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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 May 2020 About ut Investor or Relati ation ons Unit it of the Republic lic of

  1. Timeline eline o f Indonesia’s Actions in Handling COVID -19 Pandem demic ic 5/28 28/2020 2020; Covi vid-19 19 Cas ases 24 24.538 538 3/31 31/2020 2020; 1/24 24/2020 2020; Stipulation of Perppu No. 1 of 2020 To prevent Coronavirus, about State Financial Policy and 4/13 13/2020 2020; Minister of Transportation Financial System Stability for Corona Issuance of Presidential Decree Banned Flights from to Pandemic Management 12/2020 Concerning Determination of Wuhan China Non-Natural Disasters Distribution of Covid-19 as a National Disaster 3/20 20/2020 2020; Establishment of INPRES 4/2020 2/2/2020 2020; about Refocusing Activities, Budget Pick up hundreds of Reallocation, and Procurement of Indonesian citizens Goods and Services in the Context of (WNI) from Wuhan, Accelerating the Handling of Corona 5/11 11/2020 2020; Hubei Province, China Virus Disease 2019 (Covid-19) Issuance of Gov’t Regulation Number 23 of 2020 for Implementation of the National Economic Recovery Program in the Context of Supporting State Financial Policies for Handling Corona Virus Disease 2019 (COVID-19) and / or Facing Threats that Harm Nationa 1/28 28/2020 2020; The official status of certain 3/23 23/2020 2020; The 3/10 10/2020 2020; emergencies catastrophic operation of 4/10 10/2020 2020; Establishment of disease outbreaks due to the Wisma Atlet First Large-scale Social Restrictions 132 Referral Coronavirus Emergency (PSBB): Prov. DKI Jakarta Hospitals Followed by PSBB in other areas (formerly 100 Hospitals) 3/1/2020 2020; 4/6/2020 2020; The A total of 68 ABK FISCAL SUPPOR ORT FOR operation of the Diamond Princess HANDLING OF COVID-19 19 Corona Special arrived in Indonesia Hospital in Galang Island, Riau 3/13 13/2020 2020; Island Province Establishment of Task Force SUPPORT FOR for the Acceleration of Covid- SUPPORT FOR HEALTH INDUST STRY AND 19 Handling through HOUSEH SEHOLDS BUSINESS SS WORLD Presidential Decree 7 of 2020 Source: Coordinating Ministry for Economic Affairs 8

  2. 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. 9

  3. 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 IDR150,000 to IDR200,000 for a six- 2 Relaxation of Income Tax on Imports (PPh Article 22). month period commencing March 2020. 3 Provided a stimulus package for housing in the form of an IDR800 billion subsidy as well as a subsidy on down payments 3 Relaxation of Income Tax (PPh Article 25). totalling IDR700 billion. 4 4 Relaxation of Value Added Tax (VAT) Restitution. Provided incentives for domestic and international travellers. 5 Reduced the air passenger service fee (PSF) by 20% for March-May 2020. Non-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 IDR3.3 trillion to local 2 Reduce and simplify restrictions on import activities to ensure 7 governments affected by lower tax revenues food service the availability of raw materials. activities. 10

  4. 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 11

  5. 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 12

  6. 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: IDR75 75 T Budget et Support rt: IDR110 110 T Budget et Support ort: IDR150 150 T Budget et Support ort: IDR70, 70,1 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 IDR405, 405,1 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 13

  7. 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 14

  8. 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 (IDR70.1 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 = IDR6.1 T (19.5 million Customers); o PNM = IDR2.8 T (6.5 million Customers); o Pegadaian = IDR5.3 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: IDR2.4 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 15

  9. 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 16

  10. 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 17

  11. 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 18

  12. 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 19

  13. Governm rnmen ent t Measure ures to Mitigat tigate Covid id-19 Risk Fiscal Support For Handling COVID-19 Na Nationa onal l Econom nomic ic Rec ecover ery y Program am SUPPORT T FOR INDUST USTRY AND BUSINES NESS S WORLD 1 Article 21 Income Tax 11 Guarantee for New Working SUPPORT T FOR Covered by Government Capital Loans for MSMEs HEALTH HOUSEHOLDS 2 PPh Final (Tax for MSME) 12 Tourism Covered by Government 1 Shop for Handling Covid-19 1 Family Beneficiary Program 3 Dismissal of Article 22 13 Other Stimuli 2 Medical personnel 2 Groceries Support Import Tax incentives 3 Social Assistance for 4 Reduction of Installment 14 State Equity Participation 3 Compensation for death Jakarta Greater Area Article 25 Corp Tax 4 Assistance for JKN PBPU 4 Social Assistance for non- 5 Preliminary Tax Return on 15 Investment covering for Working and Health Insurance Class Jakarta Greater Area VAT Capital 3 Contribution 5 Pre-Employment Card 6 Corporate Tax Reduction 16 Fund Allocation: Liquidity 5 Covid-19 Task Force Support for Banks 6 Electricity Discount 7 Interest Rate Subsidy 17 Guarantee for working capital 7 Logistics/Food/Groceries for MSMEs 8 Housing 8 BBN subsidies in the 18 Provision of Loans to Local 9 Reserves for Expansion framework of B-30 Government 9 Accelerated Compensation 19 Investment Financing to Fund Payment Management Institution for MSMEs and Cooperatives (LPDB KUMKM) 10 Support for Local Governments Source: Coordinating Ministry for Economic Affairs 20

  14. Nati tion onal al Econ onom omic ic Recover ery Program gram - PP 23/2020 AIM MODALI LITY Aims to to protec otect, mainta ntain and nd enh enhanc nce the ec econ onomic capabilities es of of bus usines esspeop eople from om rea eal and nd fina nanc ncial sec ector or in in con onduc ucting thei eir busines ness 1. Funds Placement PRINCIPLES 2. Guara rantee Scheme • The princ nciple e of social justice; e; • The grea eates est pros osper erity y of the peop ople; e; 3. State Equ quity y Partici cipa pati tion on Support orting ng Busines ness Actors ors; • • Applyi ying ng prud udent ent policy y princ nciples es, as well as good od, transparent, ent, acceler erated ed, fair and accounta untable gover erna nanc nce e in accordanc nce e with h statut utor ory y prov ovisions ons; 4. Gov overn rnment t Inve vest stment • Does not cause e moral hazard; and Sharing ng of costs and risks ks between een stakeh kehol older ers according ng • to their respec ective e duties es and authori horities es. Source: Coordinating Ministry for Economic Affairs 21

  15. Mecha hanis nism of Interes rest t Subsidy idy Alloc ocati ation on to MSMEs Es Inte tere rest st subsidy policy y is a relief aid for ultra micro ro and MSMEs that have ve loans s in financi cial institu tuti tion ons, s, so that they can survive eve ven though their business ss has dro roppe ped significa cantl tly DISTRI RIBUTORS RS CRITERIA ERIA OF DEBTORS RS  MSMEs with a maximum loan ceiling of 10 billion Bank   Not on the National Blacklist for loans  Financial Companies Credit quality before Covid-19 (29 Feb 2020) Collectability 1 /   Government credit channeling institution in Collectability 2 SOEs, BLUs, and / or cooperatives  Have a Tax Identification Number (NPWP) or register a TIN/NPWP  Restructuring credit, especially for debtors with loans of more PERIOD than IDR500 million to IDR10 billion. Subsidies are given for 6 months, with a rate of 6% for the first 3 months and 3% for Period of 6 months starting from May 2020 the second 3 months Source: Coordinating Ministry for Economic Affairs 22

