Republic of Indonesia Presentation Book - February 2018

Republic of Indonesia
Reforms on The Move, Stability Intact

February 2018
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)
Bhayu Purnomo (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
Improving Global Perception
…with recent improvements on global competitiveness and governance indicator
Global Competitiveness Index1 Ease of Doing Business2

Rank
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Rank
0
20 20 Higher rank is better (rankings at the time of annual report publication)
30 Higher rank is better 40

36
41
40 40 60 72
80 91
50
109
60 60 100 114
123 122 121 120
129 129 128
70 68 120
71
80 140
Indonesia India Morocco Romania Hungary 160 Indonesia India Morocco Romania Hungary
90
World Governance Indicators3 Corruption Perception Index4

60
55 53
Higher score is better
50 55
50
43
50
39
48
35
33 45 45
40 40
Higher rank is better 37
15 35
2010 2011 2012 2013 2014 2015 2016
30
Voice and Accountability Political Stability/Absence of Violence 2012 2013 2014 2015 2016 2017
Government Effectiveness Regulatory Quality
Rule of Law Control of Corruption Morroco Hungary Indonesia India Romania
1. Source: World Economic Forum –The Global Competitiveness Report 2017 – 2018;
2. Source: World Bank – Doing Business Report;
3. Source: World Bank;
4. Source: Transparency International – Corruption Perceptions Index 2017 Report 4
Improving Global Perception
Indonesia has improved its competitiveness among ASEAN members....
Indonesia is inching its way up the competitiveness ladder, Indonesia’s transport infrastructure continues to improve
moving ahead 5 places supported by massive infrastructure projects
GCI Rank Change Transport Infastructure Index Change

Rank Countries Rank Countries
2017-2018 2016-2017 in Rank 2017-2018 2016-2017 in Rank
1 Singapore 3 2 1 1 Singapore 1 2 1
2 Malaysia 23 25 2 2 Malaysia 14 11 3
3 Thailand 32 34 2 3 Indonesia 30 36 6
4 Indonesia 36 41 5 4 Thailand 34 37 3
Brunei Brunei
5 46 58 12 5 63 70 7
Darussalam Darussalam
6 Vietnam 55 60 5 6 Vietnam 64 63 1
7 Philippines 56 57 1 7 Philippines 90 90
8 Cambodia 94 89 5 8 Cambodia 108 102 6
9 Lao PDR 98 93 5 9 Lao PDR 109 110 1
Source: World Economic Forum –The Global Competitiveness Report 2017 – 2018
5
Indonesia is Now Fully Rated as Investment Grade Country
Fitch JCRA
BBB / Stable
BBB
Dec 2017, BBB, Rating Upgraded
“Indonesia's resilience to external shocks has steadily
strengthened in the past few years, as macroeconomic
policies have consistently been geared towards maintaining
BBB- stability.
Investment Grade Moody’s R&I S&P
Below Investment Grade BBB- / Stable

BB+
May 2017, BBB-, Rating Upgraded
“We raised the long-term sovereign credit to BBB- as the
Indonesian authorities have taken effective expenditure and
revenue measures to stabilize the public finances despite
BB the terms of trade shock.”
Baa3 / Positive
BB- Feb 2017, Baa3, Outlook Revised to Positive

“We changed the outlook on Indonesia's sovereign rating
to positive from stable to reflect emerging signs of a
reduction in structural constraints, including its level of
external vulnerability and the strength of its institutions.“
B+
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
BBB- / Positive BBB / Stable
April 2017, BBB-, Outlook Revised to Positive February 2018, Rating Upgraded to BBB, Outlook Revised to Stable
“Indonesia's macroeconomics stability has been maintained for several “....the government led by President Joko Widodo has been pressing ahead with structural
years. Its external position is also improving,. fiscal deficits have been reforms aimed to promote sustainable growth.. First, the investment climate has significantly
reined in and government debt is low. In light of such factors, coupled improved.... Second, infrastructure development has been gaining momentum... Third, the
with improved policy management, R&I has changed the rating outlook to external debt owed by the private sector has been curbed since 2016... Taking those into
Positive.’ consideration, JCR has upgraded its ratings by one notch and changed the outlook to
Stable.
6
Indonesia Remains the Investment Destination of Choice
The Economist: Indonesia rounds out the top five of Asian economies that
can look forward to increased investment spending. (January 2018) 1 Indonesia Enjoys Large Investments Relative to Peers within the Region 2
40
China 69,4
India 47,1 35
Total Investment / GDP (%)

Indonesia 44,1
Vietnam 36,9 30
Singapore 30,6 25
Australia 30,1
Hong Kong 28,8 20
Thailand 28,7
South Korea 28 15
Japan 26,6 10
Philippines 24,7
32,90
30,38
29,94
34,17
34,29
34,28
25,11
25,87
25,54
21,21
24,28
25,85
22,25
22,00
22,72
27,58
26,58
26,75
Malaysia 24,3 5
Myanmar 20,2
Taiwan 18,2 0
India Indonesia Malaysia Philippines Thailand Vietnam
0 10 20 30 40 50 60 70 80
2015 2016 2017e
UNCTAD: Indonesia is listed as the top 5 prospective investment destination JBIC: Among ASEAN countries, Indonesia is one of the most preferred place
in the world (June 2017)3 for business investment (November 2017)4
United States (1) 40 China 45,7

China (2) 36 India 43,9
India (3) 20 Vietnam 38,1
Indonesia (8) 11 Thailand 34,5
Thailand (14) 11 Indonesia 33,1
Brazil (7) 9 USA 26,1
United Kingdom (4) 7 Mexico 18,2
Germany (5) 7 Philippines 10,6
Mexico (7) 7 Myanmar 9
Philippines (9) 6 Brazil 6,3
Spain (25) 5 Korea 6,3
Vietnam (14) 4 Malaysia 5,9
Singapura (18) 4 Russia 4,3
Canada (18) 4 % of executives responding Singapore 3,8
(x) = 2016 ranking % of surveyed who consider each country has promising prospects
Australia (13) 3 Turkey 2,7
0 10 20 30 40 50 0 10 20 30 40 50
1. Source: The Economist – Asia Business Outlook Survey 2018 3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2017
2. Source: IMF World Economic Outlook, Database October 2017 4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (29th Annual Survey)
7
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
8
Economic Equality Policies
to support sustainable public welfare...
• Build a fair land distribution scheme

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

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

Manufacture and ICT • Minimize interest gap between large companies and small companies
• Protect market share from integrated businesses and strong capital
Opportunity
• Regulate and build a database on traditional/modern market, traditional and modern shops
• Regulate the distances, location, and zone of the market and modern stores
Retail and Market • Compulsory mandates to maximize the usage of Local products
• Fair access to the logistic system
Financing & Government • Improving Kredit Usaha Rakyat (KUR) scheme to support non-bankable SME
Budget • Improving procurement scheme to support SME accessibility to finance
• Identified and built priority scale on sectors, sub-sectors of leading industries and profession
Vocational, • Improving link and match scheme between industries and vocation
Human Resource
Capacity
Entrepreneurship & Labor • Early childhood education
Market • Encourage education system to be more skill, collaborative, flexibility and impact oriented instead
of degree consideration
Source: Coordinating Ministry for Economic Affairs Priority 9

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 rural–urban logistics sector
Phase III (7 Oct ’15)
Financial services facilitation, export financing and Phase X (11 Feb ’16)
elimination of business unnecessary burden Revising the Negative investment List and
improving protection for SMEs
Phase IV (15 Oct ’15)
Social safety net and betterment of people welfare Phase XI (29 Mar ’16)
Stimulating national economy through facilitation to
SMEs and industries
Phase V (22 Oct ’15)
Improving industry and investment climate through tax Phase XII (28 Apr’16)
incentives and deregulation on sharia banking Improving Indonesia’s 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 Improving logistics
accelerating land certification process for individuals
Phase XVI (31 Aug’17)
Enhancing Business License Service Standard
Source: Coordinating Ministry for Economic Affairs
10
Boosting the Competitiveness through Logistical Efficiency
The 15th Economic Policy Package has been launched
Policy Goals Policy Targets
1 Import duty for 115 types of ship’s 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 Competitiveness 3 ships worth USD 700 million
of Logistic Service
Providers New employment opportunity of
4 2,000 sailors
Provide Market Opportunities Improve the Regional Government’s 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%
11
Enhancing Business License Service Standard
Presidential Regulation to Accelerate Ease of Doing Business has been launched
Improve efficient, streamlined, Provide business licensing Overcome the barriers

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

identify & overcome the end- regulatory reforms
Main Policy
to-end licensing barriers
Implementing a licensing checklist Implementation of the

for Special Economic Zones (KEK), Single Submission
Free Trade Zones (FTZ), Industrial system
Zones & Tourist Zones
Utilizing data sharing
Source: Coordinating Ministry for Economic Affairs 12

Progress of the Economic Policy Packages*
TOTAL INITIAL
REGULATIONS 234 I–XV
I–XII
Initially, there are 234 regulations which need to be
deregulated
11 I–XV
Based on the further assessment, 11 regulations has been
I–XII
REVOKED
REGULATIONS revoked from deregulation process
TOTAL
REGULATIONS 223 I–XV
I–XII
Total regulation subject to be deregulated: 223
regulations
SET 219 97%

As of January 18th, 2018, deregulation of 219 regulations
96%
PRESIDENTIAL LEVEL
PRESIDENTIAL
52 are finished (97%), comprising 50 regulations at
47 TOTAL 42 50 FINISHED
SELESAI
Presidential level and 169 regulations at
Ministerial/Institutional level
MINISTERIAL/INSTITUTIONAL LEVEL
171
TOTAL 169 FINISHED 97%
Unfinished regulations: Proposed Policy on Development
ON GOING
DISCUSSION 4 3% of Business and competitiveness of National Logistics
Service Providers
*as of January 18th, 2018

13
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
• 50 Bonded Logistic Center has been
State-owned train manufacturer PT Industri
launched to support various industries
Kereta Api (INKA) in Madiun, East Java, has
• North Sulawesi has sucessfully exported
begun its first passenger train exports by
coconut product through SOEs’ joint
shipping 15 train wagon to Bangladesh.
program
14
Improving Investment Climate
…implement 3-hour investment licensing service to complement the One Stop Service (OSS)
Requirement for utilizing 3-hour Investment Licensing 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 identity 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
From Jan – December 2017, 191 projects have utilized the “3 hours services”
Source: Investment Coordinating Board (BKPM)
15
…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/Compressed Natural Gass
Director arrives at Waiting in priority Applicant receive (CNG)
central OSS, then lounge, while the the requested 4 Temporary Business License for 32
submit required documents licensing products Liquefied Natural Gas (LNG) Storage
documents* processed
5 Temporary Business License for Oil 32
Refinery
Note *: ESDM3J service is given if the company has fulfilled
the checklist of administrative & technical requirements as 6 Temporary Business License for 32
regulated on MEMR Ministrial Decree No.15 of 2016 Processing Oil Residue Industry
Natural Gas Processing
From Jan – December 2017, 48 projects have 8 Temporary Business License for 40
utilized the 3 hours services for EMR Sector General Trade of Oil/Fuel
General Trade of Processed Product
16
…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 December 2017, 115 projects have utilized the “KLIK services”
17
…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)
18
…Bonded Logistic Center to Improve Indonesia’s Competitiveness
Bonded Logistic Center To date, 50 Bonded Logistic Center has been

launched to support various industries.
(Pusat Logistik Berikat/PLB) is a
facility provided by Ministry of
Finance as part of the Small and
Food &
implementation of the beverages medium
1st Economic Policy Package. industry
Personal
industry
Oil and
PLB facility aims to improve gas, and care/
mining home care
efficiency and reduce the cost of industry Synthetic
industry
transportation and logistics in Auto-
textile
Indonesia; support the growth of (chemical
motive
substances)
the domestic industry, including industry
Textile industry.
small and medium Heavy
(cotton)
Equipment
industries; increase industry
industry
investment; and to make Aircraft
Indonesia to become a logistics Defence MRO
industry industry
hub in Asia Pacific.
19
…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

