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Republic lic of Indone nesia ia Maintain tainin ing Stabi ability lity and Suppor ortin ting Growth wth, Mitigatin igating Covid id-19 Risk sk April 2020 About ut Investor or Relati ation ons Unit it of the Republic lic of

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

  2. Governmen nment t Measure ures to Mitigat igate e Covid-19 Risk Fiscal and Non Fiscal Stimuli Fiscal Stimuli Phase 1 Fiscal Stimuli Phase 2 1 Brought forward the launch of the Pre-Employment Card in 1 Relaxation of Income Tax (PPh Article 21) Bali, North Sulawesi and the Riau Islands Increased disbursements of the Noncash Food Assistance 2 Program (BPNT) from Rp150,000 to Rp200,000 for a six- 2 Relaxation of Income Tax on Imports (PPh Article 22) month period commencing March 2020 3 Provided a stimulus package for housing in the form of an Rp800 billion subsidy as well as a subsidy on down payments 3 Relaxation of Income Tax (PPh Article 25) totalling Rp700 billion 4 4 Relaxation of Value Added Tax (VAT) Restitution Provided incentives for domestic and international travellers 5 Reduced the air passenger service fee (PSF) by 20% for March-May 2020 Non-Fisca scal Stimuli Discounted the price of aviation fuel at airports located 6 1 Reduce and simplify restrictions on export activities to around nine travel destinations for March-May 2020 maintain export performance and competitiveness Subsidised or provided grants totalling Rp3.3 trillion to local 2 Reduce and simplify restrictions on import activities to ensure 7 governments affected by lower tax revenues food service the availability of raw materials activities 9

  3. Bank Indonesia’s Measur ures es to Mitigat igate e Covid-19 Risk To maintain Monet etary and Financial Mark rket et Stabi bility Measu sure res s Launched on March ch 18-19, 19, 2020 Measu sure res s Launched ed on March ch 2, 2020 Strengthening the intensity of triple intervention policy to 1 Strengthening the intensity of triple intervention policy to 1 maintain rupiah exchange rate stability in line with the currency's maintain rupiah exchange rate stability in line with the fundamental value and market mechanisms. currency's fundamental value and market mechanisms Extending the SBN repo tenor to 12 months and providing daily 2 2 auctions to loosen rupiah liquidity in the banking industry. Reducing the foreign currency reserve requirement ratio for conventional commercial banks from 8% to 4%, effective 16 th March 2020. Increasing the frequency of FX swap auctions for 1, 3, 6 and 12- 3 month tenors from three times per week to daily auctions in order to ensure adequate liquidity. 3 Reducing the rupiah reserve requirement ratio by 50bps for Strengthening foreign currency term deposit instruments in order 4 banks engaged in export-import financing activity in to enhance foreign currency liquidity management in the coordination with the Government. domestic market. Expediting the enforcement of domestic vostro rupiah accounts 5 for foreign investors as underlying transactions for Domestic NDF, 4 Expanding the types of underlying transactions available to thus increasing hedging alternatives against rupiah holdings. foreign investors as hedging alternatives against rupiah Expanding the incentive of a 50bps looser daily rupiah reserve holdings in Indonesia. 6 requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors. 5 Global investors may utilise global and domestic custodian 7 Strengthening payment system policy to support COVID-19 banks for investment activity in Indonesia. mitigation efforts . Source: Bank Indonesia 10

  4. Governm rnmen ent t Measure ures to Miti tigat gate Covid id-19 Risk Upda dates es on Stimuli 1 and 2 Update No StimuliPolicy STIMULI 1 1 Front-loading of Government Accelerating the process of disbursing Capital Expenditure, accelerating the Spending appointment of treasury officials, accelerating the implementation of tenders, etc. Accelerating disbursement of social assistance spending. Transfer to Regional and Village Funds. 2 Expansion of Staple Food Cards to Has been carried out by the Ministry of Social Affairs as of March 2020. increase the benefits (IDR 150 thousand / month → IDR 200 thousand / month) 3 Expansion of the target for housing interest  Currently in the process of drafting the implementing regulations The revision of DIPA is subsidies with an additional house volume still in the process based on the proposal of the Ministry of Public Works and Public of around 175 thousand housing units Works  The contract with the Implementing Bank is planned for April 2020 STIMULI 2 1 Relaxation of Income Tax Article 21 Income Tax Borne by the Government (DTP), exemption of Article 22 Income Tax Import, Reduction of Income Tax Article 25, VAT refunds are accelerated 2 Simplification and Acceleration of the Simplification and reduction of export and import restrictions (manufacturing, food Exim Process and medical support), acceleration of the export-import process for reputable traders, and export-import services through the National Logistic Ecosystem. Source: Coordinating Ministry for Economic Affairs 11

  5. Econom nomic ic Po Polic licies ies Taken en in Respon onse e to Covid-19 Pandem demic ic as of Apri ril 2020 • Government’s policy related to COVID-19 pandemic comprises of four safety nets. • Lates test Update 22 22/4: Expansion of business classification coverage for Fiscal Incentives. • The economic safety net and national economic recovery measures, along with other economic stimulus that focus on maintaining purchasing power and ensuring business continuity (minimizing layoffs), will minimize the spill-over effect of the COVID-19 pandemic hence limiti ting the impact to to the banki king system em. Nationa nal Econom omic Recov over ery Econom omic c Safety ty Net Social Safety ety Net Health th Safety ty Net Measur ures es Budget et Support ort: Rp75 5 T Budget et Support rt: Rp110 T Budget et Support ort: Rp150 50 T Budget et Support ort: Rp70, 0,1 1 T • Program Keluarga Harapan • Fiscal Incentives (Elimination • Government Regulation in Lieu of • BPJS contribution subsidies of Income Taxes & Imported Law No. 1 Tahun 2020 • Staple Products • Medical Personnel Incentives Goods Taxes, Corporate Tax • Pre-employment Card • Local Currency Settlement (LCS) • Death Compensation for Reduction and the • Recovery Bond Health Workers • Labor Intensive Program Acceleration of VAT Restitution Electricity tariff discount for • Purchase of Medical • • Non-Fiscal Incentives 450 VA and 900 VA (Simplification and Equipment (PPE, ventilators, masks, etc.) Acceleration of the Exim • Housing Incentives for MBR Process) • Referral Hospitals • Religious Holiday Bonus • Relaxation of Community Rp405, 05,1 1 trillion on • Price Stabilization/Market Credit (KUR) Operations (USD24. 24.6 6 billion on) Bank Indonesia Policy • Total Budget et Alloc ocation on • Ministry/Agency Budget • OJK and Capital Market Adjustment Policies Source: Coordinating Ministry for Economic Affairs 12

  6. Governm rnmen ent t Measure ures to Miti tigat gate Covid id-19 Risk Provision of Economic Stimulus for the Real Sector Safety Net COVID-19 IMPACT CT IMPACT CTED GROUPS PS POLICY CY MAIN POLICI CIES Social • Fatal threats, health problems INDIVIDUAL/ Safety ty • Job Loss, Decreased Income HOUSEHO HOLD Net • Declining purchasing power, bad credit Allowance / Postponement / • Decreased activities, business difficulties 1 Withholding Tax (Article 21/22/25 MSMEs • Lack of sales, business closures ** Income Tax, VAT) • Bad Credit, unable to pay obligations Loan Allowance / Delay Payment, 2 * Credit Restructuring Real • Declining Demand, Shrinking sales Relaxation of Rules and Licensing, Sector tor CORPO PORATIONS • Reduced production, employee layoffs 3 Ease of Doing Business and Safety ty • Loss / Bankruptcy / Closing, Bad Credit Investment * Net Process and Service Acceleration, • Raw material supply disruption, 4 Administrative Reduction and Costs * production decline • Declining demand, business closure, REAL SECTOR Special Credit Facilitation for layoffs 5 Increasing Working Capital and • Cash-Flow Difficulties, Credit Maintaining Business Restructuring • Liquidity issues, Decreasing solvency Financial • Pressure on the money market, capital FINAN ANCI CIAL AL SECTOR Sector markets, exchange rates Safe fety Net • Threats to financial sector stability * : Expans nsion on of the Policy cy in the 2nd Stimulus * Source: Coordinating Ministry for Economic Affairs : Expans nsion on of Fisca cal Incenti ntives in PMK-23/2020 13

  7. Econom nomic ic Stim imulu ulus Program grams for r MSMEs Es and Cooperat erativ ives es 1. 1. Inter eres est subsidy dy and recap guarant ntee ee relief programs (KUR, PMN, Pegadaian)  Inclusive part of the Econom omic Safe fety Net (Rp Rp. 70.1 T – Cluster III)  Inter eres est subsidy and installmen ent paymen ent following the KUR scheme  Facilitating Fintech to become chanel elling ng agent nt to access KUR and PIP  The fiscal impact for the Payment of Interest Subsidies and Principal Delays : KUR = Rp Rp 6.1 T (19.5 million Customers); o PNM = Rp Rp 2.8 T (6.5 million Customers); o Pegadaian = Rp Rp 5.3 T (10 million Customers). o 2. 2. The Saving ng and Loan Cooper eratives es (KSP) P) is facilitated through LPDB, where the amount and total is taken from the budget et realloc ocation on and refo focus ussing ng of the Ministry of Cooperatives and SMEs. 3. Financing for rural banks, PNM, Pe Pegada daian (pawnshop hops) is accessed through the Financial Safe fety Net that is being prepared (draft of Cluster IV GR is under process) 4. Exemption of MSME income e tax (to 0%) for a period od of 6 mont nths hs: Tariff decrease in MSME's Final Income Tax from 0.5%  0% (fiscal impact: Rp. 2.4 T) 5. 5. The use of Warun rung (stalls) for food distribution is coordinated by Ministry of Social Affairs and OJK through the Laku ku Pandai program. Source: Coordinating Ministry for Economic Affairs 14

  8. Econo nomic ic Stimu muli i for the Manu nufacturi uring ng Industry y Sect ctor or (Stimu imuli i 2) Tax Incentives: Article 21 Income Tax, Article 22 Import Income Tax, Article 25 Income Tax, VAT Finance Ministerial Regulation 23 23/PM PMK.03 03/2020 on March 21, 2020 concerning PMK-23 23 Tax Incen entives fo for Taxpayer ers Affec fected ed by by Corona Virus Outbr brea eak, effective on April 1, 2020 Po Policy Related ed Sector Impact 1. Article 21 Income Tax will be Borne e by by • Specific manufacturing sectors (440 KLU) Provide additional income for workers in the the Gov over ernm nmen ent for 6 months for • KITE Taxpayers manufacturing sector to maintain workers with a gross income of not • KITE IKM Taxpayers purchasing power. more than 200 million rupiah 2. 2. Exemption on from Income Tax Article 22 • Specific manufacturing sector (102 KLU) The stimulus for the industry is to maintain Import for 6 months • KITE Taxpayers the pace of imports. KITE IKM Taxpayers • 3. 3. Reduc uction on of Income Tax Article 25 by • Specific manufacturing sector (102 KLU) Domestic economic stability can be 30% for 6 months • KITE Taxpayers maintained and exports are expected to • KITE IKM Taxpayers increase. 4. VAT refunds are acceler erated ed for 6 • Specific manufacturing sector (102 KLU) Through the accelerated refunds, Taxpayers months for: • KITE Taxpayers can optimize cash management. - Exporters (without restrictions) KITE IKM Taxpayers • - Non-Exporters (maximum refund value of 5 billion) Source: Coordinating Ministry for Economic Affairs 15

  9. Proposed ed Expans nsion ion of Fiscal al Incen enti tives es for the Real Sector or Expansion of PMK-23: Addition of Sectors Other than Manufacturing Industries in PMK-23/2020 Number of No KBLI Categ egory ory proposed KBLI NOTE: 1 Agriculture, Forestry, and Fisheries 100 Total number of KBLI in PMK-23: 440 KBLI 2 Mining and excavation 17 Number of additional proposal: 761 KBLI 3 Processing Industry 127 (including proposed 118 KBLI for incentives 4 Procurement of electricity, gas, steam / hot water, and cold air 3 expansion 5 Water Management, Waste Water Management, Waste Management and 1 Total combined KBLI: 1.083 83 KBLI Recycling, and Remediation Activities 6 Construction 60 7 Wholesale and retail trade; Car and Motorcycle Repair and Maintenance 193 8 Transportation and Warehousing 85 9 Provision of Accommodation and Provision of Food and Beverages 27 10 Information and communication 36 11 Financial and Insurance Activities 3 12 Real Estate 3 13 Professional, Scientific and Technical Activities 22 14 Rental and Leasing Activities without Option Rights, Employment, Travel 19 Agencies and Other Business Supports 15 Education 5 16 Health and Social Activities 5 17 Arts, Entertainment and Recreation 52 18 Other Services 3 Total 761 761 19 19 Compani nies es at Bond nded ed Zone V Addition of “ Companies es at Bonded ed Zone ” in PMK-23. Source: Coordinating Ministry for Economic Affairs 16

  10. Governm rnmen ent t Measure ures to Miti tigat gate Covid id-19 Risk Government Regulation In Lieu of Law No.1 2020 Regul ulates es two topics: (1) Nationa onal Budget et (APBN) PBN) and (2) Financial Sector Po Policy National Budget t (APBN) Financial Sector tor Policy 1. Relaxation Deficit exceeds 3%, but starting in 2023 it returns 1. Improved Coordination among KSSK members to the maximum level of 3%. 2. Relaxation is related to the allocation/reallocation of 2. Provide the necessary authority to 4 institutions to prevent a expenditure between institutions, between functions, and crisis (forward looking) in the KSSK forum for example to issue instruments, BI buys SUN on the primary market, between programs and mandatory spending. lending to LPS and OJK may request a merger or 3. Relaxation of allocation / reallocation of Regional Government consolidation of Financial Services Institutions. Expenditures. 4. Lending to LPS. 3. Foreign exchange management (LLD) management for 5. Issuance of SUN and SBSN can be purchased by BI, BUMN, residents corporate investors and / or retail investors. 4. Increase public confidence without causing moral hazard. 6. Use of alternative budget sources for example SAL, education endowment funds, and funds managed by the Public Service Agency. 7. Taxation Policy: a) Decrease in Corporate Income Tax Rates gradually to 20% starting in 2022; b) Taxation Incentives in the Capital Market for public ownership <40%; c) Taxation of Electronic Transactions; d) Extension of tax administration time; e) Customs facilities in the context of COVID-19. Source: Coordinating Ministry for Economic Affairs 17

  11. Governm rnmen ent t Measure ures to Miti tigat gate Covid id-19 Risk Budget Refocusing Policy I. I. Presiden ential Reg egul ulation on (Per Perpres es) ) No 7/2020 on Taskf kfor orce e to Mana nage e COVID-19 Outbrea eak → Rene newed ed throug ough Pres esiden dential Reg egul ulation on (Per Perpres es) ) No No 9/2020 1. Answer to the President → Director (Chair: Coordinating Minister for Economic Affairs ) and Implementer (Chair: Head of Indonesian National Board for Disaster Management), focusing on accelerating the mitigation of COVID-19 through synergy between ministries and government 2. Funding comes from the state budget, regional budget, and other legal sources II. II. Presiden ential Instruction on (Inpres es) ) No 4/2020 concerni ning ng Refocusing of Activities, Reallocation of Ministry/Ag Agen ency Budg dget, and d Procurem emen ent of Goods ods and Services es in the e Framewor ork k of Mitigating ng COVID-19 Outbreak k and Mini nist stry of Financ nce Circul ular (SE) No 6/2020 on on Refocu ocusi sing ng Activity and d Reallocation n of Ministry/Agen ency Budg dget et in the e Framewor ork of Mitigating ng COVID-19 Outbrea eak k 1. Minister / Head of Institution prioritizes the use of budget allocations for the acceleration of mitigating COVID-19 outbreak in accordance with COVID-19 Handling Protocol 2. Done through a budget revision mechanism (done quickly, simply and accountably) III. III. Po Policy to suppor ort effor orts to adjus ust region onal alloc ocation ons and relax trans nsfers fo for handl ndling Covid-19 19 1. Minister of Finance Regulation (PMK)19/2020 concerning Distribution and Use of DBH, DAU, and DID TA 2020 in the context of COVID- 19 Countermeasures; 2. Minister of Finance Decree (KMK) 6/2020 concerning Distribution of Physical DAK on Health and BOK in the framework of Prevention and/or Handling of COVID-19 3. Permendagri 20/2020 on acceleration of COVID-19 Mitigation in the Scope of Regional Government Source: Coordinating Ministry for Economic Affairs 18