  16. Governm rnmen ent t Assista istance nce For Pre-em emplo loymen ent t Card d Program gram The Pre-Employment Card Program is a Government program in The Pre-Employment Card Program during the COVID-19 handling developing work competencies through the provision of training becomes a semi-social assistance that is given to individuals and assistance in the form of the Pre-Employment Card, which is a sign not the purchase of goods and services or identity card given to the Beneficiary Card Program beneficiaries. Principl ciples es for Organizin izing g Trainin ining During COVID-19 19 Post COVID-19 19 Per erpres es 36 36/2020 2020 mandates that the Pre-Employment program must have a traini ning After conditions return to normal, the Training during the pandemic is limited compon onent, ent, and nd inc ncenti entives es training offered is not only online by online training to limit community will be given prior completion training, but also offline training / face to mobility in relation to social / physical of training, meaning that the face, as well as blended training (mixed distancing. training must be carried out. between both online and offline) The Role e and Funct ction on of Digit ital Platf tforms orms Digit ital l Platfor orm & No. of Trainin ining The role and function of the 474 474 378 378 257 257 277 277 Traini ning Ins nstitute ute and nd Digital Training institutions are currently Platform orm in the more than 250 and provide more implementation of the Work Skill Academy Tokop oped edia than 2,000 types of online Mau Belajar Apa Pijar Mahir Card is to provide a market By Ruangguru training. This is because face-to- or marketplace. Currently 221 221 199 199 210 210 85 85 face training is not possible to do there are 8 and will continue during social restrictions to grow. Bukalapak Pinta taria Sekol olah.mu Sisnaker Source: Coordinating Ministry for Economic Affairs 23

  17. Requir irem emen ents ts and New Prot otoc ocols ols in Prep eparati aration on to Loosen en the Large ge Scale le Social ial Restric ricti tion on (PSB SBB) and Reopen n the Econ onom omy New protocols for outdoor activities that will continue to be expanded despite the PSBB being loosen New Prot otoc ocol ol (GEN ENERAL) ERAL) Requir irem emen ents ts • Devel elop opment ent Covid-19 19 ► Reduced number of cases, number of suspects, and deaths within 14 days ► • Moni nitor oring ng of virus uses es / Public Health Wash your hands often with soap / use a hand sanitizer ► Wear a mask when doing activities outside the home ► The number of tests and contact tracing increases (not only ► Maintaining physical distance (1.5 - 2 m) in big cities, but also in regions) ► If feeling unwell, do not leave the house ► The application of the use of masks is increasingly ► Temperature measurement in crowded places (supermarkets, expanded (mask for all) traditional markets, buildings) • Health service e capacity ► Sanitation of home environment (spray with antiseptic items at ► Medical personnel, PPE home) ► ► Increase ventilation in a closed room Availability of drugs, ICU room, ventilator ► If exposed to positive cases and illness, it is required to self- • Busines ness world prep eparation on isolate ► Establishing new SOPs / guidelines at work (temperature measurement, masks at work, distance keeping, etc.) ► SPECIAL PROTOCOLS S FOR SPECIFIC SECTORS / • Public Respons onse AREAS AS NEED TO BE MADE ► Discipline the application of new protocols for activities ► Submission of information that is accurate, official and transparent by the government to the public Source: Coordinating Ministry for Economic Affairs 24

  18. 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 25

  19. 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 26

  20. 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 27

  21. 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 28

  22. 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 29

  23. 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 30

  24. 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 31

  25. 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 32

  26. Imp mproving ving Inves estment ent Clima mate Online Single Submissi ssion (OSS) S) Has Been Launched... OSS is a web-bas based business ss licensi sing syste tem intended to cut the red tape involve ved in obtaining business ss permits ts and integrat rated between the central govern rnment and regional administ strat rations 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 33

  27. 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 34

  28. 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) 35

  29. 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 36

  30. Section tion 2 Econ onom omic ic Factor or: Stabl able Growth wth Prosp ospec ects ts Amid id Tempor orar ary Moder deration ation

  31. Conduciv ducive e Envir iron onment nt Under erpinni nning ng Stable le Grow owth h Fundam amenta entals ls Amid Tempor orar ary Moderat atio ion 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 38

  32. Indonesia’s GDP Growth Momentum Moderated Stron ong GDP Growth 1 • COVID-19 pandemic, which broke out at the beginning of 2020, has affected Indonesia’s economic growth in the first quarter of 2020. Indonesia’s economic % QoQ YoY growth stood at 2.97% (yoy) in the first quarter of 2020, down from 4.97% (yoy) in the 7.0 previous quarter. The drop in domestic demand was largely due to the impact of 5.065.27 5.17 5.185.075.055.024.97 5.17 5.18 5.19 5.12 5.06 5.05 5.01 5.01 5.01 COVID-19 amid the positive performance of external sector. Moving forward, Bank 4.94 4.93 4.92 4.94 4.82 4.77 4.74 5.0 Indonesia will continue to monitor the dynamic spread of COVID-19 and its impacts on 4.21 4.01 4.20 3.83 3.74 4.01 Indonesia’s economy, and will consistently strengthen coordination with the 3.31 3.27 3.19 3.14 3.09 3.06 Government and the relevant authority to maintain macroeconomic and financial 3.0 2.97 system stability, and boost national economic recovery. • On the expenditure side, the economic growth deceleration in the first quarter of 1.0 0.04 2020 is primarily affected by the declining domestic demand. Domestic consumption stood at 2.84% (yoy), far lower than the performance in the fourth quarter of 2019 of (0.16) (0.30) -1.0 (0.36) (0.41) (0.52) 4.97% (yoy). Growth in investment also declined by 1.7% (yoy), chiefly affected by (1.70) (1.69) building investment slowdown. The Government’s stimulus response through the (1.73) (1.74) (1.81) (2.07) -3.0 (2.41) Government’s consumption, which grew at 3.74% (yoy), curb deeper domestic Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 demand slowdown. In addition, net export has positively contributed as influenced by 2014 2015 2016 2017 2018 2019 2020 export, which grows to 0.24% (yoy), and import, which recorded contraction of 2.19% (yoy). By sector, economic slowdown was primarily driven by activities of trade and accommodation as well as transport and storage, resulting from declining public Favou ourable e GDP Growth Comp mpared ed to Peer ers 2 mobility as an impact of COVID-19 mitigation efforts. In addition, agriculture sector % performance declined due to unfavorable weather condition. 10.00 8.20 Growth Pros ospec ect 7.62 8.00 5.03 5.91 7.43 6.00 2020 GDP growth 4.23 Institutions 4.00 (%YoY) 1.87 2.00 0.65 2020 Budget 5.3 - 0.50 around 2,3 Bank Indonesia -2.00 -4.00 IMF (WEO April 2020) 0.5 -6.00 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* World Bank (GEP April 2020) 2.1 2.5 ADB (ADO April 2020) Bulgaria Colombia India Indonesia Philippines Consensus Forecast (May 2020) -0.1 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption 2. Source: World Economic Outlook Database – April 2020; * indicates estimated figure 39

