Republic of Indonesia Presentation Book - July 2017

Republic of Indonesia
A Resilient and Progressive Economy

July 2017
About Investor Relations Unit of the Republic of Indonesia
Investor Relations Unit (IRU) of the Republic of Indonesia has been established as a joint effort between Coordinating Ministry of
Economic Affairs, Ministry of Finance and Bank Indonesia since 2005. The main objective of IRU is to actively communicate Indonesian
economic policy and to address concerns of investors, especially financial market investors.
As an important part of its communication measures, IRU maintains a website under Bank Indonesia website which is administered by
International Department of Bank Indonesia. However, day-to-day activities of IRU are supported by all relevant government agencies,
among others: Bank Indonesia, Ministry of Finance, Coordinating Ministry for Economic Affairs, Investment Coordinating Board, Ministry of
Trade, Ministry of State Owned Enterprises, Ministry of Energy and Mineral Resources and Financial Services Authority.
IRU also convenes an investor conference call on a quarterly basis, answers questions through email, telephone and may arrange direct
visit of banks/financial institutions to Bank Indonesia and other relevant government offices.
Published by Investor Relations Unit Republic of Indonesia

Website: http://www.bi.go.id/en/iru/default.aspx
Contact: Wiwit Widyastuti (International Department - Bank Indonesia, Phone: +6221 2981 8279)
Adrianto (Fiscal Policy Office - Ministry of Finance, Phone: +6221 345 0012)
I Gede Yuddy Hendranata (Directorate General of Budget Financing and Risk Management - Ministry of Finance,
Phone: +62213510714)
E-mail: contactIRU-DL@bi.go.id
This Presentation Book also can be downloaded from: http://www.bi.go.id/en/iru/presentation/red/Default.aspx
1
Overview
Institutional and Governance Effectiveness: Fiscal Performance and Flexibility:

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

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

3
External Factor:
Improved External Resilience 6 Strong Commitment on Acceleration
of Infrastructure Provision
2
Section 1
Institutional and Government Effectiveness:
Accelerated Reforms Agenda with
Institutional Improvement
Positive Global Perception
Ease of Doing Business1 Corruption Perception Index2
2008 2009 2010 2011 2012 2013 2014 2015 2016

55 Higher score is better
50
Higher rank is better 50
70 69
45
41
90 91 40 40
99
37
110 35 35
123 30
130 130
* Both India and Brazil shared the same score (40) in 2016
25
150
2012 2013 2014 2015 2016
Indonesia India Brazil Philippines Turkey Indonesia India Brazil Philippines Turkey
Global Competitiveness Index3 World Governance Indicators4
55
2009 2010 2011 2012 2013 2014 2015 2016 52
30 47
Higher rank is better 39 45 46
41
45 40
35 38
55
60 57
25 25
75
Higher rank is better
81 15
90 2010 2011 2012 2013 2014 2015
Indonesia India Brazil Phillipines Turkey
Voice and Accountability Political Stability/Absence of Violence
Regulatory Quality Government Effectiveness
1. Source: World Bank Doing Business 2017 Report; Control of Corruption Rule of Law
2. Source: Transparency International Corruption Perceptions Index 2016 Report;
3. Source: World Economic Forum The Global Competitiveness Report 2016 2017
4. Source: World Bank
4
Investment Grade Status From Rating Agencies
JCRA Baa3 / Positive

BBB-
Feb 2017, Baa3, Outlook Revised to Positive
Fitch Moodys R&I S&P We changed the outlook on Indonesia's sovereign rating
to positive from stable to reflect emerging signs of a
Below Investment Grade reduction in structural constraints, including its level of
external vulnerability and the strength of its institutions.
BB+
BBB- / Positive
July 2017, BBB-, Positive Rating Affirmed

Indonesia's ratings balance a low government debt
BB burden, favourable growth outlook and limited sovereign
exposure to banking sector risks with weak - but
strengthening - external finances compared with 'BBB'
category peers and some lagging structural factors,
including governance standards and a still difficult - but
improving - business environment.
BB-
BBB- / Stable
May 2017, BBB-, Rating Upgraded
B+ We raised the long-term sovereign credit to BBB- as the

Indonesian authorities have taken effective expenditure and
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 revenue measures to stabilize the public finances despite
the terms of trade shock.
BBB- / Positive BBB- / Positive
April 2017, BBB-, Outlook Revised to Positive March 2017, BBB-, Outlook Revised to Positive
Indonesia's macroeconomics stability has been maintained for several JCR has changed the rating outlook from Stable to Positive, based
years. Its external position is also improving,. fiscal deficits have been on the recent improvement on the investment climate promoted by a
reined in and government debt is low. In light of such factors, coupled series of Economic Policy Packages & the containment of private
with improved policy management, R&I has changed the rating outlook to external debt brought by Bank Indonesias prudential regulations on
Positive. external borrowing.
5
Indonesia Remains the Investment Destination of Choice
The Economist: Indonesia among the top 3 destination for attracting

investors in Asia (January 2017)1 Indonesia Enjoys Large Investments Relative to Peers within the Region 2
40 2015 2016 2017*

China 71,6
* 2017 estimation
India 55,7 35
Total Investment / GDP (%)

Indonesia 53,7
Vietnam 46,2 30
Phillipines 39,4
Thailand 33,3 25
Myanmar 28,4
20
Malaysia 27,7
Australia 26,3 15
South Korea 25,3
Hong Kong 24,8 10
Japan 21,3
32,75
31,42
31,43
34,17
34,29
34,30
25,09
26,06
25,48
20,55
23,60
25,41
22,25
22,01
24,30
27,58
26,58
27,18
Singapore 18,9 5
Taiwan 18
0
0 10 20 30 40 50 60 70 80 India Indonesia Malaysia Philippines Thailand Vietnam
UNCTAD: Indonesia is listed as the top 5 prospective investment destination JBIC: Amongst ASEAN countries, Indonesia is the most preferred place for
in the world (June 2017)3 business investment (December 2016)4
United States (1) 40 India 47,6

China (2) 36 China 42,0
India (3) 20 Indonesia 35,8
Indonesia (8) 11 Vietnam 32,7
Thailand (14) 11 Thailand 29,4
Brazil (7) 9 Mexico 25,9
United Kingdom (4) 7 USA 19,3
Germany (5) 7 Philippines 10,6
Mexico (7) 7 Myanmar 10,1
Philippines (9) 6 Brazil 7,2
Spain (25) 5 Malaysia 6,8
Vietnam (14) 4 Singapore 4,8
Singapura (18) 4 Russia 3,5
Canada (18) 4 % of executives responding Korea 3,1
(x) = 2016 ranking Turkey 2,5 % of surveyed who consider each country has promising prospects
Australia (13) 3
0 10 20 30 40 50 0 5 10 15 20 25 30 35 40 45 50
1. Source: The Economist Asia Business Outlook Survey 2017 3. Source: United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2017
2. Source: IMF World Economic Outlook, Database April 2017 4. Source: JBIC Outlook for Japanese Foreign Direct Investment (28th Annual Survey)
6
National Strategic Development Plan (Nawa Cita)
The 3 Dimensions on Economic Development
Priority Sector
Human Development Development Equitable Development
Education Food Security

Inter- Income Group
Energy & Electrical Security
Health Inter-Region:
Maritime & Marine
(1) Rural Area,
Housing
Tourism & Industry (2) Periphery,
(3) Outside Java,
Character Water Security, Basic
Infrastructure & Connectivity (4) Eastern Area.
Necessary Condition
Legal Certainty & Politic & Democracy Governance
Security & Order
Law Enforcement
7
Equitable Economy Policy
The Economic Equalization Policy announced in April 2017 embodies national economic transformation to successfully overcome
the middle income trap and achieve the status of a developed country in the long-term
Three Key Pillars and Quick Win Programs
The Ministry of Environment and Forestry (KLHK) will distribute access to social forest management covering an area of
Social Forestry 211,522 ha for 48,911 families with total permits of 134
Initial focus will be on 11 villages with a total area of 15.576 ha for 9,411 households
Transmigration land of 220,000 ha and 3,800 ha under the National Agrarian Operation Project (PRONA) is ready to be
Agrarian Reform legalized from a total of 4.5 million ha, while 23,000 ha of displaced land and 707,000 ha of forest disposal are also
and Transmigration
Land
ready to be redistributed from a total of 4.5 million ha

Land Legalization The Land Object of Agrarian Reform (TORA) will be expanded to several provinces, including Banten, West Java, Central
Java, Riau, West Kalimantan, West Sumatra, North Sumatra, and Maluku
Committed to housing development within urban areas that are well connected to the center of activity, economic
Affordable Housing resources and public transportation for the urban poor
for the Urban Poor Core housing policies, among others, include provision of land for affordable housing (land availability), implementation of
Housing Scheme for MBR (social housing), and the Housing Financing Scheme
Targeted
Oppor
-tunity
Focused on addressing issues related to the tax system, development of manufacturing and IT industries and retail sector
Development
Improve the competitiveness of the retail sector and strengthen synergies between traditional and modern retail
of Key Sectors
Human Capital
Vocational and labor policies structured for capacity building of human resources, especially to align with industry needs
and to support government priority programs
Vocational Training Policy steps will be taken by the government to draft and improve on the road map for vocational education and
and Labour Markets training, through reclassification and prioritization of business fields and positions
Job matching program that will focus on strengthening vocational programs for industries
Vocational schemes in place for the automotive, tourism and transportation sectors
Source: Coordinating Ministry for Economic Affairs

8
The Economic Policy Packages
To improve national industry competitiveness, export and investment to generate significant economic growth
Harmonizing Regulations Simplifying Bureaucratic Process Ensuring Law Enforceability
Phase I (9 Sept 15) Phase VIII (21 Dec 15)

Improving national industry competitiveness Resolving land acquisition disputes, intensifying domestic
oil production, stimulating domestic parts and aviation
Phase II (29 Sept 15) industries
Easing permit requirement and simplifying export Phase IX (27 Jan 16)
proceeds requirement Accelerating electricity generation, stabilizing meat prices
and improving ruralurban logistics sector
Phase III (7 Oct 15)
Boosting investment, spurring exports, and maintaining Phase X (11 Feb 16)
peoples purchasing power Revising the Negative investment List and
improving protection for SMEs
Phase IV (15 Oct 15)
Simplifying wage formula and expanding loans for small Phase XI (29 Mar 16)
business Stimulating national economy through facilitation to
SMEs and industries
Phase V (22 Oct 15)
Improving industry and investment climate through tax Phase XII (28 Apr16)
incentives and deregulation on sharia banking Improving Indonesias rank on Ease of Doing Business (EODB)
Phase VI (5 Nov 15) Phase XIII (24 Aug 16)

Stimulating economic activities in border areas and Low Cost Housing for Low-Income Communities
facilitating strategic commodities availability Phase XIV (10 Nov 16)
Roadmap for E-commerce
Phase VII (7 Dec 15)
Stimulating business activities in labor-intensive Phase XV (15 Jun 17)
industries nation-wide through incentives in the form of Development of Business and Competitiveness
accelerating land certification process for individuals of National Logistics Service Providers

9
Boosting the Competitiveness through Logistical Efficiency
..15th Economy Policy Package has been launched
Policy Goals and Benefits Policy Targets
1 Import duty for 115 types of ships spare

parts and components 0%
Opportunities for national shipping to serve export
Strengthen the Institution and import transportation of around
of the Indonesia National
Single Window (INSW)
2 USD 600 million/year
70-100 units of new
Increase Competitivenes 3 ships worth USD 700 million
of Logistic Service
Providers New employment opportunity of
4 2,000 sailors
Provide Market Opportunities Improve the Regional Governments role
for Shipping Companies,
5 in development of Regional Logistics
Marine Insurance, and National
Ship Maintenance Businesses
System to control inflation and reduce
post-harvest product damage up to 30%
10
Thematic Policy Issues on Deregulation
Six policy issues under Packages I-XV:
improvement of widening of efficiency of improvement of expansion of improvement of
industry investment logistics sector tourism sector export societys

competitiveness purchasing power
Next Phase of Policy Packages based on Sectoral and Thematic Issues
Education and
Logistics Agrarian reform Energy
Vocational Training
Industry, Manufacture,
Invention, Innovation and
Tourism, Fishery & Service Food
Creative Economy
sector

11
Progress of the Economic Policy Packages*
TOTAL INITIAL
REGULATIONS 233 IXV
IXII
Initially, there are 233 regulations which need to be
deregulated
11 IXV
Based on the further assessment, 11 regulations has been
IXII
REVOKED
REGULATIONS revoked from deregulation process
TOTAL
REGULATIONS 222 IXV
IXII
Total regulation subject to be deregulated: 222
regulations
SET 215 97%

As of July 3rd, 2017, deregulation of 215 regulations are
96%
PRESIDENTIAL LEVEL
PRESIDENTIAL
52 finished (97%), comprising 50 regulations at Presidential
47 TOTAL 42 50 FINISHED
SELESAI
level and 165 regulations at Ministrial/Institutional level
MINISTRIAL/INSTITUTIONAL LEVEL
170
TOTAL 165 FINISHED 97%
Unfinished regulations: Proposed Policy on Development
ON GOING
DISCUSSION 7 3% of Business and competitiveness of National Logistics
Service Providers
*as of July 5th, 2017

12
Other Progress on Economic Policy Packages
Fair, Simplified & Development of

Projectable Wage System Spesial Economic Zone (SEZ)
14 Provinces have set 2016 Minimum Wage Total value of facilities and incentives for
System in accordance to the Government SEZs amounted IDR 33.8 trillion (as of
Regulation (GR) No. 78/2015 (Kepulauan September 2016)
Riau, Kalimantan Barat, Nusa Tenggara
Barat, Sumatera Barat, Jambi, Aceh, 18 companies benefitted from the
Kalimantan Selatan, Banten, Gorontalo, simplification of fiscal incentive process
Nusa Tenggara Timur, Jawa Barat, Bali, with average processing time of 13.4
Sumatera Utara, and Bangka Belitung) days (previously 2 years)
Export-Oriented Deregulation on
Business Credit (KURBE) Logistics Sector
North Sulawesi has sucessfully exported
State-owned train manufacturer PT Industri
coconut product through SOEs joint
Kereta Api (INKA) in Madiun, East Java, has
program
begun its first passenger train exports by
30 Bonded Logistic Center has been
shipping 15 train wagon to Bangladesh.
launched to support various industries
13
Improving Investment Climate
implement 3-hour investment licensing service to complement the One Stop Service (OSS)
Requirement for utilizing 3-hour Investment Lisencing Service:

1. Minimum investment of IDR 100 billion (USD 8 million)
and/or employing 1,000 local workers. No requirements for investment in
2. Application must be submitted directly by at least one infrastructure sector
candidate of the proposed company stakeholder
BKPM
Arrive at OSS at BKPM directly from the airport Wait at the lounge while documents are Obtain eight documents & letter of
Consult with Director of Investment Service processed by BKPM, in-house notary, ministries, land availability within three hours to
Submit the required documents & data & other government institutions start the business
2 documents needed 9 documents obtained

Certainty to Certainty to
Investor identitiy as the prospective shareholders start a business Import capital goods
Investment license APIP/Import identification
ID Card Certificate of incorporation
NIK/Customs registration
And/or Deed of Establishment (Indonesian company) or NPWP/Tax Registration Number
Article of Association (Foreign company) TDP/Company Registration
Flowchart of business activities workflow Certainty to work Accurate land information

