidate of the Board of Directors which has passed the fit and proper
test as meant in clause (1) and the Board member which has been reappointed

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 as meant in clause (2) will be obliged to sign a management contract prior to
his/her appointment as member of the Board of Directors.

Article 19

(1) Those who can be appointed as member of the Board of Directors are
individuals who are capable to take legal actions and have never been
declared bankrupt or become a member of Board of Directors or Committee or
Board of Supervisors which have been found guilty to cause a company or
Public Corporation declared bankrupt or persons which have never been
punished due to criminal act which caused state financial loss.
(2) Beside the fulfillment of the criteria as meant in clause (1), those who can be
appointed as member of the Board of Directors are individuals who meet the
criteria of expertise, integrity, leadership, experience, honesty, good attitude,
and possess a high dedication toward the Corporation improvement and
development.
(3) The fulfillment of the conditions as meant in clause (1) has to be proven by a
declaration letter signed by the candidate of the Board of Directors and will be
kept by the Corporation.
(4) The appointment of a member of Board of Directors which does not meet the
conditions as meant in clause (1) will be legally cancelled starting from the
finding date of the conditions unfulfillment by other member of the Board or by
the Board of Supervisors.

Article 20

(1) The number of members of the Board of Directors will be determined by the
Minister in accordance with the requirements.
(2) In the event where the number of Board of Directors member is more than one
person, one of them has to be appointed as President Director.

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 Article 21

Member of the Board of Directors will be appointed for an appointment period of 5

(five) years and will be allowed to be reappointed for 1 (one) appointment period.

Article 22

(1) In the event of a vacuum position of a member of the Board of Directors, the
following stipulations will be arranged:
a. The Minister has to fill in the vacuum position not later than 30 (thirty)
days since the date of the vacuum position occurred.
b. during the period of the vacuum position of a member of the Board of
Directors and the Minister has not yet filled in the vacuum position of the
member of the Board as meant in letter a, Board of Supervisors will
appoint one of the other members of the Board or the Minister may
appoint another person to temporarily conduct the tasks of the vacuum
member of the Board with similar tasks, rights and obligations.
c. in the event where the vacuum position of a member of the Board of
Directors is due to the termination of the appointment period and the
Minister has not yet appointed a new member, the terminated member
may temporarily conduct the similar tasks and rights till the appointment
of definitive member of Board of Directors, and
d. the task executor of the vacuum member of the Board of Directors as
meant in letter b and letter c, other than the member of the Board which is
still in function, will receive salary and allowance similar to the vacuum
member of the Board, not including retirement compensation.
(2) In the event of vacuum of all positions of the Board of Directors, the following
stipulations will be arranged:
a. The Minister has to fill in the vacuum position not later than 30 (thirty)
days since the date of the vacuum position occurred.
b. during the period of the vacuum position of the Board of Directors and the
Minister has not yet filled in the vacuum position as meant in letter a, the
Corporation will be temporarily managed by the Board of Supervisors, or

15
 other persons appointed by the Minister with similar tasks, rights and
obligations;
c. to conduct the management as meant in letter b, Board of Supervisors
may execute all together or appoint one or more person among them to
execute;
d. in the event of vacuum of all positions of the Board of Directors is due to
the termination of the appointment period and the Minister has not yet
appointed their successors, all the terminated members of the Board of
Directors may be appointed by the Board of Supervisors or Minister to
carry out their job as members of the Board of Directors with similar
tasks, rights and obligations; and
e. the task executor of the vacuum member of the Board of Directors as
meant in letter b and letter c, other than Board of Supervisors will receive
salary and allowance and/or facilities similar to the vacuum member of
the Board of Directors, not including retirement compensation.

Article 23

(1) Any member of the Board of Directors has the right to resign from his/her
position by written notice to the Minister and copy to the Board of Supervisors
and other members of the Board of Directors.
(2) The resign notice as meant in clause (1) has to be received by the Minister not
later than 30 (thirty) days prior to the effective date of resignation.
(3) In the event of resignation where the resign notice as meant in clause (2)
mentions the effective date of resignation is less than 30 (thirty) days of the
acceptance date of the notice, the effective resignation date will be counted 30
(thirty) days after the notice acceptance date by the Minister.
(4) In the event of resignation as meant in clause (2) does not mention the
effective date of resignation, the meant resigned member of Board of Directors
will automatically resign starting 30 (thirty) days after the acceptance date of
resign notice by the Minister.

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 Article 24

(1) Among members of the Board of Directors and between the members of Board
of Directors and members of the Board of Supervisors, no blood relative
relationship or marital relationship is allowed down to the third degree, neither
straight line nor side line.
(2) In the event where the situation as meant in clause (1) occurs, the Minister has
the right to discharge one of them.

Article 25

(1) Member of Board of Directors is not allowed to hold double position as:
a. member of Board of Directors in another State Owned Business
Enterprise, Regional Government’s Business Enterprise , or Private
Business Enterprise;
b. member of Commissioner Board or Board of Supervisors in State Owned
Business Enterprise;
c. structural and other functional position in central or regional government
institutions;
d. other positions in accordance with the stipulations under the legislated
regulations; and/or
e. other positions that might create conflict of interest.
(2) A member of the Board of Directors who holds other position as meant in
clause (1), will end his appointment period as member of the Board of Directors
starting from the date when the double positioning occurs.
(3) In the case where an individual who will be appointed as a member of the
Board of Directors is holding a position which is not allowed to be duplicated
with the position in the Board of Directors as meant in clause (1), he/she will be
obliged to resign from his/her old position not later than 30 (thirty) days starting
from the date of his appointment as a member of the Board of Directors.
(4) If a member of the Board of Directors does not resign from his previous
position as meant in clause (3), his position as a member of the Board of

17
 Directors will be terminated by the passing of 30 (thirty) days as meant in
clause (3).

Article 26

(1) Member of the Board of Directors is not allowed to become political party
committee, candidate for legislative member, legislative member, candidate for
Regional Chief, candidate for Vice of Regional Chief, Regional Chief, and/or
Vice of Regional Chief.
(2) Political party committee, candidate for legislative member, legislative member,
candidate for Regional Chief, candidate for Vice of Regional Chief, Regional
Chief, and/or Vice of Regional Chief are not eligible to be appointed as a
member of the Board of Directors.
(3) In the event where a member of the Board of Directors becomes a political
party committee, candidate for legislative member, legislative member,
candidate for Regional Chief, candidate for Vice of Regional Chief, Regional
Chief, and/or Vice of Regional Chief, he/she will terminate his/her position as a
member of the Board of Directors starting from the date of his/her appointment
as a political party committee, candidate for legislative member, legislative
member, candidate for Regional Chief, candidate for Vice of Regional Chief,
Regional Chief, and/or Vice of Regional Chief.

Article 27

(1) A member of the Board of Directors may be discharged prior to the end of his
appointment period based on the Minister’s Decree with explanations of the
reasons.
(2) The discharge of a member of the Board of Directors as meant in clause (1) will
be carried out based on facts that the member of the Board of Directors
concerned among others:
a. is not able to fulfill his obligations as agreed in the management contract;
b. is not capable to carry out his/her task properly;

18
 c. does not follow the stipulations under the legislated regulations and/or
statute stipulations;
d involve in acts which cause loss to the Corporation and/or State;
e. conducts unethical and/or improper acts where as a member of the Board
of Directors of a state owned business enterprise is supposed to be
respected.
f. declared as guilty based on the court verdict under the fixed force of law;
or
g. resign.
(3) Other than the discharge reasons of the member of the Board of Directors as
meant in clause (2), for the sake of the importance and objective of the
Corporation, the Board of Directors may be discharged by the Minister based
on other reasons considered correct by the Minister.
(4) The plan to discharge a member of the Board of Directors as meant in clause
(1) will be informed to the member of the Board of Directors orally or written by
the Minister or the appointed official in charge.
(5) The decision of discharge due to the reasons as meant in clause (2) letter a to
letter d and clause (3) will be taken after the person concerned has been given
chance to defend himself/herself.
(6) The self defend as meant in clause (5) will be submitted in written form to the
Minister or the appointed official in charge not later than 14 (fourteen) days
since the date when the member of the Board of Directors concerned has been
informed as meant in clause (4).
(7) In the event where the discharged member of the Board of Directors has
defend him/herself or when being informed declares no objection on his/her
discharge plan, the time stipulation as meant in clause (6) is deemed fulfilled.
(8) While the discharge plan is still under process, the member of the Board of
Directors concerned is obliged to carry out his/her task as should be.
(9) The discharge with reasons as meant in clause (2) letter d and letter f is a
disgraced discharge.