  12. Indon ones esia ia Remains ins the Investme tment nt Desti tinati nation n of Choic ice The Economist: ist: Indonesia sia rounds ds out the top five of Asia ian economie ies s that t can look Indonesia sia Enjoys s Large Investm stments ts Rela lativ tive to Peers s within thin the Regio ion 2 forwa ward to increased d investm stment t spending ding. (January 2019) 1 40 China 58.3 35 India 48.7 Indonesia 48.1 vestment / GDP (%) 30 Vietnam 39.8 25 Singapore 39.2 Thailand 38.5 20 Japan 36.4 15 Australia 36.4 Total Inve Malaysia 34.2 10 Hong Kong 32.1 31.31 31.27 31.78 34.47 34.52 34.55 23.61 22.48 23.14 26.94 27.21 29.56 24.99 24.95 25.31 26.57 26.34 26.26 Philippines 31.9 5 South Korea 26.3 0 Taiwan 25.2 India Indonesia Malaysia Philippines Thailand Vietnam Myanmar 22.5 2018 2019e 2020e 0 10 20 30 40 50 60 70 UNCTA TAD: Indo donesia sia is liste sted d in the top 20 host t econo nomie ies s base sed d on FDI inflo lows, s, 2017 JBIC: Among ASEAN AN countr trie ies, s, Indo donesia sia is one of the most st preferred d place for busin siness ss and d 2018 (June 2019) 3 investm stment t (Decembe ber 2019) 4 300 India 47.8 China 44.6 250 Vietnam 36.4 2018 2017 200 Thailand 32.9 Billion USD Indonesia 25.2 150 US 23.0 Philippines 11.9 100 Mexico 11.6 (x) = 2017 ranking Myanmar 10.1 50 Malaysia 10.1 0 Taiwan 4.5 Korea 3.7 Singapore 3.7 Germany 3.5 % of surveyed who consider each country has promising prospects Australia 3.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 1. Source: The Economist – Asia Business Outlook Survey 2019 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2019 2. Source: IMF World Economic Outlook, Database October 2019 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey) 19

  13. Mediu ium-Ter erm National tional Develop lopmen ent t Plan n (RPJMN) MN) 2020 2020-2024 President’s Vision: "The Establishment of an Advanced Sovereign, Independent and Personality Based on Mutual Coop opera eration" on". President ‘s Missi sion ons Top p 5 Presidential tial Prioriti ties 7 7 RPJMN MN Developm opment Agenda Improving the Qual ality of the Indonesian an Labour HR HR 1 1 Force Strengthening Economi mic Resilience to Develop lopment ent Achieve ve Superior Economi mic Growth Achievi ving Productive, , Independent and 2 Comp mpetitive Economi mic Structure Developing More Remo mote Regions to to Reduce e Economi mic Gap aps and Improve Equality Infrastruc ucture 2 Attaining Equitable and Prosperous Na National 3 Develop lopment ent Devel velopme ment Imp mproveme ment of Qual ality and Achieving Sustai ainab able Envi vironme mental 4 Comp mpetitiveness of the Lab abourForce Clima mate Regula ulation ion 3 Devel veloping Cultural al Progress Simp mplif ific ication on 5 Engag aging in Mental al Revo volution Reflecting the Nat ation's Personal ality and Culture Devel velopme ment Deve velopinga a Dignified and Trustworthy Legal 6 SystemFree from Co Corruption Strengthening Infras astructure to Simpli lific icatio ionof 4 Support Economic Devel velopme ment Bureauc ucracy Protection of All Nations and and Improve ve Basic Servi vices Provision of Security to All Citize zens 7 Conservation of Environment, Supporting Climat mate Chan ange, and Enhan ancing Disaster Resilience Attai aining Good, , Effective, , and Economic ic 8 5 Reliable Governance Tran ansformation on Enhan ancing Political al, Legal, Defense and Stab ability and Tran ansformi ming Public Servi vices Achievi ving Synergy of Gover vernme mental al 9 Frame mework with the Regional Gove vernment Source: Coordinating Ministry for Economic Affairs 20

  14. Simplify lifying ing Regulations lations throu ough gh Omnib ibus us Laws Omnibu bus s Laws s Gro roup a Dive verse rse Range ge of Issu sues es into o Legi gisl slation, on, Aimed ed at Crea eating g Jobs s and Empoweri ering g SMEs. s. Omnibus Law Priori ority Sectors ors Financial T axes Labour Sector 1 6 Pillars of Omn mnibus Law Perpaj ajak akan (Taxa xation) 3) Personal Taxpayer 5) Equity of Business 1) Investment Funding 2) Territorial System 4) Taxpayer Compliance 6) Taxation Facility Investment 11 Clusters of Omn mnibus Law Cipta Lapangan anKerja (Job Creat ation) 7) Government Administration 10) Government Investment and 4) Ease, Empowerment and Protection of MSMEs 1) Simplification of Licensing Projects 5) Ease of Doing Business 8) Imposition of Sanctions 2) Investment Requirements 11) Economic Zone 3) Employment 9) Land Acquisition 6) Research and Innovation Support  Following the inauguration of his second presidential term in October 2019, President Joko Widodo announced his administration’s plans to continue regulatory reform by focusing on initiatives such as developing a dynamic and qualified workforce, promoting industry cooperation through technology, further enhancing infrastructure development and economic reform as well as simplifyingregulationsand bureaucracy.  To achieve such ends, President Widodo’s Government subsequently prepared three bills of omnibus laws, namely an omnibus bill on job creation, an omnibus bill on development and strengtheningthe financial sectorand an omnibusbill on tax provision.  Omnibuslaws refer to laws that groupdiverseand unrelatedissues which are drawn into a bill which is accepted in a single vote by a legislature. 1 Under discussion Source: Coordinating Ministry for Economic Affairs 21

  15. The Econ onom omic ic Po Polic licy Packages ages “To improve national industry competitiveness, export and investment to generate significant economic growth” Harm rmonizing g Regulat ations Simplifying g Bure reau aucrat ratic Process Ensuring g Law Enforceability Phase e I (9 Sept ’15) Phase e IX (27 7 Jan ’16) Improving national industry competitiveness Accelerating electricity generation, stabilizing meat prices and improving rural – urban logistics sector Phase e II (29 Sept ’15) Easing permit requirement and simplifying export proceeds Phase e X (11 Feb ’16) requirement Revising the Negative investment List and improving protection Phase e III (7 Oct t ’15) for SMEs Financial services facilitation, export financing and elimination of Phase e XI (29 Mar ’16) business unnecessary burden Stimulating national economy through facilitation to SMEs and Phase e IV (15 Oct t ’15) industries Social safety net and betterment of people welfare Phase e V (22 Oct t ’15) Phase e XII II (28 28 Apr ’16) Improving industry and investment climate through tax incentives and Improving Indonesia’s rank on Ease of Doing Business (EODB) deregulation on sharia banking Phase e XIII (24 Aug ’1 6) Phase e VI (5 Nov ’15) Low Cost Housing for Low-Income Communities Stimulating economic activities in border areas and facilitating strategic commodities availability Phase e XI XI V (10 Nov ’1 6) Roadmap for E-commerce Phase e VII (7 De Dec ’15) Stimulating business activities in labor-intensive industries nation-wide Phase e XV (15 Jun ’1 7) through incentives in the form of accelerating land certification process Improving logistics for individuals Phase e XVI (1 (16 Nov ’1 8) Phase e VIII (21 De Dec ’15) Improving the competitiveness and domestic economy Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries In addition on to the 16 Policy y Packa kages es, on Augus ust 31, 2017 the Gover ernm nment ent has issued ued a Presidenti ential Regul ulation on No.91/ 91/2017 2017 for enhanc ncing ng busines ness licens ense e service e stand ndard Source: Coordinating Ministry for Economic Affairs 22

  16. Improving ing the Competit etitiv iven enes ess and Domes esti tic Econ onom omy th Econom The e 16 th onomic Policy y Package ge has been launched hed TAX HOLIDA DAY EXPANSI SION EXPORT PROCEEDS DS (DHE) SCHEME Background ound In order to further increase investment value in Indonesia, there is a need for expansion of sector and standard classification of Indonesian Business Fields (KBLI) that are given tax holiday, complemented with a process simplification to receive the tax holiday according to the Online Single Submission (OSS). Objec ectives es and benefi efits 1) Increasing investment and strengthening the industrial sectors from the downstream to the upstream through the expansion of the business sector, KBLI’s pioneer industries, and Special Economic Zones (SEZ) that can receive tax holiday facilities Tax Rates es on Deposit 2) Increasing the process of convenience of filing process and Tax Rates es on Depos osit Inter eres est Incom ome Inter eres est Incom ome tax holiday facilities provision Source: Coordinating Ministry for Economic Affairs 23

  17. Other er Progr gres ess on Econom nomic ic Po Polic icy Packages kages Deve evelopment ent of Fair, Simpl Fa plifi fied ed & & Spesi esial Econ onom omic Zone e (SEZ) Pro roject ectabl ble e Wage e Syst stem em 29 Provinces have set 2016 Minimum Wage Investment commitments in SEZ up to 2017 System in accordance to the Government reach 41 T, with 3 hour licenses already Regulation (GR) No. 78/2015 applied in 4 SEZ’s Administrators in 2017 Indu dust strial Zone Deregul egulation on on Logistics cs Sector 52 Bonded Logistic Center has been • The Provinces of Central Java proposed 3 launched to support various industries IZ’s : Kendal, Demak, and Ungaran • Pharmaceutical IZ in Bitung (North Sulawesi) in 2017 24

  18. Investm tmen ent t Incentiv ntives es to Boost Industr try Sector or BUSINESS NESS EXPANSI SION INDUSTR TRIAL ZONE Tax allowa owance • • VAT exemp emption ion on import or delivery of capital goods, • Exemp emption ion or relief ief of impor ort duty on capital good ods, , machin iner ery or equip uipmen ment • Impor ort Duty exem emption on on machineries/goods/materials, for production purposes that can not be produced domestically; • Tax Allow lowance e and Tax Holi liday Exem emption ion or reli lief ef of impor ort duty on raw mater eria ials ls or auxil ilia iary mater erial l for • production purposes for a certain period of time and certain conditions; Exem emption ion or suspen ension ion of VAT on the e import of capit ital l good ods or • machiner inery or equip uipment ent for production purposes that have not been FREE TRADE ZONES S AND PORTS produced domestically for a certain period of time; Accelerate dep eprec ecia iatio ion or amor ortiz ization ion (part of tax allowance); and • Prop oper erty tax reli lief ef, especially for certain business sectors in certain regions; Exemp emption ion of: • Combine with Online Single Submission (OSS) Impor ort Duty • • VAT • Luxury Good ods Sales es Tax (PPnBM) • Custom oms duty • MICRO, SMALL, MEDIUM M ENTERPRISE SES (MSMES) PIONEER INDUSTR TRIES Decrea easing ing MSMEs Es Tax from 1% to 0.5% of gross revenue Tax holi liday of corporate income tax in a certain amount and time SPECIAL ECONOMI MIC ZONE E-COMME MERCE • No coll llection ion of VAT and Luxury Good ods Sales les Tax (PPnBM), ), Sales from customs areas for non non-small l entrepreneurs through the • • Custom oms tax exemp emption, ion, market place will be subject to 0.5% incom ome e tax and 1% VAT • Tax Allow lowance e and Tax Holi liday, Sales from customs areas for small ll entrep epren eneu eurs through the market • • Suspen ension ion of Impor ort Duty, place will be subject to 0.5% incom ome e tax • 0% Impor ort Duty for goods produced using local components of a certain level Source: Coordinating Ministry for Economic Affairs 25

  19. New Tax Holida day Po Polic licy* to boost ost indust stry y sector BEFORE RE PROVISI ISION AFTER ER Pioneer Industry with minimum investment value of 500bn Rupiah Pioneer Industry with minimum investment value of 1 trillion Rupiah (minimum investment value of 500bn Rupiah for telecommunication sector) Applied to 17 industry groups: (i) upstream base metal; (ii) oil and gas refinery; (iii) petrochemical (oil, gas, Applied to 8 industry groups: or coal based); (iv) non-organic base chemical; (v) organic base chemical; (i) upstream basic metal industry; (ii) oil and gas refinery (vi) pharmaceutical materials; (vii) semiconductor and other components; industry; (iii) organic basic chemicals industry; (iv) machinery (viii) communication devices components; (ix) medical devices industry; (v) plantation, forest, and fishery products Taxpayer er components; (x) machine manufacturing for industry; (xi) machine main processing industry; (vi) telecommunication, information and components manufacturing; (xii) robotic components manufacturing; (xiii) communication industry; (vii) marine transportation; and (viii) ship components manufacturing; (xiv) airplane components manufacturing; economic infrastructure (xv) train components manufacturing; (xvi) power plants; and (xvii) economic infrastructure 10 – 100% 100% (single rate) Corporate te Income e Tax (CIT) reduction rate 5 – 20 years depends on the investment value (in IDR): • 5 – 15 years; or 1. 500Bn – 1Tn : 5 years 4. 15Tn – 30Tn : 15 years • Can be extended to 20 years; subject to MoF 2. 1Tn – 5Tn : 7 years 5. ≥ 5Tn : 20 years Conces ession ion period iod discretion 3. 5Tn – 15Tn : 10 years Not available 50% CIT reduction for the next 2 years Transit ition on Tax allowance for business expansion can be provided Tax allowance not provided with terms and conditions applied Afte ter Tax Holiday *) MoF has issued a new Tax Holiday policy through Regulation No. 35/PMK.010/2018 (PMK-35) dated 4 April 2018. Source: Coordinating Ministry for Economic Affairs 26

  20. Enhanc ancing ing Busine ness Licen ense e Servic vice e Standar ndard Presi siden dential Re Regulation on to Ac Accelera erate e Ease se of Doing g Busi sines ess s has been en launched hed Improve efficient, streamlined, & Provide business licensing Overcome the barriers to integrated business license service process assurance in terms of doing business in standards the costs and lead times Indonesia ls icy Goals 2 4 6 3 5 1 Polic Accelerate the business Increase coordination & synergy Implement integrated licensing process between central & regional licensing process (single submission) government nd Phase st Phase 2 nd 1 st Forming a Task Force to identify & Business license overcome the end-to-end licensing regulatory reforms icy barriers n Polic Implementing a licensing checklist for Implementation of the Main Special Economic Zones (KEK), Free Single Submission Trade Zones (FTZ), Industrial Zones & system Tourist Zones Utilizing data sharing Note: 1 st and 2 nd Phase are implemented in parallel Source: Coordinating Ministry for Economic Affairs 27

  21. Imp mproving ving Inves estment ent Clima mate Online Single Submissi ssion (OSS) S) Has Been Launched... OSS is a web-based business licensing system intended to cut the red tape involved in obtaining business permits and integrated between the central government and regional administrations Sectors Lorem Ipsum Environm onmen ent & Public Works & Electricity Indus ustry Sector Health h Sector or Suitable for all Forestry Sector Housing Sector Sector category, Infor ormation on & Marine ne & Fisher ery Medicine ne & Transpor ortation on Trade Sector Communi nication on Sector Food Sector Sector Sector Other Sector The Advant ntage of Using ng OSS Business licenses can Standardized Ellectronically be secured in under an business licenses integrated hour are available The whole licensing Accessible at More practical process is monitored by anytime and the Task Force anywhere Source: Coordinating Ministry for Economic Affairs 28

