Global economy

• The dynamics of the global economy in 2019 are greatly affected by the increasingly heated trade
relations of the United States (US) - China. The realization of economic growth, both developed
countries and developing countries throughout 2019 showed a slowdown.

• US economic growth in 2019 was realized at 2.3%, slowing compared to the previous year's economic
growth of 2.9%. Likewise, China experienced a slowdown from 6.6% in 2018 to only 6.1% in 2019 as well
as being the lowest economic growth for China in the past 29 years.

• Commodity prices are also experiencing pressure in line with falling demand. In 2019, the average
daily price of oil for the Brent species decreased to 64.2 US dollars per barrel, from 71.1 US dollars per
barrel. Likewise, coal and palm oil are one of Indonesia's mainstay commodities. The average daily price
of coal and palm oil also declined, respectively to US $ 524.7 and US $ 77.0 per metric ton, from US $
559.5 and US $ 107.2 per metric ton in the year 2018. This also has an impact on the economies of
commodity-producing countries such as Indonesia.

National economic analysis

• Based on data from the Central Statistics Agency, Indonesia's economic growth in 2019 will be realized
at 5.02%. Although lower than the previous year's economic growth of 5.17%, this achievement is still
one of the highest among the G20 member countries.

• Maintained economic growth is supported by household consumption that is still quite strong in line
with conditions of inflation that is maintained at a low level, which is 2.72%, down compared to 2018
which was 3.13%.

• The stable inflation rate is driven by the controlled component of food prices in line with the
maintained productivity and distribution of domestic food stock.

National Cement Industry Analysis

1. Demand for cement in 2019 based on data from the Indonesian Cement Association (ASI) only grows
below 1%.

2. Based on ASI data, cement sales in the domestic market in 2019 only grew 0.34%. In fact, in the first
semester of 2019, domestic cement sales decreased by 2%. Cement demand growth has declined
compared to the previous year due to the election agenda and many infrastructure projects that have
been completed in 2018 while new projects have been delayed in initiation until after the formation of a
new government cabinet.

3. The property industry has not shown an increase that can drive domestic cement demand growth.
While from the supply side there is still excess domestic capacity of 37 million tons. With the growth of
national cement demand is low and excess supply capacity, utilization of national cement factories only
reached 67.4% in 2019.
The Position of Indonesian Cement in the National Cement Industry

1. Semen Indonesia is the biggest player in the national cement industry. Especially after the corporate
action carried out in early 2019 by acquiring PT Holcim Indonesia Tbk, Semen Indonesia was recorded as
the biggest player in the cement industry in Southeast Asia.

2. The Company has production facilities spread across various regions in Indonesia and Vietnam with an
installed production capacity of 53 million tons per year. Not just the biggest in terms of production
capacity,

3. The Company is a player with the largest market share in Indonesia, amounting to 53.4%. This is
possible because the Company has five dominant brands in each region, including Semen Gresik, Semen
Padang, Semen Tonasa, Semen Andalas and Dynamix. In addition to a strong brand, the Company's
distribution facility spread across various regions in Indonesia is one of the advantages that enables the
Company to maintain its dominance in the national cement market, bearing in mind one of the
challenges of the cement industry is distributing bulky cement production in the Indonesian archipelago.

MARKETING PROBLEMS

1. 2019 will be a very challenging year in the cement industry. The growth of domestic cement
demand grew below 1% while the cement industry is also still in an oversupplied condition in line with
continued capacity expansion, especially by new players in the industry.

MARKETING STRATEGY

a. Strategic Marketing Initiative

In the midst of challenging market conditions, the Company has taken a number of strategic initiatives,
particularly in marketing, including:

1. Dynamix rebranding

a) In 2019, the Company took a bold step to rebrand Holcim to Dynamix. This Dynamix rebranding is a
continuation of the integration carried out by the Company after the acquisition of PT Holcim Indonesia
Tbk. The brand change is part of the Company's spirit to 'Dare to Change Better' and win the
competition amid increasingly competitive national market conditions.

b) This rebranding is part of the company's transformation process. Dynamix is a change to provide
added value in accordance with customer needs as well as future-oriented building materials
innovation.
2. Premium Brand Strategy

a) The cement industry has interesting characteristics. Cement brands usually become a heritage brand
and have a strong enough dominance in the location where the factory is located. Based on this fact, in
2019 the Company integrated marketing functions by implementing a premium brand strategy.