Containing workflow from raw material production to the
RPTKA/Employment plan Letter of land availability
finished products
IMTA/Working permit
Until March 2017, 313 projects* have utilized the 3 hours services
Source: Investment Coordinating Board (BKPM) * Since January 2016, including 12 projects in EMR sector
14
implement 3-hour investment licensing service for Energy and Mineral Resources Sector
9 Types of licensing issued by ESDM3J service
Duration for reguler

No. Type of Licensing
service (work days)
1 Temporary Business License for 20
Electricity
Oil/Fuel/LPG storage
3 Temporary Business License for 32/40
1 2 3 Storage of Processed Products/CNG
4 Temporary Business License for LNG 32
Director arrives at Waiting in priority Applicant receive Storage
central OSS, then lounge, while the the requested
submit required documents licensing products 5 Temporary Business License for Oil 32
documents* processed Refinery
Note *: ESDM3J service is given if the company has fulfilled Processing Oil Residue Industry
the checklist of administrative & technical requirements as 7 Temporary Business License for 32
regulated on MEMR Ministrial Decree No.15 of 2016
Natural Gas Processing
General Trade of Oil/Fuel
Until March 2017, 12 projects have utilized
the 3 hours services for EMR Sector 9 Temporary Business License for 40
General Trade of Processed Product
Source: Investment Coordinating Board (BKPM)

15
implement Direct Construction Permit to attract investment in Industrial Estates
Priority Investment Service No Requirements

No minimum investments or workers is
Direct Construction (KLIK)

required.
Available for 32 selected industrial estates.
Investors can directly start their project construction before
obtaining construction permits. This service is supported by Construction permits can be obtained in
both Central and Regional Governments which become the parallel with construction process.
first step to synergize between central and local licensing
Obtain investment licence at Survey a land within selected Start the construction of your
OSS at national or regional industrial estates. project. No other permits are
level. Acquire the land for your required.
industry. Apply for building construction permit
& environmental permit, in parallel
with construction process.
Until May 2017, 90 projects have utilized the KLIK services

16
Direct Construction Permit is expanded to 32 Industrial Estates (IE) throughout Indonesia
1
North Sumatera 1
(1 IE; 100 ha) KLIK 1st Stage (14 IE) 1 7
2
Medan Industrial Estate/KIM
(100 ha)
KLIK 2nd Stage (18 IE)
2 3
6
2 3
Banten 5 4
(3 IE; 3,150 ha)
4
Central Java 1 4
5 6
(3 IE; 840 ha) Riau Island

1. Modern Cikande Industrial
Estate/MCIE (1,800 ha) 1. Kendal Industrial Park/KIP
(5 IE; 556 ha)
2 4
2. Wilmar Integrated (700 ha) 1. Batamindo Industrial Riau West Java
Industrial Park/WIIP (800 2. Bukit Semarang Baru/BSB Park (61.4 ha) (1 IE; 198.9 ha) (6 IE; 1,814.1 ha)
ha) (40 ha) 2. Bintang Industrial
3. Krakatau Industrial Estate IE Dumai (198.9 ha) 1. Artha Industrial Hill
3. Wijayakusuma Industrial Park II (20 ha)
Cilegon/KIEC (570 ha) 3. Kabil Integrated (315.1 ha)
Estate/KIW (100 ha)
Industrial Estate 3 2. Greenland International
(142.5 ha) Industrial Center
3 DKI Jakarta (GIIC)/Deltamas (400
5 4. Bintan Inti Industrial
West Java (2 IE; 129 ha) ha)
(5 IE; 1.151 ha) East Java Estate (229.6 ha)
5. West Point Maritim 1. Kawasan Berikat 3. Jababeka Tahap III
(1 IE; 1,761 ha)
1. Bekasi Fajar Industrial Industrial Park Nusantara/KBN (45 ha)
Estate/BFIE (300 ha) KI Java Integrated Industrial (102.5 ha) (118.6 ha) 4. Kota Bukit Indah Ind.
2. Delta Silicon 8 (158 ha) and Port Estate/JIIPE 2. Jakarta Industrial City (510 ha)
3. Karawang Internasional (1,761 ha) Estate 5. Indotaisei Kota Bukit
Industrial City/KIIC (293 5 Pulagadung/JIEP Indah (300 ha)
ha) Central Java (10.4 ha) 6. Marunda Center (300
6 ha)
4. Suryacipta City of (1 IE; 285.7 ha)
South Sulawesi
Industry/SCI (300 ha)
5. GT Tech Park @
(1 IE; 3,000 ha) IE Demak (285.7 ha) 6 7
East Java
Karawang (100 ha) Bantaeng Industrial Park/BIP East Kalimantan
(2 IE; 341 ha)
(3,000 ha) (1 KI;133.8 ha)
1. IE Maspion (151 ha)
2. IE Tuban (190 ha) IE Kariangau (133.8 ha)
17
Bonded Logistic Center to Improve Indonesias Competitiveness
Bonded Logistic Center To date, 30 Bonded Logistic Center has been

launched to support various industries.
(Pusat Logistik Berikat/PLB) is a
facility provided by Ministry of
Finance as part of the
implementation of the
Food & Small and
2nd Economic Policy Package. medium
beverages
PLB facility aims to improve industry industry
efficiency and reduce the cost of Oil and Personal
gas, and care/
transportation and logistics in home care
mining
Indonesia; support the growth of industry industry Synthetic
the domestic industry, including Auto- textile
small and medium motive (chemical
industries; increase industry substances)
Textile industry.
investment; and to make
(cotton)
Indonesia to become a logistics industry.
hub in Asia Pacific.
18
revising the Negative Investment List
Introduction of New Foreign Ownership Regulation for Strategic Sectors
Cold storage Sports Center, Restaurants, Bars Pharmaceutical Raw Materials

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

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

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

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

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

19
improving Indonesias Rank on Ease of Doing Business (EODB)*
EODB 2017 EODB 2016 Change in EODB 2017 EODB 2016 Change in
Rank Rank Rank Points Points Points
Overall 91 106 15 61.52 58.51 3.01
Starting a business 151 167 16 76.43 67.51 8.92
Dealing with Construction Permit 116 113 3 65.73 65.26 0.47
Getting Electricity 49 61 12 80.92 77.60 3.32
Registering Property 118 123 5 55.72 53.24 2.48
Getting Credit 62 70 8 60.00 55.00 5.00
Protecting Minority Investors 70 69 1 56.67 56.67 0
Paying Taxes 104 115 11 69.25 64.47 4.78
Trading Across Borders 108 113 5 65.87 63.53 2.34
Enforcing Contracts 166 171 5 38.15 35.37 2.78
Resolving Insolvency 76 74 2 46.46 46.48 0.02
* Higher rank is better, EoDB 2017 was published in October 2016

- Government efforts to boost business growth through deregulations and de-bureaucratization have been recognized by the improvement of EODB
- Structural reforms will continue including in the budget and real sectors
Source: World Bank 20

Improving Investment Realization (Q2-2017)
Rising Direct Investments FDI Realization by Sectors

IDR tn
180
160
FDI DDI TOTAL 171
Non Metallic
140 61 Mineral Industry
120
100 US$62.7 mn
80
60 110 87.6%
40 Food Industry Wood Industry
20 US$705.3 mn US$100.6 mn
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 35.7% 6.8%
2013 2014 2015 2016 2017
Trade &
Reparation Textile Industry
IDR170.9tn
Rp159.4IDR151.6tn
T US$437.1 mn Investment US$76.1 mn
375,982 434,463
Rp145.4 T
102.7% Realization 20.9%
*
9.6% 12.7% Rubber and

15.6% Metal, Machinery & Plastic Industry
Q2-2016 Q2-2017 Electronic Industry US$137.3 mn
Q1-2016 Q1-2017 Q1-2016Q1-2017
* person US$1131.2 mn
1.5%
IDR109.9tn IDR61tn
26.6%
IDR99.4tn IDR52.2tn
Mining
US$1006.3 mn
10.6% 16.9% 40.8%

Q2-2016 Q2-2017 Q2-2016 Q2-2017
Source: Investment Coordinating Board (BKPM), compared to Q2-2016 period

21
Section 2
Economic Factor:
Strong and Stable Growth Prospects
Remain Intact
Conducive Environment
Underpinning Strong Growth Fundamentals
4th Most Budget reform as

Tax base to be
Largest Economy Populous country broadened from
a part of larger
in South East in the World; one reduce
economic reform
dependency on
Asia 64% in initiative
commodities
productive age
Large and Consistent Fuel subsidies
Stable Budget Reform significantly
Manageable Growing Middle Economy reduced and Prudent debt
Inflation Rate Income Class spending redirected management
to more productive
allocation
Reform-Oriented
Administration
From commodity-based to manufacturing Three main sources of financing for
and service sectors via infrastructure investment needs: State and regional
development budget, State Owned Enterprises and PPP
New High
Continuing from 2015 policy, infrastructure
From consumption-led to investment-led Economic Infrastructure will be higher than fuel subsidy
growth via a stronger manufacturing sector
and more investment initiatives Structure Investments
Infrastructure spending focused on basic
infrastructure projects
Policies to maintain purchasing power to
stimulate domestic economy in the midst
of weakening macroeconomic conditions Fiscal and non-fiscal incentives to attract
infrastructure investment and promote PPP
23
Indonesias Strong GDP
Strong GDP Growth1 Favourable GDP Growth Compared to Peers2

% %
QoQ YoY
7,0 9,0
5,12 4,94 4,93 5,05 5,17 4,92 5,18 5,01 4,94 5,01
4,82 4,74 4,77
5,0 7,0
3,83 3,75 4,01
3,27 3,30 3,13 5,0
3,0
3,0
1,0 0,04 1,0
-1,0 (0,17) (0,40) (1,77) (0,34) -1,0 2012 2013 2014 2015 2016 2017* 2018*
(1,70)
(2,07)
-3,0 -3,0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
-5,0 Brazil India Indonesia Malaysia
2014 2015 2016 2017 Philippines Singapore Thailand Turkey
GDP Growth Based on Expenditures (%, YoY)1 Growth Prospect
2014 2015 2016 2017 2017 GDP growth

By expenditure Institutions
(%YoY)
Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1
HH. consumption 5.2 5.2 5.1 5.1 5.1 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 2017 R-Budget Plan 5.2
Non profit HH.
23.2 22.4 5.8 (0.5) 12.2 (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.6 6.7 6.6 8.0 Bank Indonesia 5.0-5.4
consumption
Government
6.1 (1.8) 1.2 0.9 1.2 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (2.9) (4.0) (0.1) 2.7 IMF 5.1
consumption
Gross Fixed Cap.
5.4 4.0 4.4 4.1 4.4 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 World Bank
Formation 5.2
Exports 3.1 1.5 4.9 (4.4) 1.1 (0.7) (0.3) (0.9) (6.4) (2.1) (3.3) (2.2) (5.6) 4.2 (1.7) 8.0
ADB 5.1
Imports 5.1 0.4 0.2 3.0 2.1 (2.6) (7.4) (6.6) (8.7) (6.4) (5.1) (3.2) (3.7) 2.8 (2.3) 5.0
GDP 5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 Consensus Forecast (July 2017) 5.2
1. Source: Central Bureau of Statistics of Indonesia (BPS)
2. Source: World Economic Outlook Database - April 2017; * indicates estimated figure
24
Strong and Stable GDP Performance
Spatial GDP Growth Spatial GDP Growth Contribution

Bali & Nusa
Sumatera Kalimantan Tenggara: 3.0%
GDP Growth GDP Growth Bali & Nusa Maluku & Papua: 2.5%
Q1 2017: 4.1% Q1 2017:4.9% Sulawesi Sulawesi: 5.9%
Tenggara
GDP Growth Maluku & Papua
GDP Growth
Q1 2017:6.9% GDP Growth Sumatera: 22.0%
Q1 2017: 2.4% Kalimantan: 8.3%
Q1 2017: 4.2%
Java
GDP Growth
Q1 2017: 5.7%
Java: 58.5%
Contributors to GDP Growth by Sector (%, YoY)
2014 2015 2016 2017

By sectors
Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1
Agriculture, forestry, and fishery 5.2 4.9 3.6 3.3 4.2 3.8 6.5 2.9 1.6 3.8 1.5 3.4 3.0 5.3 3.3 7.1
Mining (1.2) 0.7 0.7 1.5 0.4 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.2 0.3 1.6 1.1 (0.5)
Industrial processing 4.5 4.9 5.0 4.2 4.6 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.4 4.3 4.2
Construction 7.2 6.5 6.5 7.7 7.0 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.3
Big traders, wholesale, retail 6.1 5.1 5.2 4.4 5.2 3.8 1.6 1.4 3.7 2.6 4.1 4.1 3.6 3.9 3.9 4.8
Transportation and warehousing 7.0 7.6 7.7 7.2 7.4 5.8 5.9 7.3 7.7 6.7 7.9 6.9 8.3 7.9 7.7 7.6
Information and communication 9.9 10.7 9.8 10.1 10.1 9.7 9.3 10.6 9.2 9.7 7.6 9.3 9.0 9.6 8.9 9.1
Financial service and insurance 3.6 5.5 1.9 7.9 4.7 8.6 2.6 10.4 12.8 8.6 9.3 13.6 9.0 4.2 8.9 5.7
Other Services 8.4 9.5 9.5 8.4 8.9 8.0 8.1 8.1 8.2 8.1 7.9 7.9 7.7 7.7 7.8 8.0
GDP 5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0
25
Section 3
External Factor:
Improved External Resilience
A Narrower, Structurally-Stronger Current Account Deficit
Strong Balance of Payments Improving Current Account Deficit

US$bn US$bn US$bn CA2012: 2013: 2014: 2015: 2016*:
Deficit CA Deficit CA Deficit CA Deficit CA Deficit
(US$24.4bn) (US$29.1bn) (US$27.5bn) (US$17.5bn) (US$16.9bn)
20 160 8
121.8 4 5.7
10 120
7.9 0.8
0
4.5
(2.4)
0 80
-4
(2.4) (7.5)
-8 (1.4)
-10 40
Current Account Capital & Financial Account
Overall Balance Reserve Assets (RHS) -12
-20 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1* Q3* Q1*
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1* Q3* Q1* 2012 2013 2014 2015 2016* 2017**
2012 2013 2014 2015 2016* 2017** Goods Service Income Secondary Inc. Current Account
Source: Bank Indonesia Source: Bank Indonesia
Trade Balance Surplus Continues Supported by Substantial FX Reserves to Mitigate External Challenges
US$bn 2012: 2013: 2014: 2015: 2016: 2017: FX Reserves as of June 2017: US$123.09bn
Deficit Deficit Deficit Surplus Surplus Surplus US$bn
(US$1.79bn) (US$4.10bn) (US$2.37bn) US$7.59bn US$8.83bn US$7,63bn* (Equiv. to 8.5 months of imports + servicing of government debt) Month
3,0 140 15
FX Reserves (LHS) Month of Import & Debt Service (RHS)
120
2,0 1,96
12
1,63 100
1,0
9
80
0,0
-0,33 60
6
-1,0
40
-2,0 3
OG Non-OG Total 20
-3,0 - -
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 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
2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017
* Preliminary Figure ** Very Preliminary Figure

Source: Bank Indonesia
Source: BPS
27
Exchange Rate In Line with Fundamentals
Stable Movement of Rupiah