  33. GDP P Growth th Breakdo akdown GDP Growt owth Based ed on Expen endit itures es (%, YoY) 1 2015 2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 By expenditure HH. Consumption 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 5.0 5.2 5.0 5.1 5.1 5.0 5.2 5.0 5.0 5.0 2.8 Non profit HH. (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8.1 8.8 8.6 10.8 9.1 17.0 15.3 7.4 3.5 10.6 (4.9) consumption Government 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 2.7 5.2 6.3 4.6 4.8 5.2 8.2 1.0 0.5 3.2 3.7 consumption Gross Fixed Cap. 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 7.9 5.8 6.9 6.0 6.6 5.0 4.6 4.2 4.1 4.4 1.7 Formation Exports (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.9) 3.9 (1.7) 8.4 2.7 16.5 8.4 8.9 5.8 7.5 8.3 4.6 6.5 (1.6) (1.7) 0.1 (0.4) (0.9) 0.2 Imports (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.4) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.5 14.9 13.8 7.1 11.9 (7.5) (6.8) (8.3) (8.0) (7.7) (2.2) GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 3.0 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption GDP Grow GDP owth by Sector or (%, YoY) 2015 2016 2017 2018 2019 2020 By sectors Tot Q3 Q4 Tot. Q4 Tot. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q1 Q2 Q1 Q2 Q3 . Agriculture, forestry, and 3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 3.9 3.4 4.7 3.6 3.8 3.9 1.8 5.3 3.1 4.3 3.6 0.0 fishery Mining and Quarrying (1. 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 2.1 1.8 0.0 0.7 1.1 2.6 2.7 2.2 2.2 2.3 (0.7) 2.3 0.9 1.2 0.4 3) Manufacturing 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.3 3.5 4.9 4.5 4.3 4.6 3.9 4.4 4.2 4.3 3.9 3.5 4.1 3.7 3.8 2.1 Construction 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 7.0 7.0 7.2 6.8 7.4 5.7 5.8 5.6 6.1 5.9 5.7 5.6 5.8 5.8 2.9 Wholesale and Retail Trade, Repair of Car and 3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5.0 5.2 5.3 4.4 5.0 5.2 4.6 4.4 4.2 4.6 1.6 Motorcycle Transportation and 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5 8.5 8.7 5.7 5.5 7.1 5.5 5.9 6.7 7.6 6.4 1.3 Storage Information and 10. 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 11.1 8.8 8.3 9.6 7.8 5.1 8.1 7.1 7.0 9.1 9.6 9.2 9.7 9.4 9.8 communication 5 Financial service 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.1 3.8 5.5 4.3 3.1 3.1 6.2 4.2 7.2 4.5 6.1 8.5 6.6 10.7 Other Services * 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5.4 6.2 6.7 6.4 6.2 6.8 7.3 6.4 6.2 6.7 4.6 GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0 3.0 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 40

  34. Regional onal Econom nomic ic Growth th Decline in domestic demand due to COVID-19 amid a positive growth in non-oil and gas exports suppressed economic growth in all regions in the first quarter of 2020 R EGIONA NAL ECONOMI MIC GROWTH TH FIRST QUARTER TER 20 2020 20 (% (%, YOY) KALIMANTA TAN West Kalimantan 2.49 SUMATR TRA 5.23 5.39 5.67 Central Kalimantan 2.95 Aceh 3.17 3.73 SULAWES ESI, MALUK UKU AND AND PAPUA South Kalimantan 5.68 N.Sumatra 4.65 4.63 4.61 2.49 4.57 4.5 East Kalimantan 1.27 Riau 2.24 3.25 Sulut 4.27 North Kalimantan 5.01 W. Sumatra 3.92 Gorontalo 4.06 Jambi 1.65 Sulteng 4.91 I II III IV I Riau Island 2.06 Sulbar 4.92 I II III IV I Bengkulu 3.82 Sulsel 3.07 2019 2020 Babel Island 1.35 2019 2020 Sultra 4.37 S. Sumatra 4.98 Lampung 1.73 RGDP ≥ 7,0% JAVA JA Banten 3.09 6,0% ≤ RGDP < 7,0% 5.65 5.59 5.51 5.34 Maluku 4.01 Jakarta 5.06 BALI-NUS USA TENGGARA RA 3.42 5,0% ≤ RGDP < 6,0% North Maluku 3.06 West Java 2.73 Bali -1.14 Papua 1.48 5.34 5.52 Central Java 2.60 4,0% ≤ RGDP < 5,0% 4.77 4.59 West Nusa Tenggara 3.19 West Papua 5.4 East Java 3.04 East Nusa Tenggara 2.84 0% ≤ RGDP < 4,0% Yogyakarta -0.17 0.94 I II III IV I RGDP < 0% 2019 2020 I II III IV I 2019 2020 Source: Central Bureau of Statistics of Indonesia (BPS) 41

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

  36. 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 2013: 2013: 2014: 2014: 2015 2015: 201 2016: 2017: 201 2018: 2018: 2019: 2019: 2020: 2020: CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit US$b $bn US$b $bn (US$2 $29. 9.1bn) n) (US$2 $26. 6.7bn) n) (US$1 $17. 7.5bn) n) (US$1 $16. 6.9bn) n) (US$1 $16. 6.2bn) n) (US$3 $30. 0.6bn) n) (US$3 $30. 0.4bn) n) (US$3. $3.9bn) n) 20 160 120.97 97 US$b $bn 8 0.0 15 4.40 6 -0.5 120 10 -1.42 4 -1.0 2 -1.5 5 (3.92) 92) 0 80 -2.0 -2 0 -2.5 (2.93) 93) -4 -5 -3.0 (8.08) 08) 40 -6 -3.5 -8 -10 (8.54 54) -4.0 -10 (1.87) 87) -15 0 -12 -4.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 2017 2018 2019* 2020** 2013 2014 2015 2016 2017 2018 2019* 2020** Goods Service Primary Income Secondary Income Current Account (%GDP)+(rhs) Current Account Capital & Financial Account Overall Balance Reserve Assets (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 2014 2014: 2015: 2015: 2016: 201 : 2017: 2018: 2018: 2019: 2019: 2020: 2020: 2013: 2013 FX Reserve ves as of April 2020: US$127.9 bn n Deficit Surplus Surplus Surplus Deficit Deficit Deficit Deficit (Equiv. to 7.5 months of imports + servicing of government debt) (US$2. $2.37bn) n) US$7. 7.59 59bn US$8. 8.83b 3bn US$11.83bn bn (US$8. $8.65bn) n) (US$3. $3.24bn) n) (US$2. $2.1bn) n) (US$4.10bn) n) US$b $bn FX Reserves (LHS) Month of Import & Debt Service (RHS) US$bn Month 4.00 130 15 OG Non-OG Total 14 3.00 120 13 127.9 12 -0.1 2.00 110 11 10 1.00 100 9 8 90 0.00 7 7.5 6 80 -1.00 5 -0.24 4 70 -2.00 3 -0.34 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 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 2013 2014 2015 2016 2017 2018 2019 2020 2013 2014 2015 2016 2017 2018 2019 2020 * Preliminary Figure ** Very Preliminary Figure 43 Source: Bank Indonesia Source: BPS

  37. Excha hang nge e Rate e In Line e with h Fundam damen entals tals Movem emen ent of Rupia iah IDR/US$ The ru rupiah con ontinued to to re regain los ost value as as glob obal financial market rket 17,000 uncertai ainty eas eased ed and confidence in in national economic conditions was as mainta tained. After appreciating in April 2020, a stronger rupiah 16,500 IDR/USD was also recorded in May 2020. As of 18th May 2020, the rupiah 15,711 15462 16,000 strengthen 5.1% on average and 0.17% (ptp) compared to the level Quarterly Average recorded at the end of April 2020. Nevertheless, the rupiah has still Monthly Average 15,500 lost around 6.52% of its value compared to the end of 2019, primarily 15,179 14798 due to intense depreciatory pressures in March 2020. In addition, 14,381 15,000 14,232 14,220 14850 foreign capital inflows and a dominant supply of foreign exchange 14254 14,113 14120 14,500 from domestic players have also strengthened the rupiah. Bank 13,714 14,941 14601 Indonesia is confident that the current rupiah exchange rate is 14,000 fundamentally undervalued, leading to potential appreciation and 14352 14134 14064 underpinning the economic recovery. Supporting exchange rate policy 14,141 14,006 13,500 14,031 data as of May 18 th , 2020 effectiveness, Bank Indonesia continues to optimise monetary operations in order to safeguard market mechanisms and preserve 13,000 30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 29-Feb 31-Mar 30-Apr adequate liquidity in the money market and foreign exchange market. 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 % 35 BRL data as of May 18 th , 2020 -26.54 -16.89 30.5 ZAR -11.91 -24.22 30 -13.39 2019 TRY 26.2 -10.83 YTD 2020 -7.13 23.8 THB -1.92 25 -6.52 Average YTD 2020 IDR -3.35 Avg 2019 -6.27 18.7 MYR 18.1 20 -2.08 17.0 -6.18 16.0 KRW -3.06 16.21 -5.98 point-to-point 15 INR -4.11 12.3 -5.64 SGD average 10.10 -2.34 -3.70 10 EUR -2.00 6.5 data as of May 18 th , 2020 6.3 7.0 6.4 6.2 5.4 -1.42 4.7 CNY 5.4 -1.35 5 -0.48 PHP 1.98 % 1.27 JPY 0.52 - -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 ZAR BRL TRY IDR THB PHP INR MYR 44 Source: Bank Indonesia