  22. Improving ing Investme tment nt Climat ate …Bonded Logistic Center to Improve Indonesia’s Competitiveness Bonded Logistic Center To To date, 52 Bo Bonded Logistic stic Center has been launched to to support va variou ous industri ries. (Pusat Logistik Berikat/PLB) is a facility provided by Ministry of Finance as part of the Small and Food & implementation of the 1 st Economic medium um bev ever erages es industry industry Policy Package. Pe Persona nal Oil il and care/ ga gas, s, and PLB facility aims to improve home e care mining Synthet hetic efficiency and reduce the cost of industry industry tex extile e transportation and logistics in Auto- (chemi emical motive e Indonesia; support the growth of the substanc nces es) industry industry. domestic industry, including small Tex extile e Heavy (cotton) on) and medium industries; increase Equipmen ent indust stry industry investment; and to make Indonesia Aircraft to become a logistics hub in Asia MRO Defen fence e Pacific. indust stry industry 29

  23. Improving ing Investme tment nt Climat ate e …revising the Negative Investment List Introd oduction ion of New Foreig eign Owner ership ip Regula lation ion for Strateg egic ic Sector ors Sports Center, Pha harmaceut utic ical l Raw Materia ials ls Cold storage Restaur urant nts, Bars Film lm Processing ing Lab, Crum umb Rubber Manuf nufacturin ing After Before After Before After Before After Before 100% 100% 100% 100% 33% 85% 49% 51% Priv ivate Museum um, Catering ing, apparel l Toll l Road Operator, Distrib ibut utio ion, n, Warehous housing ing Key Reforms ms in Negative Foreign Manuf nufacturin ing, Exhib ibit itio ions ns & Telecommunic unicatio ion n Testin ing Company ny Inves vestme ment List Convent ntio ions ns Before After Before After Before After Revi vision of "Par artnership" " category to refer to partnership with Micro, Smal all and Medium m Enterprises (MSMEs) 100% 67% 67% 95% 33% 51% Gran andfat ather Law: If a particular sector is tightened in future, existing foreign Professio iona nal l Traini ining ng, Golf lf Cour urse Mana nagement nt, Air Telecom ommunic icatio ion Prov ovid ider inves vestor does not need to comp mply with Trans nsport Support Servic ices, Travel l Bureau Consult ultanc ncy for Construc uctio ion 1 with h Integrated Servic ices tighter stak ake Before After Before After Before After Strengthen impleme mentat ation of negat ative inves vestme ment law through active roles from m ministries, agencies and regional 67% 67% 67% 49% 55% 65% gover vernme ments 1 For total project value of IDR10bn and above Source: Investment Coordinating Board (BKPM) 30

  24. Investme tment nt Realizati ization on (Q1-20 2020) 20) Direc ect Inves estmen ents Top 8 FDI Reali lization ion by Sectors (Q1-2020 vs Q1-2019) IDR R tn Metal, , Excep ept Machiner nery, , 240 and Equip ipmen ent Industry 210.7 220 FDI DDI TOTAL 200 US$1, 1,523. 523.8 8 mn mn Food Crop ops, 180 149.1% 160 Plantation ions, , and 112.7 140 Elec ectric icit ity, , Gas, , and Lives estoc ock 120 Water er Supply ly 100 US$478. 478.8 mn US$868. 868.6 mn mn 80 120.5% 60 43.1% 98.0 40 20 0 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 Food Industry Mining ing 2017 2019 2020 2016 2018 2013 2014 2015 Invest estment ent US$298. 298.4 mn mn US$482. 482.7 mn mn 22.1% Re Realization 21.5% IDR210.7tn tn Rp159.4 T IDR195.1tn tn 434,463 434 463 375,982 37 Rp145.4 T Trans nsportation, ion, Wareh ehous use, e, * Housing ing, Industria ial l Estate, e, and Telec ecom ommunic ication ion 8.0% and Offic ice e Buil ilding ing 9.6% 15.6% US$806. 806.9 mn mn US$602. 602.9 mn Q1-201 2019 Q1-20 2020 20 50.9% 36.5% Q1-201 2016 Q1-201 2017 Q1-201 2016 Q1-201 2017 * * person Chem emic ical l and Pharmaceu eutic ical l Industry IDR112.7tn tn IDR107.9tn tn IDR87.2tn US$569. 569.4 mn mn IDR98tn tn 81.3% decreasing 9.2% 29.3% Q1-201 2019 Q1-20 2020 20 Q1-201 2019 Q1-20 2020 20 Source: Investment Coordinating Board (BKPM), compared to Q1-2019 period 31

  25. Section tion 2 Econom onomic ic Factor or: Strong and Stable able Growth wth Prospect ospects s Remain main Intac act t

  26. Conduciv ducive e Envir iron onment nt Underp derpinn inning ing Strong ong Grow owth th Funda damen entals tals Tax base to be 4th Most t Populous Budget reform m as a a broad adened from m part of larger Larges est t Economy my in countr try in the one reduce economi mic reform South th East t Asia World; 64% in dependency on initiat ative ve producti tive ve age comm mmodities Large and Stable Consisten tent t Econom omy Fuel subsidies Budget Reform rm Rising Middle e Class significantly reduced Managea eable e Prudent debt and Affluen ent t and spending manag agement Inflati tion Rate te redirected to more Custo tomer ers productive ve allocation Refo form rm-Ori rien ented ed Administra ration on Three main sources of finan ancing for inves vestment From m comm mmodity-bas ased to manufac acturing needs: Stat ate and regional al budget, Stat ate Owned and servi vice sectors via a infras astructure Enterprises and PPP developme ment New Econom omic c High Continuing from m 2015 policy, infras astructure will Structu ture re Infrast structu ture re From m consump mption-led to inves vestme ment-led growth be higher than an fuel subsidy via a a stronger manufac acturing sector and more Investme stments investme ment initiatives Infrastructure spending focused on basic infrastructure projects Policies to maintai ain purchas asing power to stimulat ate dome mestic economy my in the midst of Fiscal al and non-fiscal al incentives to attrac act weak akening macroeconomic conditions infras astructure inves vestme ment and promo mote PPP 33

  27. Indonesia’s Strong GDP • Despite global economic moderation, resilient national economic growth has been Stron ong GDP Growth 1 maintained in Indonesia. For the year 2019, solid economic growth was recorded at 5.02% in 2019, albeit down slightly from 5.17% in 2018. The main driver of economic growth in % QoQ YoY 2019 was domestic demand, as export performance declined. In the fourth quarter of 7.0 2019, economic growth stood at 4.97% (yoy), down slightly from 5.02% (yoy) in the 5.19 5.065.275.175.185.07 5.05 5.024.97 4.77 5.17 5.18 5.01 5.12 5.05 5.06 5.01 4.94 4.82 5.01 4.93 4.92 4.94 4.74 previous period. 5.0 4.21 4.20 4.01 4.01 • Solid domestic demand was a key contributor to economic growth momentum in 2019 as 3.83 3.74 3.31 3.06 3.27 3.19 3.09 3.14 exports languished on dwindling global demand and sliding international commodity prices. 3.0 Domestic demand was influenced by stable household consumption, which grew 5.04% in 2019, relatively unchanged from the 5.05% posted in 2018. Household consumption was 1.0 0.04 maintained in line with controlled inflation and upbeat consumer confidence. (0.16) (0.30) • Furthermore, the general election held in 2019 edged up consumption by non-profit (0.36) (0.41) -1.0 (0.52) institutions serving households (NPISH) to 10.62% from 9.10% in 2018. Domestic demand (1.73) (1.69) (1.81) (1.70) (1.74) was also buoyed by strong investment performance, building investment in particular which (2.07) -3.0 grew 5.37% in the reporting period, similar to the 5.41% recorded in 2018. Services in the Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 tertiary sector were the main locomotive of economic growth in 2019, led by 2014 2015 2016 2017 2018 2019 communications and information, financial services and insurance as well as other services. Favou ourable e GDP Growth Comp mpared ed to Peer ers 2 Growth Pros ospec ect % 9.0 8.0 2020 GDP growth Institutions 7.0 (%YoY) 7.0 6.1 6.2 6.0 2020 Budget 5.3 5.7 5.1 5.0 5.0 Bank Indonesia around 2,3 3.7 4.0 3.6 IMF (WEO April 2020) 0.5 3.0 3.2 3.4 2.0 2.1 World Bank (GEP April 2020) 1.0 ADB (ADO April 2020) 2.5 0.0 2012 2013 2014 2015 2016 2017 2018 2019* 2020* Consensus Forecast (April 2020) 2.1 Bulgaria Colombia India Indonesia Philippines 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption 2. Source: World Economic Outlook Database – October 2019; * indicates estimated figure 34

  28. GDP P Growth th Breakdo akdown GDP Growt owth Based ed on Expen endit itures es (%, YoY) 1 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 By expen enditure Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 5.0 5.2 5.0 5.1 5.1 5.0 5.2 5.0 5.0 5.0 HH. Consumption Non profit HH. (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8.1 8.8 8.6 10.8 9.1 17.0 15.3 7.4 3.5 10.6 consumption Government 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 2.7 5.2 6.3 4.6 4.8 5.2 8.2 1.0 0.5 3.2 consumption Gross Fixed Cap. 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 7.9 5.8 6.9 6.0 6.6 5.0 4.6 4.2 4.1 4.4 Formation (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.9) 3.9 (1.7) 8.4 2.7 16.5 8.4 8.9 5.8 7.5 8.3 4.6 6.5 (1.6) (1.7) 0.1 (0.4) (0.9) Exports (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.4) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.5 14.9 13.8 7.1 11.9 (7.5) (6.8) (8.3) (8.0) (7.7) Imports 4.8 4.7 4.8 5.2 4.9 4.9 4.9 5.2 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 GDP GDP 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption GDP GDP Grow owth by Sector or (%, YoY) 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 By sectors Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot. Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Tot Agriculture, forestry, and 3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 3.9 3.4 4.7 3.6 3.8 3.9 1.8 5.3 3.1 4.3 3.6 fishery Mining and Quarrying 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 (1.3) 2.1 1.8 0.0 0.7 1.1 2.6 2.7 2.2 2.2 2.3 (0.7) 2.3 0.9 1.2 Manufacturing 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.3 3.5 4.9 4.5 4.3 4.6 3.9 4.4 4.2 4.3 3.9 3.5 4.1 3.7 3.8 Construction 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 7.0 7.0 7.2 6.8 7.4 5.7 5.8 5.6 6.1 5.9 5.7 5.6 5.8 5.8 Wholesale and Retail Trade, Repair of Car and Motorcycle 3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5.0 5.2 5.3 4.4 5.0 5.2 4.6 4.4 4.2 4.6 Transportation and Storage 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5 8.5 8.7 5.7 5.5 7.1 5.5 5.9 6.7 7.6 6.4 Information and 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 10.5 11.1 8.8 8.3 9.6 7.8 5.1 8.1 7.1 7.0 9.1 9.6 9.2 9.7 9.4 communication Financial service 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.1 3.8 5.5 4.3 3.1 3.1 6.2 4.2 7.2 4.5 6.1 8.5 6.6 Other Services * 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5.4 6.2 6.7 6.4 6.2 6.8 7.3 6.4 6.2 6.7 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 GDP GDP Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 35

  29. Regional onal Econom nomic ic Growth th Solid domestic demand is supported by increasing income from inter-regional trade, such as in Sumatra. Meanwhile, economic growth in Kalimantan and Bali-Nusa Tenggara has been maintained as exports of primary commodities improved. Source: Central Bureau of Statistics of Indonesia (BPS) 36

  30. Section tion 3 Exter ernal al Factor or: Impr mproved ed Exter ernal al Resi silienc lience

  31. Extern ernal al Balanc ance e under r Contr trol ol Support rted ed by Adequ equat ate e Reserv rves es Balance e of Paymen ents ts Portr trait Curren ent t Account Deficit with thin Safe e Thres eshold US$b $bn 2014: 2019: 2013: 2015: 2016: 201 2017: 201 2018: Indone nesia ia's Balance of Payment nts US$b $bn US$b $bn CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit (US$27.5bn) n) (US$30.4bn) n) (US$29.1bn) n) (US$17.5bn) n) (US$17.0bn) n) (US$16.2bn) n) (US$30.6bn) n) 20 129.18 18 160 8 0.0 0.31 6 15 12.38 8 -0.5 1.97 4 120 -1.0 10 2 -1.5 4.28 5 0 -2.0 80 -2 (8.35 35) 0 -2.5 -4 -3.0 -5 -2.84 -6 40 -3.5 -8 -10 (8.12) 12) -4.0 -10 (2.06) 06) -15 0 -12 -4.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3* Q4** Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3* Q4** 2013 2014 2015 2016 2017 2018 2019** 2013 2014 2015 2016 2017 2018 2019** Goods Services Primary Income Secondary Income Current Account (%GDP) (rhs) Current Account Capital and Financial Account Overall Balance Reserve Asset (rhs) Source: Bank Indonesia Source: Bank Indonesia Trade e Balance Portr trait Substa tanti tial FX Reser erve ves to Miti tigate te Exte ternal Challen enges 2019: 2014 2014: 2015: 201 2016: : 2017: 2018: 2013: 2013 FX Reserve ves as of March 2020: US$121.0 bn n US$b $bn Deficit Deficit Surplus Surplus Surplus Deficit Deficit (Equiv. to 7.0 months of imports + servicing of government debt) (US$3.2bn) n) (US$2.37bn) n) US$7.59bn US$8.83b 3bn US$11.83bn bn (US$8.7bn) n) (US$4.10bn) n) US$bn Month FX Reserves (LHS) Month of Import & Debt Service (RHS) 130 15 4.00 14 120 13 3.00 12 110 11 2.00 10 100 9 1.00 8 90 7 0.00 6 -1.13 80 5 -1.00 -0.50 4 70 -1.63 -2.00 3 OG Non-OG Total 2 60 -3.00 1 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 50 - 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 * Preliminary Figure ** Very Preliminary Figure 38 Source: Bank Indonesia Source: BPS

  32. Excha hang nge e Rate e In Line e with h Fundam damen entals tals Movem emen ent of Rupia iah The rupiah regained some of of its lost val value in in the second week of of April 2020 as as global IDR/US$ financial market fi ket panic began to to subside. On 13th April 2020, the rupiah appreciated 17,000 4.35% (ptp) on the level recorded at the end of March 2020. Notwithstanding, the rupiah has still depreciated by around 11.18% on the level recorded at the end of 16,195 16,500 2019. The rupiah appreciated in April 2020 in response to an influx of foreign capital IDR/USD 16195 flows to domestic financial markets after various policies were implemented around 16,000 Quarterly Average the world to mitigate the economic impact of COVID-19, including in Indonesia. The 15630 Monthly Average 15,500 stronger rupiah was also supported by the maintained supply of foreign exchange from 15,179 domestic players, which underpinned rupiah exchange rate stability. Bank Indonesia is 14798 14,381 15,000 confident that the current value of the rupiah is adequate to support economic 14,232 14,220 rebalancing, as the currency is fundamentally undervalued. Furthermore, rupiah 14254 14,113 14120 14,500 13,714 stability is expected as the currency strengthens towards Rp15,000 per US dollar at 14601 the end of 2020. Bank Indonesia will continue to bolster rupiah stabilization policy in 14,000 line with the currency's fundamental value and market mechanisms. To that end, Bank 14134 14219 14064 14,141 Indonesia will increase the intensity of triple intervention policy through the spot and 14,006 13,500 14,031 data as of April 13 th , 2020 Domestic Non-Deliverable Forward (DNDF) markets, as well as purchasing SBN in the secondary market. To boost the effectiveness of exchange-rate policy, therefore, Bank 13,000 12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 12-May 12-Jun 12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr Indonesia will continue to optimize monetary operations in order to ensure sound market mechanisms and adequate liquidity in the money and foreign exchange markets. Rupia iah Exchange e Rate e Fared ed Relative ively ly Well ll Compared ed to Peer ers Rupia iah Exchange e Rate e Vola latil ilty YTD 20 2020 20vs 201 019 -1.23 ZAR 28.7% 28.5% *data as of April 13 th , 2020 -9.30 1.91 BRL -6.57 4.35 2019 IDR 23.7% -6.27 -2.27 TRY YTD 2020 -5.71 0.17 18.1% THB 18.0% Average YTD 2020 -2.37 *data as of April 13 th , 2020 17.0% -1.07 16.0% INR -2.26 15.99% -0.81 point-to-point EUR 14.4% -1.76 -0.01 MYR average -1.23 0.42 SGD -0.84 7.0% 6.4% 6.2% 5.9% -0.38 5.4% 5.1% JPY 4.7% -0.78 3.7% 0.50 CNY -0.71 0.07 KRW -0.41 0.16 PHP 0.25 ZAR BRL TRY IDR THB PHP INR MYR % -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 39 Source: Bank Indonesia