IDR/US$
13.500 *data as of June 30th, 2017
13.450 IDR/USD Monthly Average Quarterly Average Point-to-point, the rupiah strengthened 1.08%
13.400
(ptp) to close at a level of Rp13,328/USD. The
appreciation was bolstered by the ongoing FX
13338 13345
13.350
13361 13309 13321 13328 sales by corporations and a considerably large
13348
13.300 influx of foreign capital into the domestic
13304 13298 market, and also in line with the appreciation in
13.250 the regional currencies.
13.200
12-Jun
20-Jun
3-Jan
11-Jan
19-Jan
27-Jan
1-Apr
9-Apr
16-Mar
24-Mar
4-Jun
11-May
19-May
27-May
12-Feb
20-Feb
28-Feb
8-Mar
3-May
4-Feb
17-Apr
25-Apr
Rupiah Exchange Rate Fared Relatively Well Compared to Peers
YTD 2017* vs 2016 June vs May 2017

-2,45
0,08 BRL -2,70
TRY
-16,85 -2,14
KRW -0,38
4,51
MYR -1,29
-5,57 PHP -0,12
-1,72
PHP INR -0,11
-4,88 0,00
7,96 IDR -0,04
EUR 0,17
-2,19 0,51
1,08 SGD 0,8
IDR
-0,19 MYR -0,27
5,39 0,92
KRW CNY 0,55
1,60 1,13
5,61 -1,43
THB JPY 1,15
1,62
0,20
INR 5,18 TRY 1,30
Point to Point Average 2,14 0,33
-1,60
THB Point to Point Average 1,37
BRL 1,59
9,60 EUR 1,55
ZAR *data as of June 30th, 2017 5,09 % *data as of June 30th, 2017 0,33 %
11,17 ZAR 2,85
-20,0 -15,0 -10,0 -5,0 0,0 5,0 10,0 15,0 -3,5 -2,5 -1,5 -0,5 0,5 1,5 2,5 3,5
28
Ample Lines of Defense Against External Shocks
Ample Reserves
Ample level of FX reserves to buffer against external shock

FX Reserve
FX Reserves as of June 2017: US$123.09 billion
Swap Arrangement
US$22.76 billion swap line with Japan currently in place

Japan
Bilateral
The size of the swap line was increased from US$12 bn in December 2013
South Korea Renewed a 3 year KRW/IDR swap arrangement with the size of up to 10.7 tn KRW/IDR115 tn in March 2017
Australia Established a 3 year A$/IDR swap arrangement with the size of up to A$10 bn or IDR100 tn in Dec. 2015
Chiang Mai Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX
Regional
Initiative reserves pool created under the agreement

Multilateralization
Came into effect in 2010 with a pool of US$120 bn
(CMIM)
Agreement Doubled to US$240 bn effective July 2014
IMF Global
Global
Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem
Financial Safety
Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)
Net - GSFN

29
Measures to Manage External Volatility
Pre-emptive Measures Bond Stabilization Framework

Implementing Crisis Management Protocol (CMP) First Line of Defense
Implementing Bond Stabilization Framework (BSF) Buyback fund at DG of Budget
Enhancing coordination between government institutions Financing and Risk Management
and continuous dialogue with market participants States Budget
Investment fund at Public Service
Specific policies in place to address crises enacted in Agency (BLU) (min. level Aware)
2017 budget law
State Owned
Swap facility arrangements based on international Related SoE (min. level Aware)
Enterprisess Budget
cooperation
Social Security
Organizing Agency BPJS (min. level Aware)
(BPJS)s Budget
Crisis Management Protocol
Indicators to determine crisis level of Government Second Line of Defense
Securities Market condition (normal, aware, alert, crisis) State General Treasury Account
Several market indicators that are monitored daily: (Rekening KUN) (min. level Alert)
States Budget
- Yield of benchmark series; Accumulated cash surplus (SAL) (min.
- Exchange rate; Level Crisis)
- Jakarta Composite Index;
- Foreign ownership in government securities State Owned Related SoE (min. level Alert)
Enterprisess Budget
Policies to address the crisis at every level :
Repurchase the government securities at secondary Social Security
market Organizing Agency BPJS (min. level Alert)
Postpone or stop the issuance (BPJS)s Budget
Source: Ministry of Finance

30
Strengthened Private External Debt Risk Management
Private External Debt is Stabilizing and Trending Down Debt Burden Indicator (External Debt / GDP) Remains Comparable to Peers
(US$bn) (US$bn)
Total Ext. Debt: External Debt / GDP (%)
300 US$334bn 400
47,1
350 Turkey 46,1
250
Private Sector 300 34
200 Ext. Debt: Brazil 37,4
US$165bn 250
150 200 34,1
Indonesia 36,1
150
100 36,4
Thailand 33,3
100
50
50 Philippines
24,6
26,5
0 0
26
2013 2015 Feb Apr Jun Aug Oct Dec Feb Apr India 26,2 2016 2015
2016* 2016* 2016* 2016* 2016* 2016* 2017* 2017* (%)
Public (Govt. & BI) Private Total (RHS) 0 5 10 15 20 25 30 35 40 45 50
Source: External Debt Statistics of Indonesia, July 2017 Source: Moodys Statistical Handbook, May 2017
Encouraging Corporates Compliance on Hedging Ratio Phase 1 Phase 2 Phase 3

Regulation Key Points Jan 1,2015 Jan 1,2016 Jan 1, 2017
Dec 31,2015 Dec 31,2016 and beyond
Q1-2017 (Total = 2,418) Q1-2017 (Total = 2,418)
Object of Regulation Governs all Foreign Currency Debt
Hedging Ratio
< 3 months > 3 6 months < 3 months 20%* 25%**
> 3 6 months 20%* 25%**
248 2,257
2,170
(10.3%) (93.3%) 161 Liquidity Ratio ( < 3 months) 50% 70%
(89.7%) (6.7%)
Credit Rating Not applicable Minimum rating of BB-
Must be done
Hedging transaction to meet not necessarily be done with a
with a bank in
hedge ratio bank in Indonesia
Indonesia
Comply Not Comply Comply Not Comply
Sanction As of Q IV-2015 Applied
* Provisional Figures
31
Manageable External Debt Profile
...short term non-bank corporate debt (non affiliation) represents only 8.9% of total private external debt
Public Long Term 1 Private Bank
Affiliation
US$168.4bn US$118.8bn US$19.9bn
or or or
50.5% 71.9% 12.0% US$11.9bn
of Total Ext. of Private Ext. of Private or
Debt Debt Ext. Debt 7.2%
External Debt of Private
Position Ext. Debt
US$165.2bn US$46.4bn US$26.5bn

or or or
US$333.6bn 49.5% 28.1% 16.1%
of total of Private of Private
Ext. Debt Ext. Debt Ext. Debt
Private
Non-Bank US$14.7bn
Short-Term1 or
8.9%
Private of Private
Ext. Debt
External Debt Position as of May 2017
1 Based on remaining maturity
Non Affiliation
Source: External Debt Statistics of Indonesia, July 2017
32
Section 4
Fiscal Performance and Flexibility:
More Fiscal Stimulus with Prudent Fiscal Policy
Integrated Reform to Provide Higher Quality of Economic Growth
...synergy between authorities to drive economy navigating the challenges
Productive and realistic budget

Credible budget execution
Fiscal
Synergy in reform to
boost the more
sustainable
and
inclusive
Monetary &
Real Sector growth Inflation management
Policy to maintain Financial
Monetary policy to ensure
consumption and improve Sector
macroeconomic and
investment climate financial system stability
Economic policy packages Macro-prudential policies

34
Long Term Strategies to Achieve Sustainable Growth
stimuli to maintain purchasing power
The Virtuous Cycle of Purchasing Power Stimuli

Increase non-taxable
income limit
Ease of land
Consumption is still the largest contributor to Indonesias certification
Fuel price and
electricity
GDP and licensing adjustment
for street
vendors
Private consumption has been a key factor driving
Indonesias economic growth in recent years
Rural 2 months
The government has designed stimulus program to transfer for addition of
productive rice subsidy
maintain and enhance purchasing power for households spending Maintaining program
Purchasing
u
The government has increased non-taxable income level

Power
and adjusted wage policy to ensure that the lowest
income bracket has the greatest support Stabilized Boosting
price for housing
meat development
Funds are targeted at not only to improve basic village products
infrastructure but also to create jobs through labor

intensive projects as well as other job creation programs Elimination of luxury
Predictable
labour goods tax for consumer
wages goods
35
Long Term Strategies to Achieve Sustainable Growth
stimuli to promote investments
Licensing Incentives Tax Incentives Business and Infrastructure Incentives Other Incentives
Permit & Income tax relief Incentives for Simplification of Accelerating Water One map
licensing for labor footwear and import licensing for infrastructure management policy
simplfication intensive apparel industries drugs and raw food development and
industries regulation
Relaxation of Tax incentives Dwelling time Oil refinery Aviation Downstream Debt To Expansion of
entry visa for REITS optimization development sector industries equity ratio coverage and
policies incentives interest subsidy for
MSME
Special Tax incentives Integrated CPO Support for Village-city Acceleration Relaxation of
economic on property logistics zones fund export-oriented logistics of power negative foreign
zones industries improvement infrastructure investment list
36
Building a Credible and Realistic Budget
providing more certainty to all stakeholders
Macroeconomic Assumption for 2017 R- Budget Credible and realistic budget with 2016 outlook numbers
2016 2017 used as the basis for the 2017 State Budget
Indicator
Realization Budget June Real. R-Budget4 Q1 2017 realization has been on track with the budget,
Economic growth (%, yoy) 5.1 5.012 5.2
relative to Q1 2016
5.02
Inflation (%, yoy) 4.0 4.37 4.3
Tax revenue in 2016 grew 3.6%, which includes IDR
3.02
103.1 trn from the tax amnesty program, which has
3-Month Treasury Bill (SPN) (%) 5.7 5.3 5.1 5.2
further increased to IDR 134.8 trn as of Q1 2017
Exchange Rate (Average, IDR/USD, Avg. YTD) 13,307 13,300 13,331 13,400
Budget prioritizes efficiency in terms of operational
ICP (USD/barrel) 40 45 48.9 50.0 spending, without compromising capital spending
Oil Production (thousand barrel/day) 829 815 784.23 815.0 Exemplifies discipline in maintaining budget deficit at
Gas Production (thousand barrel oil equivalent/day) 1,180 1,150 1,0943 1,150 reasonable levels
2016 2017
Description (IDR Trillion) Audited R-Budget to % Realization
Budget R-Budget 1H Realization
Realization Budget to Budget
A. Revenues and Grants 1,555.9 1,750.3 1,736.1 (14.2) 718.2 41.0%
I. Domestic Revenue 1,546.9 1,748.9 1,733.0 (15.9) 718.0 41.0%
1. Tax Revenue 1,284.9 1,498.9 1,472.7 (26.2) 571.9 38.2%
2. Non Tax Revenue 262.0 250.0 260.2 10.2 146.1 58.4%
II. Grants 9.0 1.4 3.1 1.7 0.2 15.5%
B. Expenditure 1,864.3 2,080.5 2,133.3 52.8 893.3 42.9%
I. Central Government Expenditure 1,154.0 1,315.5 1,367.0 51.5 498.6 37.9%
1. Ministerial Spending 684.2 763.6 773.1 9.5 263.9 34.6%
2. Non Ministerial Spending 469.8 552.0 593.9 41.9 234.6 42.5%
II. Transfer to Region and Village Fund 710.3 764.9 766.3 1.4 394.8 51.6%
1. Regional Transfer 663.6 704.9 706.3 1.4 360.4 51.1%
2. Village Fund 46.7 60.0 60.0 - 34.4 7.3%
C. Primary Balance (125.6) (109.0) (178.0) (69.0) (68.2) 62.6%
D. Surplus (Deficit) (308.3) (330.2) (397.2) (67.0) (175.1) 53.0%
% of GDP (2.49) (2.41) (2.92) (0.51) (1.29)
E. Financing 334.9 330.2 397.2 67.0 209.4 63.4%

1. Audited 3. Data as of May 2017
2. Q1 GDP Growth 4. Approved by Budget Committee of Parliament
37
A More Realistic 2017 Tax Revenue Target
taxation policies are directed at expanding the tax base and increase compliance
Tax Revenue (in IDR Trillion)

Tax collection in 1H2017 has been higher by 9.6% than 1H2016
Tax collection growth target has been adjusted from 16.0% to 14.6% in
order to be more credible
Optimization of post tax amnesty program and tax treaty, tax audit, as well R-Budget 2017:
as law enforcement are expected to support tax collection Target
Budget 2017:
1,472.7
1,498.9 IDR 26,2 trillion lower than 2017 budget
14,6
2016:
1,285.0
16,0 IDR 1.241,8 T
2015:
IDR 29,9 T (-2,4%)
1,240.5
2014:
1,146.8 3,6 IDR 41,8
TIDR 5,8 T (16,2%)
8,2
6,8 IDR 189,1 T

IDR 2,1 T (-1,1%)
Tax Collection Growth (yoy, %) Comparison between 2017 R-Budget with 2017 Budget
38
Indonesias Tax Amnesty Program A Success Story
With more than 965,000 taxpayers participating in the program
Tax Amnesty Result (as of the end of March 31st, 2017)
Preliminary Repatriation
Evidence Payment 3% SMEs
1% 2%
Tax Arrears Offshore Companies
Payment 147,1 12%
14% 1,7 Declaration 85,59
21%
18,8 1,036 594,99
Individual
SMEs
18% 861,81
Onshore 3.323,36
114,2 3,698 Declaration
Individuals
Redemption 76% 68%
Money
85%
Revenue Asset Declared Composition of Participants

IDR 134.8tn (~1.1% GDP) IDR 4,881tn (~39.4% of GDP) Based on Asset Declared
Redemption Money Assets Declared
39,3
1,10
% of GDP
% of GDP
0,62 0,58
8,3
0,20 0,17 5,2
0,15 0,12 3,9 3,6
0,04 0,04 2,1
0,3
Germany Belgium Italy Chile Indonesia India South Spain Australia India Spain Chile Indonesia Italy South Australia
(2004) (2004) (2009) (2015) (2016) (1997) Africa (2012) (2014) (1997) (2012) (2015) (2016) (2009) Africa (2014)
(2003) (2003)
Source: Ministry of Finance 39

Comprehensive Tax Reform to Improve and Sustain Revenue Collection
Focused on expanding taxpayer database, improving business processes, revising regulations
and strengthening support system
Expected Tax Revenue / GDP Increase (%) Ongoing Comprehensive Tax Reform on 4 Pillars
15
11,4 11,5
11,2 11,3 10,8 10,7 10,4
Regulation IT Support
10
General Provision and Tax Improvement of IT and

5 Procedures communication system
VAT Law Increased accessibility of
Income Tax Law public data for individual
Stamp Duty Law data management
0 Enhancement of data
2011 2012 2013 2014 2015 2016 2017 Budget management
Compliance Rate in Submitting Annual Tax Report
40 64%
62.3% Human Business
60.4%
30 59.2% Resources Process
59%
20 56.2% Improvement of the human Stronger law enforcement

54% resources and Authorization to gather 3rd
10
organizational capacity and party data (banking)
capabilities Implementation of
0 49% Establishment of tax reform Automatic Exchange of
2013 2014 2015 2016 Information
task force team
Registered Taxpayers
Registered Taxpayers Tax Report Required
Discipline in terms of Plan- Simplification of tax
Submitted Tax Report Do-Check-Action to monitor registration
Compliance Rate = Submitted Tax Report/Registered Taxpayers-Tax Report Required tax collection