Article 28

19
(1) The position of a member of the Board of Directors will be terminated when:
a. passing away;
b. end of appointment period;
c. discharged based of the Minister’s decree;
and/or
e. does not anymore fulfill the conditions as a member of the Board of Directors
based on the stipulations under this Government Regulation and other
legislated regulations.
(2) The stipulation as meant in clause (1) letter d includes but not limited to the
prohibited double position and resignation.
(3) Member of the Board of Directors who terminates prior to or after the end of
his/her position period, except terminates due to death will remain responsible
for all his/her acts which responsibility has not been accepted by the Minister.

Article 29

The Board of Supervisors may discharge a member of the Board of Directors

temporarily when the member of the Board of Directors concerned acts against this
Government Regulation, indicated to cause Corporation loss, neglect his/her
obligations, or existence of emergency reasons for the sake of the Corporation, by
considering the following stipulations:
a. the decision taken by the Board of Supervisors to temporarily discharge the
member of the Board of Directors is in accordance with the decision
determination method of the Board of Supervisors;
b. the temporary discharge as meant in letter a has to be informed in written
notice to the member concerned with reasons which causes the act with copy
to the Minister and the Board of Directors;
c. the written notice as meant in letter b has to handed in a period not later than 2
(two) days after the date of the determination of the temporary discharge;
d. the temporarily discharged member of the Board of Directors will not be entitled
to conduct the Corporation Management and to represent the Corporation
neither inside nor outside of the court;

20
e. within not later than 60 (sixty) days after the temporary discharge as meant is
letter d, the Minister has to decide whether to withdraw or to strengthen the
temporary discharge decision after the member of the Board of Directors
concerned has been given chance to defend himself/herself; and/or
f. if the 60 (sixty) days period as meant in letter e exceeds and the Minister is not
able to make any decision, the temporary discharge will then be cancelled.

Paragraph 2
Tasks, Rights and Obligations of the Board of Directors

Article 30

The Board of Directors will conduct all actions related to the Corporation
Management for the sake of the Corporation and in accordance with the purpose
and objection of the Corporation and representing the Corporation either inside or
outside the Court regarding all matters and occasions, with limitation as stipulated in
the legislated regulations, Statutes, and/or Minister Regulation.

Article 31

In carrying out tasks as meant in Article 30, the Board of Directors is entitled to:
a. determine the Corporation management policy;
b. arrange the handing over of the power of the Board of Directors to one or more
member of the Board of Directors to take decision upon the name of the Board
of Directors or represent the Corporation either inside or outside the court;
c. arrange the handing over of the power of the Board of Directors to one or some
Corporation employee either individually or altogether or to other person, to
represent the Corporation either inside or outside the court;
d. arrange the stipulations regarding the Corporation labour force including salary
decision, pension or old age security, and other income for the workers of the
Corporation based on the legislated regulations, with the condition where
salary decision, pension or old age security, and other income for the workers

21
 of the Corporation which exceed the obligation as stipulated under the
legislated regulation, will be upon prior approval of the Minister;
e. to recruit and discharge the Corporation workers based on the Corporation
labour force regulation and legislated regulations;
f. to recruit and discharge secretary of the Corporation;
and
g. to conduct all actions and other deeds regarding the Corporation management
and asset ownerships, to bind the Corporation with other parties and/or other
parties with the Corporation, and represent the Corporation either inside or
outside of the court regarding all matters and all occasions, with limitation as
stipulated in the legislated regulation, Statutes, and/or Minister regulations
stipulated based on legislated regulations.

Article 32

In carrying out tasks as meant in Article 30, the Board of Directors will be obliged to:
a. manage and guarantee the execution of the Corporation efforts and activities
according to its purpose and objective and its business activities;
b. prepare on time the Corporation Long Term Plan, Work Plan and Corporate
Budget including its amendments, and submit them to the Board of Supervisors
and the Minister to obtain legalization form the Minister according to the
effective regulation;
c. provide presentation to the Minister regarding the Corporation Long Term Plan
including work plan and the Corporate budget;
d. prepare the Board of Directors minutes of meetings;
e. prepare annual reports as the form of the Corporation Management
responsibility and financial documents in accordance with the Law concerning
Corporation Documents;
f. prepare financial report based on the Financial Accountancy Standard and its
submittance to Public Accountant to be audited;
g. submit annual report including financial report to the Minister to be approved
and legalized;
h. provide explanation to the Minister regarding annual report;

22
i. maintain Board of Supervisors minutes of meetings, Board of Directors minutes
of meetings, annual reports, the Corporation’s financial documents, and other
documents;
j. store at the Corporation location the Board of Supervisors and Board of
Directors minutes of meetings, annual reports, financial documents, and other
documents;
k. prepare accounting system according to Financial Accountancy Standard and
based on the principles of internal control, especially Management function,
recording, storage, and supervision;
l. provide periodic report following method and time according to the effective
stipulation, and other reports any time requested by the Board of Supervisors
and/or the Minister;
m. prepare the organization scheme of the Corporation, completed with its
descriptions and tasks;
n. provide explanation to the member of the Board of Supervisors and Minister all
inquiries or as requested;
o. prepare and determine the blue print of the Corporation organization; and
p. carry out other obligations in accordance with the stipulation which is regulated
under this Government Regulation and promulgated by the Minister based on
the legislated regulation.

Article 33

(1) In carrying out their tasks, the Board of Directors will be obliged to fully put their
force, ideas, attention and devotions to the Corporation tasks, obligation and
objective achievement.
(2) In carrying out their tasks, the member of the Board of Directors will be obliged
to obey the Corporation Statutes and legislated regulations, and will be obliged
to carry out the principles of professionalism, efficiency, transparency, self
standing, accountability, responsibility, and sensibility.
(3) In managing the Corporation, the Board of Directors will carry out guidance
given by the Minister which will not contradict the legislated regulations and/or
the Statutes.

23
 Article 34

(1) Any member of the Board of Directors will be obliged with their good intentions
and full responsibility to carry out their task for the sake of the Corporation
importance and business in accordance with the legislated regulations.
(2) Any member of the Board of Directors personally will be fully responsible for
the loss of the Corporation if the person concerned is guilty or careless in
carrying out his/her duties for the importance and business of the Corporation.
(3) Member of the Board of Directors will not be responsible for the loss as meant
in clause (2) when he/she can prove that:
a. the loss is not due to his/her fault or negligence;
b. has carried out the Management with good intentions and carefulness to
the importance and according to the purpose and objective of the
Corporation;
c. does not have any conflict of interest neither directly nor indirectly to the
Management actions which have caused the loss; and
d. has put acts to prevent the loss or the continuation of the loss.
(4) Any actions carry out by a member of the Board of Directors beyond the
decisions agreed in the Board of Directors meetings will become his/her
personal responsibility till the action concerned is approved in the Board of
Directors meeting.