  33. Ample e Lines of Defens nse Agai ains nst t Externa ernal l Shoc ocks ks Ample le Reser erves es Ample level of FX reserves to buffer against external shock  FX Reser erve FX Reserves as of March 2020: US$121.0 billion  Swap Arrangement Renewed a 3 year USD22.76 billion swap line with Japan on October 14 th , 2018  Japan The facility is available in USD and JPY  South Korea Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2020  eral Australia Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018  Bilater Singapor ore Renewed a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2019  Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in  China November 2018 Malaysia Established a 3 year RM/IDR swap arrangement with a size up to USD2 billion (equivalent) in September 2019  Entitled to a maximum swap amount of USD600 million under ASA  ASEAN Swap The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million  Arrang ngem ement ent (ASA) Doubled to USD2 billion in 2005 onal  Regiona Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool created under the  Chiang ng Mai Initiative e agreement Multilater eralization on Came into effect in 2010 with a pool of US$120 bn  (CMIM) Agreem eement ent Doubled to US$240 bn effective July 2014  IMF Global Financ ncial Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem  al Global Safe fety Net - GSFN Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)  Source: Bank Indonesia 40

  34. Solid id Po Polic licy Coordinat dination ion In Managin ging g Financial cial Markets ets Volati tilit ity y The enact ctme ment of Law No. 9/2016 rega garding g Prevention and Mitiga gation of Financia cial l System m Crise ses s as a legal foundation Gov’t Securities Crisis Managem emen ent Protoc ocol ol (CMP) P) for the government to serves at the time of financial crisis in Indic icato tors:  the form of Financi cial l System m Stabil bility Commi mittee (KSSK) K) - Yield of benchmark series; - Exchange rate; - Jakarta Composite Index; - Foreign ownership in government securities KSSK membe bers: the Ministry of Finance, Bank Indonesia, the  Policie icies to address the crisis at every level : Financial Services Authority, and the Deposit Insurance - Repurchase the government securities at secondary market Corporation - Postpone or stop the issuance Bond d Stabilization on Framewor ork Swap facility arrangements based on international cooperation First st Line of Defense Buyback fund at DG of Budget Financing and Risk Management State’s Budget Investment fund at Public Service Agency Enhancing coordination between government institutions (BLU) (min. level Aware) and continuous dialogue with market participants State Owned d Enterprises Related SOEs (min. level Aware) (BUMN)’s Budget Social Security Organi nizing BPJS (min. level Aware) Agency (BPJS)’s Budget CMP Second d Line of Defense Implementing Crisis Management Protocol (CMP) State General Treasury Account (Rekening KUN) (min. level Alert) State’s Budget Accumulated cash surplus (SAL) (min. Level Crisis) BSF Implementing Bond Stabilization Framework (BSF) Source: Ministry of Finance 41

  35. Stren rengt gthe hene ned d Privat ivate e Extern ernal al Debt t Risk Managem agemen ent Debt t Burden en Indicato tor (Exte ternal Debt/G t/GDP) Remains Comparable e to Peers Rati ting Encou ouraging ing Corporates Compli liance on Hedgin ing Ratio io & Liquid idit ity Ratio io Hedging Rati tio* External Debt/G /GDP (%) 2020F 54.3 159 , Bulgaria 261 , 56.5 2019F 6% 57.3 10% 42.3 2018 Colombia 42.9 39.9 21.4 India 20.9 20.0 > 3 - 6 6 months ≤ 3 months 37.0 Indonesia 36.7 36.2 2,341 , 2,443 , 21.9 90% Philippines 23.0 94% 23.9 0 10 20 30 40 50 60 70 Source: Moody’s Statistical Handbook, November 2019 Liquidity ty Rati tio* Regulati tion on Pruden enti tial Principle e in Managing Exte ternal Debt 308 , Phas ase 1 Phas ase 2 Phas ase 3 12% Regulat ation Key Points Jan 1,2015 – Jan 1,2016 – Jan 1, 2017 & & Dec 31,2015 2015 Dec 31,2016 2016 beyond Object of Regulation Governs all Foreign Currency Debt Hedging Ratio < 3 months 20%* 25%** > 3 – 6 months 20%* 25%** 2,294 , 88% Liquidity Ratio (< 3 months) 50% 70% Credit Rating Not applicable Minimum rating of BB- Comply Not Comply Must be done Hedging transaction to meet not necessarily be done with a bank in with a bank in hedge ratio Indonesia Indonesia *Data as of Q3 2019, with total population 2.602 corporates Sanction As of Q IV-2015 Applied Source: Bank Indonesia Source: Bank Indonesia 42

  36. Health lthy Extern ernal al Debt t Compos osit ition ion Exter ernal l Debt Structure The Structure e of Exter ernal l Debt is Domina inated ed by Long-Ter erm Debt Private External Debt Public External Debt Short Term External Debt Long Term External Debt 100% 100% 90% 90% 80% 80% 57.4 58.6 52.6 50.0 46.4 44.2 45.9 49.5 51.2 49.6 49.2 50.2 50.0 50.2 50.5 49.9 70% 70% 81.7 78.8 79.3 78.3 78.8 79.8 82.1 82.9 84.4 84.0 83.8 84.2 85.9 84.3 85.4 85.4 60% 60% 50% 50% 40% 40% 30% 30% 42.6 41.4 47.4 50.0 53.6 55.8 54.1 50.5 48.8 50.4 50.8 49.8 50.0 49.8 49.5 50.1 20% 20% 18.3 21.2 20.7 21.7 21.2 20.2 17.9 17.1 15.6 16.0 16.2 15.8 14.1 15.7 14.6 14.6 10% 10% 0% 0% Exter ernal l Debt Remains ins Managea eable le Exter ernal l Debt to GDP Ratio io & Debt to Expor ort Ratio io % Million USD % External Debt / Export Ratio External Debt / GDP Ratio (rhs) % External Debt External Debt Growth (rhs) 450,000 20.0 200 36.8 40 36.6 36.1 36.2 36.1 36.0 17.1 34.7 34.3 18.0 400,000 32.9 31.8 35 180 16.0 29.1 350,000 183.7 27.4 30 26.5 168.7 172.4 177.4 176.1 14.0 25.0 12.0 300,000 160 11.5 11.3 168.4 168.0 25 10.5 12.0 10.2 10.1 10.1 160.8 250,000 8.3 10.0 140 20 7.7 200,000 139.5 6.5 8.0 15 5.9 5.4 120 150,000 6.0 123.1 121.8 10 3.0 100,000 114.9 113.8 4.0 100 5 50,000 101.0 2.0 80 0 0 0.0 *Provisional Figures Source: Bank Indonesia, External Debt Statistics of Indonesia, April 2020 43

  37. Manage geab able le Extern ernal al Debt t Prof ofile ile Short term non-bank nk corporate e debt bt (non n affiliation) n) represen esents only y 8.6% 6% of total private e ex exter erna nal debt Public Long Term 1 Private vate Bank Affiliat Af ation US$203.3bn US$155.2bn US$19.5bn or or or 49.9% 76% 9.6% US$11.8bn of Total Ext. of Private Ext. of Private or or Debt Debt Ext. Debt 5.8% 8% Exter ernal Debt of Priv ivate te Positi tion Ext. t. Debt t US$204 204.2b 2bn US$49bn US$29.5bn or or or 50.1% 50 US$407.5bn bn 24% 24% 14.4% of total of Private of Private Ext. Debt Ext. Debt Ext. Debt Priva vate te Non-Bank US$17.7bn bn Short-Ter erm 1 or or 8.7% 7% Private vate of Priv ivate te Ext. t. Debt t External Debt Position as of February 2020 1 Based on remaining maturity Non Af Affiliat ation Source: External Debt Statistics of Indonesia, April 2020 44

  38. Section tion 4 Fiscal al Performan mance e and Flexib ibili ility ty: Prudent dent Fiscal al Polic icy to Comb mbat at the COVID VID-19 Pandem emic ic and Maintain taining ing Econ onomic omic Sust stain ainab ability lity

  39. Optim imizin izing the e Policy icy Mix x to Combat the e COVID ID-19 19 Pand ndem emic ic and nd Mainta intain ining ing Econo nomic ic Sustaina inabil ilit ity FISCAL POLICY MONETARY AND Maintaining people's purchasing FINANCIAL POLICY Line ministries and regional power and ease of export and govt: budget priorities to import: tackle COVID-19 • Fiscal stimulus MONETARY* • Non-Fiscal Stimulus • Policy in the Financial Sector Rp190 T Spending cut/saving • Reducing BI 7DRR Rp55 T Spending Reallocation • Increasing triple intervention intensity • Lowering Currency Statutory Reserves (GWM) in Rupiah & foreign currency • Extend SBN tenure Budget STIMULUS I STIMULUS II STIMULUS III Refocusing & Rp8,5 T Rp22,5 T Rp405,1 Reallocation BANKING Strengthening the domestic Rescueing national health and economy, as well economy through: as maintaining the stability of the financial • Relaxation of credit/financing/fund • Accelerating spending & sector (through Perppu No.1 Tahun 2020 ) provision requirements for MSMEs encouraging labor- • State Financial Policy (health, social safety • MSMEs credit/financing intensive policies net, business support & economic recovery restructuring • Spending stimulus financing support) 2 • Policy in the Financial Sector *For more detail please see section 5 Source: Ministry of Finance 46

  40. Extra traor ordinar dinary Handling dling of The COVID ID-19 Pandem demic ic Gov overnment Regula lation on in lieu of law (Perppu pu) ) No. 1/2020 stipula lates s that everything spent by by the gov overnment on Cov ovid-19 economic ic recovery programs s will be regarded as a measu sure to save the economy from crisis is and not a state loss Source: Ministry of Finance 47

  41. Extra traor ordinar dinary Handling dling of The COVID ID-19 Pandem demic ic Gov overnment Regula lation on in lieu of law (Perppu pu) ) No. 1/2020 stipula lates s that everything spent by by the gov overnment on Cov ovid-19 economic ic recovery programs s will be regarded as a measu sure to save the economy from crisis is and not a state loss Source: Ministry of Finance 48

  42. Extra traor ordinar dinary Handling dling of The COVID ID-19 Pandem demic ic Gov overnment Regula lation on in lieu of law (Perppu pu) ) No. 1/2020 stipula lates s that everything spent by by the gov overnment on Cov ovid-19 economic ic recovery programs s will be regarded as a measu sure to save the economy from crisis is and not a state loss PERPPU No. 1 of 2020 Background: Quick and Extraordinary Steps in Handling COVID-19 COVID-19 P 19 PAND NDEMIC: and the Impact • Escalat latio ion of confir irmed case se and fatali alitie ies MAIN PRINCIPLE/SETTINGS IN PERPPU • Great at economic ic impact • Potentia ial l disr sruptio ion to the stab abilit lity of financial al sy syst stem State Financial Policy Financial Sector Policy • • Adjustment of state budget deficit Expanding the authority of KSSK and 1 2 threshold the scope of the KKSK meeting Need quick Forceful • • Utilization of budget funding alternative Strengthening the authority of the BI, urgency and sources including in buying long-term SBN in the anticipatory • Adjusment of mandatory spending , primary market to support the handling of step shifting and refocusing central and Covid-19 pandemic • regional budgets Strengthening the authority of Financial • SBN issuance and loan program to Service Authority (OJK) and Deposit finance the additional deficit Insurance Corporation (LPS) to prevent • Incentives and tax facilities risks that endanger financial system PERPPU No. 1 of 2020 • Implementation of the National stability and protect bank customers. • Economic Recovery Program for the Strengthening the authority of the as a legal al bas asis is for r tak akin ing g ra rapid id and sustainability of the real sector and government in handling banking extrao aordin inar ary and coord rdin inat ated steps to financial sector. problems and financial system stability counter r the COV OVID-19 pan andemic ic. due to COVID-19 pandemic - carried out while maintaining good governance - Source: Ministry of Finance 49

  43. COVID ID-19 9 Impac mpacts s and Count unter ermea measu sures es Perpu No. 1/202 2020 0 provide des a legal basis to take e ex extraordi dina nary y steps in tackling ng COVI VID-19 huma mani nitarian n crisis s and saving ng the econom nomy Disruption in Real Sector and Increased Risk in Disruption of Social Health and Mental the Financial Sector & Economic Activity Threats    Disruption in business activity Increase in financing and  Losing source of income Infected (production, investment, and banking nonperforming loan   Declining purchasing power and Starving trade)  Liquidity and solvency issues consumption ability  Death  Business is facing potential in the financial sector (bank and  bankruptcy nonbank) Triggering mental health issues (anxiety, fear, sadness) Social Safety Net: Business Support: Health Measures:  Reducing of import restriction (lartas) including manufacturing support, food and health/medical goods, acceleration of the   PKH improvement and expansion Appoint dedicated hospital, export-import process, and improvement of services through emergency hospital, equipment  Basic food cards improvement and the National Logistics Ecosystem support, and medical personnel expansion  Incentives and tax facility support  Pre-Work Card expansion and   The National Economic Recovery Program through PMN, Testing and tracing flexibility placement of Government investment, and/or guarantee  physical distancing, work and  Exemption from electricity bills activities study from home, etc.  Additional interest rate subsidy  Various policies and relaxation in the financial sector: BI, OJK,  Large-scale Social Restriction assistance LPS, and the Government (PSBB) Source: Ministry of Finance 50

  44. The objec jecti tives es of Governm rnmen ent t Stim imulu ulus Global economy as well as Indonesia economy face extraordinary challenges because of the impact of COVID-19. To overcome these, liquidity channeling policies need to be prepared in order to achieve the following objectives: 1. Helping economic player to 2. Minimizing the number of work 3. Supporting banks in providing survive the impact of COVID-19 terminations (PHK) relaxation and liquidity MSMEs absorp around 97% of Trade sector could be one of In order to break the vicious total workforce and 99% of the hardest-hit business sector, cycle in conducting credit in total job field, thus it is very particularly because most of this time of crisis, liquidity crucial for the Government to them are classified as MSMEs injection becomes maintain the sustainability of (with big concerns whether important. It needs to be those MSMEs, minimize the they have sufficient financial done to channel liquidity to number of layoffs, and capacity to survive until the the real sector that needs maintain the level of outbreak ends) cashflow to undergo a crisis unemployment in a tolerable due to COVID-19. level. Source: Ministry of Finance 51

  45. Flexib ibilit ility In 2020 Budget get To Respond nd Emergen rgency Condit dition ion Wideni ening ng the defi ficit above e 3 percent ent of GDP is to acceler erate e the mitiga gation n of COVI VID-19, 9, salvage ge the econo nomy y from threa eaten ening ng crisis, and maint ntain n the stabl ble e financ ncial system em  Focusing for health, social safety net, and businesses  Slow economic activity, support, including the small and medium one ; plummeting of oil and commodities price  Reducing the non-priority spending, refocusing, and  Tax incentive for businesses reallocating to bolster the management of COVID-19;  Enhancing the spending for COVID-19 treatment Widening Outlook (Rp545.8T) Budget Budget Rp2,613.8T Outlook Rp2,540.4T Rp2,233.2T Rp1,760.9T Revenue Spending Deficit  The increasing of accumulated cash Budget Outlook surplus utilization (Rp45 trillion) (Rp307.2T) = 1.76% GDP  (Rp853.0T) = Financing to promote the national 5.07% GDP economy recovery (Rp150 trillion)  Adding the securities issuance to cover financing gap Source: Ministry of Finance 52