40
Regional Revenue and Expenditure Profile
effective expenditure policy as a tool to promote equality across Indonesia
KALIMANTAN SULAWESI PAPUA & MALUKU

Revenue 86.0 Revenue 19.7 Revenue 18.4
a. Tax 32.0 a. Tax 16.6 a. Tax 10.7
b. Custom & Excise 1.1 b. Custom & Excise 0.6 b. Custom & Excise 1.7
c. Non Tax Revenue 52.9 c. Non Tax Revenue 2.5 c. Non Tax Revenue 6.0
Expenditure 93.9 Expenditure 104.5 Expenditure 89.6
a. Transfer to Region 73.7 a. Transfer to Region 73.3 a. Transfer to Region 71.7
b. Ministerial b. Ministerial Spending 31.2
20.3 b. Ministerial Spending 17.9
Spending
Nett (84.8) Nett (71.3)
Nett (7.9)
SUMATERA JAVA BALI & NUSRA

Revenue 141.1 Revenue 1.143.2 Revenue 15.5
a. Tax 66.9 a. Tax 884.9 a. Tax 11.7
b. Custom & Excise 6.8 b. Custom & Excise 161.6 b. Custom & Excise 1.5
c. Non Tax Revenue 70.4 c. Non Tax Revenue 96.6 c. Non Tax Revenue 2.3
Expenditure 232.3 Expenditure 302.8 Expenditure 56.4
a. Transfer to Region 176.1 a. Transfer to Region 201.8 a. Transfer to Region 39.5
b. Ministerial b. Ministerial b. Ministerial Spending 17.0
56.2 101
Spending Spending
Nett (40.9)
Nett (88.2) Nett 840.4
Notes:
1. Average data 2014 - 2016
2. Revenue amount collected from certain region for central government budget
3. Expenditure amount spent for certain region from central government budget Source: Ministry of Finance
4. Figure in IDR trillion 41
Maintaining Productive and Effective Spending
Policies
Continue the efficiency of operational expense and increase the priority expenditures
2017 R-Budget
Ministerial Spending Non Ministerial Spending
798.6 T
IDR 35.0 T from 2017 Budget
568.4 T
IDR 17.4 from 2017 Budget
Operational
% 219.2 T
Preparation for Regional Interest Payment
Expense
Election and 2019 General
Efficiency Election
Rp2,0 T from 2017 Budget
16.0 T Land Certification
Energy Subsidy
Additional
Priority
UN Mission to Center
Africa 89.9T
Rp12,5 T from 2017 Budget
Spending
Asian Games 2018
48.2 T
Development program Non Energy Subsidy
of agriculture and
horticulture
79.0T
Rp3.7 T from 2017 Budget
42
2016 Budget Realization Did Not Impede Priority Projects
Although deficit was capped at manageable level, infrastructure development continued to
accelerate
Infrastructure Realization1 Infrastructure Development Achievement in 2016

IDR tn
400 2015: 88.2% of budget 2016: 84.9% of budget
317.2
Road Development (km)
290.3 Target: 3,149.6
300 256.2 267.0 Realization: 2,528.7
200
Airport
100 Target: 15 (up to 2019)
Realization: 3
0
Budget Realization Budget Realization
Bridge (km)
Ministerial Spending Non Ministerial Spending Regional Transfer Financing Target: 12.9
Realization: 10.6
Food Security Realization
IDR tn Railway2 (km)
200
2015: 87.5% of budget 2016: 84.3% of budget
Target: 114.9
Achievement: 114.9
150
125.9 117.9
110.3
99.3
100 Dam
Target: 37
Achievement: 37
50
0
Budget Realization Budget Realization Irrigation (km)
Target: 4,889
Ministerial Spending Non Ministerial Spending Regional Transfer Financing Achievement: 1,025

1. Not including LRT South Sumatra and Jabodetabek
2. Land issues are in progress
43
Education and Health Spending Well Delivered in 2016
Investment to improve social welfare in the longer term
Education Expenditure Health Expenditure

IDR tn IDR tn
2016: 88.6% of budget
600 120
2015: 95.5% of budget 2016: 88.9% of budget 104.1
500 100 2015: 88.1% of budget 92.3
408.5 390.2 416.6
400 370.5 80 74.8
67.0
300 60
200 40
100 20
0 0
Budget Realization Budget Realization Budget Realization Budget Realization
Ministerial Spending Non Ministerial Spending Regional Transfer Financing Ministerial Spending Non Ministerial Spending Regional Transfer Financing
Vaccine availability in
University scholarships for School Operational Immunization for infants
Community Health Centre
underprivileged students (Bidikmisi) Assistance (BOS) between 0 11 months
(Puskesmas)
Realization: 324 thousand college Realization: 8.0 million Realization: 4 million infants
students Realization: 81.5% Target 4 million infants
students
Target: 332 thousand college Target 80.0%
Target: 8.2 million students
students
Health Insurance Subsidy
Malaria Eradication
(PBI)
School Rehabilitation Indonesia Smart Card (KIP) Realization: 247 cities
Realization: 91.1 million
Realization: 20.7 million Target 245 cities
Realization: 28,400 rooms people
students Target 92.4 million people
Target: 30,300 rooms
Target: 19.5 million
students Accredited Regional Hospital
Realization: 201 hospitals
Target 190 hospitals

44
Better Targeting of Subsidy Policy in 2017
...more budget allocated to non energy subsidy and priority programs to improve basic services
Budget for Education Program Budget for Health Program
IDR tn IDR tn %
450 416.1 200 6,0
Budget % of R-Budget 5,0 5,0
400
5,0
350 150 3,8
300 3,3 4,0
3,0 2,8
250 2,7 2,8 2,7
100 3,0
200
150 2,0
50
100
1,0
50
0 0 0,0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017
Budget Budget
Indonesia Smart Card Bidikmisi Immunization Health Insurance Stunting Prevention

Certification
(KIP) Scholarship Subsidy (PBI)
101,100 teachers 360.5 thousands

19.5 million students Basic & complete Stunting prevention to
10,200 lecturers college students immunization for 92% of 94.4 million people 29.6% of children below 2
0-11 months old infants years old
School Operational School Operational Assistance Community Health Family Plan Program (KB)
Assistance (BOS) Rehabilitation for Colleges Centre (Puskesmas)
8.5 million students 41,128 rooms 107 700 regencies 6.7 million people
Colleges/Universities
45
Improved Budget Allocation Between Central & Local Government
promoting better allocation of budget spending to local government
2017 Transfer to Regions and Village Funds (R-Budget) Transfer to Regions/Village Funds & Ministerial Spending
Special Autonomy &
D.I Yogyakarta - DIY (IDR20.2 tn) Village Fund (IDR60.0 tn) 2013 2014 2015 2016 2017 2017
IDRtn
Gradually increasing Audited Audited Audited Audited Budget R-Budget
Improving efficiency and
effectiveness of Special Village Fund allocation
Average allocation of Transfer to
Autonomy & DIY Fund. 513.3 573.7 602.4 663.6 704.9 697.7
IDR800.5 million per Region
village
Village Fund - - 20.8 46.7 60.0 58,2
Incentive Fund
(IDR7.5 tn) 0.98% 7.85% Total
Intergovernmental 513.3 573.7 623.2 710.3 764.9 755.9
Incentive Fund allocation Transfer
has been increased (317
regions were awarded an 2.65%
incentive ranging Ministerial
Spending 582.9 577.2 732.1 677.6 763.6 769.2
between IDR 7.5bn and
IDR 65. 3bn)
22.67%
65.85%
Special Transfer Fund
Implementation of policy to allocate spending to regions
(IDR184.6 tn)
Special Transfer Minimum 25% of general transfer fund has to be used for
Fund allocation is
based on each public service infrastructure
regions proposal General Transfer Fund (IDR494.0 tn)
and national Minimum of 25% (IDR125.9 tn)
priorities earmarked for public service
facility development acceleration.
It provides revenue sharing fund
to promote equal opportunity for
natural resource producers & high
Source: Ministry of Finance tax earners
46
Policy of Infrastructure Spending and Transfer to Regions
developing the nation through targeted spending
Infrastructure Budget Allocation 2017 Infrastructure Budget Allocation (IDR billion) and
2016 realization
IDR tn %
500 Infrastructure budget
Anggaran Infrastruktur 18,6 20
Java Maluku & Papua
%%ofthd
total stateNegara
Belanja expenditure
(RHS) (RHS)
15,2
400 14,2
15 2016 : 3,229.4 2016 : 3,749.1
2017 : 3,257.8 2017 : 3.686.3
300 9,8 10,2
8,1 8,3 8,8 8,7 10
200 2016 : 461,1 2016 : 1,680.2
2017 : 1,147.5 2017 : 1,941.7
5
100
168,5
154,1
256,1
317,1
387,3
114.2
145.5
76
86
Kalimantan Sulawesi
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017
2016 : 2,889.9 2016 : 2,694.4
In 2017, minimum 25% of general transfer fund has to be used for public service infrastructure
2017 : 3,641.6 2017 : 4,117.1
2017 Construction Target

2016 : 597.9 2016 : 606.2
2017 : 1,042.6
Road Development Railways 2017 : 634.5
Target: 815 km Target: 550 km
Sumatera Bali & Nusa Tenggara

Airport Seaport
Target: 13 Target: 55 locations
2016 : 3,895.4 2016 : 661.3
2017 : 3,545.7 2017 : 1,207.3
Bridge Bus station

Target: 9,399 m Target: 3 locations
2016 : 1,044.8 2016 : 101.1
2017 : 1,320.4 2017 : 308.2
47
Financing Policy 2017: General Objective & Policy
To
To meet financing manage
debt-to-
needs at optimum GDP ratio
cost and tolerable
risk
To support market
General
To optimize
the use of
issuance
currency
optimize
domestic
external
mix of
development
loans
To
and
Policy
To enhance public
accountability as
part of transparent To
conduct
Government debt active
management debt
portfolio

48
Budget Financing Breakdown in 2017
Redemption
IDR350.9tn
Breakdown of budget financing IDR tn USD bn
(eq. USD 26.3bn)
Government debt (net) 384.7 28.9
Government securities (net) 400.0 30.0
Debt (Gross) Domestic loans (net) 1.5 0.1

IDR735.6tn
(eq. USD 55.2bn) Foreign loans (net) -16.8 -1.3
Non-Debt Budget
Financing Financing
IDR54.5tn IDR330.2tn
(eq. USD (eq. USD
4.1bn) 24.8bn)
USD/IDR: 13,323 as of 31 May 2017

Note: Subject to change in market conditions and other factors
49
Government Securities: Indicative Financing Plan for 2017
prudent and sustainable fiscal management
Budget
Domestic Bonds
Instruments
Indicative Target Indicative Target Weekly Auction:
(IDR trn) (USD bn)*
Conventional securities 24 x
Government Securities (Net) 399.99 30.03 Islamic securities 24 x
Non-Auction:
Government Securities (Gross) 684.83 51.42
Retail bonds
Composition Private Placement Based on request
Domestic 79%
Government Issuance Targets International Bonds
Auction 93%
Issuance of international
Non-Auction 7% Sukuk bonds as a complement to
29% avoid crowding out the
International Bond 21%
domestic market;
* USD/IDR: 13,323 as of 31 May 2017

Consists of USD, YEN or
EURO global bonds;
Debt
International bond issuance
Securities
can be maximized up to
Front Loading Issuance For Budget Financing 25% from gross target,
71%
depends on financing need
Pre-funding to optimize cost ahead of potential Fed rate hike
Anticipate developments in global environment Average Tenor Maturity (ATM) for Government Securities:
Government Securities target for 1st semester 2017 is 57.4 % from 6-8 years
gross issuance target
Government Securities target in Rupiah for 1st semester 2017 is
42.7% from gross issuancce target

50
Sound Government Debt Portfolio Management
Portfolio management characterized by stable debt/GDP ratio and well-diversified debt
Stable Debt to GDP Ratio Over the Years Remarkable Debt Reduction Initiative Over the Past 10 Years
US$ bn Government Debt / GDP (%) Change in Debt to GDP Ratio (2007 2017) (%)
300 27,4 28,3 28,1 30 Philippines-27,07
24,9 24,7 Turkey -21,94
250 23 54,65 25
54,37 Indonesia -12,88
200 54,74 20 India -8,43
63,76 54,47 Argentina -2,75
56,61
150 15 Thailand 16,18
Brazil 27,32
100 206,95 220,98 10
174,7 Malaysia 40,31
140,76 136,27 155,24 Mexico 52,33
50 5
Vietnam 55,08
0 0 South Africa 93,46
Russia 113,56
2012 2013 2014 2015 2016* May 2017
Securities (LHS) Loans (LHS) Gross Debt/GDP (%) (RHS) -40,00 10,00 60,00 110,00
Source: Ministry of Finance Source: IMF World Economic Outlook Database, April 2017
Weighted Average Debt Maturity of ~8.9 Years** (As of June 2017) Well Diversified Across Different Currencies
Years % of Yearly Issuance

2% 2% 1% 1%
10,0 3% 3%
9,7 3% 3% 3% 3% 4% 4%
9,7 9% 8% 7%
9,8 9,6 14% 12% 7%
9,5 9,4 29%

29% 31% 30%
24% 29%
9,3
9,0
9,0 8,9
8,8
56% 53% 57% 56% 58% 59%
8,5
8,3
8,0 2012 2013 2014 2015 2016 Jun-17
2012 2013 2014 2015 2016 Jun-17 IDR USD JPY EUR Others***
*Based on 2016 realization, ** Using GDP assumption in 2016 R-Budget, ***SDR, AUD, and other
51
Well Balanced Maturity Profile With Strong Resilience
Against External Shocks
Declining Interest Rate Risks Declining Exchange Rate Risks
% %
25 22,5 23,2 50 46,7
44,4 43,4 44,5
21,0 20,7 41,8
19,3 40,8
20 17,8 40
16,2 16,0
14,8
15 13,7
12,3 30
11,2
10 20
11,7 10,7 12,2 11,7 11,0
10,2
5 10
0 0
2012 2013 2014 2015 2016* Jun-17 2012 2013 2014 2015 2016* Jun-17
Variable Rate Ratio Refixing Rate FX Debt to GDP Ratio** FX Debt to Total Debt Ratio
Debt Maturity Profile Upcoming Maturities (Next 5 Years)

IDR tn %
50,0
300
IDR-Denominated Other Currencies
39,1
110
250 40,0 36,5

34,7
135
32,4 33,4 33,9

88
123
200 30,0
112
23,0 23,5
128
88
21,5 21,8 20,1 21,4

150
103
71
20,0
18
44
21
116
189
201
100
5
12
9,1
168
7,2 8,6 7,7 8,4

6,6
46
140
66 17
10,0
126
124
116
52 16
107
101
100
100
50
22 28
28 28
98
97
23 31
90
20 21
22 23
29 20
26 1
5 29
53
45
0 27
39
151
0 0,0
72
2046- 2012 2013 2014 2015 2016* Jun-17

2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
2055
In < 1 year In < 3 year In < 5 year
1 Variable Rate Ratio is defined as ratio between debt instruments with variable rate divided by total debt instruments (variable + fixed rates)
2 Refixing Rate ratio is defined as ratio between debt instruments with variable rate + debt instruments with fixed rate maturing in 1 year divided by total debt instruments (variable + fixed rates)
*Preliminary Figures **Using GDP assumption in 2017 Budget.