20
Continuous Improvement of Investment Climate
…another leap on Indonesia’s Rank on Ease of Doing Business (EODB)*
EODB 2018 EODB 2017 Change in EODB 2018 EODB 2017 Change in
Rank Rank Rank Points Points Points
Overall 72 91 19 66.47 61.52 4.95
Starting a business 144 151 7 77.93 76.43 1.5
Dealing with Construction Permit 108 116 8 66.08 65.73 0.35
Getting Electricity 38 49 11 83.87 80.92 2.95
Registering Property 106 118 12 59.01 55.72 3.29
Getting Credit 55 62 7 65.00 60.00 5.00
Protecting Minority Investors 43 70 33 63.33 56.67 6.66
Paying Taxes 114 104 10 68.04 69.25 1.21
Trading Across Borders 112 108 4 66.59 65.87 0.72
Enforcing Contracts 145 166 21 47.23 38.15 9.08
Resolving Insolvency 38 76 38 67.61 46.46 21.15
* Higher rank is better, EoDB 2018 was published in October 2017

- 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 21

Improving Investment Realization (Q4-2017)
Rising Direct Investments FDI Realization by Sectors

IDR tn
180 179,6
FDI DDI TOTAL
160 Non Metallic
140
Mineral Industry
120
100
US$165 mn
80 Transportation,
Warehouse, and
17.8%
60 112,0 Leather Goods and
40 Telecommunication Footwear Industry
20 US$1,208.3 mn US$110 mn
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 432.0% 824.4%
2013 2014 2015 2016 2017
Trade &
Reparation Textile Industry
IDR179.6tn
Rp159.4IDR159.4tn
T US$265.4 mn Investment US$128.6 mn
375,982 434,463
Rp145.4 T
45.8% Realization 189.6%
*
9.6% 12.7% Rubber and

15.6% Metal, Machinery & Plastic Industry
Q4-2016 Q4-2017 Electronic Industry US$112.5 mn
Q1-2016 Q1-2017 Q1-2016Q1-2017
* person US$645.6 mn
56,6%
IDR112.0tn IDR67.6tn
40.0%
IDR101.3tn IDR58.1tn
Mining
US$1,169.6 mn
10.6% 16.4% 8,9%

Q4-2016 Q4-2017 Q4-2016 Q4-2017
Source: Investment Coordinating Board (BKPM), compared to Q4-2016 period

22
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
24
Indonesia’s Strong GDP
Strong GDP Growth1 Favourable GDP Growth Compared to Peers2

% QoQ YoY %
7,0 9
5,12 4,94 5,05 5,17 5,18 5,01 4,94 5,01 5,01 5,06 5,19
4,93 4,82 4,74 4,77 4,92
5,0 7
3,83 3,74 4,01

3,27 3,31 3,14 5
3,0
4,01
3,19 3
1,0
0,04
1
(0,16) (0,36) (1,81) (0,30) (1,70)
-1,0
(1,73) -1 2012 2013 2014 2015 2016 2017* 2018*
(2,07)
-3,0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -3
2014 2015 2016 2017 Indonesia India Morocco Romania Hungary
GDP Growth Based on Expenditures (%, YoY)1 Growth Prospect

2014 2015 2016 2017
By expenditure Institutions 2018 GDP growth (%YoY)
Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot
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 4.9 4.9 5.0 4.9 2018 Budget 5.4
Non profit HH.
23.2 22.4 5.8 (0.5) 12.2 (8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.2 6.9 Bank Indonesia 5.1 – 5.5
consumption
Government
6.1 (1.8) 1.2 0.9 1.2 2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 IMF 5.3
consumption
Gross Fixed
Cap. 5.4 4.0 4.4 4.1 4.4 4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 World Bank 5.3
Formation
Exports 3.1 1.5 4.9 (4.4) 1.1 (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.8) 4.1 (1.6) 8.4 2.8 17.0 8.5 9.1 ADB 5.3
Imports 5.1 0.4 0.2 3.0 2.1 (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.5) (4.1) 2.7 (2.4) 4.8 0.2 15.5 11.8 8.1
Consensus Forecast
5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.3
GDP (February 2018)
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
2. Source: World Economic Outlook Database – October 2017; * indicates estimated figure
25
Strong and Stable GDP Performance
Spatial GDP Growth (YoY) Spatial GDP Growth Contribution
Sumatera Kalimantan
GDP Growth Bali & Nusa
GDP Growth Bali & Nusa
Q4 2017: 4.43% Q4 2017: 3.37% Sulawesi Tenggara: 3.11%
Tenggara
GP Growth Maluku & Papua Maluku & Papua: 2.43%
GDP Growth Sulawesi: 6,11%
Q4 2017: 7.53% GDP Growth
Q4 2017: 3.2%
Q4 2017: 5.42%
Kalimantan: 8.2% Sumatera: 21.66%
Java
GDP Growth
Q4 2017: 5.62%
Java: 58.49%
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 Q2 Q3 Q4 Tot.
Agriculture, forestry, and
5.2 4.9 3.6 3.3 4.2 3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.2 2.8 2.2 3.8
fishery
Mining and Quarrying -1.2 0.7 0.7 1.5 0.4 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 (1.2) 2.1 1.8 0.1 0.7
Manufacturing 4.5 4.9 5.0 4.2 4.6 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.2 3.5 4.8 4.5 4.3
Construction 7.2 6.5 6.5 7.7 7.0 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 6.9 7.0 7.2 6.8
Wholesale and Retail Trade,
6.1 5.1 5.2 4.4 5.2 3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.4
Repair of Car and Motorcycle
Transportation and Storage 7.0 7.6 7.7 7.2 7.4 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5
Information and
9.9 10.7 9.8 10.1 10.1 9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 10.5 11.1 8.8 9.0 9.8
communication
Financial service 3.6 5.5 1.9 7.9 4.7 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.2 3.8 5.5
Other Services* 5.4 4.7 5.9 6.5 5.7 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.1 3.5 4.8 6.1 4,7
GDP 5.1 4.9 4.9 5.0 5.0 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1
Source: Central Bureau of Statistics of Indonesia (BPS)
*Other services consist of 10 sectors (according to Standard National 2008)
26
Section 3
External Factor:
Improved External Resilience
Structurally-Stronger Current Account Deficit
Strong Balance of Payments Improving Current Account Deficit

US$bn US$bn 2012: 2013: 2014: 2015: 2016: 2017:
20 160 CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit
Current Account Capital and Financial Account US$bn(US$24.4bn) (US$29.1bn) (US$27.5bn) (US$17.5bn) (US$16.9bn) (US$17.3bn)
Overall Balance Reserve Asset (RHS) 8
15 130,2 6
120 4
10
3,16
2
6,5 1,20
5 0
80 -2
0 1,0 (7,82)
-4
-5,8 -6 -5,76
-5
40 -8
(2,30)
-10 -10
-12
-15 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4**
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4**
2012 2013 2014 2015 2016 2017**
2012 2013 2014 2015 2016 2017**
Goods Services Income Secondary Income Current Account
Source: Bank Indonesia
Annual Trade Balance Surplus Continues Supported by Substantial FX Reserves to Mitigate External Challenges
US$bn 2013: 2014: 2015: 2016: 2017: FX Reserves as of January 2018: US$131.98 bn
Deficit Deficit Surplus Surplus Surplus
(US$4.10bn) (US$2.37bn) US$7.59bn US$8.83bn US$11.83bn* US$bn (Equiv. to 8.2 months of imports + servicing of government debt)
Month
130 FX Reserves (LHS) Month of Import & Debt Service (RHS) 15
3,00 14
120 13
2,00 12
110 11
1,00 10
100 9
0,00 8
90
7
-1,00 6
80
5
-2,00 OG Non-OG Total 70 4
3
-3,00 60 2
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
50 -
2013 2014 2015 2016 2017 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
2013 2014 2015 2016 2017 2018

* Preliminary Figure ** Very Preliminary Figure
Source: BPS
28
Exchange Rate In Line with Fundamentals
Movement of Rupiah
IDR/US$
13.700
IDR/USD Monthly Average
The rupiah tended to appreciate in January 2018
13.600
13.537
after defying pressures in the fourth quarter of
13.500
13.561 2017. In the fourth quarter of 2017, the rupiah
13433 depreciated by an average of 1.51% to Rp13,537
13.338 13.321 13.343
13.400 per USD, before rebounding 1.36% to Rp13,378
13.395 13.378
per USD in January 2018 as non-resident capital
13.300
13.348 13.309 13.333 inflows returned in line with the promising national
13.200 economic outlook and appreciation of regional
currencies.
13.100
*data as of January 31st, 2018
13.000
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18
Rupiah Exchange Rate Fared Relatively Well Compared to Peers

YTD 2018 vs 2017 Jan 2018 vs Dec 2017
TRY 1,14 -2,89

-3,29 PHP -0,42
0,45
BRL 3,92 INR
-0,48 0,95
IDR 1,34
PHP -2,89 1,36
-0,30 TRY 1,08
1,73
IDR 1,34 -0,03
0,05 KRW 1,76
0,45 JPY 3,56
INR 1,90
2,33 2,09
SGD 1,90
KRW -0,03
6,06 THB 3,92
2,33
THB 3,92 CNY 3,47
6,37 2,62
BRL 3,92
EUR 3,29 2,78
7,32 3,53
EUR 2,99
MYR 3,80
8,76 MYR 3,80
3,11
ZAR *data as of January 31st, 2018 4,48 % ZAR 4,52
9,33 7,69
%
-6,00 -4,00 -2,00 0,00 2,00 4,00 6,00 8,00 10,00 12,00 -4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0
Point to Point Average
Point to Point Average
29
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 January 2018: US$131.98 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

30
Solid Policy Coordination
In Managing Financial Markets Volatility
Gov’t Securities Crisis Management Protocol (CMP)

The enactment of Law No. 9/2016 regarding
 Indicators:
Prevention and Mitigation of Financial System Crises
- Yield of benchmark series;
as a legal foundation for the government to serves
- Exchange rate;
at the time of financial crisis in the form of Financial - Jakarta Composite Index;
System Stability Committee (KSSK) - Foreign ownership in government securities
 Policies to address the crisis at every level :
- Repurchase the government securities at secondary market
KSSK members: the Ministry of Finance, Bank - Postpone or stop the issuance
Indonesia, the Financial Services Authority, and the
Deposit Insurance Corporation Bond Stabilization Framework
First Line of Defense
Buyback fund at DG of Budget
Most important provisions stipulated in the Law: State’s Budget Financing and Risk Management
Investment fund at Public Service
• Financial system stability monitoring and Agency (BLU) (min. level Aware)
maintenance by KSSK members based on crisis State Owned Enterprises
management protocol of each member; (BUMN)’s Budget Related SOEs (min. level Aware)
• Prevention of financial system crisis, including the Social Security

mitigation of systemically important bank’s liquidity Organizing Agency BPJS (min. level Aware)
(BPJS)’s Budget
and solvency problems;
Second Line of Defense
• Recovery Plan for Systemically Important Banks;
State General Treasury Account (Rekening
• Bank Restructuring Program KUN) (min. level Alert)
State’s Budget
Accumulated cash surplus (SAL) (min. Level
Crisis)
Gov’t Securities CMP Level State Owned Enterprises