  46. Outlook look of 2020 Budget get Revenue ue in COVID ID-19 Emerge ergency ncy DOMESTIC GROWTH OR -10% 78.9% FROM 2019’s 2020 BUDGET REVENUE REALIZATION TARGET TAX REVENUE Growth: -5.4% | Tax Ratio 9.4% Growth: -26.5% Reckoning the influence of: TAX REVENUE FROM D.G.TAX CUSTOMS & EXCISES REVENUE • The drop of oil and gas Growth: -5.9% , by calculating the impact of: prices due to the lower ICP’s Growth: -2.2%, • Slowdown of economic growth and oil price war assumption considering the stimulus • Tax incentive facilities stage II (PMK 23/2020) • It is similar to non-oil and gas commodities since the coal’s • Additional tax relaxation  Stimulus widening effect of import duty price has plunged • Reducing of Corporate Income Tax into 22% exemption for 19 industries • Possibility of Dividend Income Tax suspend due to Omnibus Law Source: Ministry of Finance 53

  47. State e Expen endit diture ure & & Trans nsfer er to Regions ons Outlook look in The e APBN 2020 Amid d Emergenc ergency y Situation on due to COVI OVID-19 19 //////////////////////// //////////////////////// //////////////////////// Rp190 T Rp255,1 T BUDGET Expenditure Savings: Additional spending to mitigate REFOCUSING & (Line Ministries: Rp95,7 T and COVID-19 (PERPPU) REALLOCATION TO Transfer to Region Rp94,2 T) • Rp75 T  Additional health spending FIGHT COVID-19 • Rp110 T  Increasing Social Safety Net Rp54,6 T • Rp70,1 T  Support for business sector/industry Expenditure Reallocation OUTLOOK Dana Desa (Village fund) DBH DAU DAK Fisik DAK Non Fisik DID & Dana Desa can be used for (Revenue (general (Physical Specific (Non Physical Specific (Incentive Fund & Village Fund) cash transfer Allocation Fund) has been sharing) in allocation fund) Allocation Fund) cut taking into account social taking into account additional line with Cut by 10% by 25% except for disbursement capacity. incentive for healthcare assistance in state revenue education and health workers of Rp3,7 T village level change programs Source: Ministry of Finance 54

  48. State e Financ ancing ing Outlook look in The APBN 2020 Amid d Emergenc ergency y Situation on due to COVI VID-19 19 DEFICIT INCREASE TO BE FROM 5,07% 1,76% OF OF GDP OUTLOOK GDP IN APBN 2020 FINANCING Rp545,7 TRILLION NON DEBT FINANCING Rp10 108, 8,9 9 T DEBT FINANCING Rp654, 4,5 T Debt financing will come from: Additional financing will use accumulated cash surplus • Government bonds issuance (SBN) , in global and ( Saldo Anggaran Lebih /SAL), endowment fund, and domestic market, fund from BLU . • Loan withdrawal from multilateral and bilateral sources . Non debt financing include: • Government bonds issuance including bonds that will be Adittional education purchased by Bank Indonesia in the primary market . Financing t support National financing Rp18,6 T  to Economic Recovery fulfill mandatory education Government will utilize debt financing sources with Program of Rp150 T spending of 20% of total relatively low cost and manageable risk. budget Source: Ministry of Finance 55

  49. The Realiz lizati ation n of The Stat ate e Budget et up to March h 2020 Control olled ed State e budget get Amid d the Pandem emic c Pressu ssure re 2019 2020 Realization Realization Budget (IDRtn) Budget as of 31 % to Budget Growth (%) Budget as of 31 % to Budget Growth March March A Revenue and Grant 2,165.1 349.0 16.1 4.6 2,233.2 375.9 16.8 7.7 I. Domestic Revenue 2,164.7 348.9 16.1 4.6 2,232.7 375.9 16.8 7.7 1. Taxation Revenue 1,786.4 278.7 15.6 6.2 1,865.7 279.9 15.0 0.4 a. Tax Revenue 1,577.6 247.7 15.7 1.3 1,642.6 241.6 14.7 (2.5) b. Custom and Excise 208.8 31.0 14.8 73.1 223.1 38.3 17.2 23.6 2. Non Taxation Revenue 378.3 70.2 31.0 (1.2) 367.0 96.0 26.2 36.8 II. Grants 0.4 0.1 33.7 (43.7) 0.5 0.1 15.5 (47.4) B Expenditure 2,461.1 452.1 18.4 7.7 2,540.4 452.4 17.8 0.1 I. Central Government Expenditure 1,634.3 260.7 16.0 11.4 1,683.5 277.9 16.5 6.6 1. Line Ministries Expenditure 855.4 128.8 15.1 24.8 909.6 143.0 15.7 11.0 2. Non Line Ministries 778.9 132.0 16.9 0.9 773.9 134.9 17.4 2.2 Expenditure III. Transfer to Region and Village Fund 826.8 191,3 23.1 3.1 856.9 174.5 20.4 (8.8) 1. Transfer to Region 756.8 181.2 23.9 3.4 784.9 167.3 21.3 (7.7) 2. Village Fund 70.0 10.1 14.4 (1.9) 72.0 7.2 10.0 (28.6) C Primary Balance (20.1) (32.5) 161.5 87.1 (12) (2.6) 21.6 (92.0) D Surplus/(Deficit) (296.0) (103.1) 34.8 20.1 (307.2) (76.4) 24.9 (25.8) % of GDP (1.8) (0.65) (1.76) (0.45) E Financing 296.0 177.9 60.1 16.9 307.2 74.2 24.2 (58.3) Source: Ministry of Finance 56

  50. Governm rnmen ent t Securit urities ies Indicative e Financing g Plan for 2020 • Auction: • Conventional Securities – 24x • Islamic Securities – 24x • Non-auction: • Retail GDS (tradable/ORI & non-tradable), Retail Sovereign Sukuk (tradable/Sukri & non-tradable); • Private Placement – based on request. Auction GS Rupiah [76% – 80%] Domestic [82% - 86%] Governm rnmen ent t Non-auction Securi riti ties [6% - 8%] Issuance Composition (GS) Forei eign n Deno nomina nated ed GS GS International [14% - 18%] *in IDR Trillion • Foreign denominated GS as com omplemen mentary  Avoid oid crowd owding ing out out in domestic market. • The target amou ount can be be adjus justed to the potential of other financing sources and financing needs. Source: Ministry of Finance 57

  51. Governmen nment t Securities urities Financin ncing g Realiz ization ation (as of Marc rch h 31, 2020) *Dual-currency bonds issuance using SEC format amounted USD2 bn and EUR1 bn, settlement on January 14, 2020 (BI mid day exchange rate; 1 USD = 13,654 IDR & 1 EUR = 15,207.83 IDR) - Including SBR009 issued February 17, 2020 Source: Ministry of Finance 58

  52. GS Primar ary Mark rket et Perform ormanc ance e 2019-2020 2020 Through Auction Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS) 400 7.00 6.50 350 6.00 5.14 300 5.00 250 4.00 200 3.17 3.11 2.80 3.00 2.97 3.01 150 2.59 2.44 2.34 2.12 2.15 2.11 1.97 2.00 100 1.00 50 - - Incoming bid 2020 = Rp65.49T , while awarded bid 2020 = Rp13.91T Source: Ministry of Finance 59

  53. Republic lic of Indone nesia ia – USD4.3 .3bn GLOBAL OBAL BONDS S ISSUANCE CE On April 7, 2020, the Republic of Indonesia priced a transaction comprising USD4.3bn in senior unsecured notes Issuer Republic of Indonesia Investor Breakdown Issuer Rating Baa2 Moody’s (Stable) Investor Breakdown by Region by Investor Type BBB S&P (Stable) BBB Fitch (Stable) RI1030 030 RI1030 030 Exp. Issue Rating Baa2 Moody’s / BBB S&P / BBB Fitch RI1050 9% RI1050 050 Format U.S. SEC registered 1% 1% 2% 3% 10% 2% 1% 21% Issue Senior unsecured fixed rate notes 4% 45% 1% 26% 22% Pricing Date April 6, 2020 Settlement Date April 15, 2020 52% 20% 25% Aggregate Size USD4,300 mm 64% 71% 20% RI0470 Long 10.5-year ar Long 30.5-year ar Long 50-year ar 1% 1% 1% 1% 18% Maturity Oct 15, 2030 Oct 15, 2050 Apr 15, 2070 11% RI0470 Tranche Size USD1,650 mm USD1,650 mm USD1,000 mm 44% Coupon (p.a.) 3.850% 4.200% 4.450% Reoffer Price 99.573 99.150 99.009 38% Reoffer Yield (p.a.) 3.900% 4.250% 4.500% Asset Managers Insurance/Pension Fund 85% US Europe Asia ex-Indonesia Indonesia Listing Singapore, Frankfurt Open Market Central Bank/Sovereign Wealth Fund Law New York Banks Use of Proceeds For general purposes of the Republic of Indonesia, including Private Banks financing COVID-19 relief and recovery Others Transaction Highlights  Net proceeds will be used for general purposes of the Republic, including financing COVID-19 relief and recovery efforts for the Republic to contain the virus and mitigate its impact on Indonesia.  The Republic's fiscal policy amidst volatile market conditions includes support for healthcare, the social safety net, and small and medium enterprises.  The debut 50-year offering on strong demand in the long end of the curve.  The transaction is the largest global offering by the Republic and demonstrates the Republic’s ability to respond swiftly to markets and capture favorable issuance windows. Source: Ministry of Finance 60

  54. Discip iplined lined and Sophistic isticated ed Debt t Po Portf tfolio olio Managem gemen ent Stable le Debt to GDP Ratio io Over er the e Years Pruden ent Fiscal l Defic icit it Government Debt / GDP (%) IDR Tn 442 442 32.1% 35.0% 500 0.0% 407 407 30.2% 362 362 29.8% 358 358 29.4% 5,000.0 400 28.3% 27.4% -0.5% 265 265 30.0% 764.5 300 810.7 24.7% 200 -1.0% 4,000.0 746.2 25.0% 734.8 100 19 19 14 14 -1.5% 755.1 20.0% - 3,000.0 (9) (7) (4) 677.6 (20) (100) -2.0% (69) (66) (56) (58) 15.0% 714.4 -1.8% 4,292.73 (200) 2,000.0 4,014.8 -2.2% -2.5% (227) 3,612.7 3,248.6 (300) 10.0% (298) 2,780.6 (308) (269) -2.5% -2.5% -2.6% (341) 2,410.0 (400) -3.0% 1,000.0 1,931.2 5.0% 2014 2015 2016 2017 2018 SBN (neto) Bonds (Net) Loans (Net) Pinjaman DN & LN (neto) - 0.0% Non Utang (neto) Surplus (Defisit) APBN 2014 2015 2016 2017 2018 2019*) Mar-20 Non Debt (Net) Budget Surplus/Deficit Rasio Defisit APBN thd. PDB (RHS) Fiscal Deficit (%GDP, RHS) Bond Loan Debt/GDP Ratio [RHS] Source: Ministry of Finance Source: Ministry of Finance Weig ighted ed Aver erage e Debt Maturit ity of ~8. 8.5 Years Well l Diver ersif ified ied Acros oss Differ eren ent Curren encies ies % of Yearly Issuance 1% 1% 1% 1% 1% 9.8 100% 5% 6% 6% 6% 7% 4% 4% 4% 5% 4% 9.4 ATM (in years) 80% 9.1 27% 30% 30% 29% 31% 60% 8.7 8.6 8.5 8.4 40% 62% 59% 59% 57% 58% 20% 0% 2014 2015 2016 2017 2018 2019 Mar-20 2016 2017 2018 2019 Mar-20 IDR USD EUR JPY OTHER Source: Ministry of Finance Note: *as of endo of December by using GDP assumption (interpolation) Source: Ministry of Finance 61

  55. Well ll Balanced nced Maturity urity Prof ofile ile With h Strong ong Resilience lience Agains inst t Extern ernal al Shocks ks Decli lining ing Exchange e Rate e Risks ks Decli lining ing Inter eres est Rate e Risks ks FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) Variable rate ratio [%] Refixing [%] 44.5 21.0 43.4 20.7 42.6 41.3 41.3 41.0 19.7 19.2 37.9 17.5 16.1 14.8 14.9 13.7 12.1 10.6 10.6 10.2 9.8 13.3 12.2 12.1 12.1 12.3 11.3 10.7 2014 2015 2016 2017 2018 2019 Mar-20 2014 2015 2016 2017 2018 2019 Mar-20 Debt Maturit ity Profi ofile le Upcom oming ing Maturit itie ies (Nex ext 5 Years) IDR tn tn 500 450 400 41.0 40.4 IDR Denominated (Triliun Rp) 40.1 39.3 183 177 Other Currencies (Triliun Rp) 350 36.0 34.7 33.9 195 190 300 250 96 25.5 25.0 110 24.3 23.5 22.7 177 139 140 142 21.4 200 20.1 58 51 19 150 283 273 215 225 31 27 37 100 208 9 10.6 176 9.9 150 129 139 141 134 128 143 39 8.4 4 8.1 7.7 50 99 42 30 6.7 96 94 39 27 35 6.5 31 89 62 29 23 20 33 28 3 55.7 46 3 35 22 20 35 28 - - - - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049-2058 2014 2015 2016 2017 2018 2019 Mar-20 in 1 year (%) in 3 year (%) in 5 year (%) Note: using GDP assumption Source: Ministry of Finance 62

  56. Holder ders of Tradab dable le Central tral Govern ernmen ent t Securities urities More e Balance e Ownersh ership In Term erms s of Holders ders and Tenors ors Holder ers of Tradable Gov’t Domestic Debt Securities Foreig eign n Owner ership ip of Gov’t Domestic Debt Secur urit ities ies by Tenor or 100% 100% 34.8% 35.0% 36.0% 37.0% 38.6% 80% 32.7% 44.7% 37.5% 37.7% 38.2% 80% 38.6% 39.8% 60% 60% 34.1% 37.4% 36.8% 39.0% 35.6% 31.6% 39.8% 38.6% 38.2% 37.5% 37.7% 40.3% 40% 37.8% 32.7% 39.9% 36.8% 42.0% 40.3% 40% 23.1% 20% 22.0% 17.3% 17.8% 18.4% 20% 11.8% 5.1% 26.9% 7.9% 5.3% 6.7% 23.9% 23.4% 1.9% 22.5% 21.1% 1.3% 20.3% 5.0% 4.3% 3.2% 3.5% 2.4% 2.4% 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar-20 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar-19 0-1 >1-2 >2-5 >5-10 >10 % Foreign Ownership of Total Foreign Holders Domestic Non -Banks Domestic Banks Source: Ministry of Finance 63

  57. Owners rship hip of IDR Tradab dable le Central tral Govern ernment nt Securit urities ies (as of Marc rch h 31, 2020) (IDR tn) Descripti tion Dec-15 15 Dec-16 16 Dec-17 17 Dec-18 18 Dec-19 19 Mar -2020 2020 Banks ks* 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 581.37 21.12% 763.39 26.94% Govt Insti titu tuti tions (Bank k 148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 262.49 9.54% 255.10 9.00% Indones esia**) Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 273.21 9.93% 426.08 15.04% GS used for Monetary 23.63 1.33% 38.01 1.81% (36.15) (1.52%) 10.72 0.39% 170.98 6.03% Operation Non-Banks 962.86 65.87% 1,239.57 69.90% 1,466.33 69.83% 1,633.65 68.98% 1,908.88 69.34% 1,814.88 64.05% Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 130.86 4.75% 129.44 4.57% Insurance Company and 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 471.67 17.13% 498.08 17.58% Pension Fund Forei eign Holder ers 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 1,061.86 38.57% 926.91 32.71% Foreign Govt's & Central 110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 194.45 7.06% 183.58 6.48% Banks Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 81.17 2.95% 86.97 3.07% Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 163.32 5.93% 173.48 6.12% Total 1,461.85 100% 1,773.28 100% 2,099.77 100.00% 2,368.45 100.00% 2,752.74 100.00% 2,833.36 100.00% 1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company and Pension Fund. 2) Others such as Securities Company, Corporation, and Foundation. *) Including the Government Securities used in monetary operation with Bank Indonesia. **) net, excluding Government Securities used in monetary operation with Banks. Source: Ministry of Finance 64