52
Profile of Total Central Government Debt
Government Debt Outstanding Foreign Ownership of Government Securities at Longer Tenors

(%) USD bn (%)
199,48 204,51 194,55 209,41 214,88 229,40 255,14 258,03 265,98 278,29 100
100 300
90
63,2 72,8 76,5 76,4 83,7 83,6 73,4 76,8 76,1 72,1
250 80
80
70
65,66 68,82 70,04 200
60 74,13 75,81 76,16 77,99 78,86 60
79,33 80,38
50 150 38,1 38,2 39,5
30,8 32,5 38,2 39,1 37,5 37,8
40 40 33,0
100
30
25,0
20 20
34,34 31,18 29,96 50 19,3 23,1 22,5
25,87 24,19 23,84 22,01
18,3 18,9 19,8 18,6
10 21,14 20,67 19,62 13,1 13,7
11,9 7,8
0 0 0 5,2 4,6 3,2 2,7 3,5 3,4 5,2 5,4
2011 2012 2013 2014 2014 2015 Jun-16 Des-16 Jan-17 Jun-17 2011 2012 2013 2014 2015 Jun-16 Des-16 Jan-17 Mar-17 Jun-17
Loan (LHS) Government Securities (LHS) Total (RHS)
0-1 1-5 >5 Foreign Ownership to Total
Holders of Government IDR Bonds Composition June 2017

100
23,95 21,95 22,5 26,22 26 26 20,4
31,04 29,81 27,27 28,03
80 36,63 36,53 33,70
60 37,9 38,9 39,9 40,1

30,8 31,3 34,9 34,5 35,5 35,0 34,6
33,8
(%)
32,6 30,5
40
20 38,1 38,2 38,9 39,1 37,5 37,8 37,5 38,2 39,0 39,1 39,5
30,8 33,0 32,5
0
2011 2012 2013 2014 2015 Jan-16 Jun-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
Foreign Holder Domestic Non Banks Domestic Banks

53
Ownership of IDR Tradable Central Government Securities
(IDR tn)
Description Dec-14 Dec-15 Jun-16 Dec-16 Jun-17
Banks* 375.55 31.04% 350.07 23.95% 361.54 21.95% 399.46 22.53% 399.19 20.45%
Govt Institutions (Bank
41.63 3.44% 148.91 10.19% 150.13 9.12% 134.25 7.57% 175.89 9.01%
Indonesia**)
Bank Indonesia (gross) 149.07 9.05% 157.88 8.90% 180.28 9.23%
GS used for Monetary
-1.05 -0.06% 23.63 1.33% 4.39 0.22%
Operation
Non-Banks 792.78 65.52% 962.86 65.87% 1135.18 68.93% 1239.57 69.90% 1377.15 70.54%
Mutual Funds 45.79 3.78% 61.60 4.21% 76.44 4.64% 85.66 4.83% 91.56 4.69%
Insurance Company 150.60 12.45% 171.62 11.74% 214.47 13.02% 238.24 13.43% 254.21 13.02%
Foreign Holders 461.35 38.13% 558.52 38.21% 643.99 39.10% 665.81 37.55% 770.55 39.47%
Foreign Govt's&Central
103.42 8.55% 110.32 7.55% 118.53 7.20% 120.84 6.81% 131.94 6.76%
Banks
Pension Fund 43.30 3.58% 49.83 3.41% 3.93% 4.92% 89.11 4.56%
64.67 87.28
Individual 30.41 2.51% 42.53 2.91% 48.90 2.97% 57.75 3.26% 60.49 3.10%
Others 60.51 5.00% 78.50 5.37% 86.72 5.27% 104.84 5.91% 111.23 5.70%
Total 1,209.96 100% 1,461.85 100% 1,646.85 100% 1,773.28 100% 1,952.23 100.00%
1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company and Pension Fund.
2) Others such as Securities Company, Corporation, and Foundation.
*) Including the Government Securities used in monetary operation with Bank Indonesia.
**) net, excluding Government Securities used in monetary operation with Banks.

54
Government Securities Realization
(IDR mn)
Budget Realization % Realization to

Budget 2017
(a.o. Jun. 22, 2017) Budget 2017
Government Securities Net 399,992,586 253,339,039 63.34%
Government Securities Maturing in 2017 and Buyback 284,842,264 141,754,317 49.77%
Issuance Need for 2017* 684,834,850 395,093,356 57.69%
Government Debt Securities (GDS) 273,214,088
IDR Denominated GDS 213,173,000
-Coupon GDS 107,130,000
-Conventional T-Bills 105,650,000
-Private Placement 393,000
-Retail Bonds -
International Bonds 60,041,088
-USD GMTN 47,197,500
-Euro GMTN -
-Samurai Bonds 12,117,580
-Domestic Foreign Denominated Bonds 726,008
Government Islamic Debt Securities 121,879,267
Domestic Government Islamic Debt Securities 81,910,267
- IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) 65,872,957
- Retail Sukuk 14,037,310
- Private Placement 2,000,000
Global Sukuk 39,969,000
*Adjusted with issuance related to cash management realization

55
Positive Response of Government Securities Issuance in 2016
Global Conventional Bond Global Sukuk Euro-Denominated Bonds Samurai Bonds
Tenure 10 yr 30 yr 5 yr 10yr 7 yr 12 yr 3 yr 5 yr
th th th st ,
Pricing Date December 8 , 2015 March 29 , 2016 June 14 , 2016 June 21 2016
US$ 1.25
Nominal US$ 2.25 bn US$0.75 bn US$1.75 bn EUR 1.5 bn EUR 1.5 bn JPY62 bn JPY38 bn
bn
Coupon Rate 4.75% 5.95% 3.40% 4.55% 2.625% 3.750% 0.83% 1.16%
Yield 4.80% 6.00% 3.40% 4.55% 2.772% 3.906% 0.83% 1.16%
Incoming Bid US$8.1 bn US$8.6 bn EUR 8.4 bn JPY100 bn
Increasing Incoming Bids in 2016s Government Securities Issuance
IDR bn
The average incoming bids in 2016 was

IDR18.81tn/auction, higher than 2015
(IDR14.05tn/auction);
The average awarded bids in 2016 was
IDR9.44tn/auction, higher than 2015
(IDR6.75tn/auction);
Bid to cover ratio of government securities issuance
in 2016 was 1.99 times (2015 was 2.08 times).
Incoming Bid 2016 Awarded Bid 2016 Bid to Cover Ratio 2016 (RHS)

56
Section 5
Monetary and Financial Factor:
Credible Monetary Policy Track Record
and Favourable Financial Sector
Bank Indonesia Policy Mix: July 2017
The BI Board of Governors agreed on 19th and 20th July 2017 to hold the BI 7-days Repo Rate at
4.75%, as well as the Deposit Facility at 4.00% and Lending Facility at 5.50%
Deposit and credit

Monitors closely Continues to growth are expected to
stabilise Rupiah Continues to increase, to reach the
various global risks,
exchange rates strenghten range of 9-11% and 10-
especially coming from Predicts 2017 domestic
Holds the BI in line with the coordination with 12%. The potential
the US, including the economic growth in the
7-day Repo currencys the central growth, however, are still
planned FFR hike, the 5.0-5.4% range, supported
Rate at fundamental government and shadowed by a number
Feds plan to unwind by stronger export
4.75% value, while regional of risks, namely
its large balance performance and
maintaining administrations, to domestic demand
sheet, and investment
market keep inflation within recovery prospects and
uncertainties in the
mechanisms its target corridor developments in the
fiscal policy.
banking consolidation.
58
Bank Indonesia Policy Mix: 2015-2017
16 Jun 2016
Cut BI Rate 25 bps to 6.5%, DF
14 Jan 2016 & LF Rate at 4.5% & 7.0%
Cut BI Rate 25 respectively
bps to 7.25%, DF Relaxed the loan-to-value ratio 19 Aug 2016 20 Oct 2016
26 Jun 2015 18 Mar 2016 19 Jan 20 July
& LF Rate at (LTV) and financing-to-value Held BI 7- Cut BI 7-day
RR-LDR Cut BI Rate 2017
5.25% & 7.75% ratio (FTV) on housing day RR Rate RR Rate to
RR-LFR 25 bps to Held BI 7-day RR
BI lower its loans/financing and DF Rate 4.75%, DF and
Accomodate 6.75%, DF & Rate at 4.75%,
monetary Relaxed partially prepaid at 5.25% LF Rate to
banks SMEs LF Rate at DF Rate at 4.00%
operation rates loans/financing and 4.5% 4.00% and
loan in RR 4.75% & and LF Rate at
even further, Raised the floor on the Reserve Cut LF Rate 5.50%
calculation 7.25% 5.5 %
ranging from Requirement - Loan to Funding to 6.00%.
25bps to 45bps Ratio (RR-LFR) from 78% to
(O/N to 1Y) 80%, with the ceiling maintained
at 92%. The change was
effective on Aug. 2016
21 April 2016 21 Jul 2016

18 Feb 2016 Held BI Rate at Held BI Rate at 6.5%, &
Cut BI Rate 25 6.75%, and maintained BI 7-day RR Rate,
bps to 7%, DF maintained DF & LF DF & LF Rate at 5.25%, 4.5%
18 Jun 2015 & LF Rate at Rate at 4.75% & & 7.00% respectively. 17 Nov
17 Nov 2015 22 Sep 2016
Increase the 5% & 7.5% 7.25% respectively. BI continued to conduct 15 Dec 2016
Lowering IDR Cut BI 7-day
Loan-to-Value BI lower the Reformulated policy financial market deepening by Held BI 7-day
Primary RR by RR Rate to
(LTV) ratio rupiah rate from BI Rate introducing new investment & RR Rate at
50bps from 5.0%, DF and
Reduce down denominated into the 7 day hedging products in the 4.75%, DF
8.0% to 7.5%. LF Rate to
payments for primary reserve (Reverse) Repo Rate financial market, strengthened Rate at 4.00%
Effective since 4.25% and
automotive requirement by to improve the monetary management and LF Rate
1 Dec 2015 5.75%.
loans 1%, from 7.5% effectiveness of strategies, & encouraged the at 5.5 %
to 6.5%, monetary policy real sector to make optimal
effective from transmission. The use of repatriation funds to
Mar. 16th 2016 change was effective support the implementation of
on Aug. 19th 2016 the 2016 Tax Amnesty Law
59
Stable Monetary Environment Despite Challenges
Inflation Continues Under Controlled Strengthened Monetary Policy Framework

(%) CPI (%, yoy) Core (%, yoy) Volatile Food (%, yoy) Administered (%, yoy) (%)
19 19 August 2016
8,0
The New
7,5 Monetary
LF Rate: 7.00
14 7,0 Operation
BI Rate: 6.50 Framework
6,5
10,64
6,0 LF Rate: 5.50
9
5,5 BI 7Day RR Rate:
5,0 4.75
4,37 DF Rate: 4.50
4 4,5
DF Rate: 4.00
3,13
2,17 4,0
3,5
-1
3,0
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5
Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 Mei-17 Jul-17
2011 2012 2013 2014 2015 2016 2017
LF Rate BI Rate BI-7Day RR Rate DF Rate
Rupiah Exchange Rate Remains Comparable to Peers Credit Growth Supported by Macroprudential Policy
YTD 2017* vs. 2016 (YoY) Total Growth Working Capital loans
40% Consumption Loans Investment Loans
0,08
TRY
-16,85
4,51 35%
MYR
-5,57
PHP -1,72 30%
-4,88
EUR 7,96 25%
-2,19
1,08
IDR
-0,19 20%
5,39
KRW 15%
1,60 8,3%
5,61
THB 9,4%
1,62 10%
5,18 8,5%
INR Point to Point Average 2,14
5% 8,7%
-1,60
BRL
9,60
*data as of June 30th, 2017 5,09 0%
ZAR
11,17 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
%
-20,0 -15,0 -10,0 -5,0 0,0 5,0 10,0 15,0 2013 2014 2015 2016 2017
60
6 Measures to Control Inflation in 2017
On January 25th, 2017, the Government and Bank Indonesia agreed on six strategic measures to control inflation in 2017 within the target
corridor of 41% (as well as in 2018 at 3.51%), while also setting the inflation targets for 2019-2021 at 3.51%, 31% and 31%
respectively.
1 2 3
Dampening the Introducing
Maintaining volatile food (VF) second-round effect of Administered Price
inflation at 4-5% by: Administered Price Sequencing
adjustments Including the planned conversion of
Example: several direct subsidies to cash transfers
Controlling transportation fares (fertilizer, rice for the poor and 3kg LPG)
Strengthening Developing a Utilising fiscal
infrastructure for food commodity flow data instruments and
logistics in local system, specifically incentives to extend 3kg
areas, particularly for food commodity the local governments
warehousing for role in price stability
4 5 6
storage
Establishing the Strengthening Strengthening the

Encouraging diverse food Strengthening Accelerating Improving
consumption in the interregional connectivity planting National Inflation central and local Bank Indonesia
community, especially of cooperation infrastructure patterns Control Team government policy mix to
fresh chillies and alliums, development Through Presidential Decree coordination maintain
by fostering product to strengthen the National
innovation in the Inflation Task Force (TPI) Through Eighth National macroeconomic
processed foods industry
and Regional Inflation Task
Forces (TPID)
TPID Coordination Meeting
in July 2017
stability
Those measures are needed to address several onerous domestic and external challenges that demand vigilance and early mitigations.
The external challenges mainly stem from rising international commodity prices, while the domestic challenges stem from ongoing
energy reform through adjustments of electricity tariffs for 900VA subscribers as well as fuel prices as the global oil prices continues to
rise. The current aforementioned reform is warranted to ensure equitable development and to create more healthy fiscal space.
61
Improving the Effectiveness of Monetary Policy Transmission
Bank Indonesia has instituted a Reformulation of Monetary Policy Operations Framework which consists of 3 pillars;
(1) implementation of BI 7day Reverse Repo Rate; (2) implementation of reserve requirement averaging; and
(3) continue to implement money market deepening program.
Reformulation of
Monetary Policy Operational Framework
Implementation of Implementation of
Implementation of Reserve
BI 7 Day Reverse Money Market
Requirement (RR) Deepening Program
Repo Rate Averaging
Enhancement of
Enhancement of monetary Enhancement of banking instruments
policy signal liquidity management and transactions
Source: Bank Indonesia 62

Enhancement of Monetary Operations Framework
...positive results thus far
Domestic Money Market Yield Curve (2nd week of July 2017)
Monetary operation term structure is being

referred by money market rates
Domestic money market yield curve tend to

converge
O/N 1W 2W 3W 1M 3M 6M 12M
JIBOR IBMM Repo FX Swap MO
IBMM: Interbank Money Market MO: Monetary Operation
PREVIOUS JIBOR
Can be traded among contributor banks for 10
minutes.
Up to the amount of Rp10 billion.
Up to 1-month tenor.
CURRENT JIBOR (as per June 1st, 2016)

Can be traded among contributor banks for 20
minutes.
Up to a total of Rp20 billion.
Up to 3-month tenor.
Introducing Reserve Requirement (RR) Averaging
Previously, RR ratio is set at 6.5% (fixed) of the TPF (Third Party Fund) and to be maintain on daily basis.
From 1 July 2017, the fulfilment method of RR has been adjusted to daily RR of 5% of TPF and average RR of 1.5% of TPF within
a fixed period
The Purpose of RR Averaging
1 2 3
To function as To provide space

To provide flexibility an interest rate buffer
in liquidity management in order to reduce for liquidity placement
in order to increase interest rate volatility in order to boost
bank efficiency in the money market financial market deepening