Related BUMNs (min. level Alert)
(BUMN)’s Budget
Social Security
NORMAL AWARE ALERT CRISIS Organizing Agency BPJS (min. level Alert)
(BPJS)’s Budget
Source: Ministry of Finance 31
Strengthened Private External Debt Risk Management
Private External Debt Remains Manageable Debt Burden Indicator (External Debt/GDP) Remains Comparable to Peers Rating
US$bn US$bn
Total Ext. External Debt/GDP (%)
300 Public (Govt. & BI) Private Total (RHS) Debt: 400
95,2
US$352.2bn Hungary 92,1
350
250 105,4
Private Sector 300
Ext. Debt: 52,9
200 Romania 51,9
US$171.6bn 250 55,4
150 200 42,2
Morocco 44,7
150 42,5
100
100 34,2
50
Indonesia 34,0
50 36,1
0 0 22,6
India 20,4 2017F 2016 2015
23,2
0,0 20,0 40,0 60,0 80,0 100,0 120,0
Source: External Debt Statistics of Indonesia, February 2018 Source: Moody’s Statistical Handbook, November 2017
* Provisional Figures ** Very Provisional Figures
Encouraging Corporates Compliance on Hedging Ratio & Liquidity Ratio

Phase 1 Phase 2 Phase 3
Regulation Key Points Jan 1,2015 – Jan 1,2016 – Jan 1, 2017
Hedging Ratio* Liquidity Ratio* Dec 31,2015 Dec 31,2016 & beyond
Object of Regulation Governs all Foreign Currency Debt
< 3 months > 3 – 6 months Hedging Ratio
268; 167; 324;
(10,2%) (6,4%) (12,4%) < 3 months 20%* 25%**
> 3 – 6 months 20%* 25%**
2.353 ;
2454; 2297;
(89,8%)
(93,6%)
Liquidity Ratio (< 3 months) 50% 70%
(87,6%)
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
Sanction As of Q IV-2015 Applied
*Data as of Q3 2017, with total population 2.621 corporates
Source: Bank Indonesia 32
Manageable External Debt Profile
short term non-bank corporate debt (non affiliation) represents only 8.7% of total private external debt
Public Long Term 1 Private Bank
Affiliation
US$180.6bn US$125.6bn US$19.2bn
or or or
51.3% 73.2% 11,2% US$11.9bn
of Total Ext. of Private Ext. of Private or
Debt Debt Ext. Debt 6.9%
External Debt of Private
Position Ext. Debt
US$171.6bn US$46.1bn US$26.8bn

or or or
US$352.2bn 48.7% 26.8% 15.6%
of total of Private of Private
Ext. Debt Ext. Debt Ext. Debt
Private
Non-Bank US$14.9bn
Short-Term1 or
8.7%
Private of Private
Ext. Debt
External Debt Position as of December 2017
1 Based on remaining maturity
Non Affiliation
Source: External Debt Statistics of Indonesia, February 2018
33
Section 4
Fiscal Performance and Flexibility:
More Fiscal Stimulus with Prudent Fiscal Policy
Integrated Reform to Provide Higher Quality of Economic Growth
Structural reforms to enhance potential growth and navigate through challenges
• Fair State Budget that declines

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

35
Growth Momentum is Expected to Continue
Several key drivers and strategies to accelerate growth
Key Drivers Strategies to Encourage Growth
• Maintaining purchasing power, boosting domestic

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

 Increasing foreign tourists arrival through
Risks & Challenges cooperation with other countries by
increasing the direct flight schedule
Global economic uncertainties: China economic rebalancing
 Encouraging national creative industry growth
and its financial vulnerability, advanced countries policy
normalization, geopolitic, and climate change
36
More Credible and Realistic Budget
…providing more certainty to all stakeholders
Macroeconomic Assumption for 2018 Budget
2016 2017 2018

• 2018 budget will focus on efficiency and quality of
Indicator
Realization¹ Realization2 Budget priority expenditure, optimization and reforms on
Economic growth (%, yoy) 5.02 5.07 5.4 government revenue, and maintaining economic
Inflation (%, yoy) 3.02 3.61 3.5
momentum as well as public confidence.
3-Month Treasury Bill (SPN) (%) 5.7 4.98 5.2 • 2018 fiscal deficit is set lower than 2017 R-budget
Exchange Rate (Average, IDR/USD) 13,307 13,384 13,400
at 2.19% of GDP. However, government spending
is targeted towards infrastructure development as
ICP (USD/barrel) 40.2 51.2 48
well as poverty and unemployment reduction for
Oil Production (thousand barrel/day) 829 803.9 800 an equitable development and improved
Gas Production (millions of barrels/day) 1.18 1.14 1.2 connectivity.
2016 2017 2018

Description (IDR Trillion) Audited % Realization % difference
R-Budget Realization2 Budget
Realization to R-Budget with R-Budget
A. Revenues and Grants 1,555.9 1,736.1 1,655.8 95.4 1,894.7 9.1%
I. Domestic Revenue 1,546.9 1,733.0 1,648.1 95.1 1,893.5 9.3%
1. Tax Revenue 1,285.0 1,472.7 1,339.8 91.0 1,618.1 9.9%
2. Non Tax Revenue 262.0 260.2 308.4 118.5 275.4 5.8%
II. Grants 9.0 3.1 7.6 244.9 1.2 -61.3%
B. Expenditure 1,864.3 2,133.30 2,001.6 93.8 2,220.7 4.1%
I. Central Government Expenditure 1,154.0 1,367.00 1,259.6 92.1 1,454.5 6.4%
1. Ministerial Spending 684.2 798.6 759.6 95.1 847.4 9.6%
2. Non Ministerial Spending 469.8 568.4 500.0 88.0 607.1 2.2%
II. Transfer to Region and Village Fund 710.3 766.3 741.9 96.8 766.2 0.0%
C. Primary Balance -125.6 -178 -129.3 72.6 -87.3 -51.0%
D. Surplus (Deficit) -308.3 -397.2 -345.8 87.1 -325.9 -18.0%
% of GDP -2.49 -2.92 -2.57 -2.19
E. Financing 334.5 397.2 364.5 91.8 325.9 -18.0%

1. Audited
2. Unaudited
37
Increasing Tax Revenue Over The Years
Future policies will be directed at expanding the tax base and increasing compliance
Tax Improvement Efforts

Taxation Revenue Automatic Exchange of Information
(AEoI)
• Expanding tax base
IDR Trilion
• Preventing Base Erosion Profit
1800 14 Shifting
11,6 .
1600 11,9 11,9 Data and Information System
11,4 12
10,7 More up to date integrated system
1400 10,3 e-filing, e-form and e-faktur.
10,0
10
1285 1618
1200
1240
1147 1344 Taxpayer Compliance
8
1000 1077 Building sustainable compliance e.g.
981
Tax Revenue Custom & through e-service, mobile tax unit,
800 KPP Mikro, and outbond call.
6 1,424.0 Excise
600 194.1
4 Tax incentive
400 • Tax holiday and tax allowance
Oil & Gas Non O&G • Reviewing VAT exemption policy
2 for several items.
200 38.1 1,385.9
0 0 Human Resource and
2012 2013 2014 2015 2016 2017* 2018 Regulation
APBN Improving service and institution
Tax Revenue % GDP - RHS framework
*preliminary realization

38
Commitment to Continue Strengthening Productive Spending
Allocating budget to a more productive spending
Central Government Spending Line Ministries Rp.847,4 T

• Improving planning with performance
2016 based, and integrated with development
priority
2015 Rp1,154.0 T • Operational spending efficiency
• Monitoring and evaluation
Rp1,183.3 T • Early procurement process
2018
Rp1,454.5 T
Non Line Ministries Rp.607,1 T
2017
Rp1,259.6 T
Energy Subsidy Non Energy Subsidy Interest payment
Subsidy as % of Total Spending Better targeting Integration with Cost efficiency

4,00 energy subsidy
3,35 3,35 • Subsidy for the • Controlling
3,50 Energy Non-Energy
poorest family and • Synergy with cost of
3,00 there is no plan to social assistance financing
eliminate the subsidy, programs and
% Spending
2,50 • Deepening
rather making it well- transfer to regions
2,00 government
targeted. • Staple good price
1,50
bond market
1,03 • Targeted for the poor. management
0,86 • Controlling
1,00 0,67 0,64 Electricity subsidy is • Improving debt burden
0,50 targeted to the agriculture
0,49 0,49 0,58 0,54 0,59 0,42 subscribers of 450 VA productivity
-
and 900 VA
2013 2014 2015 2016 2017 2018
• Database improvement
• Inflation management

39
Increasing Quality of Spending
Reinforcing Allocation, Distribution, and Stabilization functions
(Rp Trilllion)
Poverty and Infrastructure Main Sector Civil Servant and Defense of

Inequality Community Service Security &
Democracy
297.8 410.7 34.8 365.8 220.8
Social protection program
Road Construction Agriculture Improved Defense
(PKH)
865 km • Increased food bureaucratic
2018: 10,0 mio families Rp17,3 T production and
The achievement of
reform to
2017: 6,0 mio families Rp12,7 T construction of MEF phase 2 and
improve the
facilities and the development of
quality of public
Irrigation infrastructure defense industry
services
Construction • horticulture
Expansion of Non-Cash Food cultivation
Assistance (BPNT) 781 km Security
2018: 10,0 mio families Rp13,5 T Welfare Maintenance of
2017: 1,4 mio families Rp1,6 T Tourism apparatus and security, order,
Electrification • developing 10 pensioners and criminal
Ratio tourist destinations
Health services PBI • Increased tourists
investigation
2018: 92,4 mio people Rp25,5T 95,15 % Increase in food
• Tourism promotion
2017: 92,4 mio people Rp25,5T allowance for TNI
/ Polri 
Democracy
Education Smart Indonesia Program Rp5 mio from
Fishery The 2018
2018: 19,7 thousand students Rp10,8 T Construction of • Increased Rp55.000 tp
2017: 19,7 thousand students Rp10,7 T Affordable Rp60.000/person/ election
competitiveness of
Bidik Misi: 401,5 thousand students Housing day organizer and
processed fishery
Rp4,1 T products preparations for
13.405 unit
2017: 339,4 thousand students Rp3,5 T • Fishing boats System the 2019
support 1048 units improvements election
• Environmental and retirement
sustainability
benefits of the
state apparatus

40
Investments in human capital has been ramped up
20% of national budget is allocated for education and another 5% for health
Budget for Education Program Budget for Health Program
IDR tn IDR tn
500 444,1
125 111,0
450 419,8 104,9
390,1
400 370,4 100 92,3
353,4
350
300 75 65,9
59,7
250
200 50
150
100 25
50
0 0
2014 Real 2015 Real 2016 Real 2017 Outlook 2018 Budget 2014 Real 2015 Real 2016 Real 2017 Outlook 2018 Budget
Targets of Education Program in 2018 Targets of Health Program in 2018