  58. Section tion 5 Monetar tary and Financial ial Factor: Credib edible le Monetar tary Policy icy Trac ack Rec ecord d and Favou ourab able le Financial ial Sec ector or

  59. Bank Indonesia’s Policy Mix To Mainta tain in Macr croecon oeconomi omic c and Financial cial Syst stem em Stabil ilit ity Accommodative monetary policy  consistent with controlled inflation  Implementing Macro prudential in the target corridor, while serving Intermediation Ratio (RIM) as a pre-emptive measure to Implementing Macro prudential Liquidity  maintain domestic economic growth Buffer (MLB) momentum 2 1  Stabilize exchange rate consistent with fundamentals Macro- pruden dential Monet etary  Optimize monetary operations in Po Policy order to ensure market Po Policy  Electronification: Social program, e- mechanisms and adequate liquidity payment for Government in the money and foreign exchange Financial technology  markets 3  National Payment Gateway (NPG)  QRIS (QR Indonesia Standard) Paymen ent  Expanding National Clearing System Coordi dination on System em (SKNBI) services with other er Po Policy  Controlling inflation: TPIP, TPID Author horities es 4 Structural reforms: Government  5  Developing market instruments for financing  Financial deepening & stability: KSSK infrastructure Financial Market et (Financial System Stability  Developing financial market infrastructures Committee), OJK (Financial Services Deepen ening Authority) Rupiah Interest Rate Swaps (IRS) and Overnight Index  Coordinating efforts in reducing Swap (OIS)  Current Account Deficit  Domestic non-Deliverable Forward (DNDF)  Developing the Commercial Papers (Surat Berharga Komersial) Source: Bank Indonesia 66

  60. Bank Indone onesia ia Po Polic licy Mix: : April il 2020 The e BI Board rd of Gover ernors rs agree eed d on 13th h and 14th h Apri ril 2020 020 to hold d the BI 7-Da Day y Rever erse e Repo Rate e at 4.50 50%, while e also maintaini ning ng the Deposit Facility y (DF) and Lendi nding ng Facility y (LF) rates es at 3.75 75% and 5.25 25%. Rupiah h Reser erve e Requireme ement nt Lowe wered d by 200 0 bps Reinforced its policy Focus on Continue to strengthen Continue to mix towards mitigating macroprudential coordination with Monetary policy optimize monetary the risk of COVID-19 policy measures on financial authorities and considers the need Holds the BI operations in order transmission, perceives efforts to maintain relevant government to maintain external 7-Day to ensure market adequate space to financial system ministries/agencies will stability amidst Reverse Repo mechanisms and lower the policy rate stability and constantly be improved in heightened global Rate at adequate liquidity due to mild inflationary anticipate potentially terms of formulating an financial market 4.50% in the money and pressures and the higher risks in the optimal policy mix and to uncertainty foreign exchange urgent need to financial sector due mitigate escalating risk in markets stimulate economic to COVID-19. the financial system. growth 67 Source: Bank Indonesia

  61. Bank Indone onesia ia Po Polic licy Mix: : April il 2020 The BI Board of Govern rnor ors s agreed on 13th and 14th April 2020 to hold the BI 7-Day Reverse rse Repo Rate at 4.50%, while also maintaining the Deposi sit t Facility ty (DF) and Lending Facility y (LF) rates at 3.75% 5% and 5.25% 5%. Rupiah Reserv rve Require rement t Lowere red by 200 bps 1) To stabilize and strengthen rupiah exchange rates, Bank Indonesia has strengthened the intensity of triple intervention policy through the spot and Domestic Non-Deliverable Forward (DNDF) markets, as well as purchasing SBN in the secondary market. 2) To support national economic recovery efforts from the deleterious COVID-19 impact, Bank Indonesia will increase monetary easing through quantitative easing as follows: a. Expand monetary operations by providing banks and the corporates a term-repo mechanism with SUN/SBSN underlying transactions of tenors up to one year. b. Lower the rupiah reserve requirement ratios by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units, effective from 1st May 2020. c. Relax the additional demand deposit obligations to meet the Macroprudential Intermediation Ratio (MIR) for conventional commercial banks as well as Islamic banks/Islamic business units for a period of one year, effective from 1st May 2020. 3) To strengthen liquidity management in the banking industry and in relation to the lower rupiah requirements, Bank Indonesia has raised the Macroprudential Liquidity Buffer (MLB) by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units, effective from 1st May 2020. The banking industry is required to meet the additional MLB through purchases of government issued SUN/SBSN in the primary market. 4) To increase the uptake of non-cash payment instruments in order to mitigate the COVID-19 impact, Bank Indonesia is increasing various payment system policy instruments as follows: a. Supporting government programs to accelerate non-cash social aid program (bansos) disbursements to members of the public in conjunction with payment system service providers by expediting the electronification of relevant social programs, including the Family Hope Program (PKH), Noncash Food Assistance Program (BPNT), Pre-Employment Card and Smart Indonesian Card (KIP). b. Increasing public socialization activities in collaboration with payment system service providers to increase the uptake of non-cash payment instruments through digital banking, electronic money and broader QRIS acceptance. c. Relaxing credit card policy by lowering the upper limit for credit card interest, minimum payment requirements and the penalties for late payments, while supporting credit card issuer policy to extend the due date for customers. 68

  62. Bank Indon ones esia ia Po Polic licy Mix: : March 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on To o strengthen coord rdinati tion and the va various s policy y measu sure res s already y take ken, Bank Indonesia on Marc rch nd 2020 intro 2 nd roduce ced a va variety ty of five ve follow ow-up p policy cy measure res s to to mainta tain moneta tary and financial market t stabi bility ty as well as mitigate te the COVID-19 19 risks 1) Intensify triple intervention policy to ensure rupiah exchange rates move in line with the currency's fundamental value and market mechanisms. To that end, Bank Indonesia will optimize its intervention strategy in the DNDF market, spot market and SBN market in order to minimize the risk of increasing rupiah exchange rate volatility. 2) Lower the FX reserve requirements for commercial banks from 8% to 4%, effective 16th March 2020, which will increase FX liquidity in the banking industry by around USD3.2 billion and simultaneously alleviate foreign exchange market pressures. 3) Lower the rupiah reserve requirements by 50bps for banks financing export-import activity in coordination with the Government. Effective from 1st April 2020 for a period of nine months before a further review, this policy is expected to facilitate export-import activity through lower costs/fees. 4) Expand the range of underlying transactions available to foreign investors in order to provide alternative hedging instruments against rupiah holdings. 5) Reaffirm that global investors can utilize global and domestic custodian banks to conduct investment activity in Indonesia. 69

  63. Bank Indon ones esia ia Po Polic licy Mix: : March 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on th and 19 th Marc sia on the Board of Gov overn rnor ors s Meeti ting 18 th 19 th rch 2020 has reinfor Bank k Indon onesi orced ed its policy mix towa owards ds mitigating the risk k of COV OVID-19 transm smissi ssion on, while e maintaining money ey market et and financial system em stabi bility and catalyzi zing economi omic growt owth h momentum m throu ough h the followi owing policy measu sures es: 1) Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms, including the spot and DNDF markets as well as purchasing SBN in the secondary market. 2) Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry, effective from 20th March 2020. 3) Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate liquidity, effective from 19th March 2020. 4) Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market, while encouraging the banks to utilize the foreign currency reserve requirements lowered by Bank Indonesia for domestic purposes. 5) Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia, which has been brought forward from 1st April 2020 to no later than 23rd March 2020. 6) Expanding the incentive of a 50bps daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors, effective from 1st April 2020. 7) Strengthening payment system policy to support COVID-19 mitigation efforts by: • providing hygienic currency fit for circulation, alternative cash and backup services, and urging the public to prioritize non-cash payment transactions; • encouraging the use of non-cash payment channels by reducing the cost of the National Clearing System (SKNBI) from the banking industry to Bank Indonesia from Rp600 to Rp1 and from customers to the banking industry from a maximum of Rp3,500 to Rp2,900, effective from 1st April 2020 until 31st December 2020; and • supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), Pre-Employment Card and College Smart Indonesia Card. 70

  64. Bank Indon ones esia ia Po Polic licy Mix: : March 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on th and 19 th Marc sia on the Board of Gov overn rnor ors s Meeti ting 18 th 19 th rch 2020 has reinfor Bank k Indon onesi orced ed its policy mix towa owards ds mitigating the risk k of COV OVID-19 transm smissi ssion on, while e maintaining money ey market et and financial system em stabi bility and catalyzi zing economi omic growt owth h momentum m throu ough h the followi owing policy measu sures es: 1) Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms, including the spot and DNDF markets as well as purchasing SBN in the secondary market. 2) Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry, effective from 20th March 2020. 3) Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate liquidity, effective from 19th March 2020. 4) Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market, while encouraging the banks to utilize the foreign currency reserve requirements lowered by Bank Indonesia for domestic purposes. 5) Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia, which has been brought forward from 1st April 2020 to no later than 23rd March 2020. 6) Expanding the incentive of a 50bps daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors, effective from 1st April 2020. 7) Strengthening payment system policy to support COVID-19 mitigation efforts by: • providing hygienic currency fit for circulation, alternative cash and backup services, and urging the public to prioritize non-cash payment transactions; • encouraging the use of non-cash payment channels by reducing the cost of the National Clearing System (SKNBI) from the banking industry to Bank Indonesia from Rp600 to Rp1 and from customers to the banking industry from a maximum of Rp3,500 to Rp2,900, effective from 1st April 2020 until 31st December 2020; and • supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), Pre-Employment Card and College Smart Indonesia Card. 71

  65. Bank Indon ones esia ia Po Polic licy Mix: : April il 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on As a follow-up p measu sure to stren rengthen monetary and financial mark rket stabi bility in conjunction on with the Coordi dinating Minist stry of Economi omic Affairs, s, Minist stry of Finance, e, Indon ones esian Financial Services es Au Autho hority (OJK) and Deposi osit Insurance e Corpora oration on (LPS), th the e Gov overnor or of Bank k Indon onesi sia, Perry Wa Warjiyo, on April 1st 2020 delivered ered The policy mix impleme emented ed by by Bank k Indo dones esia to mitigate e the COV OVID-19 impact is as follows ws: 1) Lower the BI 7-Day (Reverse) Repo Rate in February and March by 25bps respectively; 2) Intensify triple intervention policy in the spot and DNDF markets and purchasing SBN in the secondary market; 3) Reduce the foreign currency reserve requirements for conventional commercial banks from 8% to 4%; 4) Extend the SBN repo tenor and provide daily auctions to loosen rupiah liquidity as well as increase the frequency of FX Swap auctions to daily in order to ensure adequate liquidity; 5) Expand the types of underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia; 6) Lower the rupiah reserve requirements by 50bps for banks that are engaged in export-import financing, as well as the financing of MSMEs and other priority sectors; 7) Loosen the Macroprudential Intermediation Ratio (MIR); 8) Provide hygienic currency fit for circulation, reduce the costs of the National Clearing System (SKNBI), maintain a QRIS Merchant Deposit Rate (MDR) of 0% for micro-merchants, and support non-cash disbursements of various government programs, including the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), as well as the Pre-Employment Card and College Smart Indonesia Card. Bank Indonesia reiterated that rupiah exchange rates are currently adequate and the outlook scenario formulated for the main macroeconomic indicators is a form of forward-looking anticipatory measure towards prevention through joint efforts, while Bank Indonesia continues to maintain rupiah stability. 72

  66. Bank Indon ones esia ia Po Polic licy Mix: : April il 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on As a follow-up p measu sure to stren rengthen monetary and financial mark rket stabi bility in conjunction on with the Coordi dinating Minist stry of Economi omic Affairs, s, Minist stry of Finance, e, Indon ones esian Financial Services es Au Autho hority (OJK) and Deposi osit Insurance e Corpora oration on (LPS), th the e Gov overnor or of Bank k Indon onesi sia, Perry Wa Warjiyo, on April 1st 2020 delivered ered The policy mix impleme emented ed by by Bank k Indo dones esia to mitigate e the COV OVID-19 impact is as follows ws: • Bank Indonesia also backs promulgation of the Government Regulation in Lieu of Law in order to relax prevailing laws to mitigate the COVID-19 impact as an anticipatory measure in conjunction with the Government, OJK and LPS. COVID-19 handling requires extraordinary measures, unconventional policies and policies that exceed previous jurisdiction. • To that end, Bank Indonesia has reiterated its authority in accordance with Government Regulation in Lieu of Law (Perpu) No. 1 of 2020 as follows: 1) Expansion of BI authority to purchase long-term government securities (SBN) and government Islamic securities (SBSN) in the primary market in order to assist the Government finance the handling of the COVID-19 impact on financial system stability. 2) SBN will be purchased in the primary market by Bank Indonesia as a last resort if the market is unable to fully absorb the SBN issued by the Government. Further provisions will be regulated in conjunction with the Minister of Finance and the Governor of Bank Indonesia based on the following considerations: financial market conditions and the impact on inflation. 3) As an anticipatory measure, Bank Indonesia will purchase repo securities held by the Deposit Insurance Corporation (LPS) in order to finance the handling of solvency issues at systemic and non-systemic banks; 4) Provision of short-term liquidity loan or short-term liquidity financing facilities in compliance with sharia principles to systemic and non-systemic banks; 5) Foreign exchange flow management for residents. The use of foreign exchange by residents, including provisions for the surrender, repatriation and conversion of foreign exchange to maintain macroeconomic and financial system stability as follows: 6) Bank Indonesia would like to stress that this measure is not a form of foreign exchange control but policy to manage foreign exchange applicable only to residents (excluding non-residents/foreign investors). Foreign portfolio investment and foreign direct investment (FDI) are still required for the Indonesian economy, thus existing policy permitting the free flow of foreign exchange by foreign investors remains effective. 7) Regulating foreign exchange amongst residents is consistent with international prudential principles for macroeconomic management, particularly under economic distress, such as the current COVID-19 pandemic. 73

  67. Bank Indon ones esia ia Po Polic licy Mix: : April il 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on Bank k Indon onesi sia has agree eed d a repurcha hase se agree eemen ent line (repo o line) with h the US Federal reser erve e worth USD6 D60 billion on • The agreement may be used by Bank Indonesia to fulfil US dollar liquidity if required. The repo line facility for Foreign and International Monetary Authorities (FIMA) has only been extended to a few central banks, thus indicating confidence in Indonesia's economic outlook and the macroeconomic policies implemented. In addition, Bank Indonesia has also established repo line facilities with several other institutions, namely the Bank for International Settlements (BIS), worth USD2.5 billion, the Monetary Authority of Singapore (MAS), USD3 billion, as well as other central banks in the region valued at USD500 million-USD1 billion. • The agreements will strengthen Bank Indonesia’s second line of defence, encompassing Bilateral Currency Swap Arrangements (BCSA) with several other central banks, namely the People’s Bank of China (PBoC), worth CNY200 billion (equivalent to USD30 billion), the Bank of Japan (BOJ), USD22.76 billion, Bank of Korea, KRW10.7 trillion (equivalent to Rp115 trillion), and the Monetary Authority of Singapore (MAS), USD10 billion. 74