b) Currently the Company has 6 different cement brands. Each brand has different characteristics and
strengths. In 2019, the Company seeks to strengthen one brand that has become a premium brand in
one region, rather than having to encourage other brands to enter the region. The presence of other
brands is only needed when "interference"

c) Selling Solutions and Not Just Cement Products Indonesia has a diverse range of products. In 2019,
these advantages will be optimized by implementing an integrated marketing program. The Company
does not only focus on marketing each of its products, but also markets solutions consisting of several
products and services.

d) Strengthening the Export Market The Company further strengthens its position as a player in the
largest cement industry in Southeast Asia by continuing to encourage an increase in overseas markets.
This approach is also carried out to ensure the Company's sales volume remains high, so that the
utilization of production facilities can be maintained as an embodiment of the implementation of the
capacity management strategy.

e) Customer focus where for retail customers the Company enhances the active role of Distributors as a
line to distribute its products. While for corporate customers, the Company has a Corporate Marketing
Unit, which is more focused on serving bulk cement demand, as well as cement bags in large parties to
real estate companies, contractors, industries and so on, including exploring the concept of synergy
between SOEs in marketing products -products. This Corporate Marketing Unit will continue to develop
its competencies, so as to be able to market products related to physical development in service
packages and products, work together and synergize with other subsidiaries of the Company.

3. Optimizing the Role of Distributors

Distributors have a very important role in the marketing chain of cement products. Therefore, the
Company strives to continue to optimize the role of distributors so that they don't only act as traders.
Distributors are also required to develop their store network while continuing to increase engagement
with the store network itself.

4. Marketing Communication

In 2019, the Company made a significant change in marketing communications. By implementing an

integrated marketing strategy, the Company does not have to force itself to play in national marketing
communications. The marketing communication program carried out is more local in nature to
strengthen the position of a brand.
5. Market share

a) In 2019, the demand for cement in the domestic market will grow limited by 0.3% compared to the
previous year, reaching 69.8 million tons. The national cement market is still dominated by sales on the
island of Java, which controls 55.7% of total national cement sales. However, cement sales outside of
Java also showed very good growth in 2019.

b) In 2019, the Company controlled 53.4% (including January 2019 SBI sales; 904.7 thousand tons) of the
national cement market, an increase compared to the previous year of 39.4%.

In 2019, the Company will focus on four priority strategies, namely:

a) Cost Leadership through Centralized Strategy and Integrated Operations

The Company focuses on creating cost efficiencies to improve competitiveness by optimizing integrated
operating patterns across all lines to all subsidiaries. Integration makes it possible to exchange resources
and complement weaknesses with strengths.

b) Differentiation through Product Development and Optimization of Product Portfolio with Excellence
Services

Creating differentiation through steps that are in line with the company's long-term strategy towards
building material solutions providers. This step is carried out by providing a complete quality product
according to customer needs and reliable services. Product and service development initiatives are
carried out to create competitiveness compared to other competitors.

c) Proactive Stakeholder Management and Sustainable Oriented Partnership

Proactive in managing synergy with broad stakeholders and related to supply, market, and the
surrounding environment to create a conducive atmosphere, supporting business strengthening and
development. Management is carried out with an orientation towards sustainable partnerships on the
basis of the existence of mutual exchange of mutual benefits and benefits.

d) Culture Transformation towards One Firm Mentality

On the basis of the awareness that the Semen Indonesia Group became large and strong because of
unity, a cultural transformation was carried out that reinforced the mentality as a group. There is no
more separation as a subsidiary. Programs in all fields will lead to building mentality as a solid group
with a common vision and mission.

Production Performance
To improve efficiency in the supply chain process both inbound, factory and outbound operations, the
implementation of information technology is the key to success, starting from the planning,
implementation, monitoring and evaluation processes.

In 2019, in line with the acquisition of PT Holcim Indonesia Tbk (now PT Solusi Bangun Indonesia Tbk)
installed cement capacity

Companies in Indonesia increased to 52.6 million tons, from 37.8 million tons from the previous year.
Thus, the installed capacity of the Company's cement is equivalent to 44.4% of the 2019 national
installed capacity of 113.1 million tons.