Article 35

(1) The following acts of the Board of Directors will be subject to written approval
from the Board of Supervisors:
a. guarantying permanent assets to withdraw short term credits;
b. organizing cooperation with other business enterprise or parties in the
form of licensing, management contract, asset leasing, operation
cooperation, Build Operate Transfer (BOT), Build Own Transfer (BOwT),
Build Transfer Operate (BTO), and other cooperation within a certain
value or time period determined by the Minister;

24
 c. accepting or providing intermediate term or long term loans, except for
loans (debts or receivables) due to business transaction, and loans
provided to subsidiary Corporation with a condition that the loan provided
to the subsidiary Corporation is reported to the Board of Supervisors;
d. writing off jammed receivables and dead goods stock from the book
keeping;
e. releasing moving permanent assets with economic life time commonly
valid in industry which in general is 5 (five) years;
and/or
f. determining the organization structure 1 (one) level below the Board of
Directors.
(2) In order to obtain the approval as meant in clause (1), the Board of Directors
will submit written proposal to the Board of Supervisors with all necessary
documents.
(3) Within not more than 30 (thirty) days after the receipt date of the Board of
Directors’s proposal, the Board of Supervisors will be obliged to give their
decision.
(4) In the event where the Board of Supervisors may still need information or
additional documents from the Board of Directors, the Board of Supervisors will
request the information and/or additional documents concerned from the Board
of Directors within the time range as meant in clause (3).
(5) Within not more than 30 (thirty) days after the receipt date of the information
and/or additional documents concerned from the Board of Directors, the Board
of Supervisors will be obliged to give their decision.

Article 36

(1) The following acts may only be carried out by the Board of Directors upon
written approval from the Minister:
a. guarantying permanent asset to withdraw intermediate term or long term
credit;
b. conduct capital participation to other corporation;
c. establish corporation subsidiary and/or joint venture corporation;

25
 d. releasing capital participation to corporation subsidiary and/or joint
venture corporation;
e. conduct merger, fusion, taking over, separation, and liquidation of
corporation subsidiary and/or joint venture Corporation;
f. corporation binding as a guarantor;
g. organizing cooperation with other business enterprise or parties in the
form of licensing, management contract, asset leasing, operation
cooperation, Build Operate Transfer (BOT), Build Own Transfer (BOwT),
Build Transfer Operate (BTO), and other cooperation within a certain
value or time period exceeding the stipulation determined by the Minister
as meant in Article 35 clause (1) letter b;
h. halting the collection of written off jammed receivables;
i. releasing and writing off the Corporation permanent assets, except
moving permanent assets with economic life time commonly valid in
industry which in general is 5 (five) years;
j. determining the blue print of the organization of the Corporation;
k. determining and changing the logo of the Corporation;
l. conduct other acts and acts as meant in Article 35 clause (1) not yet
determined in the Corporation Work Plan and Budget;
m. establishing foundation, organization, and/or association related either
directly or indirectly to the Corporation which will have impact to the
Corporation;
n. allocation of fixed and routine Corporation cost for the foundation,
organization and/or association related either directly or indirectly to the
Corporation; and/or
o. proposing representative of the Corporation to be a candidate of the
member of Board of Directors and/or Board of Commissioners in a joint
venture and/or corporation subsidiary by providing significant contribution
to the Corporation and/or strategically valued as stipulated by the
Minister.
(2) To obtain written approval from the Minister as meant in clause (1), the Board
of Directors will submit written proposal to the Minister attached with written
comment from the Board of Supervisors and the necessary documents.

26
(3) To obtain written comment from the Board of Supervisors as meant in clause
(2), the Board of Directors will submit written proposal to the Board of
Supervisors attached with the necessary documents.
(4) Within not more than 30 (thirty) days upon the date of the receipt of the Board
of Directors’s proposal as meant in clause (3), the Board of Supervisor will be
obliged to give the written comments.
(5) In the event where the Board of Supervisors may still need information or
additional documents from the Board of Directors, the Board of Supervisors will
request the information and/or additional documents concerned from the Board
of Directors within the time range as meant in clause (4)
(6) In the event where the Board of Supervisors does not give written comments
and do not request any information and/or additional documents from the
Board of Directors within the time range as meant in clause (4), the Board of
Directors will submit written proposal to the Minister to obtain written approval
without written comments from the Board of Supervisors with an explanation
regarding the absence of the written comments from the Board of Supervisors.
(7) Within not more than 30 (thirty) days upon the date of the receipt of the
information and/or additional documents from the Board of Directors as meant
in clause (5), the Board of Supervisors will be obliged to give written
comments.
(8) In the event where within not more than 30 (thirty) days upon the date of the
receipt of the information and/or additional documents from the Board of
Directors as meant in clause (5) the Board of Supervisors do not give any
written comments, the Board of Directors will submit proposal to the Minister to
obtain written approval with explanation regarding the absence of written
comments from the Board of Supervisors.

Article 37

(1) Based on the Board of Supervisors’s proposal, the Minister may stipulate the
Board of Directors to act as meant in Article 35 without written approval from
the Board of Supervisors.

27
(2) The Minister may delegate the authority to approve the acts of Board of
Directors as meant in Article 36 t the Board of Supervisors.
(3) Whenever required for the sake of the Corporation safety, the Minister may
stipulate other limitations to the Board of Directors.

Article 38

(1) To carry out task as meant in Article 30, unless decided different by the Board
of Directors, the President Director may and entitled to act for and on behalf of
the Board of Directors and representing the Corporation , with a condition that
all the acts of the President Director has been agreed in the Board of Directors
meeting.
(2) In the event of the absence or unavailability of the President Director due to
reasons not necessary proven to the third party, one of the Directors appointed
by the President Director will be entitled to act on behalf of the Board of
Directors.
(3) In the event where the President Director does not do any appointment, one of
the Directors will thus be appointed by and among the available member of the
Board of Directors, which will be entitled to act on behalf of the Board of
Directors.
(4) In the event where the appointment as meant in clause (3) does not carried
out, one of the Directors with the longest appointed member of the Board of
Directors will be entitled to act on behalf of the Board of Directors.
(5) In the case where the Director with the longest appointed member of the Board
of Directors is more than 1 (one) person, the Director as meant in clause (4)
which will be entitled to act on behalf of the Board of Directors will be the oldest
one.

Article 39

The Board of Directors will be entitled to appoint one or more person as his/her
representative to act a certain law by giving a special power as arranged in the
power of attorney.

28
 Article 40

(1) Distribution of tasks and rights of each member of the Board of Directors will be
determined by the Minister.
(2) The Minister may delegate his authority regarding distribution of tasks and
rights of the Board of Directors as meant in clause (1) to the Board of
Supervisors.

Paragraph 3
Meetings of the Board of Directors

Article 41

(1) All decisions of the Board of Directors will be taken in the meeting of the Board
of Directors.
(2) Decision of the Board of Directors may as well be taken outside the meeting of
the Board of Directors as long as all members of the Board of Directors agree
on the decided method and subject.
(3) In every meeting of the Board of Directors, minutes of meeting has to be
prepared, signed by the chairman of the meeting of the Board of Directors and
all members of the Board of the Directors attended, consists of discussed
matters and decided, including statements of disapproval from the Board of
Directors if any.
(4) Copy of the minutes of meeting as meant in clause (3) will be submitted to the
Board of Supervisors as information.

Article 42

(1) The Board of Directors will hold meetings when deemed necessary by one or
more member of the Board of Directors or upon written request from one or
more member of the Board of Supervisors or Minister with explanation on
matters to be discussed.

29
(2) The meeting of the Board of Directors will be held at the Corporation domicile,
at the business location of the Corporation, or other venues within the Republic
of Indonesia as determined by the Board of Directors.
(3) Invitation to the meeting of the Board of Directors will be done in written form
by the member of the Board of Directors entitled to represent the Corporation
and submitted not later than 3 (three) days prior to the meeting or in a shorter
time in emergency situation, not including the date of invitation and the date of
the meeting.
(4) In the meeting invitation, meeting agenda, date, time and venue has to be
stated.
(5) The meeting of the Board of Directors is valid and entitled to take any bounded
decision if attended by more than ½ (one half) of the total number of the
member of the Board of the Directors or its representative.
(6) In the event where the meeting of the Board of the Directors is held without any
written invitation, the meeting will be deemed valid and entitled to take any
bounded decision if attended by all members of the Board of Directors or its
representative.
(7) In the miscellaneous agenda, the meeting of the Board of Directors will not be
entitled to take any decision unless all member of the Board of Directors or its
legal representative attend and agree on the meeting agenda to become
miscellaneous agenda.