Indonesia Smart Bidikmisi School Immunization Indonesia Healthy Provision of Health
Program Scholarship Rehabilitation Program Facilities
Basic & complete

19.7 million students 401.5 thousand college 61.2 thousand rooms immunization for 92.5% of 92.4 million people 49 hospitals/health centers
students 0-11 months old infants
School Operational Drug and Food Family Plan Program

Assistance (BOS) Teacher Allowance Certification (KB)
• Non Civil Servants : 435.9 thousand teachers
• Civil Servants : 257.2 thousand teachers
• Local Civil Servants : 1.2 million teachers
56 million students 74 thousand certifications 1.8 million people
41
Improved Budget Allocation Towards Local Government
…promoting better allocation of budget spending to local government
2018 Transfer to Regions and Village Funds (Budget) Transfer to Regions/Village Funds
Special Autonomy &
D.I Yogyakarta - DIY (IDR21.1 tn) Village Fund (IDR60.0 tn) 2013 2014 2015 2016 2017 2018
IDRtn
Reformulated to (1) Audited Audited Audited Audited Realization Budget
Special Autonomy & Fund for
DIY keeps increasing from year Give more weight on Transfer to
to year the poor population. (2) Region 513.3 573.7 602.4 663.6 682.2 706.2
Improving inequality
between villages
Village Fund - - 20.8 46.7 59.8 60.0
3%
1% Total
Regional Incentive Regional 513.3 573.7 623.2 710.3 766.3 766.2
Fund (IDR8.5 tn) 8% Transfer
Incentive Fund allocation
has been increased to
enhance local • Indonesia continues its improvement of regional transfer, esp.
government performance village fund, to spur growth throughout regions
and public service
delivery
• Allocation for both Transfer to Region and Village Fund has
24%
been increasing substantially
Special Transfer Fund
• The increased allocation indicates the Government’s
(IDR185.9 tn) 64% commitment to support development in regions
Special Transfer
Fund allocation is
based on each • A minimum 25% of general transfer fund must be earmarked
General Transfer Fund (IDR490.7 tn)
regions’ proposal for public service infrastructure
and national Minimum of 25% (IDR122.7 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
42
2017 Achievements of State Budget
Value creation on various projects and country development
15.5% 101.7% 118.5% 7.4% 23.0% 27.8%
• Tax revenue growth vs. • Revenue of customs • Non-tax revenue over • Growth of realized • Capital expenditure • Growth of transfer
2016 (excluding Tax and excise over 2017 2017 revised Budget, a government spending growth vs. 2016, a to village vs. 2016,
Amnesty and Asset revised Budget, a growth of 17.7% vs vs. 2016 92.8% over 2017 99.6% over 2017
Revaluation) 7.4% increase vs. 2016 revised Budget. revised Budget
2016
Local Government Achievements Central Government Milestones
Infrastructure:
• 794 km road development
Bridges: 3,749 m bridge • 9,072 m bridge development
in development, 291 m • 3 airports completed
maintenance, and • 618.3 km railways
2,916m improvement Classroom: 1,351 new
Roads: 1,033 km in
development, 1,503 km classrooms, 11,006
maintenance, 9,789 km rehabilitation, 11,758
improvement rural library collection Education:
• Distributed Indonesian Smart Card to 19.8
Tuition: Reduced tuition million students
costs for 46.6 million • School Operational Benefit for 8.0 million
students and 5.6 • Scholarship for 364.4 students
million kindergarten-
Medical: Improved aged children Welfare: Increased welfare
facilities in 347 and work ethics of 1.7
hospitals and 3,873 million civil teachers in rural Healthcare and Social Security:
clinics areas and compensated • Distribution of Indonesian Health Card to
41,000 teachers in special 92.1 million people
Rural: 107,9 village roads, regions
89,200 health clinics,
178,800 toilets, and
107,700 connected clean
water and 25,903 Ha
irrigated lands

43
Indonesia’s Tax Amnesty Program – A Success Story
With more than 965,900 taxpayers participating in the program
Tax Amnesty Result (as of the end of March 31st, 2017)
Preliminary Repatriation
Evidence Payment 3% SMEs
1% 2%
Tax Arrears Offshore Companies
Payment 147,1 12%
14% 1,7 Declaration 85,59
21%
18,8 1,036 594,99
Individual
SMEs
18% 861,81
Onshore 3.323,36
114,2 3,698 Declaration
Individuals
Redemption 76% 68%
Money
85%
Revenue Asset Declared Composition of Participants

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

Financing Policy 2018: General Objective & Policy
To meet financing
needs at efficient
cost and tolerable
risk
To support the
development of
General
deep, active, and Policy
liquid market
To enhance public
accountability as
part of transparent
Government debt Cost control
management and debt
risk

45
2018 Financing Need
Fulfilled from Government Securities IDR 737.5 tn (93%) and Loan IDR55.8 tn (7%)
Domestic GS
IDR592.2 tn
Deficit Domestic Debt
Rp325,9 T IDR596.7 tn
Debt
matures
(75%)
Rp394,1 T
(include
Domestic Loan
Rp10,1 T of
IDR4.5 tn
Private
Placement)
Investment
Financing Lending Financing
Rp65,7T Rp6,7T Needs
IDR793.3 tn Foreign
Other Denominated
financing Bonds
(Rp0,2T) (JPY, EUR, USD)
IDR145.3 tn
Government Foreign Debt
Guarantee
IDR196.6 tn
Obligation
Rp1,1T
(25%)
Foreign Loan
(Program &
Project)
IDR51.3 tn

46
Indicative Financing Plan for 2018
Creating prudent and sustainable fiscal management
Government Securities to Meet State Budget Financing Domestic Bonds
Indicative Budget Target* Weekly auction:

Instruments
IDR tn USD bn Conventional securities 24-25x
Budget Deficit (2.19% 325.9 24.3 Islamic securities 24-25x
Government Securities (Net) 414.5 30.6 Non-Auction
Government Securities (Gross) 856.5 63.9 Retail bonds (Indonesian Retail Government Bond, Retail Sukuk, Online Retail Bonds)
Private Placement Based on request
Composition
Target avg. tenor maturity for Government Securities (SBN) Issuance
Domestic Bond 80 - 83%
7-8 years
International Bond 17 - 20%
Issuance Targets for Government Debt Securities and Sukuk International Bonds (USD, Sukuk USD EUR, JPY-denominated)
 Avoid crowding out in domestic market

25.0% - 30.0%  Provide benchmarks for corporate bonds
 Investor base diversification
Front Loading Issuance for 2018 Budget Financing
 Faster access to liquidity

 Anticipate developments in global environment
70.0% - 75.0%
Government Debt Securities Government Sukuk
*exchange rate assumption in 2018 budget: IDR13,400/USD

47
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 Deficit Productivity**
Government Debt / GDP (%)
6,8
100% 35,0%
5,5
5,3
5,1
3,4
28.3% 29.2%
2,7
27.4%
2,1
2,1
1,6
1,2
30,0%
80% 24.9% 24.7%
23.0% 25,0%
70,0%
(0,1)
74,1%
(0,4)
76,2%
(0,6)
68,8% 79,1% 81,1%
(1,6)
60%
(2,2)
20,0%
(2,8)
(2,9)
(3,3)
(3,7)
(4,8)
(5,3)
(5,8)
(6,1)
(7,1)
40% 15,0%
BRAZIL
MALAYSIA
10,0%
USA
S AFRICA
JAPAN
UK
AUSTRALIA
INDONESIA
TURKEY
THAILAND
ITALY
INDIA
20%
31,2% 30,0% 25,9% 5,0%
23,8% 20,9% 18,9%
0% 0,0%
2012 2013 2014 2015 2016 2017*
GDP Growh Fiscal Deficit (% GDP)
Loans (LHS) Securities (LHS) Govt Debt / GDP (%) (RHS)
Source: Ministry of Finance Source: MOF, World Economic Outlook
Weighted Average Debt Maturity of ~8.6 Years (As of Dec. 2017) Well Diversified Across Different Currencies
Years % of Yearly Issuance

2% 2% 1% 1%
10,0 3% 3%
3% 4% 4%
9,7 3% 3% 9% 3% 8% 7% 6%
9,7 14% 12%
9,8 9,6
9,4 29% 32% 31% 29%
9,5 24% 29%
9,3
9,0
9,0
8,8 8,6 56% 57% 55% 58% 60%
53%
8,5
8,3
2012 2013 2014 2015 2016 2017
8,0
2012 2013 2014 2015 2016 Dec-17 IDR USD JPY EUR Other
*As of end of 2017, **GDP growth and fiscal deficit numbers are average of 2012-2016 (5 years), ***SDR, AUD, and other.
48
Well Balanced Maturity Profile With Strong Resilience
Against External Shocks
Declining Interest Rate Risks Declining Exchange Rate Risks
% %
25 23,2 FX Debt to GDP ratio (%) FX Debt to total debt ratio (%)
21,0 20,7 46,7
19,5 50 44,5
20 43,4 42,6
17,5 17,4 40,4 41,1
16,0
14,8 40
15 13,7
12,1
10,7 10,6 30
10
20
5 11,7 10,7 12,2 12,1 11,7 10,9
10
0
2013 2014 2015 2016 2017 *) Jan 18 0
1 2 2013 2014 2015 2016 2017 *) Jan 18
Variable rate ratio [%] Refixing rate [%]
Debt Maturity Profile Upcoming Maturities (Next 5 Years)

IDR tn %
50,0 in < 1 year (%) in < 3 year (%) in < 5 year (%)
400 Other Currencies IDR Denominated
350 39,8
38,1
40,0 36,0
33,4 33,9 34,7
300
140
250 30,0
84
25,3
110
133
140
22,7 23,2
200 21,8 21,4
123
20,1
126
89
92
150 20,0
20
226
123
10,1
210
24
134
100
12
70
8,6
19
8,4 7,9
6
7,7
168
10,0
154
6,5
147
134
133
130
57 29
126
56 17
108
100
50
98
97
90
2923
2332
2624
67
2121
48
530
262
32
2
15
0 0,0
72
2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044- 2013 2014 2015 2016 2017 *) Jan 18
2055
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 figure

49
Profile of Total Central Government Debt
More Balance Ownership In Terms of Holders and Tenors
Holders of Tradable Gov’t Domestic Debt Securities Foreign Ownership of Government Securities at Longer Tenors
100%
32,5% 38,2% 36,0% 37,0% 36,5%

38,1% 37,5% 37,8% 39,8% 80%
41,3% 44,5% 42,8% 44,7%
60%
33,8%
30,8% 39,8% 41,3%
34,9% 38,1% 38,2%
37,8% 39,9% 36,8% 32,9% 37,5%
40%
32,5%
34,3%
37,4% 35,6%
32,0% 33,6%
20% 39,0% 17,0%

33,7% 17,8% 17,3%
31,0% 12,9% 15,2%
27,3% 25,8%
23,9% 22,5% 23,4%
11,8% 5,5%
5,4% 3,7% 5,1%
5,3%
1,3% 6,7%
5,2% 4,6% 3,2% 3,5% 5,0%
0%
Dec-13 Dec-14 Dec-15 Dec-16 Jan-17 Dec-17 Jan-18 Dec 13 Dec 14 Dec-15 Dec-16 Dec-17 Jan-18
0-1 ≥1-2
Foreign Holders Domestic Non-Banks Domestic Banks ≥2-5 ≥5-10
≥10 %Foreign Ownership of Total