  38. 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 April 2020: US$127.9 billion  Swap Arrangement Renewed a 3 year USD22.76 billion swap line with Japan on October 14 th , 2018  Japan The facility is available in USD and JPY  South Korea Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2020  eral Australia Renewed a 3 year A$/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 45

  39. 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 46

  40. 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 Bulgaria 56.5 161 ; 240 ; 2019F 57.3 6.3% 42.3 9.4% 2018 Colombia 42.9 39.9 21.4 India 20.9 20.0 37.0 ≤ 3 months > 3 - 6 months Indonesia 36.7 36.2 21.9 2,397 ; 2,318 ; Philippines 23.0 93.7% 23.9 90.6% 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 304 ; Phas ase 1 Phas ase 2 Phas ase 3 11.9% 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%** 2,254 ; Liquidity Ratio (< 3 months) 50% 70% 88.1% Credit Rating Not applicable Minimum rating of BB- Must be done Hedging transaction to meet not necessarily be done with a bank in Comply Not Comply with a bank in hedge ratio Indonesia Indonesia *Data as of Q4 2019, with total population 2.558 corporates Sanction As of Q IV-2015 Applied Source: Bank Indonesia Source: Bank Indonesia 47

  41. 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 50.1 50.5 49.8 47.2 70% 70% 60% 81.7 78.8 79.3 78.3 78.8 79.8 82.1 82.9 84.4 84.0 83.9 84.3 85.9 84.3 85.5 85.4 84.4 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 49.9 49.5 50.2 52.8 20% 20% 18.3 21.2 20.7 21.7 21.2 20.2 17.9 17.1 15.6 16.0 16.1 15.7 14.1 15.7 14.5 14.6 15.6 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 % External Debt / GDP Ratio External Debt / Export Ratio (rhs) Million USD % % External Debt External Debt Growth (rhs) 450,000 20.0 200 34.3 34.7 36.0 36.8 36.6 36.2 36.1 34.5 40 36.1 17.1 18.0 400,000 32.9 31.8 35 180 16.0 27.4 29.1 350,000 183.8 30 26.5 25.0 168.9 172.5 177.6 177.8 176.1 14.0 11.3 12.0 300,000 160 11.5 168.4 168.0 25 10.2 10.5 12.0 10.2 10.1 160.8 Axis Title 250,000 10.0 8.3 140 20 7.8 200,000 139.5 6.5 8.0 5.9 15 5.4 150,000 120 6.0 123.1 121.8 10 3.0 100,000 114.9 4.0 113.8 100 5 50,000 0.5 2.0 101.0 80 0 0 0.0 Source: Bank Indonesia, External Debt Statistics of Indonesia, May 2020 *Provisional Figures **Very Provisional Figures 48

  42. 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 9.4% 4% of total private e ex exter erna nal debt Public Long Term 1 Private vate Bank Affiliat Af ation US$183.8bn US$154.9bn US$19.4bn or or or 47.2% 75.4% 9.5% US$11.9bn 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$205 205.5b 5bn US$50.6bn US$31.1bn or or or 52.8% 52 US$389.3bn bn 24.6% 15.2% of total of Private of Private Ext. Debt Ext. Debt Ext. Debt Priva vate te Non-Bank US$19.2bn bn Short-Ter erm 1 or or 9.4% 4% Private vate of Priv ivate te Ext. t. Debt t External Debt Position as of March 2020 1 Based on remaining maturity Non Af Affiliat ation Source: External Debt Statistics of Indonesia, May 2020 49

  43. Section tion 4 Fiscal al Performan mance e and Flexib ibili ility ty: The Design ign of Econ onom omic ic Rec ecover ery Prog ogram am

  44. COVID ID-19 9 Impa mpacts and Coun unter ermea measures 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 51

  45. The Nati tional onal Econom nomic ic Recover ery Progr gram am (PEN EN) PEN’s  The principle of social justice Principles  The greatest prosperity of the people PP 23/2020  Supporting Business Actors  Implement policy rules: prudence, good governance, The PEN Program aims to transparency, acceleration, fairness and accountability  Does not cause moral hazard protect, maintain and  Distribution of costs and risks between stakeholders according improve the economic to their respective duties and authorities capabilities of Business Actors in running their  State Capital Participation (PMN) businesses  Funds Placement article 4  Government Investment  Guarantee through  State Expenditures article 5 Source: Ministry of Finance 52

  46. Nati tion onal al Econ onom omic ic Recover ery Program gram is Part t of Extraor traordinar dinary Po Polic icy CONDITIONS OF INTEREST & PERPRES 54/2020 AND PERPPU TAKING THE NATIONAL ECONOMIC RECOVERY EXTRAORDINARY IMPLEMENTATION POLICY STEPS The formulation and determination of the PEN Program The fast-spreading of • Changes to the State Budget 2020 posture regulated in through a series of processes according to article 7 PP COVID-19 created a a 23/2020: Perpres 54/2020 (6 April 2020) health crisi sis (February • Coordination on Meeting at the Coordinating Ministry 29, 2020 in • The PEN program is regulated in for the Econom omy together with relevant Ministers, Indonesia) that it PP 23/2020 (May 13, 2020) as LPS, BI, and OJK (most recently on May 15, 2020) needed PERPPU the implementation of Article 11 • Submission of PEN and 2020 State Budget Posture 1/2020 for Handling PERPPU 1/2020 at the Cabinet Session on (18 May 2020) Covid-19 Pandemic • In PP 23/2020, PEN is carried • Discussion of PEN and 2020 State Budget Posture and / or in the out with 4 modalities & state in the Indonesia sian Parli liamentary Budget Agency cy framework of Facing expenditure : (May 20, 2020) Economic Threats / • Coordination on Meeting at the Coordinating Ministry  PMN Financial System for the Economy with related Ministers, , LPS, BI, and  Funds Placement Stability (March 31, OJK (May 22, 2020)  Gov overn rnment t Inve vest stment 2020) which wa was Discussion of PEN in the House of Represen sentatives s •  Guarantee tee Commissi ssion on XI passe sed into Law  State te expenditu ture re is not Input from the results s of the discu cussi ssion on will be taken ken 2/2020 limited ted to to MSME inte terest st into to consider eratio tion in the formulati tion on of the PEN and the subsidies new ew postu ture e for the 2020 state e budget et which h will be submitted ed in the rev evision on of Perpres 54/20 2020 Source: Ministry of Finance 53