Article 43

(1) A member of the Board of Directors may be represented in the meeting only by
the other member of the Board of Directors based on written power of attorney
given for the specific need.
(2) A member of the Board of Directors may represent only one other member of
the Board of Directors.

Article 44

(1) Meeting of the Board of Directors will be chaired by the President Director.

30
(2) In the event where the President Director does not attend or not available, the
meeting of the Board of Directors will be chaired by a Director specially
appointed by the President Director.
(3) In the event where the President Director does not do any appointment, one of
the Directors appointed by and among the available members of the Board of
Directors will be entitled to chair the meeting of the Board of Directors.
(4) In the event where the appointment as meant in clause (3) is not carried out,
the longest appointed member of the Board of Directors will chair the meeting
of the Board of Directors.
(5)` In the case where the Director with the longest appointed member of the Board
of Directors is more than 1 (one) person, one of the oldest member of the
Board of Directors will be entitled to chair the meeting of the Board of Directors.

Article 45

(1) Decision in the meeting of the Board of Directors will be taken through
discussion to agree.
(2) In the event where the decision is unable to be taken through discussion to
agree, the decision will be taken through the common largest number of votes.
(3) Every member of the Board of Directors will be entitled to give 1 (one) vote and
1 (one) additional vote for the represented member of the Board of Directors.
(4) When the number of agree votes and disagree votes is equal, the decision of
the meeting will be in accordance with the chairman opinion by still paying
attention to the stipulation regarding the responsibilities as meant in Article 34
clause (2).
(5) In the event where the proposal is more than two alternatives and the result of
voting has not yet obtain one alternative with votes more than 1/2 (one half)
part of the total votes, re-selection will be carried out to two proposals with the
largest votes till one of the proposal can obtain more than 1/2 (one half) part of
the total votes.
(6) Abstain vote will be deemed as agree to the proposal raised in the meeting.
(7) Invalid votes will be deemed as unavailable and will not be counted in deciding
the number of votes raised in the meeting.

31
 Paragraph 4
Member of the Board of Directors’s Conflict of Interest

Article 46
(1) Member of the Board of Directors will not be entitled to represent the
Corporation when:
a. a case in front of court occurs between the Corporation and the member of
the Board of Directors concerned; and/or
b. member of the Board of Directors concerned has a contradictive interest
against the Corporation interest.
(2) In the event where the condition as meant in clause (1), the Corporation will be
represented by on of the Directors appointed from and by the member of the
Board of Directors beside the member of the Board of Directors as meant in
clause (1).
(3) In the event where the conflict of interest involves all the member of the Board
of Directors, the Corporation will be represented by the Board of Supervisors of
somebody appointed by the Board of Supervisors.
(4) In the event where the condition as meant in clause (3) occurs and the Board
of Supervisors is not available, the Minister will appoint one or more person to
represent the Corporation.
(5) In the event where all members of the Board of Directors or Board of
Supervisors have a conflict of interest with the Corporation, the Minister will
appoint other party to represent the Corporation.

Part Five
Supervision

Paragraph 1
Appointment and Discharge of the Board of Supervisors

Article 47

Corporation supervision will be carried out by the Board of Supervisors.

32
 Article 48

(1) Appointment and discharge of the member of Board of Supervisors will be

carried out by the Minister.
(2) Member of the Board of Supervisors may consist of the elements of the officials
under the Technical Minister, Minister of Finance, Minister, and chiefs of
department/ non department institutions which activities directly related to
those of the Corporation.
(3) The appointment of the member of Board of Supervisors from the elements as
meant in clause (2) will be carried out by keep paying attention to the condition
of the member of Board of Supervisors as stipulated under this Government
Regulation.

Article 49

(1) Those who can be appointed as member of the Board of Supervisors are
individuals who are capable to take legal actions and have never been
declared bankrupt or become a member of Board of Directors or Commissioner
or Board of Supervisors which have been found guilty to cause a company or
Public Corporation declared bankrupt or persons which have never been
punished due to criminal act which caused state financial loss..
(2) Beside the fulfillment of the criteria as meant in clause (1), those who can be
appointed as member of the Board of Supervisors are individuals who has the
integrity, dedication, knowledge in corporation management related to one of
the management function, suitable knowledge in the field of corporation
business, and able to provide sufficient time to carry out his/her job.
(3) The fulfillment of the conditions as meant in clause (1) has to be proven by a
declaration letter signed by the candidate of the Board of Supervisors and will
be kept by the Corporation.
(4) The appointment of a member of Board of Supervisors which does not meet
the conditions as meant in clause (1) will be legally cancelled starting from the
finding date of the conditions unfulfillment by other member of the Board of
Supervisors or Board of Directors.

33
 Article 50

(1) The number of member of Board of Supervisors will be determined by the

Minister according to the requirements.
(2) In the event where the member of the Board of Supervisors is more than 1
(one) person, one of the member of the Board of Supervisors will be appointed
as the Chairman of the Board of Supervisors.

Article 51

(1) Member of the Board of Supervisors will be appointed for an appointment

period of 5 (five) years and will be allowed to be reappointed for 1 (one)
appointment period.
(2) The appointment of the member of Board of Supervisors will not be at the
same time with the appointment of the member of the Board of Directors.

Article 52

(1) In the event of a vacuum position of a member of the Board of Supervisors, the
following stipulations will be arranged:
a. the Minister has to fill in the vacuum position not later than 30 (thirty) days
since the date of the vacuum position occurred.
b. during the period of the vacuum position of a member of the Board of
Directors and the Minister has not yet filled in the vacuum position of the
member of the Board as meant in letter a, Board of Supervisors will
appoint one of the other members of the Board or the Minister may
appoint another person to temporarily conduct the tasks of the vacuum
member of the Board with similar tasks, rights and obligations.
c. in the event where the vacuum position of a member of the Board of
Directors is due to the termination of the appointment period and the
Minister has not yet appointed a new member of the Board of the

34
 Supervisors, the terminated member may temporarily conduct the similar
tasks of the vacuum member of the Board of Supervisors concerned with
similar tasks and rights till the appointment of definitive member of Board
of Supervisors, and
d. the task executor of the member of the Board of Directors as meant in
letter b will receive honorarium and allowance or facilities similar to the
vacuum member of the Board, not including retirement compensation.
(2) In the event of vacuum of all positions of the Board of Supervisors, the
following stipulations will be arranged:
a. the Minister has to fill in the vacuum position not later than 30 (thirty) days
since the date of the vacuum position occurred.
b. during the period of the vacuum position of the Board of Supervisors and
the Minister has not yet filled in the vacuum position as meant in letter a,
the Minister will appoint one or more person to temporarily carry out the
tasks of the Board of Supervisors with similar tasks, rights and
obligations;
c. in the event of vacuum of all positions of the Board of Supervisors is due
to the termination of the appointment period and the Minister has not yet
appointed their successors, all the terminated members of the Board of
Directors may be appointed by the Minister to carry out their job as
members of the Board of Supervisors with similar tasks, rights and
obligations; and
e. the task executor of the member of the Board of Directors as meant in
letter b and letter c, other than Board of Supervisors will receive
honorarium and allowance and/or facilities similar to the member of the
Board of Directors, not including retirement compensation.

Article 53

(1) Any member of the Board of Supervisors has the right to resign from his/her
position by written notice to the Minister and copy to the other members of the
Board of Supervisors and the Board of Directors.