50
Ownership of IDR Tradable Central Government Securities
(IDR tn)
Description Dec-14 Dec-15 Dec-16 Jan-17 Jun-17 Dec-17 31-Jan-18
Banks* 375.55 31.04% 350.07 23.95% 399.46 22.53% 493.82 27.27% 399.19 20.45% 491.61 23.41% 544.59 28.85%
Govt Institutions (Bank
41.63 3.44% 148.91 10.19% 134.25 7.57% 53.31 2.94% 175.89 9.01% 141.83 6.75% 58.16 2.76%
Indonesia**)
Bank Indonesia (gross) 157.88 8.90% 163.63 9.03% 180.28 9.23% 179.84 8.56% 180.18 8.55%
GS used for Monetary
23.63 1.33% 110.32 6.09% 4.39 0.22% 38.01 1.81% 122.02 5.79%
Operation
Non-Banks 792.78 65.52% 962.86 65.87% 1,239.57 69.90% 1,264.02 69.79% 1,377.15 70.54% 1,466.33 69.83% 1503.99 71.39%
Mutual Funds 3.78% 61.60 4.21% 85.66 4.83% 87.84 4.85% 91.56 4.69% 104.00 4.95% 104.31 4.95%
45.79
Insurance Company 150.60 12.45% 171.62 11.74% 238.24 13.43% 241.25 13.32% 254.21 13.02% 150.80 7.18% 154.89 7.35%
Foreign Holders 461.35 38.13% 558.52 38.21% 665.81 37.55% 685.51 37.85% 770.55 39.47% 836.15 39.82% 869.77 41.29%
Foreign Govt's & Central
103.42 8.55% 110.32 7.55% 120.84 6.81% 118.91 6.57% 131.94 6.76% 146.88 6.99% 145.74 6.92%
Banks
Pension Fund 43.30 3.58% 3.41% 4.92% 86.95 4.80% 89.11 4.56% 198.06 9.43% 202.81 9.63%
49.83 87.28
Individual 30.41 2.51% 42.53 2.91% 57.75 3.26% 57.69 3.19% 60.49 3.10% 59.84 2.85% 56.42 2.68%
Others 60.51 5.00% 78.50 5.37% 104.84 5.91% 104.78 5.79% 111.23 5.70% 117.48 5.60% 115.79 5.50%
Total 1,209.96 100% 1,461.85 100% 1,773.28 100% 1,811.14 100% 1,952.23 100% 2,099.77 100% 2,106.74 100%
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.

51
Positive Response of Government Securities Issuance in 2017
Pricing Date March 22, 2017 May 31, 2017 July 11, 2017 December 4, 2017
Global Conventional Euro-Denominated Global Conventional Bonds (Prefunding

Instrument Global Sukuk Samurai Bonds
Bonds Bonds for 2018)
Tenure 5 yr 10yr 3 yr 5 yr 7 yr 10 yr 30 yr 7 yr 5 yr 10 yr 30 yr
Nominal US$1 bn US$2 bn JPY40 bn JP50 bn JPY10 bn US$1 bn US$1 bn EUR1 bn US$1 bn US$1.25 bn US$1.75 bn
Coupon Rate 3.40% 4.15% 0.65% 0.89% 1.04% 3.85% 4.75% 2.15% 2.95% 3.50% 4.35%
Yield 3.40% 4.15% 0.65% 0.89% 1.04% 3.90% 4.80% 2.178% 3.00% 3.55% 4.40%
Incoming Bid US$10.8 bn JPY100 bn US$7.3 bn EUR4.3 bn US$9.9 bn
Increasing Incoming Bids in 2016’s Government Securities Issuance
IDR bn
200 4,00 • The average incoming bids in 2017 is IDR27.99

180 3,36
tn/auction, higher than 2016 (IDR19.05 tn/auction)
160 2,81 2,83
2,67 3,00
140 2,37 • The average awarded bids in 2017 is IDR11.74 tn/
120 2,00 2,07 2,04 2,12
1,98
100
1,84
2,00
auction, higher than 2016 (IDR9.37 tn/auction)
80
60
1,00
40
20
- 0,00
Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)

52
Section 5
Monetary and Financial Factor:
Credible Monetary Policy Track Record
and Favourable Financial Sector
Bank Indonesia’s Policy Mix 2018
To Maintain Macroeconomic and Financial System Stability
1. Monetary Policy:
5. Coordination with other
a. Accelerate interest rate reduction,
Authorities:
especially on bank lending
a. Controlling inflation: TPIP, TPID
b. Stabilize exchange rate consistent
Coordination with b. Structural reforms: Government
with fundamental 5
other Authorities c. Financial deepening & stability:
c. Accelerate implementation of
1 KSSK, OJK
reserve requirement averaging
Bank
Indonesia
2018 Strategic 4
2. Macroprudential Policy: Policies 4. Payment System Policy:
a. Introducing Macroprudential 2 a. National Payment Gateway (NPG)
Intermediation Ratio (MIR) b. Electronification: Social program,
b. Introducing Macroprudential e-payment for government
Liquidity Buffer (MLB) 3 c. Financial technology
3. Financial Market Deepening:

a. Developing market instruments for financing infrastructure
b. Developing financial market infrastructures, eg. market
operators & centralized counterparty (CCP).
53
Bank Indonesia Policy Mix: February 2018
The BI Board of Governors agreed on 14th and 15th February 2018 to hold the BI 7-days Reverse
Repo Rate at 4.25%, while maintaining the Deposit Facility and Lending Facility rates at 3.50% and
5.00% respectively, effective 19th February 2018
Continues to monitor the

risks, including global risks Remains vigilant of Continues to
such as growing emerging global strengthen policy Predicts stronger credit
uncertainty in the global financial market coordination and deposit growth in
financial markets owing to Projects the uncertainty, while between Bank 2018, improving
Holds the anticipation of a higher- domestic continuing exchange Indonesia and the respectively to 10-12%
BI 7-day than-expected FFR hike, economy to rate stabilisation Government in (yoy) and 9-11% (yoy)
Repo Rate coupled with the rising oil expand in the measures to anticipation of a in line with the expected
at 4.25% price, as well as the 5.1-5.5% (yoy) safeguard the potential build-up economic recovery and
domestic risks linked to range in 2018 currency’s of inflationary progress in terms of
ongoing corporate fundamental value pressures, corporate and banking
consolidation, a sluggish and maintain specifically from sector consolidation
bank intermediation market mechanisms. volatile foods.
function and inflation risk.
55
Principles of Average Reserve Requirement Ratios Improvement
Considerations for the Average Reserve Requirement Effective

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

in rupiah feature for conventional commercial banks (e.g. Calculation period, lag
period, and Maintenance period of 2 weeks)
56
Principles of Macroprudential Intermediation Ratio (MIR) and
Macroprudential Liquidity Buffer (MLB)
Considerations for Macroprudential Instruments

Macroprudential Intermediation Ratio (MIR) and
1 2 3 4 5
Financial sector behavior, especially Banks procyclical behavior Bank Indonesia enhances its The policy is also This
in the banking sector, tends to be can potentially disrupt the macroprudential policy by applied to shari’a macroprudential
procyclical with the rise and fall of balanced, good quality implementing the banks to strengthen instrument is
the economy. When the economy is intermediation function in Macroprudential Intermediation intermediation and procyclical in
doing well, banks will expand and the financial system. Ratio and the Macroprudential improve banking nature and can be
increase risk taking behavior. On the Moreover, liquidity risk Liquidity Buffer to prevent and resilience. adjusted in line
contrary, when the economy is can amplify other risks reduce risk and procyclical with the economic
slowing, banks tend to hold back into becoming systemic behavior of banks. The policy is and financial
from expanding by witholding credit risks. expected to promote banking cycle.
disbursement. On the other hand, intermediation function to the
banking liquidity ratio tends to real sector in line with the
decrease during economic expansion economic capacity and growth
and is at the lowest just prior to a target while also maintaining
crisis. prudential principles, and
addressing liquidity procyclicality
issues.
57
Principles of Macroprudential Intermediation Ratio (MIR) and
a. Macroprudential Intermediation Ratio (MIR)
MIR
RR-loan to funding ratio (RR-LFR)/additional RR linked to
financing to deposits ratio Conventional Commercial Shari’a Conventional Banks and
Banks Business Units
For Conventional Banks (RR-LFR):
Credit
Deposits + Securities issued Credit + Shari′ a Securities held
Formula Credit + Securities held
For Shari’a Banks and Business Units: Deposits + Shari′ a Securities issued
Calculation Deposits + Securities issued
(Additional RR linked to the financing to deposits ratio):
Financing
Deposits
Magnitude Lower bound 80% and upper bound 92%
Effective Date 16th July 2018 1st October 2018
b. Macroprudential Liquidity Buffer (MLB)

MLB
Secondary RR
Conventional Commercial Banks Shari’a Banks
• Percentage of rupiah securities held by conventional

• Percentage of rupiah Percentage of rupiah securities
commercial banks to rupiah deposits that can be used in
securities held by held by shari’a banks to its rupiah
open market operations, among others include BI
conventional commercial deposits that can be used in
Formula Certificate, BI Deposit Certificate, and Tradeable
banks to rupiah deposits open market operations, among
Calculation Government Securities
• No existing Secondary others include BI Certificate, BI
• For conventional commercial banks with a shari’a
RR for shari’a banks and Deposit Certificate, and Tradeable
business unit, securities of and deposits held by the
business units Government Securities
shari’a business units will be calculated in the MLB
Magnitude 4% of rupiah deposits
Under certain conditions, max. 2% of rupiah deposits may be repoed to BI through the open
Flexibilty No flexibility
market operations to meet liquidity needs
Effective Date 16th July 2018 1st October 2018
58
Bank Indonesia Policy Mix: Maintaining Stability, Supporting Growth
2015 2016 2017 Monetary Transmission
1. Monetary Policy • BI Rate cut of  Policy Rate cuts of • BI 7-day RR Rate Policy Rate RR
25bps (Feb) 150bps cut of 25bps to ↓ 200 bps ↓ 150 bps
 Moving from BI Rate 4.50% (Aug) (Jan‘16 – Sept’17) (Dec’15 –Mar’16)
Policy Rate (12 month) to BI 7- • Further BI 7-day
day Reverse Repo RR Rate cut of 25
Rate (Aug) bps to 4.25%
(Sept) Lending Rate Deposit Rate
(Jan’16 – Jan’18) (Jan’16 – Jan’18)
Reserve Lowering RR by • Further lowering RR • Implementation of
• ↓151 bps (11.32%) ↓ 196 bps (5.98%)
Requirement 50bps to 7.5% by 100bps to 6.5% RR Averaging
(Nov) (Feb) (Aug): RR fixed Deposit
Lending
5%; RR Averaging (Jan’17 – Jan’18 (LBU)
(Jan’17 – Jan’18 (LBU)
1.5% Total ↑ Rp319 T (7.40% yoy) Total ↑ Rp403 T (8.36% yoy)
 Market-based exchange rate stability consistent with fundamental