Financial Intermediation Improves in Early 2017
The growth of banking loans has improved from the previous year and is expected to further expand by 9-12% this year. In the
domestic capital markets, capital raising by corporations (particularly right issues and corporate bond issuance) remained strong.
The growth of financing distributed by multifinance companies in May

The growth of banking loans was 8.71% (yoy) in May 2017 2017 was still in an increasing trend
Bank Loans YoY Growth (rhs) Financing YoY Growth (rhs)

5000 25% 450
35%
4000 20% 350
IDR tn
IDR tn
25%
3000 15% 250
8.71%
2000 10% 9.24% 15%
150
1000 5% 5%
50
0 0%
-50 -5%
2012 2013 2014 2015 2016 Jan-17 Feb-17 Mar-17 Apr-17 May-17
Capital raising through rights issues & corporate bond issuance in H1 Gross premium revenue in the domestic insurance industry is also
- 2017 increased from the same period last year countinuously growing
140 IPO Equity 400

116.2 350
120 Rights Issue
Corporate Bonds & Sukuk 300
100 84.7
IDR tn
250
IDR mn
80 67.1
53.8 200
60 147
150
40
100
20 12.1
4.1 50
0 0
2012 2013 2014 2015 2016 Jan-Jun 2017 2012 2013 2014 2015 2016 Jan-May17
Source: Financial Service Authority (OJK) 65

Financial Institutions Remain Robust and Less Vulnerable
Domestic financial institutions exhibit generally robust condition. Capital adequacy is maintained well above the minimum requirements.
Profitability and leverage are maintained at a sufficient level. Further, gearing (debt-to-equity) ratio of multifinance companies provides
ample room for future growth.
Banking sectors capital adequacy ratio (CAR) was maintained at a high level. Risk-based capital (RBC) of the insurance industry also remains high,
As of May 2017, CAR & Tier 1 Capital was 22.86% & 20.08% respectively well above the minimum threshold (120%)
% CAR Tier-1 Capital 700% 281% 300%

25,0 22.86
650% 270%
20.08
20,0
600%
240%
15,0 550%
503% 210%
10,0 500%
450% 180%
5,0 RBC - Life Insurance RBC - General Insurance (rhs)
400% 150%
0,0
May-16
Jun-16
Aug-16
Nov-16
Jan-17
May-17
Sep-16
Oct-16
Dec-16
Feb-17
Apr-17
Jul-16
Mar-17
Gearing ratio of multifinance companies was 3.03 times (well below the
Profitability of the banking sector is relatively stable maximum requirement of 10 times), providing ample room for future growth
%
Net Interest Margin Return on Assets 4
6
5.36
5 3.03
3
4
3 2.46
2 2
0 1
2012 2013 2014 2015 2016 Jan-17 Feb-17 Mar-17 Apr-17 May-17 2012 2013 2014 2015 2016 Jan-17 Feb-17 Mar-17 Apr-17 May-17
Adequate Liquidity, Manageable Credit Risks
Banks are equipped with adequate liquid assets to anticipate depositors withdrawal. Insurance industry also demonstrates an enhanced
level of investment adequacy ratio. The non-performing loan/financing (NPL/NPF) ratio is also maintained below the threshold.
The ratio of liquid assets to deposits in the banking sector was well Investment adequacy ratio in the insurance industry is maintained
maintained at a high level. above 100%
% Liquid Assets to Non-Core Deposits (lhs) % % Life Insurance General Insurance

110 Liquid Assets to Deposit (rhs) 26 140
130 125.10
100 18.58 22
120
90 18
88.85 110 116.80
80 14
100
70 10 90
Aug-16
May-16
Jun-16
Nov-16
May-17
Sep-16
Jan-17
Dec-16
Feb-17
Apr-17
Oct-16
Jul-16
Mar-17
60 6
Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17
As of May 2017, the gross & net NPL ratios of the banking sector NPF ratio in the multifinance industry was 3.45% as of May 2017,
were 3.07% & 1.33% respectively, maintained below the threshold maintained well below the 5% threshold
% 4%
NPL Net NPL Gross
4 3.45%
3.07 3%
3
2 2%
1.33
1 1%
0 0%
2012 2013 2014 2015 2016 Jan-17 Feb-17 Mar-17 Apr-17 May-17 2013 2014 2015 2016 Jan-17 Feb-17 Mar-17 Apr-17 May-17
Manageable Market Risk Amidst Fluctuations
Being exposed to market fluctuations, financial institutions demonstrated resiliency in dealing with such risks. Net open position of
the banking sector remains low, while the investment value of domestic institutional investors (mutual funds, insurers, and pension
funds) continues to increase.
Net open position in the banking sector was kept far below the The movement of mutual funds net asset value (NAV) is in line
maximum limit (20%) with that of market index, but with much lower volatility
% IDR tn
NAV of Mutual Funds (lhs) IDX Stock Composite Index (rhs)
5
400 6.000
380 5.800
4
360 5.600
3 340 5.400
2.12 320 5.200
2 300 5.000
280 4.800
1
260 4.600
Aug-16
Jun-16
Nov-16
Jan-17
May-17
Jun-17
Sep-16
Dec-16
Oct-16
Feb-17
Apr-17
Jul-16
Jul-17
Mar-17
0
The investment value of insurers & pension funds remained in an Multifinance companies exposures to foreign debt have generally been
increasing trend mitigated through hedging measures
IDR tn IDR tn IDR tn
Domestic Debt Foreign Debt 162
900 Investment of Insurers Investment of Pension Funds (rhs) 300
160
850 868
800 250 140
750 244
200 120
700
100
650 150
600 80
85
550 100
60
May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17
May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17
Capital Market Demonstrate Strengthening Trend
In the middle of unfavorable global environment, the domestic capital markets continues its strengthening trend. The volatility of the
markets is relatively low.
The IDX Stock Composite Index continues to strengthen and is among Both the stock & bond markets are in a strengthening trend in
the best-performing indices in the region (as of July 14th, 2017, ytd) July 2017, with a low level of volatility
WORLD 11,24
230 6.200
THAI 2,26 Comp Bond Index Comp Stock Index (rhs)
KOREA 19,16
INDO 10,10 220
5.700
HKN 19,95
SIN 14,12 210
PHIL 15,28
5.200
CHIN 3,83
MAL 6,90 200
JPN 5,26
4.700
EURO 5,24 190
AS 9,49
RUS -12,18
BRAZ 8,65 180 4.200
May-16
Jun-16
Aug-16
Nov-16
May-17
Jun-17
Jan-16
Sep-16
Jan-17
Apr-16
Apr-17
Feb-16
Oct-16
Dec-16
Feb-17
Mar-16
Jul-16
Mar-17
Jul-17
TURK 34,60
% -20 -10 0 10 20 30 40
Despite FFR hike, the equity and government debt markets still In line with the stabilizing IDR and improving domestic prospects, the
attract nonresident inflows government bond yields continued to decline
IDR tn Yield (%)
5-yr Yield 10-yr Yield 20-yr Yield
120
100 Gov't Debt Securities Equity 10
80
60 9
40
20 8
-9
0
-20 7
-5
-40
2015
Aug-16
Jan-16
May-16
Jun-16
Nov-16
Jan-17
May-17
Jun-17
Sep-16
Dec-16
Apr-16
Apr-17
Feb-16
Oct-16
Feb-17
Jul-16
Jul-17
Mar-16
Mar-17
Aug-16
Jan-16
May-16
Jun-16
Nov-16
Jan-17
May-17
Jun-17
Sep-16
Dec-16
Apr-16
Apr-17
Feb-16
Oct-16
Feb-17
Jul-16
Jul-17
Mar-16
Mar-17
Source: Bloomberg, IBPA, Indonesia Stock Exchange, Ministry of Finance
69
Maintaining Financial System Stability
maintaining resilience in confronting possible shocks and enhancing financial system stability
Strengthening & structuring

Strengthening financial sector
financial sector based on
supervision
international standards
Assessment on the soundness of financial institutions Risk-based supervision for all financial sectors
Liquidity coverage ratio for banks Regulations on domestic systemically-important banks
Regulations on risk management for financial and capital surcharge
institutions Enhancement of crisis management protocol and
Minimum capital requirement for banks interagency coordination
Enhancement of GCG for financial institutions and
publicly-listed companies
Financial conglomerates account for 66.96% of the total

assets of financial sector
Improving the integrated regulation &
supervision framework
Others
33,04% Such improvement has become even more important
due to the dominance of financial conglomerates in the
domestic financial sector.
OJK has issued regulations on GCG, risk management,
and minimum capital requirements for financial
Financial conglomerates. These will be followed by regulations on
Conglomerates liquidity management, capital management, and
66,96% intragroup transaction exposures.
Source: Financial Service Authority (OJK), March 2017 70

A Comprehensive Financial Deepening Program
...strategy to tackle challenges in deepening Indonesias financial markets
Financial Market Deepening Program
First Priority:
Continuous Basis
Market Development Coordination
Money Market
Encourage well-functioning money market (deep and efficient, risk mitigation, and market integrity), through:
Bank Indonesia Regulation (PBI) on Negotiable Certificate of Deposit (NCD) Corporate
Enriching money market instruments, encourage banks to raise long term funding, and acts as an alternative Bonds
investment for investors Government
Monitoring, match Bank Indonesia Regulation (PBI) on Commercial Paper Bonds
making, and Alternative sources of financing for non-bank corporations, as well as an investment outlet for investors
Medium term
solution:
notes
Repo FX Market
Development roadmap of Indonesia CCP in OTC Derivatives Other
Hedging
To support FX market development and reduce market segmentation. instruments
Establish Local Currency Settlement Framework Infrastructure
Reducing dependency on USD payment for international trade. (ETP, etc)
Encourage product development to increase hedging Supply in domestic market
To provide hedging instrument alternative for corporations to manage their risk exposure
Supporting Regulations
Strengthening JISDOR Money Broker Certification of Dealer and Code of Conduct
Increase the governance of money broker Obligation on certification for dealers

Strengthening the credibility of JISDOR
Revitalize role of money broker in financial Obligation to honor code of conduct
Extend the usage of JISDOR
market Dealers training for certification
Inter-agency Cooperation
On April 2016, the Minister of Finance, the Governor of Bank Indonesia, and the Chairman of the Board of Commissioners
of the Financial Services Authority have launched a Coordination Forum for the Development Financing through Financial
Market (FK-PPPK). The three authorities have agreed to formulate The National Strategy to Develop Indonesian Financial
Market Towards 2025 which is expected to be concluded by the end of 2017/early 2018.

Progress on General Market Repo Agreement (GMRA)
January 2016 March 2017

Signing
4 Banks 74 Banks
Transaction
4 Banks 47 Banks
Daily Volume
IDR 0.0 IDR 1.0 4.6 tn

Continuous Program on Capital Market Deepening
continuously strengthened, including through capital market deepening initiatives
The utilization of capital markets by domestic corporations

(including financial institutions) demonstrates an increasing trend Enhancing the supply-side
IDR tn
140 IPO Equity
Rights Issue 116.2 Simplification of public-offering requirements &
120
procedures
Corporate Bonds & Sukuk
100 84.7 Development of financial market products (mutual
80 67.1 funds, private equity funds, REITs, ABS)
53.8
60 Development of municipal bonds
40 Cross-border offering (harmonizing regulations with
20 12.1 ASEAN Disclosure Standards established by ACMF)
4.1
0
2012 2013 2014 2015 2016 Jan-Jun 2017
Enhancing the demand-side
Expansion of the domestic investor base (conducting

investor education programs)
Strengthening market infrastructure Expansion of mutual fund distribution channels,
including the marketing methods of securities
companies
Expansion of Single Investor Identification (SID) coverage
Development of electronic trading platform (ETP) in the
debt market
Development of integrated investment management Strengthening governance
system
Enhancement of the clearing and settlement process
Enhancement of capital market data warehouse Development of market players capacity
Enhancement of GCG for publicly-listed companies
Development of repo regulations and infrastructure
Source: Financial Service Authority (OJK), July 2017 73
Macroprudential Policy Mix to Support Growth
1
Effective from August 24th, 2016, Bank Indonesia raised the lower limit of the primary reserve requirements loan financing ratio
(GWM LFR) from 78% to 80% with the upper limit unchanged at 92%, in order to support credit growth.
2
Effective from August 29th, 2016, Bank Indonesia relaxed the Loan to Value Ratio (LTV) and Financing to Value Ratio (FTV) on
housing loans at 85-90% for the first mortgage lending facility, 80-85% for the second mortgage lending facility, and 75-80% for
the third mortgage lending facility. The relaxation is only applicable to banks with nett NPL for total loan below 5% and gross
NPL for property loan/financing below 5%.
The rationale is to stimulate domestic demand in order to drive domestic economic growth momentum while maintaining
compliance to prudential principles.
Housing Loans and Financing

Housing Financing Based on MMQ and IMBT Contracts
Based on Murabahah and Istishna Contracts
Lending/Financing Facility Lending/Financing Facility

Property Property type (m2)
type (m2) First Second Third First Second Third
House House
>70 m2 85% 80% 75% >70 m2 90% 85% 80%
22 - 70 m2 - 85% 80% 22 - 70 m2 - 90% 85%
<21 m2 - - - <21 m2 - - -
Apartment Apartment
>70 m2 85% 80% 75% >70 m2 90% 85% 80%
22 - 70 m2 90% 85% 80% 22 - 70 m2 90% 85% 80%
<21 m2 - 85% 80% <21 m2 - 85% 80%
Home Shop/Office - 85% 80% Home Shop/Office - 85% 80%

Financial Sector: Fostering Domestic Growth
boosting domestic economic activities and supporting the national economic development
Funding of infrastructure & Capacity building of financial

priority economic sectors institutions
Enhancement of NBFI ownership in government Strengthening the capital of financial institutions to

bonds increase their financing capacity
Private equity funds for infrastructure financing Expansion of the business lines of multifinance
Asset-backed securities specifically designed for companies
secondary mortgage financing Capital requirements for rural banks based on their
Insurance for farmers and fishermen operational zones
Development of financial Development of Islamic financial

products & services sector
Expansion of the distribution channels for financial Strengthening the capital of Islamic financial
products & services institutions
Development of sustainable finance regulations Spin-off of the Islamic business units of commercial
Utilization of KYC information from third parties banks
Facilitating access to capital market as a source of Development of Islamic financial product regulations
funding (e.g. simplification of public offering (sukuk, mutual funds, asset-backed securities)
procedures) Continuous education & socialization on Islamic
Capital market deepening initiatives financial products & services

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

(Program Keluarga Program (Program
Harapan -PKH) Indonesia Pintar-PIP)
Gradual
Implementation
2016-2020
9876543210
XXYYZZ
12345678
Full
Implementation
Non Cash
Food Assistance
LPG
Subsidy
Interconnected &
interoperable
payment system
76
Progress of NCSA Programs
Family Hope Program Prosperous Rice