35
(2) The resign notice as meant in clause (1) has to be received by the Minister not
later than 30 (thirty) days prior to the effective date of resignation.
(3) In the event of resignation where the resign notice as meant in clause (2)
mentions the effective date of resignation is less than 30 (thirty) days of the
acceptance date of the notice, the effective resignation date will be counted 30
(thirty) days after the notice acceptance date by the Minister.
(4) In the event of resignation as meant in clause (2) does not mention the
effective date of resignation, the meant resigned member of Board of
Supervisors will automatically resign starting 30 (thirty) days after the
acceptance date of the resign.
(5) When the Minister does not decide in 30 (thirty) days or till the requested
effective date, the resigning member of the Board of Supervisors concerned
will be automatically resign in 30 (thirty) days after the date of acceptance of
resignation letter by the Minister.

Article 54

(1) Among members of the Board of Supervisors and between the members of
Board of Supervisors and members of the Board of Directors, no blood relative
relationship or marital relationship is allowed down to the third degree, neither
straight line nor side line.
(2) In the event where the situation as meant in clause (1) occurs, the Minister has
the right to discharge one of them.

Article 55

(1) Member of the Board of Supervisors is not allowed to hold double position as:
a. member of Board of Supervisors in another State Owned Business
Enterprise, Regional Government’s Business Enterprise, Private
Business Enterprise;
b. other positions in accordance with the under the legislated regulations;
and/or
e. other positions that might create conflict of interest.

36
(2) Member of the Board of Supervisors who holds double position as meant in
clause (1), will end his appointment period as member of the Board of
Supervisors starting from the date when the double positioning occurs.
(3) In the case where an individual who will be appointed as a member of the
Board of Directors is holding a position which is not allowed to be duplicated
with the position in the Board of Supervisors as meant in clause (1), he/she will
be obliged to resign from his/her old position not later than 30 (thirty) days
starting from the date of his appointment as a member of the Board of
Supervisors.
(4) Member of the Board of Supervisors who does not resign from his previous
position as meant in clause (3), his position as a member of the Board of
Supervisors will be terminated by the passing of 30 (thirty) days as meant in
clause (3).

Article 56

(1) Member of the Board of Supervisors is not allowed to become political party
committee, candidate for legislative member, legislative member, candidate for
Regional Chief, candidate for Vice of Regional Chief, Regional Chief, and/or
Vice of Regional Chief.
(2) Political party committee, candidate for legislative member, legislative member,
candidate for Regional Chief, candidate for Vice of Regional Chief, Regional
Chief, and/or Vice of Regional Chief are not eligible to be appointed as a
member of the Board of Supervisors.
(3) In the event where a member of the Board of Directors becomes a political
party committee, candidate for legislative member, legislative member,
candidate for Regional Chief, candidate for Vice of Regional Chief, Regional
Chief, and/or Vice of Regional Chief, he/she will terminate his/her position as a
member of the Board of Supervisors starting from the date of his/her
appointment as a political party committee, candidate for legislative member,
legislative member, candidate for Regional Chief, candidate for Vice of
Regional Chief, Regional Chief, and/or Vice of Regional Chief.

37
 Article 57

(1) A member of the Board of Supervisors may be discharged prior to the end of
his appointment period based on the Minister’s Decree with explanations of the
reasons.
(2) The discharge of a member of the Board of Supervisors as meant in clause (1)
will be carried out based on facts that the member of the Board of Supervisors
concerned among others:
a. is not capable to carry out his/her task properly;
b. does not follow the stipulations under the legislated regulations and/or
statute stipulations;
c involve in acts which cause loss to the Corporation and/or State;
d. conduct unethical and/or improper acts where as a member of the Board
of Supervisors of a state owned business enterprise is supposed to be
respected;
e. declared as guilty based on the court verdict under the fixed force of law;
or
f. resigns.
(3) Other than the discharge reasons of the member of the Board of Supervisors
as meant in clause (2), for the sake of the importance and objective of the
Corporation, the member of the Board of Supervisors may be discharged by
the Minister based on other reasons considered correct by the Minister.
(4) The plan to discharge a member of the Board of Supervisors as meant in
clause (1) will be informed to the member of the Board of Supervisors orally or
written by the Minister or the appointed official in charge.
(5) The decision of discharge due to the reasons as meant in clause (2) letter a to
letter d and clause (3) will be taken after the person concerned has been given
chance to defend himself/herself.
(6) The self defend as meant in clause (5) will be submitted in written form to the
Minister or the appointed official in charge not later than 14 (fourteen) days
since the date when the member of the Board of Supervisors concerned has
been informed as meant in clause (4).

38
(7) In the event where the discharged member of the Board of Supervisors has
defend him/herself or when being informed declares no objection on his/her
discharge plan, the time stipulation as meant in clause (6) is deemed fulfilled.
(8) While the discharge plan as meant in clause (4) is still under process, the
member of the Board of Supervisors concerned is obliged to carry out his/her
task as should be.
(9) The discharge with reasons as meant in clause (2) letter c and letter e is a
disgraced discharge.

Article 58

(1) The position of a member of the Board of Supervisors will be terminated when:
a. passing away;
b. end of appointment period;
c. discharged based of the Minister’s decree;
and/or
f. does not anymore fulfill the conditions as a member of the Board of
Supervisors based on the stipulations under this Government Regulation
and other legislated regulations.
(2) The stipulation as meant in clause (1) letter d includes but not limited to the
prohibited double position and resignation.
(3) Member of the Board of Supervisors who terminates prior to or after the end of
his/her position period, except terminates due to death will remain responsible
for all his/her acts which responsibility has not been accepted by the Minister.

Paragraph 2
Tasks, Rights and Obligations of the Board of Supervisors

Article 59

The Board of Supervisors will conduct supervision on the management policy, the
managing process in general either regarding the Corporation or the Corporation
business being carried out by the Board of Directors, advising the Board of Directors

39
including the supervision on the execution of the Corporation Long Term Plan, work
plan and the Corporation budget, stipulations of the Statutes and the Minister’s
Decree, and legislated regulations, for the sake of the Corporation importance in
accordance with the purpose and objective of the Corporation.

Article 60

In carrying out tasks as meant in Article 59, the Board of Supervisors is entitled to:
a. look at the books, letters and other documents, inspect the cash for verification
and other marketable securities, and inspect the Corporation’s assets;
b. enter the yard, building, and office being used by the Corporation;
c. request information from the Board of Directors and/or other officials regarding
all matters related to the Corporation management;
d. know all policies and acts done and will be done by the Board of Directors;
e. ask the Board of Directors and/or other officials under the Board of Directors
within the knowledge of the Board of Directors to attend the meeting of the
Board of Supervisors;
f. appoint and discharge the secretary of the Board of Supervisors, when deemed
necessary;
g. temporarily discharge a member of the Board of Directors in accordance with
the stipulations under this Government Regulation;
h. establish other committee other than audit committee, when deemed
necessary by paying attention to the capability of the Corporation;
i. assign experts for certain matters and in a certain period of time on the
Corporation cost, when deemed necessary;
j. manage the Corporation in a certain condition for a certain period of time in
accordance with the stipulations under this Government Regulation;
k. attend the Board of Directors’s meeting and provide opinions to the discussed
matters; and
l. conduct the authority of other supervision as long as it does not contradict the
legislated regulations, Statutes, and/or the Minister’s Decree.

40
 Article 61

In carrying out tasks as meant in Article 59, the Board of Supervisors will be obliged
to:
a. advice the Board of Directors in conducting the Corporation management;
b. observe and analyze and sign the Corporation Long Term Plan including work
plan and the Corporation budget prepared by the Board of Directors in
accordance with the stipulations under this Government Regulation;
c. provide opinion and suggestions to the Minister regarding the Corporation Long
Term Plan including Work Plan and the Corporation budget;
d. follow the activity development of the Corporation, provide opinion and
suggestions to the Minister regarding all matters considered important for the
Corporation management;
e. immediately report to the Minister when the Corporation performance tends to
decline;
f. observe and analyze periodic report and annual report prepared by the Board
of Directors and sign the annual report;
g. provide explanation, opinion, and suggestion to the Minister regarding annual
report, if required;
h. prepare annual work plan and include in the Corporation Work Plan and
Budget;
i. establish audit committee;
j. propose external auditor to the Minister;
k. prepare minutes of the Commissary Board meetings and store the copies;
l. provide reports regarding Supervision tasks being carried out during the recent
previous book year to the Minister; and
m. conduct the other obligations in the Supervision tasks and advising, as long as
they do not contradict the legislated regulations, Statutes, and/or the Minister’s
Decree.