  68. Bank Indon ones esia ia Po Polic licy Mix: : April il 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on Bank k Indon onesi sia Issued d Impl pleme menting Prov rovisi sion ons s for Au Auction on of Gov overn rnme ment Debt Securi rities s (SUN) ) and/ d/or or Gov overnmen ment Islamic Securities es (SBSN) in the Prima mary Market et • Bank Indonesia issued Board Member of Governors Regulation No. 22/5/PADG/2020 on Auction of Government Debt Securities and/or Government Islamic Securities in the Primary Market to Maintain State Financial Management Sustainability as Implementation of Government Regulation in Lieu of Law Number 1 of 2020 on State Financial Policy and Stability of Financial Systems for the Management of Corona Virus Disease 2019 (Covid-19) and/or Encounter the Threat to National Economy and/or Stability of Financial Systems. The regulation starts to take effect on 20 April 2020. • The regulation serves as a follow-up to Government Regulation in Lieu of Law Number 1 of 2020, granting authority to Bank Indonesia among others to purchase Government Debt Securities (SUN) and/or Government Islamic Securities (SBSN) in the primary market . It is necessary as a funding source for the government to recover the national economy including maintaining state financial management sustainability including SUN and/or SBSN issued in response to COVID-19 pandemic. Purchase of SUN and/or SBSN in the primary market is based on principle that Bank Indonesia is a last resort if the market capacity is unable to purchase them and/or result in high yield increase. Further, this regulation specifies the following: 1) Bank Indonesia holds auction of SUN and/or SBSN and auction of additional SUN and/or SBSN for long-term SUN and/or SBSN in the primary market as a follow-up to the implementation of Government Regulation in Lieu of Law Number 1 of 2020. 2) Provisions for offer quote and participants of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the applicable Finance Minister Regulation on auction of SUN and/or SBSN in the domestic primary market. 3) Bank Indonesia may quote an offer to purchase long-term SUN and/or SBSN in auction of SUN and/or SBSN and auction of additional SUN and/or SBSN in the following manners: a. directly without using the main dealer and/or SBSN main dealer; b. non-competitive bid. 4) Implementation of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the applicable Bank Indonesia provisions for auction of Government securities in the primary market provided that they are not in contravention of this regulation. 75

  69. Princ ncipl iples es of Average ge Reser erve e Requirem uiremen ent Ratios ios Impr provemen ovement Effec ective e Consider derations ons for the Aver erage e Reser erve e Requi uirem emen ent Ratios os Substanc nce Old New Date Improv ovem ement nt a. Additional rupiah Improvement in average reserve requirement is a follow up 16 th July • average reserve Fixed RR: 5% Fixed RR: 4.5% to the monetary policy operational framework reform requirement for Average RR: 1.5% Average RR: 2% 2018 implemented by Bank Indonesia since 2016. conventional RR: 6.5% RR: 6.5% commercial banks • Monetary policy operational framework reform started in August 2016 as BI7DRR replaced BI Rate as policy rate. This 16 th July b. Annulment of was then strengthened in 1st July 2017, by the demand deposit 2.5% (from 1.5% RR) 0% 2018 implementation of the average reserve requirement in renumeration rupiah for conventional commercial banks at 1.5% out of the total 6.5% of GDP reserve requirement in Rupiah. The c. Implementation of reformulation is also backed by various efforts in financial foreign exchange Fixed RR: 8% Fixed RR: 6% market deepening. average reserve 1 st October Average RR: 0% Average RR: 2% requirement for 2018 • The current improvement aims to elevate flexibility in RR: 8% RR: 8%* conventional banking liquidity management, enhance banking commercial banks intermediation function, and support efforts in financial market deepening. This multiple targets will in turn improve d. Implementation of the effectiveness of monetary policy transmission in Fixed RR: 5% Fixed RR: 3% 1 st October average reserve maintaining economic stability. Average RR: 0% Average RR: 2% 2018 requirement for RR: 5% RR: 5%* Islamic banks * Complemented by harmonisation feature to align with the average reserve requirement in rupiah feature for conventional commercial banks (e.g. Calculation period, lag period, and Maintenance period of 2 weeks) Source: Bank Indonesia 76

  70. Relaxing ing Reserve rve Requir irem emen ent t Ratios ios Lower reserve requirements, effective 1 st May 2020 Regulati tion on 1 200bps for conventional commercial banks INELIGIBLE for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3% 2 50bps for Islamic banks and Islamic business units INELIGIBLE for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3% 3 200bps for conventional commercial banks eligible for looser daily reserve requirements as per macroprudential policy to support export- import and MSME financing, effective from 1 st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3% 4 50bps for Islamic banks and Islamic business units eligible for looser daily reserve requirements as per macroprudential policy to support export-import and MSME financing, effective from 1 st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3% Source: Bank Indonesia 77

  71. Prin inciples les of Macrop opruden rudenti tial al Interm ermediat ediation ion Ratio o (MIR) R) and Macrop oprude rudential ntial Liquidity uidity Buffer er (MLB) Consideration ons s for Macropr prudential l Instruments s Macrop oprudential Intermediation on Ratio o (MIR) and Macroprudentia ial Liqu quidity Buffer (MLB) 1 2 3 4 Striving to stimulate the bank The policy is expected to This The regulation is effective intermediation function and liquidity stimulate the bank macroprudential for conventional management, Bank Indonesia intermediation function to the policy instrument is commercial banks from 16 th July 2018 and for issued Bank Indonesia Regulation real sector congruent with countercyclical and (PBI) No. 20/4/PBI/2018 and Board sectoral capacity and the can be adjusted in sharia banks from 1 st of Governors Regulation (PADG) No. economic growth target in line with prevailing October 2018. 20/11/PADG/2018 concerning the compliance with prudential economic and Macroprudential Intermediation principles, while also overcoming financial dynamics. Ratio (MIR) and Macroprudential the issue of liquidity Liquidity Buffer (MLB) for procyclicality. Conventional Commercial Banks, Sharia Banks and Sharia Business Units. Source: Bank Indonesia 78

  72. Prin inciples les of Macrop opruden rudenti tial al Interm ermediat ediation ion Ratio o (MIR)* )* MIR Sharia (Sharia Banks s and Sharia Business s Regulati tion MIR (Conventional Commercial Bank) Units) 1 MIR Accounting Formula Credit + Owned Bond Financing + Owned Sharia Bond Deposit + Issued Bond Deposit + Issued Sharia Bond   2 Rate and Parameters Ceiling 94% Ceiling 94%   Floor 84% Floor 84%   Minimum Capital Adequacy Requirement 14% Minimum Capital Adequacy Requirement 14%   Upper disincentive parameter 0.2 For Sharia business units, the Minimum Capital Adequacy Requirement is the same as that of the parent  Lower disincentive parameter 0.1 conventional commercial bank  Upper disincentive parameter 0.2  Lower disincentive parameter 0.1   3 Scope of credit/financing and Credit: rupiah and foreign currency Financing: rupiah and foreign currency deposits to calculate MIR / MIR   Deposits in rupiah and a foreign currency: (i) Deposits in rupiah and a foreign currency: (i) wadiah Sharia demand deposits, (ii) savings deposits; and (iii) savings; and (ii) unrestricted investment funds, excluding term deposits, excluding interbank funds interbank funds 4 Source of Data Monthly Commercial Bank Reports Monthly Sharia Bank Reports  5 Criteria for securities held Corporate bonds and/or corporate sukuk Corporate bonds and/or corporate sukuk  Issued by a nonbank corporation and by a resident  Offered to the public through a public offering  Equivalent to investment grade rating affirmed by a rating agency  Administrated by an authorised securities institution 79 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  73. Prin inciples les of Macrop opruden rudenti tial al Interm ermediat ediation ion Ratio o (MIR)* )* Regulati tion on MIR (Convention onal Commercial Bank) MIR Sharia (Sharia Banks and Sharia Busines ess Units) 6 Percentage of the securities 100% held Criteria for securities issued  medium-term notes (MTN), floating rate notes (FRN)  sharia-compliant medium-term notes (MTN) and/or 7 and/or bonds other than subordinated bonds sukuk other than subordinated sukuk  Issued by a nonbank corporation and by a resident  Offered to the public through a public offering  Equivalent to investment grade rating affirmed by a rating agency  Administrated by an authorised securities institution 8 Securities Reporting Offline delivery mechanism (email)  Average daily total deposits in rupiah at all branch  Average daily total deposits in rupiah at all branch 9 Scope of deposits to meet DD MIR /DD MIR Sharia offices in Indonesia offices and sharia business units in Indonesia   Including rupiah liabilities to a resident and non- Including rupiah liabilities to a resident and non- resident third-party nonbank, consisting of: (i) resident third-party nonbank, consisting of: (i) wadiah demand deposits, (ii) savings deposits; (iii) term savings; (ii) unrestricted investment funds, and (iii) deposits, and (iv) other liabilities other liabilities  10 Relaxation of DD Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing disbursement MIR/Sharia DD MIR and fund accumulation  The provisions may be relaxed based on a request from a conventional commercial bank, Sharia bank or Sharia business unit or a recommendation from the Financial Services Authority (OJK)  Conventional commercial banks, Sharia banks or Sharia business units that receive the relaxed policy are exempt from sanctions 80 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  74. Adjus justment ent of Macr cropr oprud udentia ential Inter ermed mediatio iation n Ratio io (MIR)/ )/Sharia ia Macr cropr oprud udentia ential Inter ermed mediati iation on Ratio io (Sharia ia MIR)* )* Bank Indonesia strengthens accommodative macroprudential policy through an adjustment to the Macroprudential Intermediation Ratio by including the loan/financing received by banks as a component of funding in MIR/sharia MIR. Policy Backgroun ounds Main Regul ulator ory Points • Including loan received by conventional commercial banks and financing received by Islamic banks and Islamic • In response to global and domestic economic business units as a source of bank funding in the calculation of MIR/sharia MIR. developments, BI is maintaining an accommodative policy mix to maintain the • The criteria for loans/financing received by banks that are eligible to be included in MIR/sharia MIR calculation economic growth while also maintaining are as follows: macroeconomic and financial system stability. a. Loans/financing received in Rupiah and foreign currency; b. Loans/financing received in the form of bilateral loans and/or syndicated loans for conventional commercial • BI relaxed MIR/sharia MIR policy in March banks, Islamic banks and Islamic business units; 2019, which stimulated bank lending. c. Loans/financing excludesinterbank loans/financing. Nevertheless, the macroprudential d. Loans/financing received with a maturity of no less than 1 year; and intermediation ratio (MIR) is again e. Loans/financing received based on a loan agreement. approaching the upper bound, thus necessitating efforts to increase bank lending Based on points a and b, the adjusted MIR/sharia MIR formula is as follows: • capacity. Cred edit t + Owned ed Bond • Considering the potential of bank funding Deposit t + Issued Bond + Loan/Financing Rec ecei eived ed sources that are not included in the MIR ratio, for example the expanding share of Lowe wer disincen enti tive ve paramet eter er Upper disincen enti tive ve paramet eter er loans/financing received by banks, BI decides MIR/shar aria MIR RR RR= MIR/shar aria MIR RR RR= to adjust MIR/sharia MIR policy in order to Lower Disincentives Parameter x (Lower Bound of MIR/Sharia MIR 0.2 x (Bank’s MIR/sharia MIR - Upper Bound of optimize loans/financing received for bank Target – Bank’s MIR/Sharia MIR) x Deposit MIR/Sharia MIR Target – ) x Deposit lending. • This policy to stimulate credit growth will *This disincentive applies for banks with CAR below 14%. comply with prudential principles. Therefore, BI is only encouraging banks with low non- performing loans and adequate capital resilience to expand credit/financing. The reference rate used to calculate penalties for banks that do not meet MIR/sharia MIR policy will be adjusted • from the Jakarta Interbank Offered Rate (JIBOR) to the Indonesia Overnight Index Average (IndONIA). *This adjustment will be effective from December 2 nd , 2019 81 Source: Bank Indonesia

  75. Prin inciples les of Macrop opruden rudenti tial al Liquidit uidity Buffer er (MLB) Regulati tion MLB (Conventi tional Commerci cial Bank) MLB Sharia (Shari ria Banks) s) 1 Rate 4% of rupiah deposits (including Sharia Business Units 4% of rupiah deposits deposits)  Securities denominated in rupiah held by a conventional  Sharia-complaint securities denominated in rupiah 2 Components commercial bank that may be used for monetary held by an Sharia bank that may be used for sharia- operations (including SBI/SDBI/SBN); and compliant monetary operations (including SBIS/SBSN)  Sharia-complaint securities denominated in rupiah held by an Sharia business unit that may be used for sharia- compliant monetary operations (including SBIS/SBSN) 3 Calculation Formula Percentage of rupiah securities held by a conventional Percentage of sharia-compliant rupiah securities held by commercial bank to rupiah deposits an Sharia bank to rupiah deposits 4 Flexibility Under certain conditions, the securities used to meet the MLB Under certain conditions, the securities used to meet the may be used for repo transactions to Bank Indonesia for open sharia MLB may be used for repo transactions to Bank market operations, totalling no more than 2% of rupiah Indonesia for open market operations, totalling no more deposits than 2% of rupiah deposits   5 Sources of Data on Monthly Commercial Bank Reports Monthly Sharia Bank Reports Deposits   Rupiah deposits to calculate MLB are the average daily Rupiah deposits to calculate sharia MLB are the total deposits at all branches in Indonesia average daily total deposits at all branches in Indonesia  Rupiah deposits include: (i) demand deposits, (ii) savings  Rupiah deposits include: (i) wadiah savings; (ii) deposits; (iii) term deposits, and (iv) other liabilities unrestricted investment funds, and (iii) other liabilities 82

  76. Macr cropr oprud udentia ential Liquid uidit ity y Buf uffer er (MLB LB) ) Policy icy and nd Credit it card policy icy Policy to increase the Macroprudential Liquidity Buffer (MPLB), effective 1 st May 2020. Regulati tion Before re Afte ter 1 Increase in the Macroprudential Liquidity Buffer (MLB) 4% of rupiah deposits 6% of rupiah deposits for conventional commercial banks 2 Increase in the Macroprudential Liquidity Buffer (MLB) 4% of rupiah deposits 4.5% of rupiah deposits for Islamic banks and Islamic business units Credit card policy, effective 1 st May 2020. Regulation on Before re Afte ter Effectiv tive Period 1 st May 2020 1 Lower upper limit on credit card interest 2.25% per month 2% per month 1 st May 2020 – 31 st 2 Temporary reduction of minimum payment 10% 5% requirements December 2020 1 st May 2020 – 31 st 3 Temporary reduction of late payment 3% or maximum of Rp150,000 1% or maximum of Rp100,000 penalties December 2020 1 st May 2020 – 31 st 4 Supporting credit card issuer policy to extend Issuer discretion the due date for customers December 2020 83

  77. Relaxing xing the Loan-to to-Value lue (LTV) ) and Fina inancin cing-to to-Value lue (FTV) ) Ratios ios* The LTV/ V/FT FTV V relaxation is conduc ucted ed while taking g into account nt aspects of prude dential and consum umer er protect ection* 2. Relaxing the amount of loan/financing facility through indent 1. Increasing opportunities of first time buyers to fulfill their housing needs mechanism to a maximum of 5 facilities without taking account of through housing loan, specifically by adjusting the LTV ratio for property the orders loan and the FTV ratio for property financing for the 1st facility, 2nd facility, etc., making the largest LTV ratio for property credit and FTV 3. Adjusting the arrangement of stages and amount of property ratio for property financing as shown in the table below. loan/financing disbursement of indent property: “ - “= The LTV rate depends on each bank’s risk management *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019 Source: Bank Indonesia 84

  78. Relaxing xing the Loan-to to-Value lue (LTV) ) and Fina inancin cing-to to-Value lue (FTV) ) Ratios ios* Pruden dential aspec ects s of Re Relaxing g the e Loan-to to-Value e (LTV) V) and Financing-to to-Value e (FTV) V) Ratios os 1. The requirements of the LTV ratio for property credit and FTV ratio for property financing are as follows: i. The net ratio of NPL to total credit or NPF to total financing must not exceed 5%; and ii. The gross ratio of property NPL to total property credit or property NPF to total financing must not exceed 5%. 2. Banks must make sure that there is no loan transfer to another borrower at the same bank or different bank for tenors of less than 1 year. The requirements are valid for banks that will disburse pre-order property loan/financing. 3. Banks are required to comply with prudential principles when disbursing loans. 4. Gradual loan liquidation is only allowed for developers that comply with bank’s risk management policy (e.g.the business feasibility of the developer). 5. Banks are required to ensure that transactions to disburse loans (including down payment) and gradual liquidation must be processed through the debitor and developer/seller’s bank account. LTV V / FTV V Exem emptions Central government or local government loan / financing programs are exempt from this regulation. Source: Bank Indonesia 85