  47. Polic Po licies ies in Smoothing thing The Econ onom omy from The Demand and Shocks ks STABILIZING MAINTAINING BOLSTERING TRADE CONSUMPTION INVESTMENT FLOWS ACTIVIITES • • Accelerating and • Tax incentives Tax incentives strengthening the social • • Custom and excise incentives Custom and excise incentives safety net spending for poor • • Relaxing the restrictions of Relaxing the regulation for and vulnerable groups (e.g. exported/imported goods credit and financing for MSME food subsidy, cash transfer, • businesses Streamlining the pre-employment card, • administration process of Interest subsidies for MSME electricity bills discount) export import for reputable loan/financing • Expanding the consumption- traders related stimulus with focus • Improving and accelerating on middle income class the National Logistic System (tourism, transport, etc) Source: Ministry of Finance 54

  48. Social ial Prot otec ection ion Map of f The COVID ID-19 Distr trib ibuti ution on Perio iod Cash Transfer for Non Cash Transfer for Poor Food Subsidy for Cash Transfer through Food Subsidy Electricity Subsidy Jakarta-Bogor-Depot- (PKH) Jabodetabek Village Fund Tanggerang Area 6 450 VA: 24 mio hhs 11 million households DKI:1,3 mio hhs 5 900 VA: 7,2 mio hhs Bodetabek: 600 thou. hhs Non-Jabodetabek: 9 million households Apr-Jun: Rp600 thou./mo 4 Jul-Des: Rp300 thou./mo Income Deciles 20 million households Apr-Jun: Rp600 thou./mo excl. cash transfer and Apr-Jun: Rp600 thou./mo 3 Jul-Des: Rp300 thou./mo food subsidy beneficiaries Jul-Sept: Rp300 thou./mo 10 million households excl. cash transfer and 2 food subsidy beneficiaries Excl. any cash transfer and food subsidy support index per beneficiaries Rp200 thousand/month 450 VA Free 1 component increased by 900 VA Diskon 50% 25% 6 months 9 months 9 months 6 months Period monthly for 12 months monthly for 12 months (April-September) (April-December) (April-December) (April-September) Additional Budget Rp8,3T Rp15,5T Rp6,9T Rp32,4T Rp6,8T Rp31,8T Total Budget Rp37,4T Rp43,6T Rp61,69T Rp32,4T Rp6,8T Rp31,8T Source: NDPA, Ministry of Social Affairs, MoF 55

  49. Interes erest t Rate Subsidy idy Program ogram for r MSME IDR34. 4.15 T Interest t Rate Subsidy idy Benefic iciar iaries ies: : 60.6 .66 milli lion accounts ts* IDR DR27. 27.26 26T IDR DR6. 6.40T 40T IDR DR0. 0.49T 49T through: through gh: through gh: BPR, Ba BP Banks, s, and d Fi Financ ncing ing Co Compa panie ies Online, Operation, Farmers, LPDB, LPMUKP, KUR, UMi, , Mekaar, , Pegadaia ian Local Gov’s SMEs Postponement of principal instalments and Delay in instalments and interest subsidies Relaxation is given a subsidy interest subsidies for KUR, UMi, Mekaar, for Micro and Small Enterprises by 6% for and Pegadaian for 6 months 6% interest for 6 months the first 3 months and 3% for the next 3 months, and Medium Business by 3% for Total Principal Delays: Total Outstanding Interest Subsidies Loans the first 3 months and 2% for the next 3 IDR285.09 T months IDR1,601.75 Trillion 56 Source: Ministry of Finance * from 60.66 million accounts, there are still double data . 56

  50. Fund d Placem ement ent in Banks Affec ected ed by MSME Loan Restruc tructuring turing • To provide liquidity support to banks that restructure MSME loan and/or provide new additional Goals working capital loan. • Provided for Participating Banks Implementing Banks Participating Banks • • Conventional or Syariah Banks 15 largest Indonesia’s commercial banks* (in term of asset) and Channels • Have been restructuring MSME loan that are impacted by the financially healthy • pandemic Appointed by the Commissioner of Financial Services Authority • To provide liquidity injection for local banks (BPR) as the (OJK) • consequences of MSME loan restructuring and/or provide new To channel the fund provided by the government to the working capital loan for MSME Implementing Banks that requires additional liquidity as the consequences of MSME loan restructuring and/or provide new *holding government bond, BI certificate, BI deposit certificate more than 6 percent of third working capital loan for MSME party fund that have not been repurchased • MoF requests OJK’s assessment regarding the health status of the • OJK decides the participating banks Implementing Bank • Implementing Bank submits a proposal for fund placement to • MoF disburses the fund based on OJK assessment and bank’s proposal Flow Participating Bank • Implementing bank uses the fund to restructure loan and/or to provide • Management and Controlling Shareholders guarantee the new loan accuracy of the fund placement proposal. • Indonesia Deposit Insurance Corp. guarantees the fund placed by the govt. • Participating Banks assess the proposal, they could use SPV • In the case of Implementing Bank fails to meet its obligation BI may debit service the Implementing Bank's checking account in BI • The Participating Bank requests the fund to MoF • Auditor, FSA, and IDIC monitor the participating and implementing banks 57 Source: Ministry of Finance

  51. Guarant rantee ee of Working rking Capita tal l Loans ns of SME The Guarantee can be done by: a. Directly by the Government (can only be given to SOEs); and/or b. Through a designated guarantee business entity Potential figures for additional working capital loans will be coordinated with the Coordinating Ministry for the Economy Direct Guarantee Guarantee through a Business Entity only for SOEs The government assigns tasks to PT Jamkrindo and / or PT Askrindo (through a Ministerial decree) to guarantee business actors for working capital loans provided by banks. The government can provide support in the form of payment for guarantee services (according to the portion of support provided), counter guarantees, loss limits, or other risk sharing support needed • The government allocates a guarantee reserve fund and a guarantee service fee budget that comes from the State Budget Source: Ministry of Finance 58

  52. Tax Incentiv entives es for Busines nesses es Incentive Incentive Incentive Eligible Taxpayers Eligible Taxpayers No Incentives Value Value Value (PMK 23/2020) (PMK 44/2020)* (Initial) (Additional) (Total) * Includes industry groups stated in PMK 23/2020 • • 1 Individual income tax borne by the 440 industry groups 8,6 T 1,062 industry groups 17,06 T 25,66 T • • Export-oriented Import (KITE) Export-oriented Import (KITE) taxpayers government (PPh 21) • taxpayers Bonded Zone taxpayers 2 Final income tax for MSME borne n/a - Taxpayers who have certain gross circulation 2,4 T 2,4 T and are subject to final income tax (based on by the government (PPh Final PP Number 23 of 2018) UMKM) • • 102 industry groups 431 industry groups 3 Import tax exemption (PPh 22 8,15 T 6,6 T 14,75 T • • Export-oriented Import (KITE) Export-oriented Import (KITE) taxpayers Import) • taxpayers Bonded Zone taxpayers • • 102 industry groups 846 industry groups 4 Reduction of income tax debt 4,2 T 10,2 T 14,4 T • • Export-oriented Import (KITE) Export-oriented Import (KITE) taxpayers instalment by 30% (PPh 25) • taxpayers Bonded Zone taxpayers • • 102 industry groups-Export- 431 industry groups 5 Advance VAT tax refund (PPN) 1,5 T 4,3 T 5,8 T • oriented Import (KITE) taxpayers Export-oriented Import (KITE) taxpayers • Bonded Zone taxpayers No Incentives Tax Object Regulation Total Incentive Value 1 Income tax tariff reduction Tariff reduction from 25% to 22% UU 2/2020 20T (previously Perppu No. 1 /2020)  Additional individual income tax (PPh 21 DTP) borne by government: IDR14T*  Reserves for other tax incentives IDR26T* * To anticipate the period changes and the need to expand the stimulus Source: Ministry of Finance 59