Article 62

(1) In carrying out their tasks, the member of the Board of Supervisors will be
obliged to obey the Corporation Statutes and legislated regulations, and will be

41
 obliged to carry out the principles of professionalism, efficiency, transparency,
self standing, accountability, responsibility, and sensibility.
(2) In supervising the Corporation, the Board of Supervisors will carry out guidance
given by the Minister as long as it does not contradict the legislated regulations
and/or the Statutes.

Article 63

(1) Any member of the Board of Supervisors will be obliged with their good
intentions and full responsibility to carry out their task for the sake of the
Corporation importance and business in accordance with the legislated
regulations.
(2) Any member of the Board of Supervisors personally will be fully responsible for
the loss of the Corporation if the person concerned is guilty or careless in
carrying out his/her duties for the importance and business of the Corporation.
(3) In the event where the Board of Supervisors consists of 2 (two) or more
members of the Board of Supervisors, the responsibility as meant in clause (2)
will unlimitable borne by each member of the Board of Supervisors;
(4) The member of the Board of Supervisors will not be responsible for the loss as
meant in clause (20) when it can proven that:
a. Supervision has been done with good intention and carefully for the
importance of the Corporation and in accordance with the purpose and
objective of the Corporation;
b. no personal interest neither directly nor indirectly to the Board of Directors
management which has caused the loss;
and
c. advice has been given to the Board of Directors to avoid the loss or the
continuation of the loss.

Article 64

To assist the smoothness of the execution of tasks, the Board of Supervisors may
appoint a secretary of the Board of Supervisors on the Corporation cost.

42
 Article 65

When deemed necessary, the Board of Supervisors may get assistance from experts
in carrying out their tasks for certain matters and in a certain time period on the
Corporation cost.

Article 66

All cost required for the execution of the tasks of the Board of Supervisors will be the
responsibility of the Corporation and clearly included in the Work Plan and
Corporation Budget.

Paragraph 3
Meeting of the Board of Supervisors

Article 67

(1) All decisions of the Board of Supervisors will be taken in the meeting of the
Board of Supervisors.
(2) Decision of the Board of Supervisors may as well be taken outside the meeting
of the Board of Supervisors as long as all members of the Board of Supervisors
agree on the decided method and subject.
(3) In every meeting of the Board of Supervisors, minutes of meeting has to be
prepared, signed by the chairman of the meeting of the Board of Supervisors
and all members of the Board of the Directors attended, consists of discussed
matters and decided, including statements of disapproval from the Board of
Supervisors if any.
(4) The original of the minutes of meeting as meant in clause (3) will be submitted
to the Board of Directors to be stored and maintained.

Article 68
(1) The Board of Supervisors will hold a meeting at least once a month and in the
meeting the Board of Supervisors may invite the Board of Directors.

43
(2) Other than the meeting as meant in clause (1), the Board of Supervisors may
hold accidental meeting whenever needed by the Chairman of the Board of the
Supervisors, proposed by at least 1/3 (one third) of the total number of
members of the Board of Supervisors, or upon written request from the
Minister, with explanation on matters to be discussed.
(3) Meeting of the Board of Supervisors will be held at the Corporation domicile, at
the business location of the Corporation, or other venues within the Republic of
Indonesia as determined by the Board of Supervisors.

Article 69

(1) Invitation to the meeting of the Board of Supervisors will be done in written form
by the Chairman of the Board of Supervisors or member of the Board of
Supervisors appointed by the Chairman of the Board of Supervision and
submitted not later than 3 (three) days prior to the meeting or in a shorter time
in emergency situation, not including the date of invitation and the date of the
meeting.
(2) In the meeting invitation, meeting agenda, date, time and venue has to be
stated.
(3) Meeting invitation as meant in clause (1) is not required if all the members of
Board of Supervisors attended the meeting.
(4) The meeting of the Board of Supervisors is valid and entitled to take any
bounded decision if attended by more than ½ (one half) of the total number of
the members of the Board of the Supervisors or its representative.
(5) In the event where the meeting of the Board of the Supervisors is held without
any written invitation, the meeting will be deemed valid and entitled to take any
bounded decision if attended by all members of the Board of Supervisors or its
representative.
(6) In the miscellaneous agenda, the meeting of the Board of Supervisors will not
be entitled to take any decision unless all member of the Board of Supervisors
or its legal representative attend and agree on the meeting agenda to become
miscellaneous agenda.

44
 Article 70

(1) A member of the Board of Supervisors may be represented in the meeting only
by the other member of the Board of Supervisors based on written power of
attorney given for the specific need.
(2) A member of the Board of Supervisors may represent only one other member
of the Board of Supervisors

Article 71

(1) Meeting of the Board of Supervisors will be chaired by the Chairman of the
Board of Supervisors.
(2) In the event where the Chairman of the Supervisors does not attend or not
available, the meeting of the Board of Supervisors will be chaired by a member
of the Board of Supervisors specially appointed by the Chairman of the Board
of Supervisors.
(3) In the event where the Chairman of the Board of Supervisors does not do any
appointment, one of the member of the Board of Supervisors appointed by and
among the available members of the Board of Supervisors will be entitled to
chair the meeting of the Board of Supervisors.
(4) In the event where the appointment as meant in clause (3) is not carried out,
the longest appointed member of the Board of Supervisors will chair the
meeting of the Board of Supervisors.
(5)` In the case where the member of the Supervisors with the longest appointed
member of the Board of Supervisors is more than 1 (one) person, one of the
oldest member of the Board of Supervisors will be entitled to chair the meeting
of the Board of Supervisors.

Article 72

(1) Decision in the meeting of the Board of Supervisors will be taken through
discussion to agree.

45
(2) In the event where the decision is unable to be taken through discussion to
agree, the decision will be taken through the common largest number of votes.
(3) Every member of the Board of Supervisors will be entitled to give 1 (one)
vote and 1 (one) additional vote for the represented member of the Board of
Supervisors.
(4) When the number of agree votes and disagree votes is equal, the decision
of the meeting will be in accordance with the chairman opinion by still paying
attention to the stipulation regarding the responsibilities as meant in Article 63
clause (2).
(5) Abstain vote will be deemed as agree to the proposal raised in the meeting.
(6) Invalid votes will be deemed as unavailable and will not be counted in
deciding the number of votes raised in the meeting.

Part Six
Long Term Plan

Article 73

(1) The Board of Directors will be obliged to prepare the draft of Long Term Plan
which will be the strategic plan containing the goal and objective of the
Corporation to be obtained in the time period of 5 (five) years.
(2) The Draft of Long Term Plan which has been signed by both the Board of
Directors and the Board of Supervisors will be submitted to the Minister to be
legalized as the Long Term Plan.

Article 74

The Long Term Plan as meant in Article 73 clause (2) will at least contain:
a. evaluation of the execution of the previous Long Term Plan;
b. the Corporation position during the preparation of Long Term Plan;
c. used assumption in the preparation of Long Term Plan;
d. determination of mission, goal, strategy, policy, and work program of the Long
Term Plan; and

46
e. policy of the Corporation business development.

Part Seven
Work Plan and the Corporation Budget

Article 75

(1) The Board of Directors will be obliged to prepare the draft of Work Plan and the
Corporation Budget containing annual clarification of the Long Term Plan.
(2) The draft of Work Plan and Corporation Budget as meant in clause (1) which
has been signed with the Board of Supervisors will be submitted to the Minister
at the latest 60 (sixty) days prior to start of the fiscal year to be legalized.
(3) The draft of Work Plan and Corporation Budget as meant in clause (1) has to
be legalized by the Minister not later than 30 (thirty) days after the fiscal year
start.
(4) In the event where the draft of Work Plan and Corporation Budget has not been
legalized by the Minister as meant in clause (3), the draft of Work Plan and
Corporation Budget concerned will be deemed valid to be executed as long as
the stipulation of the preparation method of the draft of Work Plan and
Corporation Budget has been fulfilled.
(5) If the Corporation is declared healthy in 2 (two) consecutive years, the authority
of the Minister to legalize the Work Plan and Corporation Budget as meant in
clause (3) may be delegated to the Board of Supervisors.