(Program Keluarga Harapan - (Beras Sejahtera / Rastra)
PKH)
The Family Hope Program (PKH) is a program that
provides cash to very poor households. Rp 2 Rastra is a poverty alleviation and social
million /year will be granted for each household protection program that is managed by the
(hh). PKH will be granted every February, May, central government. It provides subsidized rice to
August, and November low-income households. Rp 110 thousand/month
In December 2016, Non-Cash PKH was granted to will be granted for each hh as Non-Cash Rastra.
23% of total target of household.
For 2017, Non-Cash Rastra was targeted for 1.6
In 2017, PKH is targeted for 6 million hh (50% or million hh (9% of total target 15.5 million hh) in 45
3 million distributed on non-cash basis and the cities and 6 regencies. Non-cash Rastra can be
remaining in cash basis. However, in the 2nd used in certain stores: Toko Sembako, E-warong,
semester of 2017 all PKH will be distributed on and Rumah Pangan Kita.
non-cash basis.
As of February 2017, Non-Cash Rastra was
granted to 881 thousand hh.
PKH Target
Non-
Non-
Cash Cash
50%
Cash
100% Non-Cash Rastra will be expanded
50%
to 10 million families in 200
January 2017 2nd Semester of 2017 regencies in 2018.
As of June 2017, Non-Cash PKH was granted to

2.65 million hh (88,33% of 3 million hh).
77
Stronger Fundamentals Facing the Headwinds
Inflation Rate (%) IDR Movement (%) Foreign Reserves (USD bn)
Significantly higher than 1998 & 2008, ample to cover
Inflation controlled within the target range IDR still appreciated in H1 - 2017
8.6 months of import and external debt repayment
1998 1998 -197 1998

82,4 17,4
2008 12,1 2008 -35 2008 50,2
Sep-15
June 17 4.37 (yoy)
6,8 Sep 16
June 17 5,62
1.1 (ytd) Sep-15
June 17 123.09
Non-Performing Loan/NPL (%) More Liquid Market (%)

Overnight interbank money market rate
NPL level is below the maximum threshold of 5%
is relatively lower
62
1998 30,0
2008 3,8 10,5

5,7
4.39
Agu-15
May 17 3.07
2,8
1998 2008 June 17
Jul-15
External Debt (Public & External Debt/GDP

Government Debt/GDP
Private) to FX Reserve Ratio Slightly higher than 2008, but
Significantly lower than 1998 crisis Consistently well-maintained below 30% significantly lower than 1998
8.6x 3.1x 27.4%

2.7x 100.0% 116.8% 33.2%
1998 2008 28.1% 34.1%
1998 2008 1998 2008
Q1-2017 May 20171 Q1-2017
12017 year end position of debt/GDP ratio is projected based on
GDP assumptions in APBN (Budget 2017)
78
Outlook of Domestic Economy Remains Robust
...domestic economic growth is predicted to be higher in 2017
2017 Economic Outlook

Economy to grow in the range of 5.0-5.4% (yoy) in 2017, supported by stronger export performance and investment.
Inflation is predicted to be within the 2017 inflation target of 41%, with the current account deficit projected below 2.5% of GDP
Credit is expected to grow 10-12% in line with expectations of expected economic gains and ongoing impact of previous monetary and
macroprudential policy easing.
Economic Growth Inflation CAD (% of GDP) Credit Growth
2016
5.02% 3.02% 1.8% 7.9%
(Realization)
2017 5.0-5.4% 4.01% <2.5% 10-12%
2017 Economic Opportunities & Challenges

Global Domestic
Opportunities Improving global economic growth Continous economic recovery process
Acceleration of world trade volume
Challenges Further FFR hikes Ongoing consolidation in the corporate and banking
Feds plan to shed its large balance sheet sectors
Uncertainties in the US fiscal policy
Source : Bank Indonesia

79
Section 6
Progressive Infrastructure Development:
Strong Commitment on
Acceleration of Infrastructure Provision
The Government has Enacted Various Reforms to Accelerate
Infrastructure Provision
Fiscal Reforms Institutional Reforms Regulatory Reforms

Viability Gap Funding (VGF) KPPIP Direct Lending
Issuance of MoF Reg. No. 223/2012. KPPIP is actively involved in accelerating Issuance of Presidential Reg. No.
To increase project financial feasibility by delivery of priority infrastructure projects 82/2015.
contributing up to 49% of Allow guarantee for direct lending to SOE
the construction cost PT. Sarana Multi Infrastruktur to accelerate financial close process for
Merging between PT. SMI and Govt infrastructure projects
Availability Payment Investment Center (PIP) to become an
Issuance of regulatory framework for infrastructure funding company Land Acquisition
annuity payment scheme by the Issuance of Presidential Reg. No.
Government (MoF Reg. No. 190/2015 for Indonesia Infrastructure Guarantee Fund
148/2015.
Central Govr and MoHA Reg. No. 96/2016 (IIGF)
To stipulate land acquisition acceleration
for Regional Govt.) during the concession IIGF has the potential to provide project based on Law No. 2/2012
period after the project operational by guarantee for non-PPP projects
private sector in order to make the project Economy Packages
bankable PPP Unit
Conduct deregulation for issues hindering
Provide facilities to help GCA on preparing infrastructure delivery and develop a task
Land Revolving Fund PPP project (PDF/TA) force under CMEA to ensure the
Issuance of MoF Reg. No. 220/2010. A effectiveness of economic packages
BLU LMAN implementation
revolving-fund sourced from State Budget,
to accelerate land acquisition The State Asset Management Agency is
mandated to provide land fund for National
Risk-sharing Guidelines Strategic Projects to ensure timely land
acquisition process
IIGF has issues risk allocation and
mitigation guidelines for PPP project
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 81

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

A facility with Guaranteeing A scheme in which
contribution to Govt. concessionaires
contractual MoF Reg. No.
construction receive sum of A facility to support
obligations 159/PMK.
cost to money periodically land acquisition for
under 010/2015 re: tax
Project increase from central or infrastructure
infrastructure holiday for pioneer
development project regional projects particularly
concession sector, such as
facility contributing financial government after projects that involve
agreements and base metal, oil
to assist GCA on viability the completion of private sector
Mof Regulation refinery, basic
PPP project an asset.
No 130/PMK. petrochemical,
preparation Managing MoF Regulation, Managing enitiy:
08/2016 re: machinery,
(PDF&TA) Entitiy: and MoHA Ministry of Finance,
Govt guarantee renewable energy,
Ministry of for electricity Regulation on Ministry of Agrarian
& telco equipment
Managing entity: Finance based project Availability and Land
industries. Sector
KPPIP, PT SMI PT on GCA acceleration Payment has been Spatial/BPN and
will be further
IIF, and Ministry of proposal ratified. BLU-LMAN
Managing entity: expanded
Finance
Govt. IIGF and MoF Managing entity: Govt. commitment:
Managing entitiy:
commitment: Govts Ministry of Finance US$ 12 mn (2016)
Ministry of Finance
49% max. Per comitment: & Ministry of
project cost US$ 450 mn Home Affairs
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)

82
Efforts to Accelerate Infrastructure Provision
Regulation improvement to accelerate land procurement process

The Government of Indonesia issued Law No. 2 of 2012 on Land Acquisition for Public Interest, with a purpose to provide certainty
about the land acquisition duration for the Government Contracting Agencies and the Investors. The Law sets an estimated 583
days maximum time to complete the land acquisition process.
For its implementation, the Law No. 2 of 2012 was supported by the Presidential
Regulation No. 71 of 2012 on Land Acquisition Implementation for Developing Law No. 2/2012 was successfully applied in:
Public Facilities, which has been revised into the Presidential Regulation No. 30
of 2015. The Amendment to the Regulation allows a Business Entity to allocate 1. Palembang Indralaya section of the Trans
funding for a land acquisition which can be reimbursed by the Government Sumatera Toll Road Project
following the completion of land acquisition process. With this Regulation, the 2. Java North Line Double Track Rail Project
land acquisition process is expected not to be delayed by the unallocated
budget or the delay on the budget disbursement.
Land Procurement Process as Stipulated in Law No. 2 of 2012

83
Efforts to Accelerate Infrastructure Provision
the establishment of Indonesia Asset Management Agency (LMAN)
On December 12th, 2016, Indonesia Asset Management Agency (Lembaga Manajemen Aset Negara/LMAN) has been launched
to optimize the use of state assets. LMAN should plan for funding and utilization of land banks as well as pay compensation
for land acquisition to support the governments infrastructure development program
Mandate
Legal Basis
1. Property Management
2. Land Funding for
1. Government Regulation
National Strategic Project
No.27/2014 on the Management
of State/Region Property
2. Finance Minister Regulation
No.219/PMK/2015 on the Portfolio Assets
Governance and Organization of
State Asset Management 1. Asset of ex-Pertamina: LNG Badak
Bontang, LNG Arun, and
3. Finance Minister Regulation Tarogong Land
No.1319/KMK.05/2015 on the
Appointment of Indonesia Asset 2. Asset of ex-Indonesian Bank
Management Agency as Restructuring Agency (BPPN)
Government Agency to Implement Other portfolio: Asset of ex-Asset
Financial Management of Public Management Company (PPA) and ex-
Service Agency Contractor Cooperation Contract
(KKKS)
Source: Ministry of Finance 84

Under Presidential Reg. No.3/2016 j.o. the Presidential Reg.
No.58/2017, 245 projects and 2 programs are listed as PSN
Projects
Projects Projects 27 Projects

61 24 13
US$13.0 Bn
US$49.0 Bn US$43.4 Bn
US$34.2 Bn
93
Projects 1
2 Programs
National
10
12 Projects
Proyek Projects
US$100 Bn
US$81.9 Bn
Projects 15
US$0.8 Bn
PSN includes 15 sectors at project level and 2 sectors at program level

Project
INDUSTRI-AL WATER & IRRIGA- TECH- OIL FISHERY

ROAD RAILWAY SEAPORT AIRPORT HOUSING HOUSING SANITA- DAM IRIGASI SMELTER SEA DIKE
ZONE TION NOLOGY REFINERY
74 23 10 30 54 7 4 6 12 1 1
TION
Projects Projects Projects

8
Project Projects
3
Projects
3
Projects
9
Projects Projects Projects Projects Projects Projects Project Project
s
Program
1 1
Small-
Electricity PROGRAM Medium PROGRAM
Airplane
Exchange rate: US$ 1 = IDR 13,000
85
PSN may receive privileges as stipulated in the Presidential Reg.
No. 3/2016 j.o. the Presidential Reg. No. 58/2017
Acceleration of Non- Determination of National

State Budget Strategic Projects
Projects
Settlement of Permit & Non-

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

Hindrance Completion acceleration
08 05
SOEs Assignment 07 06 Local Content
Utilization
Projects Monitoring Government

Additional Facilities
via KPPIP IT System Guarantee Provision
Existing Facilities
86
Progress on 245 National Strategic Projects
LOCATIONS The Estimated Investment Cost of National Strategic Projects
1. Sumatera 61 4. Bali &

15 State
Nusa Tenggara Budget Notes:
2. Java 93 The investment cost was
(IDR525 tn)
IDR 4,197 tn
6. Maluku & Papua 13 calculated for 245 NSP.
3. Kalimantan 24 Excluding cost of 16 NSP with
SOE unknown investment cost.
4. Sulawesi 27 7. National 12
(IDR1,258 tn)
SECTORS
Private
(IDR2,414 tn)
Communi National Economic
Road Irrigation
-cation Borders Zones
Progress of National Strategic Projects (as of June 2017)
74 4 3 30 7
2%
Housin Fisheries/ Water Sea
g
Energy Maritime Supply
Airport
dike
5 projects are completed
40% 130 projects are under construction1
3 12 1 9 8 1
53% 12 projects are during transaction
Aircraft
Seapor Smelte
Railway Dams Power industr 100 projects are in preparation
t r
y
5% 1Including one electricity program under construction
category (39% of electricity program has reached
10 23 54 6 1 1 construction per April 2017)

87
Progress on 30 Priority Projects
From the National Strategic Projects, the Government has selected a list of 30 Priority Project to be the focus of
infrastructure delivery in the beginning of 2016.
4
8
4 9
1 29
2 29
4 4
30 26
20 29 29
25 29
29
24 29
4
14 4 29 29
5 16 7 29
4
4 17 13 27
Construction 6
3 15 23 22 21
Transaction 18 28
10 12
Preparation 11 19
Reassessed
1. Balikpapan-Samarinda Toll Road

2. Manado-Bitung Toll Road
3. Panimbang-Serang Toll Road 21. Central-West Java 500 kV Transmission Line
4. Trans-Sumatera Toll Road (8 Sections) 22. Batang, Central Java Powerplant
5. SHIA Express Railway 13. Inland Waterways Cikarang-Bekasi-Laut (CBL) 23. Indramayu Powerplant
6. MRT Jakarta South-North Line 14. Light Rail Transit (LRT) South Sumatera 24. Mine to Mouth Powerplant South Sumatera 8-10
7. Makassar-Parepare Railway 15. Integrated LRT Jakarta-Depok-Bogor-Bekasi 25. Bontang Refinery
8. Kuala Tanjung International Port Hub 16. National Capital Integrated Coastal Development 26. Revitalization of the Existing Refineries
9. Bitung International Port Hub (NCICD) Phase A (Balikpapan, Cilacap, Balongan, Dumai, Plaju)
10. Karangkates IV & V (2x250MW) 17. Jakarta Sewerage System 27. New Port Development in West Java (North Part)
Hydro-Electric Plant 18. West Semarang Water Supply System 28. Tuban Refinery
11. Kesamben (37MW) Hydro-Electric Plant 19. High Voltage Direct Current (HVDC) 29. Palapa Ring Broadband
12. Lodoyo (10MW) Hydro-Electric Plant 20. Sumatera 500 kV Transmission Line 30. East Kalimantan Railway

Progress on 30 Priority Projects
Progress of 30 Priority Projects (as of July 2017) Recent Milestones
Bitung International Port Hub

17% 10%
Consultant team of OBC PHI Bitung has been established,
13 projects are in construction PT Mott MacDonald Indonesia, PT Deloitte Konsultan
Indonesia, dan PT Hanafiah Ponggawa & Partners
3 projects are in transaction
9 projects are in preparation Cilacap Refinery Revitalization

30% 43% 1
KA-ANDAL assessment process is completed after
5 projects are reassessed
fulfilling administrative pre-requirements including letter
from Spatial Planning Director General, Seaport
Transport Director General and projects inclusion in
National Port Master Plan.
Funding Scheme of 30 Priority Projects
West Semarang Water Supply

State PPP has been agreed as the financing scheme by the main
Budget stakeholders
(IDR255 tn)
Jakarta MRT (South-North Line)
SOE Governor regulation No. 53/2017 regarding the assignment
(IDR325 tn) to PT. MRT Jakarta was published.
Private
(IDR770 tn) 1
5 projects reassessed include HVDC; Mine Mouth South Sumatera 8,9,10 Plant;
Karangkates IV & V, Kesamben and Lodoyo Plants.