  79. Adjustm justment ent of LTV Ratio io for Proper erty y Loans ns, , FTV Ratio io for Proper perty y Fina nanc ncing, ing, and nd Down own Paymen yments on Automo omotiv ive e Loans ns/Fi Fina nanci ncing* ng* Bank Indonesia adjusts macroprudential policy in the property and automotive sectors by: (i) relaxing the LTV ratio for property loans and the FTV ratio for property financing; (ii) providing additional incentive on LTV ratio for green property loans and FTV ratio for green property financing; (iii) relaxing down payments on automotive loans/financing; (iv) providing additional incentive on down payments on green automotive loans. Policy Backgroun ounds Main Regul ulator ory Points • In response to global and domestic economic 1. Adjustment of LTV Ratio for Property Loans and FTV Ratio for Property Financing. developments, BI is maintaining an accommodative policy a. BI decides to relax the LTV ratio for property loans and FTV ratio for property mix to maintain the economic growth while also financing by 5% from current ratio as follows: maintaining macroeconomic and financial system stability. This effort will be targeted to several potential sectors. Considering the ongoing needs to stimulate the property • and automotive sectors which have a huge backward and forward linkages to other sectors in the economy, BI decides to relax LTV/FTV policy for property loans/financing and down payments on automotive loans in compliance with prudential principles. • Additional incentives are also given to support sustainable development through green financing in order to reduce potential disruptions to financial system stability stemming from environmental degradation. As a prudential mitigation, those relaxations will be given to • borrower with strong repayment capacity and low credit/financing risk. • BI will regularly evaluate this policy at least once a year. *This adjustment will be effective from December 2 nd , 2019 Source: Bank Indonesia 86

  80. Adjustm justment ent of LTV Ratio io for Proper erty y Loans ns, , FTV Ratio io for Proper perty y Fina nanc ncing, ing, and nd Down own Paymen yments on Automo omotiv ive e Loans ns/Fi Fina nanci ncing* ng* Main Regul ulator ory Points 2. Additional incentive on the LTV ratio for green property loans and FTV ratio for green property financing. a. The Green Property criteria refers to the standards/certificates issued by a nationally or internationally recognized environmental institution. b. Green property that is granted for the incentive has to meet the following standards: i. For residential areas/buildings in certified green belt areas, each unit in the residential area/building is 3. Adjustment of Down Payments on Automotive Loans/Financing considered to meet the criteria. a. Down Payments on Automotive Loans/Financing is adjusted as ii. In case that the residential area/building is not a certified follows: green belt area, an evaluation will be conducted on each i. Relaxation on the down payments of automotive loans or unit as follows: automotive financing 5%-10% from current regulations;  For buildings < 2500m 2 , the bank may conduct a self- assessment using the tools/applications provided by a ii. The relaxation should consider the gross NPL/NPF ratios recognized institution. and gross NPL/NPF ratios on automotive loans/financing;  For buildings > 2500m 2 , the assessment must be iii. The adjustment of down payments of automotive conducted by a recognized institution; loans/financing in points a and b is as follows:  For new buildings constructed in an area by one developer or group of developers, the assessment must be conducted by a recognized institution and the certificate must be submitted by the developer i. Additional incentive for green property on LTV ratio for property loans and FTV ratio for property financing is 5% from the LTV/FTV ratio presented in Table 2 as follows: *This adjustment will be effective from December 2 nd , 2019 Source: Bank Indonesia 87

  81. Adjustm justment ent of LTV Ratio io for Proper erty y Loans ns, , FTV Ratio io for Proper perty y Fina nanc ncing, ing, and nd Down own Paymen yments on Automo omotiv ive e Loans ns/Fi Fina nanci ncing* ng* Main Regul ulator ory Points 4. Adjustment of Down Payments on Green Automotive Loans/Financing a. The green vehicles criteria refers to the Presidential Regulation No. 55 of 2019 concerning Battery Electric Vehicles. b. The down payments on green automotive loans or green automotive financing is adjusted as follows: i. Additional incentive of 5% on green vehicles from the down payment presented in Table 5; ii. The down payment incentives considers the gross NPL/NPF ratios and gross NPL/NPF ratios on automotive loans/financing; iii. The down payment regulation for green automotive loans or green automotive financing in points a and b is as follows: Note: Adjustments of the LTV ratio for property loans, FTV ratio for property financing and down payments on automotive loans or financing will be effective from December 2 nd , 2019 *This adjustment will be effective from December 2 nd , 2019 Source: Bank Indonesia 88

  82. Prin inciples les of Domes estic tic Non n Deliv iverab erable le Forwar ard d (DND NDF) F) Trans nsac acti tion on Purposes oses Genera eral Pro rovision isions  Domest stic c Non-Delivera rabl ble Forward Transa sacti ction on (DNDF Transa sacti ction on) 1. To support the effort of stabilizing Plain vanilla derivatif transaction of foreign exchange against rupiah in the form of the Rupiah exchange rate through forward transaction with fixing mechanism in the domestic market the additional of alternative hedging instruments  Forward Transa sacti ction ons Forward Transactions are sell/purchase foreign currencies againts rupiah whereas the delivery of funds shall be performed in more than 2 days after the transaction date 2. To support the development and deepening of the domestic  Fixing Mechanism sm financial market Transaction settlement mechanism without full movement of funds by calculating the difference between rate on the transaction date and reference rate in JISDOR on a 3. To increase the confidence of specified future time agreed in the contract (fixing date) exporters, importers, and investors in conducting economic and  Other r Definiti tion ons investment activities through the The definition of derivative transaction of foreign exchange againts rupiah, Forward flexibility of hedging transactions Transaction, Spot Transaction, Customers, Foreign Party is referring to Bank Indonesia against Rupiah currency risk regulations regarding foreign exchange transaction againts rupiah Source: Bank Indonesia 89

  83. Prin inciples les of Domes estic tic Non n Deliv iverab erable le Forwar ard d (DND NDF) F) Trans nsac acti tion on Bank can perform orm DNDF F Tra ransactions ons as follows: s: 1. Must have Unde derlyi ying Transa sact ction ons: Transa sacti ction on between: Includ uding ng all follow owing ng activities es : a. Trade of goods and services b. Investments, loans, capital, and other investements. c. Banks credit or financing in foreign currencies (specifically for transactions between bank and customers) Can only be performed to Bank – Customer Exclud uding ng follow owing ng activities es: hedge rupiah a. Bank Indonesia certificates; b. Placement of funds with bank; exchange rate c. Unwithdrawn credit facilities; risk. d. Documents of foreign currencies sales againts rupiah; e. Money transfer by fund transfer companies f. Intercompany loan g. Money changer activities. Bank – Foreign Party 2. Nominal of DNDF Transactions ≤ Nominal of Underlying Transactions 3. Tenor of DNDF Transactions ≤ Tenor of Underlying Transactions Bank – Bank Source: Bank Indonesia 90

  84. Prin inciples les of Domes estic tic Non n Deliv iverab erable le Forwar ard d (DND NDF) F) Trans nsac acti tion on Transa saction on Settlem emen ent • Use Fixing mechanism • Reference rate: JISDOR for USD/IDR and BI FX Transaction MidRate for non-USD/IDR • Settlement currency : IDR • Roll over and early termination are not allowed over and early term rmination on for DNDF is pro Roll ov rohibited However, unwind can be done by opening the reverse DNDF transactions Cov over er Hedgi dging Bank may conduct DNDF Transactions with Bank Overseas for cover hedging purpose. • Underlying Transactions: DNDF Transaction between Bank and Customer/Foreign • Purpose: Hedging Ove vers rsea eas Custom tomer / / Cover Bank Hedging Foreign Party Bank Hedging Notes: Customer A conduct DNDF transactions with Bank B, and so Bank B can conduct DNDF transactions with overseas Bank for the purpose of cover hedge. Source: Bank Indonesia 91

  85. Amendm ndmen ent t on DNDF DF Regulat lation ion *to to provid ide e more e flexib exibil ility ty in DNDF F transa sacti ction on *to to increa ease se liqui quidit ity y and efficiency ciency in domestic stic foreign ign exch exchange ge market et BI Re Regulation No. 21/7/PBI/2019 BI Re Regulation on No. 20/10/PBI/2018 AMENDMENT Article e 3 Article e 3 1. Sell FX/IDR through DNDF up to $ 5 mio can be done without 1. DNDF transactions must have Underlying underlying documents Article e 6 Article e 6 2. Not Regulated; 2. DNDF can be terminated (unwind); Article e 11 Article e 11 3. Underlying documents for buy FX/IDR for DNDF is : 3. Underlying documents must be final (firm) with additional • Final (firm commitment) + Supporting documents supporting documents 4. Underlying documents for sell FX/IDR for DNDF above threshold $ 5 mio can be: • Final (firm commitment) + Supporting documents • Projection (anticipatory basis) + Supporting documents Article e 11 Article e 11 5. In using estimate underlying transaction documents in the 4. Not Regulated; form of cash flow projection, Bank must evaluate the appropriateness through: a. Supplementary documents; b. Historical data within at least 1 year before; and c. Track record of the Customer or Foreign Party. *Effective on May 17 th , 2019; English version of the regulation is available in BI website. Source: Bank Indonesia 92

  86. Overnight night Index Swaps (OIS) S) & Interes erest t Rate Swaps (IRS) IRS is a contract between two parties to As hedging instruments s against st Rupiah interest st rate changes periodically exchange rupiah interest rate flows 4 during the contract period or at the completion of the contract based on certain notional amount. IRS pricing is based on JIBOR. 3 OIS is an interest rate swap agreement based on a daily overnight reference rate (IndoNIA) Improvement of IRS transaction 2 liquidity Alignment between JIBOR  Encourage price transparency in the rupiah and OIS interest money market rate OIS transaction 1 Strengthen monetary policy transmission  with IndoNIA as  Provide alternative hedging instruments benchmark rate against rupiah interest rate changes  Support securities market deepening in IndoNIA & JIBOR Indonesia Strengthening reference rate based on real transactions Source: Bank Indonesia 93

  87. OIS and IRS Trans nsac action ions: : General eral Provis vision ions Market Pla layers. Banks, bank clients, both individual and non-bank institutions, and also foreign parties. Market Conventions Transa sact ction ion Nee Needs An Analysis sis. A bank performing an IRS or OIS transaction with a customer and/or foreign party on behalf of the customer and/or foreign party is Calculation on Interest erest Paymen ent OIS Quotation on rates es required to have an analysis on the need of rupiah Base se AC ACT/360 based ed on Netting based ed on 2 decima mals interest rate derivative transactions. IndON ONIA Index x Notion onal of Net Quotation on : 1W, 2W, Market Con onventions. When performing IRS and OIS interest rest payme ment in with h 5 5 1M, 2M, 3M, 4M, transactions, the respective bank is bound by market IDR with 0 decima mals decima mals 5M, 6M conventions agreed upon by market players through industry association including the Indonesian Foreign Exchange Market Committee. At At the 1st phase se, OIS Compou ound d settleme ement will only Settlemen ment Date e = 1 Set Settlem lement. Settlement can be performed as a netting Floating Rates es be done at the end busines ess s days s after er payment and every transaction has to be settled in (CFR) based ed of the OIS tenor or Maturi rity Date (MD) on 5 decima mals Rupiah. Clos lose-out nettin ing can be applied under (MD+1bd). d). predetermined conditions. Source: Bank Indonesia 94

  88. Stab able le Monetar etary Envir ironm onmen ent t Despit ite e Challen llenges ges Well l Maint intaine ined Infla latio ion Ensured ed Pric ice e Stabil ilit ity Stren engthen ened ed Monet etary Poli licy Framew ewor ork (%) (%) 19 August 2016 8.00 The New CPI (%, yoy) rhs 8.38 8.36 Moneta tary 20 9.00 Operati tion on Core (%, yoy) - lhs 18 7.00 8.00 Framewor ork LF Rate: 7.00 Volatile Food (%, yoy) - lhs2 16 7.00 Administered (%, yoy) - lhs BI Rate: e: 6.50 14 6.00 6.00 12 5.00 10 LF Rate: e: 5.25 25 3.61 5.00 8 3.35 4.00 3.13 3.02 2.96 2.72 BI 7Day RR Rate: e: 4.50 6 3.00 4 4.00 2.00 DF Rate: e: 3.75 2 1.00 0 3.00 -2 0.00 2013 2014 2015 2016 2017 2018 2019 Mar-2020 LF Rate BI Rate BI-7Day RR Rate DF Rate LF Rate (Dummy) Rupia iah Exchange Rate Remains ins Comparable le to Peer ers Cred edit it Growt owth Profi ofile le YTD 20 2020 20 vs 201 019 %,yoy -1.23 20 Total Growth ZAR Working Capital Loans -9.30 1.91 BRL 18 -6.57 Investment Loans 4.35 IDR -6.27 16 Consumption Loans -2.27 TRY -5.71 14 0.17 THB *data as of April 13 th , 2020 -2.37 12 -1.07 INR -2.26 10.3 -0.81 point-to-point 10 EUR -1.76 6.1 -0.01 MYR average 8 -1.23 0.42 SGD -0.84 6 5.9 -0.38 JPY -0.78 4 0.50 3.4 CNY -0.71 2 0.07 KRW -0.41 % 0.16 0 PHP 0.25 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 2015 2016 2017 2018 2019 2020 Source: Bank Indonesia 95

  89. Regional onal Inflati lation on Remain ins under er Contr trol ol Inflation in most regions remained within the 2020 national inflation target range of 3.0% ± 1%. Inflation in West Java (3,9%) and Aceh (3.9%) remained high, driven by rising commodity prices of various fish and gold jewelery REGIONAL INFLATION, MARCH 2020 20 (% (%, YOY) Source: Central Bureau of Statistics of Indonesia (BPS), calculated 96

  90. 4 Strat ateg egies ies to Achie ieve e the Inflation ation Target et 2018-2019 19 Target 20 2020 20-20 2021 Target Achieving inflation at 3,5%±1% Achieving inflation at 3,0%±1% • Maintaining core inflation • Maintaining core inflation • Maintaining volatile food stability at 4-5% • Maintaining volatile food inflation less than 4% • Controlling administered price inflation • Controlling administered price inflation 4 Strategies 1. Price e Affor orda dabi bility lity 2. Supply ly Availa labil ility ity 3. Well l Managed ed Distr trib ibution tion 4. Effec ectiv tive e Communica ication tion Strengthening production, Encouraging Government Strengthening Stabilizing the Managing Strengthening trade Improving trade Improving data food reserves central-regional price demand side institution cooperation infrastructure quality and food export- coordination between regions import management Source: Bank Indonesia 97

  91. Improving ing the Effec ecti tiven enes ess of Monet etar ary Po Polic licy Trans nsmis ission ion Bank k Indon ones esia has instituted uted a Reform ormul ulation on of Moneta etary y Policy Operation ons Framew ework ork which consists of 3 pillars; (1) 1) implem emen enta tati tion of BI 7day y Rever erse e Repo o Rate; e; (2) 2) implem ementa entation on of reser erve e requi uirem ement ent averaging ng; and (3) continue nue to implem ement ent money ey market et deep epeni ening ng prog ogram. Refor formul ulation on of Monet etary Po Policy Operationa onal Framew ewor ork Implem emen entation on of Money Implem emen entation on of Reser erve e Implem emen entation on of BI 7 Day Market et Deepen ening ng Program Requi uirem emen ent (RR) Aver eraging ng Rev ever erse e Repo o Rate Enhancement of monetary policy Enhancement of banking liquidity Enhancement of instruments signal management and transactions Source: Bank Indonesia 98

  92. Enhanc ancem emen ent t of Monetar etary Operati ations ons Framewor ork PREVI VIOUS S JIBOR • Can be traded among contributor banks for 10 minutes. • Up to the amount of Rp10 billion. Up to 1-month tenor. • CURRENT NT JIBOR (as per June 1 st , 2016) • Can be traded among contributor banks for 20 minutes. • Up to a total of Rp20 billion. • Up to 3-month tenor. Source: Bank Indonesia 99

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