Article 76

(1) Amendment to the legalized Work Plan and Corporation Budget as meant in
Article 75 clause (3) will be done by the Minister.
(2) The amendment proposal for the Work Plan and Corporation Budget which has
been signed with the Board of Supervisors will be submitted to the Minister to
get approval.

47
(3) The Minister’s approval as meant in clause (1) has to be given not later than 30
(thirty) days after the date of acceptance of the amendment proposal from the
Board of Directors.
(4) In the event where the draft of the amendment of the Work Plan and
Corporation Budget has not been legalized by the Minister within the time
period as meant in clause (3), the draft of amendment of the Work Plan and
Corporation Budget concerned will be deemed valid to be executed as long as
the stipulation regarding the preparation method of the draft of amendment of
the Work Plan and Corporation Budget has been fulfilled.
(5) In the event where the legalization of the Work Plan and Corporation Budget
has been delegated to the Board of Supervisors, the authority to approve the
amendment of Plan and Corporation Budget will be decided by the Board of
Supervisors.

Article 77

The Work Plan and Corporation Budget as meant in Article 75 should contain at
least:
a. Mission, business goal, business strategy, Corporation policy, and work/activity
program;
b. Corporation budget detailed to the budget of each work/activity program;
c. Financial projection of the Corporation and the Corporation subsidiaries;
d. Work program of the Board of Supervisors; and
e. other matters which require Minister’s Decree.

Part Eight
Reporting

Article 78

(1) The Board of Directors will be obliged to prepare periodical reports containing
the execution the work plan and the Corporation Budget.

48
(2) Periodical reports as meant in clause (1) comprise quarterly reports and annual
reports.
(3) Beside periodical reports as meant in clause (2), the Board of Directors may
eventually provide specific reports to the Board of Supervisors and/or the
Minister.
(4) The periodical reports as meant in clause (1) and the specific reports as meant
in clause (3) will be presented in the format, contents, and method of
preparation in accordance with the stipulation under the legislated regulations.

Article 79

(1) The Board of Directors will be obliged to submit quarterly reports to the Board
of Supervisors not later than 30 (thirty) days after the end of the meant
quarterly period.
(2) The quarterly reports as meant in clause (1) will be signed by all members of
the Board of Directors.
(3) In the event where a member of the Board of Directors does not sign the
quarterly report as meant in clause (2), a written explanation on the reason has
to be provided.

Article 80

(1) Not later than 5 (five) months after the closing of the fiscal year of the
Corporation, the Board of Directors will be obliged to submit annual report
including financial report which has been audited by the Minister to be
legalized.
(2) The Corporation annual report as meant in clause (1) will be signed by all
members of the Board of Directors and the Board of Supervisors.
(3) In the event where a member of the Board of Directors or the Board of
Supervisors does not sign the annual report as meant in clause (2), a written
explanation on the reason has to be provided.
(4) Annual report as meant in clause (1) should at least contain:

49
 a. annual calculation comprising end balance of the recently past fiscal year
and income statement of the fiscal year including explanation on the
documents, and report regarding unrecorded rights of the Corporation in
the book keeping among others the written off receivables;
b. joint balance and joint income statement of the joint corporation in one
group, beside the balance and income statement of each corporation;
c.report regarding the condition and the running of the Corporation including
the achievement;
d. main activities of the Corporation and changes during the fiscal year;
e. detail of problems occurred during the fiscal year which influence the
Corporation activities;
f. report regarding Supervision tasks executed by the Board of Supervisors
during the recently past fiscal year;
g. named of the members of the Board of Directors and the Board of
Supervisors; and
h. salary and other allowances for the members of the Board of Directors and
honorarium and other allowances for the members of the Board of
Supervisors.

Article 81

(1) Annual statement of the Corporation as meant in Article 80 clause (4) letter a
will be prepared in accordance with the Financial Accounting Standard.
(2) In the event where the Financial Accounting Standard as meant in clause (1)
can not be done as it should be, explanation with reasons has to be provided.

Article 82

(1) The Board of Directors will be obliged to submit the annual statement to the
external auditor appointed by the Minister upon proposal from the Board of
Supervisors to be audited.
(2) Audit report as the result of audit by the external auditor as meant in clause (1)
will be submitted to the Minister in written format to be legalized.

50
(3) In the event where the obligation as meant in clause (1) has not been fulfilled,
legalization of the statement will not be able to be carried out.
(4) Annual statement as meant in clause (1) after being legalized by the Minister
will be announced in daily newspaper.

Article 83

(1) Approval on the annual statement and legalization of the Corporation annual
statement will be done by the Minister.
(2) In the event of where the prepared annual statement document is in fact untrue
and/or misleading, the member of the Board of Directors and the Board of
Supervisors will each be unlimitedly liable to the detrimented party.
(3) The members of the Board of Directors and the Board of Supervisors will be
relieved of their responsibility as meant in clause (2) when the condition
concerned is proven to be not their fault.

Article 84

Legalization as meant in Article 83 will dispense the Board of Directors and Board of
Supervisors from their responsibility on the management and supervision being
carried out during the past fiscal year, as long as the action is stated in the annual
report and annual statement by paying attention to the stipulation under the
legislated regulation.

Part Nine
Internal Supervision Unit

Article 85

(1) The Corporation will be obliged to establish Internal Supervision Unit.

(2) The Internal Supervision Unit as meant in clause (1) will be led by a chief
responsible to the President Director.

51
 Article 86

The tasks of the Internal Supervision Unit are as the following:

a. to assist the President Director in conducting the Corporation operation and

financial, evaluate the Corporation control, management and execution,
including suggesting the improvements;
b. to provide reports regarding inspection result or the result of the execution of
the Internal Supervision Unit’s tasks as meant in letter a to the President
Director; and
c. to monitor further actions on the reported inspection result.

Article 87

(1) The President Director will submit the inspection result report of the Internal
Supervision Unit as meant in Article 86 letter b to all members of the Board of
Directors, to be acted further in the Board of Directors meeting.
(2) The Board of Directors will be obliged to pay attention and necessary steps
have to be taken immediately on all matters raised in every inspection result
report as prepared by the Internal Supervision Unit.

Article 88

Based on written request from the Board of Supervisors, the Board of Directors will
be obliged to provide explanation regarding the inspection result or the result of the
execution of the Internal Supervision Unit’s tasks as meant in Article 86 letter b.

Article 89

In carrying out their tasks, the Internal Supervision Unit will be obliged to maintain
the smoothness of tasks of other organization units in the Corporation in accordance
with each tasks and responsibilities.

52
 Part Ten
Audit Committee and Other Committees

Article 90

(1) The Board of Supervisors will be obliged to establish audit committee who will
work collectively and function to assist the Board of Supervisors in carrying out
their tasks.
(2) Establishment of audit committee will be carried out in accordance with the
stipulation under the legislated regulation.
(3) The tasks of Audit Committee are to:
a. assist the Board of Supervisors in ascertaining the affectivity of internal
control system and effectivity of the task execution of external auditor and
internal auditor;
b. evaluate the execution of activities and audit result carried out by the Internal
Supervision Unit and external auditor;
c. provide recommendations regarding the improvement of management
control system and its execution;
d. ascertain that satisfactory review procedure exists to all information issued
by the Corporation;
e. identify matters that need attention from the Board of Supervisors and other
tasks of the Board of Supervisors; and
f. carry out other tasks in accordance with the stipulation under the legislated
regulation and/or determined by the Board of Supervisors.