2. Exchange Rate  Dual intervention in the FX market and purchases of government bonds
Policy from secondary market in time of distress (capital reversal) or large
Impacts of LTV Relaxation
mis-alignment Growth % (yoy)
Loan
Des-16 Des-17
• Relaxation of LTV  Further relaxation of  Initiative to issue
Construction 20.33 15.48
Real Estate 22.22 5.67
for property and LTV for property macroprudential
3. Macroprudential Housing 7.67 10.53
automotive loans loans (Sept) regulation on
Policy Total 7.86 8.24
(June)  Strengthening Financing to
systemic surveillance Funding Ratio
& Crisis Management (FFR)
Protocol (April)
 Obligation to use  E-money for social  National Payment

IDR in domestic transfer (Nov) Gateway (June)
4. Payment transaction  Financial Technology  Modernized cash
System Policy (March) (FinTech) Office management
 Non-cash (Nov) underway
movement  New Rupiah issuance
(GNNT) (Dec)
59
Stable Monetary Environment Despite Challenges
Well Maintained Inflation Ensured Price Stability Strengthened Monetary Policy Framework
(%) 19 August 2016
(%) CPI (%, yoy) Core (%, yoy) Volatile Food (%, yoy) Administered (%, yoy)
The New
8,00
Monetary
18
LF Rate: 7.00 Operation
Framework
7,00
BI Rate: 6.50
13
6,00
8 LF Rate: 5.00
5,82 5,00
3,25 BI 7Day RR Rate: 4.25
3 2,69
2,62 4,00
DF Rate: 3.50
-2 3,00
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
2013 2014 2015 2016 2017 2018
Rupiah Exchange Rate Remains Comparable to Peers Credit Growth is Expected to Pick Up
YTD 2017* vs 2016 (%, YoY)
1,14 40
TRY
-3,29 Total Growth
BRL 3,92 35 Working Capital Loans
-0,48
PHP -2,89 30 Investment Loans
-0,30
1,34 Consumption Loans
IDR
0,05 25
INR 0,45
2,33 20
KRW -0,03
6,06 15
THB 3,92
6,37 10 10,89
EUR 3,29 8,46
7,32
5 8,15
MYR 3,80
8,76
0 4,64
ZAR 4,48 %
9,33 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
-6,00 -4,00 -2,00 0,00 2,00 4,00 6,00 8,00 10,00 12,00
Point to Point Average 2013 2014 2015 2016 2017
60
5 Measures to Control Inflation
On January 22nd, 2018 the National Inflation Control Coordination Center has agreed on five strategic measures to control inflation in
2018 within the target corridor of 3.5±1%, while also setting the inflation targets at 3.5±1% for 2019 and 3±1% for 2020 and 2021.
Strengthening coordination between central

and regional governments as well as Bank
Indonesia
Dampening the second-round Strengthening quality

effect of aministered price control of government
adjusments policies.
3
Maintaining volatile food (VF) inflation 2 4
at 4-5% Strengthening the Bank
Indonesia policy mix to
1. Ensuring food production maintain macroeconomic
2. Strengthening the government’s food
stock
1 5 stability
3. Improving production management
through corporate/cooperative farming
4. Improving rice miling yield & rice quality
5. Distributing subsidised rice for low-
income households & non cash food
assistance in time
6. Developing an accurate database on
rice production
7. Synergizing between farmers &
downstream industries
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 Reserve Implementation of Money

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

signal management and transactions

Enhancement of Monetary Operations Framework
...positive results thus far
Domestic Money Market Yield Curve (2nd week of February 2018)
Monetary operation term structure is being

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

converge
O/N 1W 1M 3M 6M 12M
IBMM 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.
Intermediation Expected to Further Expand in 2018
The intermediation growth is still at a moderate level in line with consolidations in the real sector as well in bank loans.
Intermediation is projected to improve next year (10-12%). In the domestic capital markets, capital raising by corporations
(particularly right issues and corporate bond issuance) remains strong.
The growth of financing distributed by multifinance companies was
The growth of bank lending was 8.24% (yoy) as of Dec-17 7,05% (yoy) in Dec-17
450 413 415

Bank Loans YoY Growth (rhs) 4.605 4.738 Financing YoY Growth (rhs)
5.000 10% 35%
350
4.000 8%
8,24% 25%
7,47%
IDR tn
250
IDR tn
3.000 6%
15%
2.000 4% 150 7,58%
7,05%
1.000 2% 50 5%
0 0% (50) -5%
Capital raising through rights issues and corporate bond issuance in Gross premium revenue in the domestic insurance industry is also
Jan-Dec 2017 increased by 30.77% (yoy) continuously growing
180 450 406

IPO Equity 156,7
160 400
Rights Issue
140 350
Corporate Bonds & Sukuk 116,2
120 300
IDR tn
IDR mn
100 88,2
250
80 67,1 200
60 150
40 100
12,1 9,6
20
50
0
0
2012 2013 2014 2015 2016 2017
2012 2013 2014 2015 2016 2017
Source: Financial Service Authority (OJK) 64
Financial Institutions Remain Robust
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.
CAR of the banking sector remains at a high level as of Dec-17, CAR & Risk-based capital (RBC) of the insurance industry also remained high,
Tier-1 Capital was 23.36% & 21.54%, respectively well above the minimum threshold (120%)
% 700% 321% 330%

24,0 Life Insurance General Insurance (rhs) 310%
23,37 23,36 650%
23,5 300%
23,0 600%
22,5 550% 521% 270%
22,0 21,69 492%
21,54 500%
21,5 240%
21,0 450%
210%
20,5 400%
20,0 350% 180%
19,5
Gearing ratio of multifinance companies was at 2.99 times (well below the
Profitability of the banking sector is relatively stable maximum requirement of 10 times), providing ample room for future growth
4,0
%
6,0 Net Interest Margin Return on Assets
5,31 5,32
3,5
5,0 2,99
3,0
4,0
2,5
3,0 2,48 2,45
2,0 2,0
1,0 1,5
0,0 1,0

Adequate Liquidity, Manageable Credit Risks
Banks are equipped with sufficient liquid assets. Insurance industry also demonstrates an enhanced level of investment adequacy ratio.
The non-performing loan/financing (NPL/NPF) ratio is 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%
%
120 % 25 % Life Insurance General Insurance
240
21,95
110
104,79 *
100 20 203
190
90
80 15
140
70 134
threshold Liquid Assets/Deposit=10% threshold 100%
60 10
50
threshold Liquid Assets/Non-Core Deposits=50%
90
40 5
*The spike in this ratio was due a change in calculation methods.
As of Dec-17, the gross & net NPL ratios of the banking sector were NPF ratio of the multifinance industry was 2.96% as of Dec-17,
2.59% & 1.11% respectively, maintained below the threshold maintained well below the 5% threshold
% NPL Net NPL Gross 4,0%

3,5
3,5%
3,0 2,96%
2,59
3,0%
2,5
2,5%
2,0
2,0%
1,5 1,11 1,5%
1,0
1,0%
0,5 0,5%
0,0 0,0%

Relatively low market risks
Market risks are generally manageable in line with the strengthening trend of the domestic financial market. 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 grow.
Net open position in the banking sector was kept far below the Mutual funds’ net asset value (NAV) continued to grow in line with
maximum limit (20%) the strengthening domestic financial market
% IDR tn
4 500,0 7.000
NAV of Mutual Funds (lhs) IDX Stock Composite Index (rhs)
480,0 6.800
460,0 6.600
3 440,0 6.400
2,04 420,0 6.200
400,0
2 1,67 380,0
6.000
5.800
360,0
340,0 5.600
1 320,0 5.400
300,0 5.200
280,0 5.000
0 260,0 4.800
Oct-16
Dec-16
Feb-17
Oct-17
Dec-17
Feb-18
Jan-17
Mar-17
Apr-17
Jun-17
Aug-17
Sep-17
Jan-18
Nov-16
Jul-17
Nov-17
May-17
The investment value of insurers & pension funds continued 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

180 177
1.050 1.007,38 300
160
950
250
254,48 140
850
200 120
750
100
150
650 Investment of Insurers Investment of Pension Funds (rhs) 80 83
550 100 60

Capital Markets Continue to Strengthen
In line with the improving global and domestic economic prospect, the domestic capital markets continue to demonstrate a
strengthening trend. The volatility of the markets is relatively low.
In 2017, the IDX Stock Composite Index grew by 4.16% (ytd as of 23 Both the stock & bond markets continued a strengthening trend, with
Feb 2018), one of the best-performing equity indices in the region a low level of volatility
WORLD 20,12 Comp Bond Index Comp Stock Index (rhs)

260 7.200
THAI 13,66
KOREA 21,76 250
6.700
INDO 19,99 240
HKN 35,99 6.200
SIN 18,12 230
PHIL 25,11 220 5.700
CHIN 6,56
MAL 9,45 210
JPN 5.200
19,10
EURO 200
5,55
AS 4.700
25,08 190
RUS -5,51
BRAZ 26,86 180 4.200
TURK
Aug-16
Aug-17
Jun-16
Nov-16
May-17
Jun-17
Nov-17
Sep-16
Jan-17
Sep-17
Jan-18
Oct-16
Dec-16
Feb-17
Apr-17
Oct-17
Dec-17
Feb-18
Jul-16
Jul-17
Mar-17
% -12 -5 2 9 16 23 30 37
Nonresident inflows in the domestic capital market remain In line with the stable IDR and improving domestic prospects, the
significant, particularly to the government debt market government bond yields tend to decline
200 IDR tn Yield (%)
Gov't Debt Securities Equity 10 5-yr Yield 10-yr Yield 20-yr Yield IDR (rhs) 13800
150 13600
9
100 13400
8 13200
50
0 7 13000
12800
-50
6
12600
Aug-16
2016
Aug-17
2017
Jan-16
May-16
Jun-16
Nov-16
Jan-17
May-17
Jun-17
Nov-17
Jan-18
Sep-16
Dec-16
Sep-17
Dec-17
Apr-16
Apr-17
Feb-16
Oct-16
Feb-17
Oct-17
Feb-18
Jul-16
Jul-17
Mar-16
Mar-17
5 12400
Aug-16
Aug-17
Jun-16
Nov-16
Jan-17
May-17
Jun-17
Nov-17
Jan-18
Sep-16
Sep-17
Apr-17
Oct-16
Dec-16
Feb-17
Oct-17
Dec-17
Feb-18
Jul-16
Jul-17
Mar-17
*: as of 23 February 2018
Source: Bloomberg, IBPA, Indonesia Stock Exchange, Ministry of Finance

68
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 66.77% of the total

assets of financial sector…
Improving the integrated regulation &
supervision framework…
Financial Conglomerates
Others
 Such improvement has become even more important
33,23% 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
conglomerates. These will be followed by regulations on
66,77%
liquidity management, capital management, and
intragroup transaction exposures.
Source: Financial Service Authority (OJK), June 2017 69

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

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

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

Continuous Program on Capital Market Deepening
…continuously strengthened, including through capital market deepening initiatives
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 71
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

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

(Program Keluarga Program (Program
Harapan -PKH) Indonesia Pintar-PIP)
Gradual
Implementation
2016-2020
9876543210
XXYYZZ
12345678
Full
Non Cash
Food Assistance Implementation
(Bantuan Pangan
Non Tunai – BPNT) LPG
Subsidy
Interconnected &
interoperable
payment system
73
Progress of NCSA Programs
Family Hope Program Non Cash Food Assistance