  53. Governm rnmen ent t Suppor ort t for Impacted ed State-owned ed Enter erpris rises es (SOEs Es) SOEs’ Issues CRITERIA FOR SOES TO RECEIVE SUPPORT Government Support 1. Its impact on people’s life 2020 Budget Supply 2. Sovereign role in SOE’s operation (Perpres 54/2020) 3. Exposure to financial system  Disrupted supply from  Allocation: IDR27.5 T for subsidy 4. Government’s ownership domestic and overseas expenditures, compensation, capital  5. The size of asset compared to the economy Idle inventories injection to SOEs Demand PRIORITIZED SOEs Additional Support  (based on current assessment) Weaker purchasing power (PP 23/2020) and demand 1. PLN (electricity)  Part of National Economy Recovery  Lower sales 2. Hutama Karya (construction) Program (PEN) 3. BULOG (rice and other basic food commodities) Operational  Allocation: IDR121.73 T for social 4. Garuda Indonesia (airline) safety net, compensation, capital  Limited business activity 5. Kereta Api Indonesisa (train) injection to SOEs, government  Need its role to address the 6. Perkebunan Nusantara (agriculture) investment for SOEs’ working capital pandemic 7. Bahana (investment) 8. PNM (investment) Others Financial 9. Krakatau Steel  10. Perumnas (housing) Allocation: IDR26.1 T  Solvency, liquidity, and  11. Pertamina (oil and gas) Optimizing state’s asset, government profitability issues 12. Indonesia Tourism Development Corporation (ITDC) guarantee, dividend postponement, etc  Increase in loan exposures Source: Ministry of Finance 60

  54. State e Budget get Suppor ort t for Regio ional nal Govern ernmen ent t to Bolster er Econo nomic ic Recover ery Preparing additional support in the form of Regional Incentive Funds (DID) sourced from state treasurer (BUN) reserves to support the acceleration of economic recovery in the regions IDR5T Utilization of Physical Special Allocation Fund (DAK) amounted IDR9,1T* for physical development programs (i.e. housing and habitation, as well as agriculture) using self- management (swakelola) method, labor-intensive method, local labor, and completed within 3 to 4 months period. Provision of loan facilities to the regions IDR1T Total Support for Regional Government are amounted around IDR15,1T** *has been allocated in Presidential Decree 54/2020 **provisional number Source: Ministry of Finance 61

  55. The Realiz lizati ation n of The Stat ate e Budget et up to April il 2020 Control olled ed State e budget get Amid d the Pandem emic c Pressu ssure re 2019 2020 Budget et Budget et (IDRt Rtn) Reali lization ion as Reali lization ion as Budget et % to Budget et % to Budget et Growth (Per erpres es of 30 April il of 30 April il No.54/2020) No. A Reven enue and Grant 2,165.1 .1 532.3 .3 24.5 .59 1,760.9 .9 549.5 .5 31.2 .21 3.23 I. Domestic Revenue 2,164.7 532.2 24.58 1760.4 548.8 31.18 3.13 1. Taxation Revenue 1,786.4 438.1 24.52 1,462.6 434.3 29.70 (0.86) 2. Non Taxation Revenue 378.3 94.1 24.87 297.8 114.5 38.46 21.70 II. Grants 0.4 0.2 36.20 0.5 0.7 135.17 327.73 B Expen endit iture 2,461.1 .1 632.6 .6 25.7 .70 2,613.8 .8 624.0 23.8 .87 (1.3 .36) I. Central Government Expenditure 1,634.3 370.1 22.64 1,851.1 382.5 20.66 3.37 1. Line Ministries Expenditure 855.4 201.1 23.51 836.5 203.2 24.29 1.04 2. Non Line Ministries Expenditure 778.9 168.9 21.69 1,014.6 179.3 17.68 6.14 III. Transfer to Region and Village Fund 826.8 262.5 31.76 762.7 241.4 31.66 (8.04) 1. Transfer to Region 745.6 248.5 33.33 691.5 220.5 31.88 (11.29) 2. Village Fund 70.0 14.0 20.05 71.2 21.0 29.48 49.56 C Prim imary Bala lance (87.3 .3) (17.7 .7) 20.2 .23 (20.1 .1) 18.4 .4 (91.2 .24) (203.8 .89) D D Surplus lus/( /(Defi eficit it) (296.0 .0) (100.3 .3) 33.8 .87 (852.9 .9) (74.5 .5) 8.73 (25.7 .73) % of GDP (1.87) (0.63) (5.07) (0.44) 8.73 (30.13) E E Financing ing 296.0 .0 144.4 .4 48.8 .80 852.9 .9 221.8 .8 26.0 .01 53.5 .58 Source: Ministry of Finance 62

  56. 2020 Financi ncing ng Needs Fulfi filled ed from rom Govern overnmen ent Securi rities es IDR1,289.32 tn tn (89.5 9.55% 5%) and Loan IDR150 50.48 48 tn tn (10.45%) %) GS*** Investment Other Loan Lending Liability Financing Financing Financi cing Needs IDR325.85T IDR107.55 T (IDR5.81T) IDR0.59T IDR229.32T (IDR70.64T) 75.18% 24.82% IDR1, 1,439. 439.80 80 T Non-Debt Financing (nett) Matured Debt Budget Foreign Denominated Debt Domestic Debt Deficit IDR153.47T IDR433.40 T IDR852.94T 22.47% 77.53% Foreign Domestic Financi cing Needs Domestic Loan Foreign Loan Denominated Government IDR1, 1,439. 439.80 80 T Bonds Securities Gross oss Gov overn ernment ment Debt to GDP Ratio Secu curit ritie ies (Through auction & 2019 Matured Reali lization ion non-auction) Project ction ion T-Bills Issuance GDS GDS Sukuk uk 2019 2020 2020 70 – 75% 70 75% 25 – 30% 25 30% 30.2%* 36% Note: * preliminary result Source: Ministry of Finance 63

  57. 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%] • 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 64

  58. Governmen nment t Securities urities Financin ncing g Realiz ization ation (as of Apri ril 30, 2020) *Dual-currency bonds issuance using SEC format amounted USD2 bn and EUR1 bn, settlement on January 14, 2020 (BI mid day exchange rate; 1 USD = 13,654 IDR & 1 EUR = 15,207.83 IDR) - Including SBR009 issued February 17, 2020 Source: Ministry of Finance 65

  59. GS Primar ary Mark rket et Perform ormanc ance e 2019-2020 2020 Through Auction Incoming bid 2020 = IDR57.68T/ auction, while awarded bid 2020 = IDR14.47T/auction Source: Ministry of Finance 66

  60. 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 Exp. Issue Rating Baa2 Moody’s / BBB S&P / BBB Fitch RI1050 050 RI1030 030 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 470 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 470 Tranche Size USD1,650 mm USD1,650 mm USD1,000 mm 44% Coupon (p.a.) 3.850% 4.200% 4.450% Reoffer Price 99.573 99.150 99.009 38% Reoffer Yield (p.a.) 3.900% 4.250% 4.500% Asset Managers Insurance/Pension Fund 85% US Europe Asia ex-Indonesia Indonesia Listing Singapore, Frankfurt Open Market Central Bank/Sovereign Wealth Fund Law New York Banks Use of Proceeds For general purposes of the Republic of Indonesia, including Private Banks financing COVID-19 relief and recovery Others Transaction Highlights  Net proceeds will be used for general purposes of the Republic, including financing COVID-19 relief and recovery efforts for the Republic to contain the virus and mitigate its impact on Indonesia.  The Republic's fiscal policy amidst volatile market conditions includes support for healthcare, the social safety net, and small and medium enterprises.  The debut 50-year offering on strong demand in the long end of the curve.  The transaction is the largest global offering by the Republic and demonstrates the Republic’s ability to respond swiftly to markets and capture favorable issuance windows. Source: Ministry of Finance 67