Article 91

(1) The Board of Supervisors may establish other committee to assist the tasks of
the Board of Supervisors.
(2) The establishment and task execution of the other committee will be carried out
in accordance with the stipulation under the legislated regulation.

53
 Part Eleven
Expenditure of Income and Spare Budget

Article 92

(1) Every fiscal year, the Corporation will be obliged to set aside a certain amount
of the net income to spare.
(2) The sparing of the net income as meant in clause (1) will be carried out until
the spare reaches at least 20% (twenty percent) of the Corporation capital.
(3) The spare budget up to the amount of 20% (twenty percent) of the Corporation
capital can only be spent to cover the Corporation loss.
(4) If the spare budget has exceeded the amount of 20% (twenty percent), the
Minister may decide to spend the surplus of the spare budget for the
Corporation needs.
(5) The Board of Directors will be obliged to manage the spare budget to get
income from the meant spare budget with good method by paying attention to
the stipulation under the legislated regulation.
(6) The income gained from the management of spare budget will be included in
the account statement.

Article 93

(1) The spending of net income of the Corporation including the spare amount for
the spare budget as meant in Article 32 will be determined by the Minister.
(2) The Minister may determine whether a part or the total net income of the
Corporation to be spend for dividend distribution and/or other distribution such
as tantiem for the Board of Directors and the Board of Supervisors, bonus for
the employees, or keep the net income in the Corporation spare among others
for the expansion of the Corporation business.

Article 94

When the account statement in a fiscal year shows the existence of loss which can
not be covered by the spare budget, the loss will still be stated in the Corporation

54
book keeping and the income of the Corporation will be deemed as none as long as
the stated loss has not been fully covered, without decreasing the stipulation under
the legislated regulation.

Part Twelve
Joint Venture, Merger, Taking Over, and Changing of the Legal Entity of the
Corporation

Article 95

(1) Joint venture, merger, taking over and changing of the legal entity of the
Corporation will be promulgated under the Government Regulation.
(2) Joint venture, merger, taking over and changing of the legal entity of the
Corporation will be carried out in accordance with the stipulation under the
legalized regulation.

Part Thirteen
Liquidation of the Corporation

Article 96

(1) Liquidation of the Corporation will be promulgated under a Government

Regulation.
(2) Liquidation of the Corporation will be carried out in accordance with the
stipulation under the legalized regulation.

Article 97

(1) In the event where the Corporation is liquidated, the Corporation will not be
able to do any legal action except when necessary to settle the Corporation
assets in the process of liquidation.
(2) The act of assets settlement as meant in clause (1) comprises:
a. registration and collection of the Corporation assets;

55
 b. determination of the method of the Corporation assets distribution;
c. payment to the creditors;
d. payment of the Corporation assets balance as the result of liquidation to the
Minister; and
e. other required acts to be carry out in the execution of the Corporation
assets settlement.

Part Fourteen
The Corporation Fiscal Year

Article 98

The Corporation fiscal year is the calendar year, except if determined different by the
Minister.

Part Fifteen
The Corporation Employees

Article 99

(1) The Corporation employees are the Corporation workers whose appointment,
discharge, rights, and obligations determined by the Board of Directors based
on mutual working agreement in accordance with the stipulation under the
legislated labour regulation.
(2) Stipulations of civil service and position ecehlonization for civil servants will not
be effective in the Corporation.

Article 100

In the event where an employee of the Corporation is appointed as a member of the

Board of Directors of the Corporation, the Board of Directors of other State Owned
Business Enterprise, or the Board of Directors of the Corporation Subsidiary which

56
previous status was State Owned Business Enterprise, he/she will be retired as the
Corporation employee with the highest rank in the Corporation, starting fro the date
of appointment as a member of the Board of Directors, and entitled for the highest
pension rights in the Corporation.

Article 101

(1) Employee of the Corporation is not allowed to become political party

committee, candidate for legislative member, legislative member, candidate for
Regional Chief, candidate for Vice of Regional Chief, Regional Chief, and/or
Vice of Regional Chief.
(2) In the event where the employee of the Corporation becomes political party
committee, candidate for legislative member, legislative member, candidate for
Regional Chief, candidate for Vice of Regional Chief, Regional Chief, and/or
Vice of Regional Chief, the employee concerned will be automatically
terminated from his/her position as employee starting from the date of his/her
appointment as political party committee, candidate for legislative member,
legislative member, candidate for Regional Chief, candidate for Vice of
Regional Chief, Regional Chief, and/or Vice of Regional Chief.

Part Sixteen
Issues of Obligations and Other Debt Securities

Article 102

The issue of obligations and other debt securities by the Corporation will be
promulgated by the Minister by paying attention to the stipulation under the legislated
regulation.

57
 Part Seventeen
Procurement of Goods and Services

Article 103

(1) Procurement of goods and services by the Corporation which use direct budget
from the State Income and Expenditure Budget either partly or wholly will be
carried out in accordance with the stipulations regarding the execution of the
State Income and Expenditure Budget.
(2) The Board of Directors of the Corporation will determine the method of goods
and services procurement, except for the goods and services procurement as
meant in clause (1), base on the general guidance promulgated by the Minister.

Part Eighteen
Income of the Board of Directors and the Board of Supervisors

Article 104

(1) The income amount and type of the Board of Directors and the Board of
Supervisors will be determined by the Minister by paying attention to the
stipulation under the legislated regulation.
(2) The determination of the income of the Board of Directors and the Board of
Supervisors will be carried out by considering the income, assets, target
achievement, financial capability, and the health level of the Corporation.
(3) Besides considering those as meant in clause (2), the Minister may as well
consider other relevant factors.
(4) Beside the income received as a member of the Board of Directors and the
Board of Supervisors as determined by the Minister, the member of the Board
of Directors and the member of the Board of Supervisors are prohibited to take
personal profit from the Corporation activities.

58
 Part Nineteen
The Corporation Documents

Article 105

The Board of Directors will be obliged to manage the Corporation documents in

accordance with the stipulations under the legislated regulation regarding
corporation documents.

Part Twenty
Writing Off and Handing Over the Corporation Assets

Article 106

Writing off and handing over the Corporation assets will be carried out in accordance
with the method stipulated under the Minister Regulation.

Part Twenty
One Bankruptcy

Article 107

(1) Submission of the proposal to declare the Corporation as bankrupt can only be
carried out by the Minister of Finance.
(2) In the even where the bankruptcy occurs due to the fault or carelessness of the
Board of Directors and the Corporation assets is not enough to cover the loss
due to the bankruptcy, each member of the Board of Directors will be
unlimitedly liable on the loss.
(3) Member of the Board of Directors who can prove that the bankruptcy is not due
to his/her fault or carelessness will not unlimitedly liable on the loss.

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 Part Twenty Two
Compensation

Article 108

Member of the Board of Directors and all the Corporation employees who due to
his/her acts against the law inflict loss to the Corporation will be obliged to recover
the inflicted loss.

CHAPTER IV
CLOSING PROVISIONS

Article 109

Upon the effectivity of this Government Regulation, the execution stipulations under
the Government Regulation no. 94 Year 1999 concerning Jasa Tirta II Public
Corporation (Perum) will remain effective as long as it does not contradict and has
not been replaced by a new stipulation based on this Government Regulation.

Article 110

Upon the effectivity of this Government Regulation, the Government Regulation no.
94 Year 1999 concerning Jasa Tirta II Public Corporation (Perum) shall be cancelled
and declared to be not longer effective.

Article 111

This Government Regulation in declared effective upon the date of legislation.

So that everyone may recognize, command this Government Regulation to be
announced in the State Gazette of the Republic of Indonesia.

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 Promulgated in Jakarta
Date January 8, 2010

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

signed

DR. H. SUSILO BAMBANG YUDHOYONO

Legislated in Jakarta
Date January 8, 2010
MENTERI HUKUM DAN HAK ASASI MANUSIA
REPUBLIK INDONESIA,

signed

PATRIALIS AKBAR

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF YEAR 2010 NUMBER 10

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