(Program Keluarga Harapan - (Bantuan Pangan Non Tunai -
PKH) BPNT)
• The Family Hope Program (PKH) is a program • BPNT is a poverty alleviation and social
that provides cash to very poor households. protection program that is managed by the
Rp 1,89 million /year will be granted for each central government. It provides subsidized rice
household. PKH will be granted every February, and eggs to low-income households. Rp 110
May, August, and November. thousand/month will be granted for each
household as BPNT that can be used in
certain stores which called e-warong.
• As of December 2017, PKH is distributed to
6,0 million households on non-cash basis.
• As of December 2017, BPNT was distributed to
1,2 million households in 44 cities.
• PKH will be expanded to 10 million
households in 514 regencies/cities in 2018.
• BPNT will be expanded to 10 million
households in 217 regencies/cities on the
25th of each month in 2018.
74
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 slightly depreciated in January 2018
8.2 months of import and external debt repayment
1998 82,4 1998 -197 1998 17,4
2008 2008 -35 2008

12,1 50,2
Jan-18 1,34 (ytd) Sep-15

Sep-15
January ‘18 3.25 (yoy)
6,8 January ‘18 131.98
Non-Performing Loan/NPL (%) More Liquid Market (%)

NPL level (gross) is below the maximum threshold of 5% Overnight interbank money market rate
is relatively lower
62
1998 30
2008 3.8 10,5

5,7
3.87
Agu-15
December ‘17 2..6
2,8
1998 2008 Dec’ 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 29.2% 34.82%
1998 2008 1998 2008
2017 2017 2017
75
Outlook of Domestic Economy Remains Robust
...domestic economic growth is predicted to be higher in 2018
2018 Economic Outlook
 Economic growth in 2018 is projected in the 5.1-5.5% range, buoyed by investment in ongoing infrastructure projects
coupled with increasing non-building investment, including private investment, specifically machinery and equipment as well
as solid export growth as the global economy continues to recover and international commodity prices remain high.
 Inflation is predicted to remain within the target range for 2018, namely 3.5±1%, with the current account deficit is expected
to remain under control and within a safe threshold at 2.0-2.5% of GDP in line with domestic economic improvements.
 Credit growth is predicted to grow in the 10.0-12.0% range, in line with the expected economic recovery and progress in
terms of corporate and banking sector consolidation.
Economic Growth Inflation CAD (% of GDP) Credit Growth
2017
5.07% 3.61% 1.7% 8.2%
Realization
2018 5.1–5.5 % 3.5±1% 2.0-2.5% 10-12%
Source : Bank Indonesia

76
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 Gov’t 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.
Indonesia Infras. Guarantee Fund (IIGF)
Government (MoF Reg. No. 190/2015 for 148/2015.
Central Gov’r and MoHA Reg. No. IIGF has the potential to provide project To stipulate land acquisition acceleration
96/2016 for Regional Gov’t.) during the guarantee for non-PPP projects based on Law No. 2/2012
concession period after the project
operational by private sector in order to PPP Unit Economy Packages
make the project bankable
Provide facilities to help GCA on preparing Conduct deregulation for issues hindering
PPP project (PDF/TA) infrastructure delivery and develop a task
Land Revolving Fund
force under CMEA to ensure the
BLU LMAN
Issuance of MoF Reg. No. 220/2010 A effectiveness of economic packages
revolving-fund sourced from State Budget, BLU LMAN is mandated to provide land implementation
to accelerate land acquisition fund for National Strategic Projects to
ensure timely land acquisition process
Risk-sharing Guidelines
IIGF has issues risk allocation and
mitigation guidelines for PPP project
Source: Committee for Acceleration of Priority
Infrastructure Delivery (KPPIP) 78
Reforms Along the Project’s Life Cycle
...to encourage and accelerate infrastructure project using PPP scheme
Government of Indonesia
Project Viability
Guarantee Availability Land
Development Funding Tax Facilities
Fund Payment Acquisition
Facility (PDF) Gap (VGF)
Preparation Bidding Process Construction

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

79
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

80
Efforts to Accelerate Infrastructure Provision
…the establishment of Indonesia Asset Management Agency (LMAN)
Government has established State Asset Management Unit (LMAN) as a solution to

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

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

New Fundamental Regulations Have Been Initiated in 2017
to accelerate infrastructure projects delivery
Government Reg. No. 13/2017 on National Spatial Plan (RTRWN)
1
The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure
projects listed in the annex of Government Reg. No. 13/2017. A number of breakthroughs were developed,
and one of them is that the Minister of Agrarian and Spatial can issue a recommendation of spatial
utilization; so that the process of obtaining project
permission can be done.
MoF No. 60/2017 on Procedures for the Provision of Central Government Guarantee for the
Acceleration of the National Strategic Projects Implementation
2
The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic
Projects Implementation. This regulation regulates the scope and general requirements and procedures to
propose and grant guarantees, as well as allocate state budget obligation on government guarantees to
all PSN. The guarantee provision is expected to increase the feasibility and trust of investors to
participate in the implementation of PSN.
Presidential Reg. No. 56/2017 on Social Impact Handling in Land Acquisition Process for PSN
3 This Presidential Reg. allows the Executing Agency to pay land acquisition compensation to the impacted
community who does not have official rights over the land required for PSN. This regulation helps to
solve the land acquisition problem due to community objection over the land use.
MoF No. 21/2017 on Procedures for Land Acquisition for National Strategic Projects and Asset
4
Management of Land Acquisition by State Asset Management Agency
The implementing regulation of Presidential Reg. No.102/2016 on Financing of Land Acquisition for the
Development of Public Interest in the Framework of the National Strategic Implementation. This
regulation becomes the legal basis for the financing of the procurement of National Strategic and
Priority Projects by BLU LMAN
82
Under Presidential Reg. No.3/2016 j.o. the Presidential Reg.
No.58/2017, 245 projects and 2 programs are listed as PSN
27
Projects
61
Projects
24 13
Projects Sulawesi Projects
Sumatra Kalimantan US$24.3 Bn

US$47.3 Bn US$41.7 Bn Maluku & Papua
US$33.2 Bn
93 2
1 Programs
Projects
National
10
12 Projects
Proyek Projects
Java
US$98.8 Bn
US$81.1 Bn
15
Projects
US$0.8 Bn
Exchange rate: US$ 1 = IDR 13,500
PSN includes 15 sectors at project level and 2 sectors at program level

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

ROAD RAILWAY SEAPORT AIRPORT HOUSING SANITA- DAM IRIGASI SMELTER SEA DIKE
ZONE BORDERS TION NOLOGY GAS
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
Note: The investment value is based on the updates per October 2017. The data on investment value is
1 1
Small-
Electricity PROGRAM Medium PROGRAM under verification process with The Executive Office of President (KSP) and Indonesia’s National Government
Airplane Internal Auditor (BPKP)
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 83
PSN may receive privileges as stipulated in the Presidential Reg.
No. 3/2016 j.o. the Presidential Reg. No. 58/2017
Acceleration of Non- Determination of National

State Budget Strategic Projects
Projects
Settlement of Permit & Non-

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

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

Additional Facilities
via KPPIP IT System Guarantee Provision
Existing Facilities

Progress on 245 National Strategic Projects
The Estimated Investment Cost of National Strategic Projects1 5 Sectors with Highest
Investment Value
State
State Budget
Budget
13%
Total Investment US$ 40.6 Bn
Value2 Energy
SOEs/RSOEs 12 Projects
Private
SOEs/
RSOEs US$ 327.2 US$ 92.9 Bn US$ 93 Bn
Billion Private
59% 28%
US$ 193.7 Bn Electricity
1 Program
1Exclude
US$ 76.7 Bn
12 projects which investment value are still unknown
2Exchange rate : US$ 1 = IDR 13,500
Progress of National Strategic Projects + 2 Programs (per January 2018) Road

74 Projects
US$ 52.2 Bn
3% 8 projects are completed
3%
157 projects & 1 program are in construction1 Train
23 Projects
30% 7 projects are in transaction US$ 46.2 Bn
73 projects & 1 program are in preparation
64% 11
SEZs and IEs
Electricity Program in construction category
30 Projects
US$ 28.7 Bn
Note: This data will be verified with The Executive Office of President (KSP)
1 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) and Indonesia’s National Government Internal Auditor (BPKP)
85
Progress on 37 Priority Projects
From the revised National Strategic Projects, the Government has selected a list of 37 Priority Project to be the focus of
infrastructure provision.
1. Balikpapan-Samarinda Toll Road 13. LRT of DKI Jakarta 26. Tuban Oil Refinery
2. Manado-Bitung Toll Road 14. Kuala Tanjung International Hub Seaport 27. RDMP/Revitalization of the Existing Refineries
3. Panimbang-Serang Toll Road 15. Bitung International Hub Seaport (Balikpapan, Cilacap, Balongan, Dumai, Plaju)
4. 15 Segments of Trans – Sumatera Toll 16. Patimban Port 28. Abadi WK Masela Field
Road 17. Inland Waterways Cikarang-Bekasi-Laut (CBL) 29. Unilization Field Has Jambaran-Tiung Biru
5. Probolinggo – Banyuwangi Toll Road 18. Palapa Ring Broadband 30. Indonesian Deepwater Development (IDD)
6. Yogyakarta – Bawean Toll Road 19. Batang, Central Java Power Plant (CJPP) 31. Tangguh LNG Train 3 Development
7. SHIA Express Railway 20. Central – West Java Transmission Line 500 kV 32. West Semarang Drinking Water Supply System
8. MRT Jakarta South-North Line 21. Indramayu Coal-fired Power Plant 33. Jakarta Sewerage System
9. Makassar-Parepare Railway 22. Sumatera 500 kV Transmission (4 Provinces) 34. National Capital Integrated Coastal
10. Light Rail Transit (LRT) of Jakarta- 23. Mulut Tambang Coal-fired Power Plant (6 Development (NCICD) Phase A
Depok-Bogor-Bekasi Provinces) 35. Jatiluhur Drinking Water Supply
11. LRT of South Sumatera 24. PLTGU (16 Provinces) 36. Lampung Drinking Water Supply
12. East Kalimantan Railway 25. Bontang Oil Refinery 37. Waste to Energy Program in 8 cities
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Note: New Priority Projects are highlighted in the red color 86
Progress on 37 Priority Projects
Progress of 37 Priority Projects (per January 2018) Recent Milestones
Yogyakarta – Bawen Toll Road

Outline Business Case has been completed by the end
of December 2017.
32% 20 projects are in construction
5 projects are in transaction

54% Patimban Port
Loan Agreement has been signed on 15 November
12 projects are in preparation 2017.
14%
Bitung International Hub Port

Outline Business Case has been completed by the end
Funding Scheme of 37 Priority Projects of December 2017.
Mass Rapid Transit (MRT) Jakarta South-North

Total Investment Value
Allocation of repayment liability on additional-loan for Phase I
US$ 181.6 Billion and Phase II has been decided in the KPPIP Ministerial meeting –
10%
49% will be borne by Central Government and 51% will be borne
US$92.4 billion from Private/ Provincial Government of DKI Jakarta.
PPP
US$71.8 billion from SOE/ Refinery Development Master Plan Cilacap
51% Environmental Permit has been issued by LHK Ministry – letters of
Regional SOE
recommendation for spatial aspects and rerouting of road have
39% US$17.5 billion State/ also been issued.
Regional Budget
(including G-to-G loan)
Exchange rate : US$ 1 = IDR 13,500