  61. 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 Tn Debt Outstanding (Triliun IDR) 442 442 500 0.0% 407 407 362 362 358 358 400 31.78% -0.5% 35.00% 265 265 30.18% 300 29.81% 29.40% 5,000.0 28.33% 27.43% 764.5 30.00% 200 -1.0% 24.74% 810.7 100 19 19 14 14 4,000.0 746.2 25.00% -1.5% 734.8 - (9) (7) (4) (20) 755.1 20.00% 3,000.0 (100) -2.0% (69) (66) (58) (56) 677.6 -1.8% 15.00% (200) 714.4 4,338.44 -2.2% (227) -2.5% 2,000.0 4,014.8 3,612.7 (300) 3,248.6 10.00% (298) (269) (308) -2.5% 2,780.6 -2.6% -2.5% (341) (400) -3.0% 2,410.0 1,000.0 1,931.2 5.00% 2014 2015 2016 2017 2018 Bonds (Net) Loans (Net) SBN (neto) Pinjaman DN & LN (neto) - 0.00% Non Debt (Net) Budget Surplus/Deficit Non Utang (neto) Surplus (Defisit) APBN 2014 2015 2016 2017 2018 2019*) Apr - 2020 **) Fiscal Deficit (%GDP, RHS) Bond Loan Debt/GDP Ratio [RHS] Rasio Defisit APBN thd. PDB (RHS) Note: *) as of end of December 2019, **) April 2020 using GDP assumption Weig ighted ed Aver erage e Debt Maturit ity of ~8. 8.8 Years Well l Diver ersif ified ied Acros oss Differ eren ent Curren encies ies % of Yearly Issuance 1% 1% 1% 1% 1% 100% 9.8 5% 6% 6% 6% 7% 4% 4% 5% 4% 4% 9.4 80% 27% 28% 9.1 30% 30% 31% 60% 8.8 8.7 8.5 8.4 40% 62% 60% 59% 57% 58% 20% 0% 2014 2015 2016 2017 2018 2019 Apr-20 2016 2017 2018 2019 Apr-20 IDR USD EUR JPY OTHER ATM (in years) Source: Ministry of Finance 68

  62. 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 Variable rate ratio [%] Refixing [%] FX Debt to GDP ratio (%) FX Debt to total debt ratio (%) 44.5 21.0 43.4 20.7 42.6 41.3 41.0 19.7 19.2 39.6 37.9 17.5 16.1 14.8 14.1 13.7 12.1 10.6 10.6 9.8 9.5 12.6 12.2 12.1 12.3 12.1 11.3 10.7 2014 2015 2016 2017 2018 2019 Apr-20 2014 2015 2016 2017 2018 2019 Apr-20 Debt Maturit ity Profi ofile le Upcom oming ing Maturit itie ies (Nex ext 5 Years) IDR tn tn 500 IDR Denominated (Triliun Rp) Other Currencies (Triliun Rp) 450 41.0 400 40.4 39.3 39.4 170 165 36.0 350 34.7 33.9 176 181 300 89 250 25.5 25.0 24.3 165 22.7 23.2 91 21.4 130 129 200 131 20.1 79 48 18 150 286 281 225 29 25 220 208 9 34 100 10.6 9.9 164 153 8.4 149 150 8.1 139 141 143 37 7.7 134 3 6.5 6.6 50 54 99 39 28 96 94 29 3 2 36 25 32 92.1 89 62 36 23 20 36 28 - - 20 38 - 34 32 21 - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049-2070 2014 2015 2016 2017 2018 2019 Apr-20 in 1 year (%) in 3 year (%) in 5 year (%) Note: 1. *) as of end of December 2019, preliminary number and using GDP assumption Source: Ministry of Finance 69

  63. Holder 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% 31.8% 34.8% 37.5% 37.7% 36.0% 36.4% 38.2% 38.6% 37.0% 80% 39.8% 38.6% 80% 44.7% 60% 60% 34.1% 37.4% 36.8% 39.0% 35.6% 40.2% 32.1% 39.8% 37.8% 39.9% 38.6% 38.2% 36.8% 42.0% 40.3% 37.5% 37.7% 40% 40% 31.8% 20% 22.3% 20% 22.0% 17.3% 17.8% 18.4% 28.0% 23.9% 23.4% 22.5% 21.1% 20.3% 11.8% 5.1% 5.3% 6.7% 7.2% 1.9% 1.3% 5.0% 4.3% 3.5% 3.2% 2.4% 2.1% 0% 0% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Apr-20 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Apr-20 Foreign Holders Domestic Non -Banks Domestic Banks 0-1 >1-2 >2-5 >5-10 >10 % Foreign Ownership of Total Source: Ministry of Finance 70

  64. Owners rship hip of IDR Tradab dable le Central tral Govern ernment nt Securit urities ies (as of Apri ril 30, 2020) (IDR tn) Descrip iption ion Dec-15 15 Dec-16 16 Dec-17 17 Dec-18 18 Dec-19 19 Apr -2020 Banks ks* 350.0 .07 23.9 .95% 399.4 .46 22.5 .53% 491.6 .61 23.4 .41% 481.3 .33 20.3 .32% 581.37 21.1 .12% 816.30 28.0 .04% Govt Instit itutions ions (Bank nk 148.9 .91 10.1 .19% 134.2 .25 7.57% 141.8 .83 6.75% 253.4 .47 10.7 .70% 262.4 .49 9.54% 261.7 .71 8.99% Indon ones esia ia**) Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 273.21 9.93% 440.32 15.13% GS used for Monetary 23.63 1.33% 38.01 1.81% (36.15) (1.52%) 10.72 0.39% 178.60 6.14% Operation Non Non-Banks ks 962.8 .86 65.8 .87% 1,239.5 .57 69.9 .90% 1,466.3 .33 69.8 .83% 1,633.6 .65 68.9 .98% 1,908.8 .88 69.3 .34% 1,832.7 .78 62.9 .96% Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 130.86 4.75% 132.51 4.55% Insurance Company and 221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 471.67 17.13% 496.12 17.04% Pension Fund Foreig eign Hold lder ers 558.5 .52 38.2 .21% 665.8 .81 37.5 .55% 836.1 .15 39.8 .82% 893.2 .25 37.7 .71% 1,061.8 .86 38.5 .57% 924.7 .76 31.7 .77% Foreign Govt's & 110.32 7.55% 120.84 6.81% 146.8 .88 6.99% 163.7 .76 6.91% 194.4 .45 7.06% 182.1 .16 6.26% Central Banks Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 81.17 2.95% 91.64 3.15% Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 163.32 5.93% 187.75 6.45% Total 1,461.8 .85 100% 1,7 ,773.2 .28 100% 2,099.7 .77 100.0 .00% 2,368.4 .45 100.0 .00% 2,752.7 .74 100.0 .00% 2,910.8 .80 100.0 .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 71

  65. 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

  66. 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 73

  67. Bank Indone onesia ia Po Polic licy Mix: : May 2020 The e BI Board d of Gover erno nors agree eed d on 18th h and 19th h May 2020 20 to hold d the BI 7-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%. Maintains an Reinforced its policy accommodative Continues to strengthen Continues to mix towards mitigating macroprudential Monetary policy coordination with the optimize monetary the risk of COVID-19 policy stance considers the need Government and other Holds the BI operations in order transmission, perceives to maintain external consistent with the relevant authorities to 7-Day to ensure market adequate space to stability amidst existing policy mix, ensure policy Reverse Repo mechanisms and lower the policy rate heightened global including the full effectiveness in terms of Rate at adequate liquidity due to mild inflationary financial market panoply of efforts to driving the economic 4.50% in the money and pressures and the uncertainty mitigate risk in the recovery during and after foreign exchange urgent need to financial sector COVID-19. markets stimulate economic caused by COVID-19. growth 74 Source: Bank Indonesia