89
Energy Sector: the Progress of 35.000 MW Program
Debottlenecking through regulation:

Average economic growth of 6.7%
requires 7,000 MW / year or 1. Regulation No.1/2015 concerning electricity Launching 35.000 MW
35,000 MW / 5 years supply cooperation & joint utilization of the by the President in
electrical network among license holders. Cabinet Meeting
(Kepmen ESDM No. 0074/2015 on Goa Beach Sanden
Progress of
RUPTL 2015-2024) 2. Regulation No.3/2015, concerning DIY
35,000 MW
Procedures of Purchasing Electrical Power
and benchmark prices for Electrical Power
through the Direct Selection & Appointment.
17 Dec 14 Jan 15 Jan 15 16 Mar 15 4 May 15
Cabinet Meeting
Theres electricity crisis in The progress so far: June17
Indonesia, requires construction
of large capacity plant " 35,000 MW Program Distribution
Kalimantan Sulawesi No Phase MW %
PLN: 900 MW PLN: 2,000 MW
Papua
Private: 1,735 MW Private: 1,470 MW
PLN : 220 MW 1 Operating 758 2
Transmission: 5,604 ckt.km Transmission: 5,275 ckt.km
Private: 0 MW
Substation: 3,500 MVA Substation: 4,390 MVA
Transmission: 364 ckt.km 2 Construction 14,593 41
Substation: 460 MVA
Sumatera 3 Signed Power-purchase Agreement 8,150 23
PLN: 1,100 MW
Private: 8,990 MW 4 Procurement 5,355 15
Transmission: 18,729 ckt.km
Substation: 35,521 MVA 5 Planning 6,970 19
Maluku
Nusa Tenggara PLN: 260 MW
Jawa & Bali Source: KPPIP
PLN: 670 MW Private: 12 MW
PLN: 5,000 MW
Private: 0 MW Transmission: 653 ckt.km
Private: 13,697 MW
Transmission: 2,347 ckt.km Substation: 620 MVA
Transmission: 9,185 ckt.km
Substation: 1,410 MVA
Substation: 66,265 MVA
Source: PLN
90
Acceleration of 35.000 MW Program
The Government has issued Presidential Regulation No. 4/2016 on Electricity Infrastructure Acceleration to accelerate power projects
Government Support (outside Guarantee) Local Content

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

PLN Subsidiary Independent
and Transmission Ministry of
(Joint Venture) Power Producer
Finance
Strengthen Equity
Strengthen PLNs Balance Sheet
Loan from Equity Injection by PT PLNs divident
independent lenders the Government allocation
Refinancing Hedging
Bond issuance Asset Direct Company
by PT PLN Revaluation Lending Tax Holiday *)SJKU=Surat Jaminan
Financial Asset Optimization Kelayakan Usaha/
Direct Other types Business Viability
Lending of funding Guarantee Letter
Significant Progress on Infrastructure Projects
Roads Improving Monitoring System on Infrastructure Projects1
KPPIP developed an integrated IT System for monitoring of

national strategic and priority projects, providing database on
projects latest status which can be effectively utilized for
monitoring and decision-making purposes.
Trans-Sumatra Toll Road Merah Putih Bridge, Ambon Database Platform data outlook
Dams Drinking Water Processing
Project information that is efficient and
such as map, track, functional using a
existing study and user-friendly
latest project status. framework.
Jatigede Dam (Operational) Umbulan Drinking Water Provision System, East Java
Transportation
An integrated IT Record decisions related

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

2 Not funded from National Budget
New Tanjung Priok Port Project2 Nop Goliat Dekai, Papua 92
Investment in Iron Ore, Alumina and Bauxite Smelter
Existing Iron Ore Refinery Facility

Ore Input Concentrate Input Capacity Investment
No. Company Product Progress Completion Date
Capacity (ton) (ton) (USD mn)
1 PT DPS Sponge iron 1.100.000 220.000 40 100% 2012
Sponge iron,
2 PT MJIS 3.300.000 660.000 150 100% 2013
slab, billet
3 PT SBP Cold Bricket Iron 240.000 65.800 120 100% 2017
Upcoming Iron Ore Refinery Facility

Ore Input Concentrate Input Investment
No. Company Product Progress Completion Date
Capacity (ton) Capacity (ton) (USD mn)
1 PT SILO Sponge iron 8.000.000 6.300.000 170 61% 2021
Sponge iron
2 PT RS 3.200.000 264.000 6,9 0% 2020
Existing Alumina and Bauxite Refinery Facility
Investment
No. Company Product Input Capacity (ton) Progress Completion Date
(US$ mn)
PT Indonesia Chemical
1 Chemical Grade Alumina 851.725 0,49 100% 2013
Alumina
3.000.000 (Phasa 1) Phase 1 : 100% 2016 (Phase 1)

2 PT Well Harvest Winning Smelter Grade Alumina 1,1
6.000.000 (Phase 2) Phase 2 : 0% 2017 (Phase 2)
Completed but not operating Completed and operating
Source: Ministry of Energy and Mineral Resources, July 2017

93
Investment in Nickel Smelter
Source: Ministry of Energy and Mineral Resources, July 2017

94
Financing Needs and Schemes
Infrastructure Financing Need 2015-2019 General criteria for financing schemes
*(USD bn) Government Budget is used for basic infrastructure projects,

399.6 164.8 mainly for projects that are economically feasible but
financially are not.
SOE scheme is used for projects managed under SOEs
41,3% (electricity, toll roads, oil, etc.) to leverage public funding
234.8 88.8 channeled through capital injections (PMN) and empower SOEs
PPP scheme is mainly targeted for projects that are both
100%
145.9 economically and financially feasible.
22,2%
58,7% The government may provide financial support to make certain projects
financially feasible.
36,5%
Financing Govt Financing SOE Private PPP scheme and facilities provided to PPP Projects
Needs Budget Gap
Financial Facilities Provided to SOEs Infrastructure Projects
The government may appoint certain SOEs to assign specific

infrastructure projects
To support the infrastructure provision through the SOEs, the
government provide a number of financial facilities, such as:
Capital Injection (PMN)
Lending
Credit Guarantees
Guarantees for SOE Direct Lending
Business Viability Guarantees
95
95
Management of Contingent Liabilities
Government Guarantee Program and Portfolios 2008 - Present Guarantee Program Based on Guarantee Classification
Committed
Exposure/
Power (Electricity) Full credit guarantee for Central Government Guarantee Guarantee Guarantee
No. Outstanding
for Infrastructure Programs Documents Amount
PLNs default on its payment obligation (FTP (USD bn)1
(USD bn)1
1 10,000 MW, 35GW)
Water 70% guarantee of PDAMs principal
Coal Power Plant 10,000MW Fast
payment obligation 1 36 6,98 3,47
Track Program (FTP 1)
Credit Infrastructure - Full credit guarantee on
Guarantee SOEs default (for lending from international
2 Clean Water Supply Program 10 0,02 0,01
financial institution) & guarantee for PT SMI
(local infrastructure financing)
Direct Lending from International
Toll road Full credit guarantee on Hutama 3 2 1,10 0,23
Financial Institution to SOEs
Karyas payment obligation (Sumatra Toll
Road Development) 4 Sumatra Toll Road Development 3 0,20 0,07
Renewable energy, Coals & Gas

5 12 11,91 1,47
Business Power (Electricity) Guarantee on the Power Plant 10,000 MW (FTP 2)
Viability viability of PLN to fulfill Purchase Contract
Guarantee Electricity & guarantee against political risk 6 Public-Private Partnerships (PPP) 5 5,81 0,83
Total 68 26,03 6,08

Infrastructure Guarantee on the obligation
PPP
of Government related entities in accordance As % of GDP 2.8% 0.7%
Guarantee
to the Agreement 1. USD/IDR: 13,360 as of 14 Mar 2017
For the period 2017 2020, the Maximum Guarantee Limit is set at 6% of GDP
In compliance with the guarantee limit, with projected 2020 GDP of IDR 18,000tn (eq. USD 1,349bn),
the capacity for guarantee issuance during 2017-2020 is IDR 1,083tn (eq. USD 81bn) cumulative
96
Government Financial Facilities for PPP Projects
Financial Facilities to Attract More Private Participation More Funding Schemes are on the Pipelines
Project Financing funded by the private sector

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

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

funds other than Governments budget, e.g.
PINA long term management funds (insurance,
Availability Payment Financing from repatriated funds from tax amnesty, pension
Schemes PT. SMI and PT. IIF (Non-Government funds, etc.), private equity investors and
Budget infrastructure funds. Supported & facilitated by
Infrastructure National Development Planning
Financing) Ministry/Bappenas.
Those financial facilities were instrumental in supporting the execution of Scheme Characteristics
PPP projects, indicated by the signing of financial close
of the following PPP projects: Asset is owned by private sector
Greenfield / brownfield / operating projects
97
Progress of PPP Infrastructure Projects
Successful Projects Reaching Financial Close in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
1 Central Java Power Plant 40 Guarantee (MoF & IIGF) FC on June 6th, 2016; Construction 30%; COD Target: May 2020
2 Palapa Ring West Package 1.28 PDF, IIGF Guarantee & AP FC on August 11th, 2016; COD target: February 2018
3 Palapa Ring Central Package 1.38 PDF, IIGF Guarantee & AP FC on September 29th, 2016; COD target: March 2018
4 Palapa Ring East Package 5.13 PDF, IIGF Guarantee & AP FC on March 29th, 2017; COD target: September 2018
5 Umbulan Water 2.1 PDF, VGF & IIGF Guarantee FC on August 30th, 2016; COD target: July 2019
Signed PPP Projects in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
1 BatangSemarang Toll Road 11 IIGF Guarantee PPP & guarantee contracts signed on April 27th, 2016
2 ManadoBitung Toll Road 5.1 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
3 SamarindaBalikpapan Toll Road 9.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
4 PandaanMalang Toll Road 5.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
5 SerpongBalaraja Toll Road 6.0 - PPP contracts signed on June 8th, 2016
6 JakartaCikampek Elevated Toll Road 14.8 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th,
2016 and February 22nd, 2017
7 KrianLegundi-Krian Toll Road 9.0 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th,
2016 and February 22nd, 2017
8 SerangPanimbang Toll Road 5.3 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
9 CileunyiSumedang-Dawuan Toll 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
Road
Source: Ministry of Finance, as of July 2017 98
New Guarantee Schemes for Non-PPP Projects
Guarantee on SOE Direct Lending from International Financial Institutions (IFIs)
The Government had issued Presidential Regulation No 82/2015 and Ministry of Finance Regulation No 189/2015 to provide
guarantee for SOE Direct Lending from IFIs for the Development of Infrastructure Projects.
The objective of this guarantee is to provide credit enhancement in terms of low interest rate and long tenor financing,
with 3 main principles:
Best practice of fiscal risk

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

The Government had issued the acceleration of local
Based on Government Regulation infrastructure development through
Ministry of Finance Regulation No
No. 95/2015 and Ministry of the ease of access to infrastructure
174 of 2016 to provide guarantee
Finance Regulation No. 232/2015,
to PT SMI on the assignment of financing and to boost local
Minister of Finance assigns PT SMI
regional infrastructure financing economic growth, as well as to
(Sarana Multi Infrastruktur) to carry
provision, by loan to local provide alternative financing
out functions in providing loan to
governments that is transferred schemes in order to meet local
local government, as previously
from PIP to PT SMI, and new loan infrastructure development needs
carried out by PIP (Government
channeled by PT SMI to the local
Investment Center). and to reduce reliance on
government.
state/local budget.
99
Progress of SOEs Projects
Progress of Projects Benefiting from Guarantees on SOE Loans
The Government issued government guarantees to loans of PT. Hutama Karya in the development of Trans-Sumatera Toll Road, as
comprise as follow:
Length Project Cost

No Sections Status (as of March 10th, 2017)
(Km) (IDR bn)
1 Medan-Binjai 17 2.74 Construction progress: 54.18%
Land Acquisition: 89.91%
2 Palembang-Indralaya 22 3.30 Construction progress: 52.68%
3 Bakauheni-Terbanggibesar 140 16.79 Construction progress: 23.88%
4 Pekanbaru-Dumai 131 16.21 Construction progress: 41.02%
Preparation for DED
5 Terbanggibesar-Pematangpanggang 100 11.86 Preparation
6 Pematangpanggang-Kayuagung 85 10.08 Preparation
7 Kisaran-Tebingtinggi 60 6.99 Survey and Planning
8 Palembang-Tanjungapiapi 90 14.29 Survey and Planning
100
Progress of SOEs Projects
Progress of Projects Benefiting from Guarantees on SOE Direct Lending
Project Cost
No Project Name Lender SOE Status
(IDR mn)
1 Sumatera Power Transmission and 600 ADB PT. PLN Guarantee is effective
Distribution
2 Sumatera Power Distribution 500 World Bank PT. PLN Guarantee is effective
3 The Enhancement of Electricity Grid 330 IDB PT. PLN Preparation of guarantee issuance
(recommendation to the Minister of
Minister for Approval)
Other Guarantees That Have Been Provided to SOE Projects
Guarantee Commited
No Program SOE Number of Guarantees
(IDR bn)
1 Fast Track Program 1 6.98 PT. PLN 36
2 Fast Track Program 2 11.91 PT. PLN 12
3 Clean Water Supply Program 0.02 PDAM 10
101

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Republic of Indonesia Presentation Book - July 2017

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Republic of Indonesia

A Resilient and Progressive Economy

Published by Investor Relations Unit Republic of Indonesia

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

Institutional and Governance Effectiveness: Fiscal Performance and Flexibility:

Economic Factor: Monetary and Financial Factor:

Progressive Infrastructure Development:

Ease of Doing Business1 Corruption Perception Index2

2008 2009 2010 2011 2012 2013 2014 2015 2016

Global Competitiveness Index3 World Governance Indicators4

JCRA Baa3 / Positive

July 2017, BBB-, Positive Rating Affirmed

May 2017, BBB-, Rating Upgraded

B+ We raised the long-term sovereign credit to BBB- as the

BBB- / Positive BBB- / Positive

The Economist: Indonesia among the top 3 destination for attracting

40 2015 2016 2017*

Total Investment / GDP (%)

United States (1) 40 India 47,6

The 3 Dimensions on Economic Development

Education Food Security

Three Key Pillars and Quick Win Programs

ready to be redistributed from a total of 4.5 million ha

Source: Coordinating Ministry for Economic Affairs

Harmonizing Regulations Simplifying Bureaucratic Process Ensuring Law Enforceability

Phase I (9 Sept 15) Phase VIII (21 Dec 15)

Phase VI (5 Nov 15) Phase XIII (24 Aug 16)

Source: Coordinating Ministry for Economic Affairs

Policy Goals and Benefits Policy Targets

1 Import duty for 115 types of ships spare

Six policy issues under Packages I-XV:

improvement of widening of efficiency of improvement of expansion of improvement of

industry investment logistics sector tourism sector export societys

Next Phase of Policy Packages based on Sectoral and Thematic Issues

Source: Coordinating Ministry for Economic Affairs

SET 215 97%

Source: Coordinating Ministry for Economic Affairs

Fair, Simplified & Development of

Requirement for utilizing 3-hour Investment Lisencing Service:

2 documents needed 9 documents obtained

Flowchart of business activities workflow Certainty to work Accurate land information

9 Types of licensing issued by ESDM3J service

Duration for reguler

Source: Investment Coordinating Board (BKPM)

Priority Investment Service No Requirements

Until May 2017, 90 projects have utilized the KLIK services

(3 IE; 840 ha) Riau Island

Bonded Logistic Center To date, 30 Bonded Logistic Center has been

Introduction of New Foreign Ownership Regulation for Strategic Sectors

Cold storage Sports Center, Restaurants, Bars Pharmaceutical Raw Materials

33% 100% 49% 100% 100% 85% 100%

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

Revision of "Partnership" category to

Grandfather Law: If a particular

1 For total project value of IDR10bn and above

Source: Investment Coordinating Board (BKPM)

Overall 91 106 15 61.52 58.51 3.01

Starting a business 151 167 16 76.43 67.51 8.92

Dealing with Construction Permit 116 113 3 65.73 65.26 0.47

Getting Electricity 49 61 12 80.92 77.60 3.32

Registering Property 118 123 5 55.72 53.24 2.48

Getting Credit 62 70 8 60.00 55.00 5.00

Protecting Minority Investors 70 69 1 56.67 56.67 0

Paying Taxes 104 115 11 69.25 64.47 4.78