87
Energy Sector: the Progress of 35.000 MW Program
Debottlenecking through regulation:

Average economic growth of 6.7%
requires 7,000 MW / year or 1. Regulation No.1/2015 concerning electricity Launching 35.000 MW
35,000 MW / 5 years supply cooperation & joint utilization of the by the President in
electrical network among license holders. Cabinet Meeting
(Kepmen ESDM No. 0074/2015 on Goa Beach Sanden
Progress of
RUPTL 2015-2024) 2. Regulation No.3/2015, concerning DIY
35,000 MW
Procedures of Purchasing Electrical Power
and benchmark prices for Electrical Power
through the Direct Selection & Appointment.
17 Dec ‘14 Jan ‘15 Jan ‘15 16 Mar ‘15 4 May ‘15
Cabinet Meeting
“There’s electricity crisis in The progress so far: June‘17
Indonesia, requires construction
of large capacity plant " 35,000 MW Program Distribution
Kalimantan Sulawesi No Phase MW %
PLN: 900 MW PLN: 2,000 MW
Papua
Private: 1,735 MW Private: 1,470 MW
PLN : 220 MW 1 Operating 1,041 3
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 16,642 46
Substation: 460 MVA
Sumatera 3 Signed Power-purchase Agreement 12,776 36
PLN: 1,100 MW
Private: 8,990 MW 4 Procurement 3,160 9
Transmission: 18,729 ckt.km
Substation: 35,521 MVA 5 Planning 2,228 6
Maluku
Nusa Tenggara PLN: 260 MW
Note : Progress of 35,000 MW Electricity Program per December 2017
Jawa & Bali
PLN: 670 MW Private: 12 MW
PLN: 5,000 MW
Private: 0 MW Transmission: 653 ckt.km
Private: 13,697 MW
Transmission: 2,347 ckt.km Substation: 620 MVA
Transmission: 9,185 ckt.km
Substation: 1,410 MVA Note: This data is still going to be verified by The Executive Office of
Substation: 66,265 MVA
Source: PLN President (KSP) and Indonesia’s National Government Internal Auditor (BPKP)

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

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

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

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

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

2 Not funded from National Budget
New Tanjung Priok Port Project2 Nop Goliat Dekai, Papua 90
Infrastructure Projects and Financing Schemes
Public Private Partnerships (PPP), SOE, and Private Sector serve as alternative to direct
budgetary spending
Financing Breakdown (2015 – 2019) Establishment of PPP Unit
Broad  Champion project preparation and acceleration of the PPP

Government & Objective agenda in Indonesia
local budget ~ USD164.8bn
 Improve quality of project selection under KPPIP – OBC criteria
(40.0%)
Total financing Core  Support project preparation through PDF support and highly
needs: Mandates qualified transaction advisors
Financing SOE Alternative  Act on behalf the Minister of Finance in providing government
~ USD345.1bn gap
~ USD180.3bn Financing support and approvals for projects
(60.0%)
Scheme  Coordinate all public finance instruments
PPP Additional  Provide input for PPP Policy program Development and Regulations
Mandates  Implement capacity building for Govt. Contracting Agency (GCAs)
 One stop shop for PPP promotion & Information
Budget Public Private Partnership SOE & Private Sector

 Central & regional budget  Certain infrastructure projects to be funded and operated through a  Government to inject capital into SOEs:
(special allocation fund & partnership between the Indonesian government and the private sector Intended multiplier effect to develop more
rural transfer) – Projects ready for auction under the PPP Scheme: infrastructure projects
 Primarily to support basic – Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung  Key focus areas:
infrastructure projects: – Railway projects such as an express line into Soekarno-Hatta – Infrastructure and maritime development
– Food security: International Airport – Transportation and connectivity
Irrigation, dams etc. – Water supply projects such as the West Semarang Project – Food security
 Various government support for PPP:
– Maritime: Seaports,  Medium term infrastructure developments to
shipyards etc. – Project Development Facility (PDF): Helps Government focus on:
Contracting Agencies (GCAs) in project preparation and
– Connectivity: Village transaction – Water Supply
roads, public – Viability Gap Fund: improves financial viability of PPP projects – Airports
transportation etc. – Government Guarantees: Supports PPP projects’ bankability by – Seaports
providing sovereign guarantees – Electricity and power plants
– Infrastructure Financing Fund: Provided through PT SMI and IIGF – Housing
– Mining
Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity
Source : Ministry of Finance; Bappenas; KPPIP: “Komite Kebijakan Percepatan Penyediaan Infrastruktur” or National Committee for the Acceleration of Infrastructure Delivery
91
Government Guarantee For Basic Infrastructure Development
Reflects strong commitment to national development planning
Government Guarantee Program Contingent Liabilities from Government Guarantees
 Power (Electricity) – Full credit guarantee for

Exposure/
PLN’s debt payment obligation under FTP 1 No. Central Government Guarantee for Infrastructure Programs Outstanding
10,000 MW and 35GW
(USD bn)
 Celan Water – Guarantee for 70% of PDAM’s
debt principal payment obligations 1 Coal Power Plant 10,000 MW Fast Track Program (FTP 1) 2.94
 Infrastructure - Full credit guarantee on SOE’s 2 Clean Water Supply Program 0.01
borrowing from international financial institution
Credit & guarantee for PT SMI’s local infrastructure 3 Direct Lending from International Financial Institution to SOEs 0.35
Guarantee financing
4 Sumatra Toll Road Development (PT Hutama Karya’s) 0.48
 Toll road – Full credit guarantee for PT Hutama
Karya’s debt payment obligation (Sumatra Toll Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP
5 1.58
Road Development) 2)
 Public Transportation (Light Rail Transit) – Full
6 Obligation of government-related entities under PPP 1.06
credit guarantee for PT Kereta Api Indonesia’s
debt payment obligations for the development of 7 Local infrastructure financing through PT SMI 0.07
LRT Jabodebek
Total 6.49
 Power (Electricity) – Guarantee for PT PLN’s
Business Viability obligations under Power Purchase Agreements
Guarantee (BVG)  The Maximum Guarantee Limit for the period 2018 – 2021 is set at 6% of GDP
with IPPs (off-take and political risk) under FTP-2
10.000MW and 35GW programs* in anticipation of the project pipeline increase to IDR1,178.1 Trillion
 Infrastructure – Guarantee on the obligation of

PPP
Government related entities in accordance to the
Guarantee
Agreement
*) MOF provides both credit guarantees and BVGs for 35GW program

92
Government Financial Facilities for PPP Projects
Financial Facilities to Attract More Private Participation More Funding Schemes are on the Pipelines
Project Financing funded by the private sector

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

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

funds other than Government’s budget, e.g.
PINA long term management funds (insurance,
Availability Payment Financing from repatriated funds from tax amnesty, pension
Schemes PT. SMI and PT. IIF (Non-Government funds, etc.), private equity investors and
Budget infrastructure funds. Supported & facilitated by
Infrastructure National Development Planning
Financing) Ministry/Bappenas.
Those financial facilities were instrumental in supporting the execution of Scheme Characteristics
PPP projects, indicated by the signing of financial close
of the following PPP projects: • Asset is owned by private sector
• Greenfield / brownfield / operating projects
93
Progress of PPP Infrastructure Projects
Successful Projects Reaching Financial Close in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
1 Central Java Power Plant 40 Guarantee (MoF & IIGF) FC on June 6th, 2016; Construction 30%; COD Target: May 2020
2 Palapa Ring – West Package 1.28 PDF, IIGF Guarantee & AP FC on August 11th, 2016; COD target: February 2018
3 Palapa Ring – Central Package 1.38 PDF, IIGF Guarantee & AP FC on September 29th, 2016; COD target: March 2018
4 Palapa Ring – East Package 5.13 PDF, IIGF Guarantee & AP FC on March 29th, 2017; COD target: September 2018
5 Umbulan Water 2.1 PDF, VGF & IIGF Guarantee FC on August 30th, 2016; COD target: July 2019
Signed PPP Projects in 2016 and 2017
Project Cost
No Project Name Financial Facilities Status
(IDR tn)
1 Batang–Semarang Toll Road 11 IIGF Guarantee PPP & guarantee contracts signed on April 27th, 2016
2 Manado–Bitung Toll Road 5.1 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
3 Samarinda–Balikpapan Toll Road 9.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
4 Pandaan–Malang Toll Road 5.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
5 Serpong–Balaraja Toll Road 6.0 - PPP contracts signed on June 8th, 2016
6 Jakarta–Cikampek Elevated Toll Road 14.8 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th,
2016 and February 22nd, 2017
7 Krian–Legundi-Krian Toll Road 9.0 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th,
2016 and February 22nd, 2017
8 Serang–Panimbang Toll Road 5.3 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
9 Cileunyi–Sumedang-Dawuan Toll 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
Road
Source: Ministry of Finance, as of July 2017 94
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.
95

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Republic of Indonesia Presentation Book - February 2018

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Republic of Indonesia

Reforms on The Move, Stability Intact

Published by Investor Relations Unit – Republic of Indonesia

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

Institutional and Governance Effectiveness: Fiscal Performance and Flexibility:

Economic Factor: Monetary and Financial Factor:

Progressive Infrastructure Development:

Global Competitiveness Index1 Ease of Doing Business2

20 20 Higher rank is better (rankings at the time of annual report publication)

30 Higher rank is better 40

World Governance Indicators3 Corruption Perception Index4

GCI Rank Change Transport Infastructure Index Change

8 Cambodia 94 89 5 8 Cambodia 108 102 6

9 Lao PDR 98 93 5 9 Lao PDR 109 110 1

Investment Grade Moody’s R&I S&P

Below Investment Grade BBB- / Stable

BB- Feb 2017, Baa3, Outlook Revised to Positive

BBB- / Positive BBB / Stable

Total Investment / GDP (%)

United States (1) 40 China 45,7

The 3 Dimensions on Economic Development

Education Food Security

• Build a fair land distribution scheme

Fishermen & Seaweed • Integrating fishing and seaweeds sectors

• Developing natural resources industries and value chains

Source: Coordinating Ministry for Economic Affairs Priority 9

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)

Policy Goals Policy Targets

1 Import duty for 115 types of ship’s spare

Improve efficient, streamlined, Provide business licensing Overcome the barriers

1st Phase 2nd Phase

Forming a Task Force to Business license

to-end licensing barriers

Implementing a licensing checklist Implementation of the

Utilizing data sharing

Source: Coordinating Ministry for Economic Affairs 12

SET 219 97%

Source: Coordinating Ministry for Economic Affairs

Fair, Simplified & Development of

Requirement for utilizing 3-hour Investment Licensing 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

Priority Investment Service No Requirements

(3 IE; 840 ha) Riau Island

Bonded Logistic Center To date, 50 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 72 91 19 66.47 61.52 4.95

Starting a business 144 151 7 77.93 76.43 1.5

Dealing with Construction Permit 108 116 8 66.08 65.73 0.35

Getting Electricity 38 49 11 83.87 80.92 2.95

Registering Property 106 118 12 59.01 55.72 3.29

Getting Credit 55 62 7 65.00 60.00 5.00

Protecting Minority Investors 43 70 33 63.33 56.67 6.66