  68. 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. 75

  69. 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. 76

  70. 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 IDR600 to IDR1 and from customers to the banking industry from a maximum of IDR3,500 to IDR2,900, effective from 1st April 2020 until 31st December 2020; and • supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program (BPNT), Pre-Employment Card and College Smart Indonesia Card. 77

  71. 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. 78

  72. 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 (Perppu) No. 1 of 2020 as follows: 1) Expansion of BI authority to purchase long-term government securities (SBN) and government Islamic securities (SBSN) in the primary market in order to assist the Government finance the handling of the COVID-19 impact on financial system stability. 2) SBN will be purchased in the primary market by Bank Indonesia as a last resort if the market is unable to fully absorb the SBN issued by the Government. Further provisions will be regulated in conjunction with the Minister of Finance and the Governor of Bank Indonesia based on the following considerations: financial market conditions and the impact on inflation. 3) As an anticipatory measure, Bank Indonesia will purchase repo securities held by the Deposit Insurance Corporation (LPS) in order to finance the handling of solvency issues at systemic and non-systemic banks; 4) Provision of short-term liquidity loan or short-term liquidity financing facilities in compliance with sharia principles to systemic and non-systemic banks; 5) Foreign exchange flow management for residents. The use of foreign exchange by residents, including provisions for the surrender, repatriation and conversion of foreign exchange to maintain macroeconomic and financial system stability as follows: 6) Bank Indonesia would like to stress that this measure is not a form of foreign exchange control but policy to manage foreign exchange applicable only to residents (excluding non-residents/foreign investors). Foreign portfolio investment and foreign direct investment (FDI) are still required for the Indonesian economy, thus existing policy permitting the free flow of foreign exchange by foreign investors remains effective. 7) Regulating foreign exchange amongst residents is consistent with international prudential principles for macroeconomic management, particularly under economic distress, such as the current COVID-19 pandemic. 79

  73. 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 IDR115 trillion), and the Monetary Authority of Singapore (MAS), USD10 billion. 80

  74. 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. 81

  75. Bank Indon ones esia ia Po Polic licy Mix: : May 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on Mechanism sm for Bank k Indon onesi sia to purch rchase se SBN in the prima mary mark rket to finance the State e Rev Revenue e and Expen endi diture e Budg dget et (APBN) – Abov ove e the Line  In accordance with the joint decree issued by the Minister of Finance and Bank Indonesia Governor, SUN/SBSN purchases by Bank Indonesia in the primary market are based on general practices through transparent market mechanisms to maintain good governance. The mechanism for Bank Indonesia to purchase SUN/SBSN in the primary market is divided into three stages as follows: (i) Phase I: As a non-competitive bidder, Bank Indonesia can purchase SUN/SBSN in the primary market based on the following provisions:  Yield commensurate with the weighted average yield of the auction on the same day  Maximum SUN bid of up to 25% of the target auction maximum and maximum bid on SBSN > 1 year of up to 30% of the target auction maximum. (ii) Phase II: A greenshoe option based on the following provisions:  Yield commensurate with the weighted average yield of the auction on the previous day.  If the incoming bid is lower than the auction target, the maximum offer is the same as the previous offer. (iii) Phase III: Private placements based on the following provisions:  Refer to the latest market price published by the Indonesia Bond Pricing Agency (IBPA).  Private placements are implemented if the Government seeks additional financing based on the agreed terms and conditions.  Bank Indonesia provide interest remuneration on the government account as a form of burden sharing to reduce the state budget burden.  SBN purchases by Bank Indonesia in the primary market as a follow-up action to Act No. 2 of 2020 currently stand at IDR23.98 trillion, with IDR166.21 trillion purchased in the secondary market for stabilisation purposes. Consequently, BI holdings of SBN were recorded at IDR443.48 trillion on 26th May 2020. 82

  76. Bank Indon ones esia ia Po Polic licy Mix: : May 2020 Mitiga igati ting g the risk sk of COVID-19 19 transmiss smission on Nationa onal Econom omic c Re Recover ery and state e budget et financi cing mecha hanism sm – Below w the Line  Bank Indonesia is providing liquidity to the banking industry through a repo mechanism for SBN in order to fund loan restructuring as part of the national economic recovery. If SBN purchases are insufficient, banks can apply to the government for fund placements, funded through SBN purchases by Bank Indonesia (below the line).  In accordance with Government Regulation No. 23 of 2020, government fund placements will only occur at participating banks if SBN available for repo to Bank Indonesia are insufficient, provided the participating bank is healthy based on a soundness assessment conducted by OJK and is holding tradeable government securities (SBN), Bank Indonesia certificates of deposit (CD), Bank Indonesia Certificates (SBI), Bank Indonesia Sukuk (SukBI) and Islamic Bank Indonesia certificates (SBIS) that have not been repo totaling more than 6% of third party funds.  Liquidity from Bank Indonesia to the banking industry for loan restructuring is provided through the following mechanisms: (i) Phase I: SBN Repo Total SBN held by the banking industry as of 14th May 2020 was recorded at IDR886.0 trillion. After meeting the Macroprudential Liquidity Buffer (MPLB) requirements for the banking industry, approximately IDR563.6 trillion must be repo to Bank Indonesia prior to applying for government fund placements. The current position of repo SBN to Bank Indonesia stands at IDR43.9 trillion. (ii) Phase II: Government fund placements in accordance with Government Regulation No. 23 of 2020 (iii) Phase III: Repo SBN - Macroprudential Liquidity Buffer (MPLB)  Pursuant to Bank Indonesia regulations (Macroprudential Liquidity Buffer - MPLB), banks are required to maintain minimum SBN totaling 6% of deposits (IDR330 trillion) for liquidity management in addition to the 3.5% reserve requirements  All SBN, totaling IDR300 trillion, can be repo through monetary operations in accordance with the Bank Indonesia Act before applying for short- term liquidity loan/financing facilities (PLJP/S).Bank Indonesia provide interest remuneration on the government account as a form of burden sharing to reduce the state budget burden. (iv) Phase IV: Short-term liquidity loan/financing facilities (PLJP/S)in accordance with Act No. 2 of 2020 Banks can apply for the short-term liquidity loan/financing facilities (PLJP/S)if the SBN already repoed are nearly depleted. Pursuant to Act No. 2 of 2020, short-term liquidity loan/financing facilities (PLJP/S) are only available to solvent and healthy banks based on OJK requirements and assessments, with adequate repayment capacity and guaranteed by current loans registered at Bank Indonesia. 83

  77. 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 84

  78. 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 85

  79. 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 86

  80. 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 87 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  81. 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 88 *As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2 nd , 2019

  82. 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 89 Source: Bank Indonesia

  83. 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 90

  84. 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 IDR150,000 1% or maximum of IDR100,000 penalties December 2020 1 st May 2020 – 31 st 4 Supporting credit card issuer policy to extend Issuer discretion the due date for customers December 2020 91

  85. 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 92

  86. 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 debtor 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 93

  87. 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 1. Adjustment of LTV Ratio for Property Loans and FTV Ratio for Property Financing. • In response to global and domestic economic 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 94

  88. 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 95

  89. 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 96

  90. 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 derivative 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 against 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 against 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 against rupiah Source: Bank Indonesia 97

  91. 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 98

  92. 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 99

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