Sales Performance

The Company's sales consist of Indonesian domestic sales and regional markets. In the domestic market,
in 2019 the Company faces market conditions with stagnant growth. While competition is also getting
tougher, where the national installed capacity increased by 2 million tons to 113 million tons in 2019. In
such a situation, with the various strategies outlined above, the Company managed to sell cement as
much as 36.3 million tons (excluding SBI sales January 2019 904.7 thousand tons) in the domestic
market, up 32.5% from 2018 sales of 27.4 million tons. The significant increase was due to the
consolidation of PT Solusi Bangun Indonesia Tbk by the Company. Domestic sales. The company in 2019
reached 667.7 thousand tons, an increase of 213.2% from 2018 which amounted to 213.2 thousand
tons. The achievement of the Company's sales performance in 2019 is a very good result considering the
condition of the national cement market in 2019 only experienced a growth of 0.3%. In addition, in
2019, the condition of the national cement market is still experiencing a significant oversupply, reaching
37 million tons.

Consolidated companies that experienced a decrease in revenue

a. PT Semen Indonesia Beton (SIB) and PT Semen Gresik (IKSG) Packaging Industry PT United Tractors
Semen Gresik (UTSG)

b. Revenue decreased from 2,251 in 2018 to 1,860 in 2019 Loss from (19.8) to (161.8)

FINANCIAL STRATEGY

a. Maintain cash availability

The company continues to implement a distributor financing scheme to maintain cash availability.
Through this scheme, if a distributor needs a longer time to pay to the Company, then the distributor
can use bank funds to make payments according to the period determined by the Company, so that
payments can be made on time. This facility provides distributors with a flexible financial flow of cash
flow flexibility.
As of December 31, 2019, the Company's cash and cash equivalents were recorded at Rp3,950 billion,
down 24.7% compared to the year-end position in the previous period of Rp5,246 billion.

b. Maintaining supplier relations

In order to maintain relationships with suppliers, the Company provides supplier financing facilities in
collaboration with banks at competitive financial costs. This facility allows suppliers to receive payments
early according to the needs of each supplier without affecting the payment period

The Strategic Cost Leadership through Centralized Strategy and Integrated Operations are:

a. Cost transformation efforts undertaken for energy costs include:

b. Manage the consumption figure / coal usage index and fuel consumption index at the factory by
maintaining the best performance ever achieved.

c. Centralized optimization and centralization of industrial fuel purchases to get competitive prices.

d. Optimization of factory electricity consumption index especially for equipment which consumes large
power / kWh while maintaining the best performance on each device.

e. Optimization of the utilization of power plants and WHRPG facilities that are already operating

Cost-efficiency ways:

a. Efficiency index of maintenance costs and reduce patch jobs.

b. Centralized outsourcing and material management.

c. Optimizing the procurement of heavy equipment with more effective and efficient patterns.

d. Increasing the composition of the use of local and alternative parts and substitutes with more
competitive lubricants.

e. Standardization and centralization of material needs for spare parts to get competitive prices

Increased revenue

a. Integration of Indonesian Bangun Solutions (SBI), optimization of strategic functions in the marketing,
supply chain, procurement, and various cost transformation steps of the Company.

b. This improvement in performance can be seen from the gross profit margin and EBITDA margin which
increased compared to last year. Net profit margins have decreased due to an increase in financial
burden in the acquisition of Holcim. The Company has also taken various steps to improve financial cost
efficiency including by optimizing working capital facilities, reprofiling existing loans and loans related to
the acquisition of Holcim at a rate of
Capital structure management

• The capital structure always considers the balance between financial risk and the rate of return in an
effort to increase the value of the Company.

• Optimizing the capital structure by managing the ideal combination of Debt and Equity by considering
the funding requirements and the ability of the Company's cash flow.

• The combination of capital structure is determined after conducting a sensitivity analysis with a variety
of core assumptions that are most likely to be faced by the Company.

Investment Portfolio

The company makes investments to maintain the continuity of plant operations and company
development. The development of the company in question is the development of the company's
business to increase revenue through the establishment of joint ventures of mortar companies and
other investments to reduce costs, such as the creation of distribution facilities.

HR Development

Leader as teacher & Retired Faculty (CDL - Corpu), Predicting future capability, Professional Certification
Institute and Assessment Center & Counseling.

Knowledge Management

Knowledge Management is determined as one of the fields in SICC, under the name Center of
Knowledge Management (CKM). The establishment of the CKM is intended to support the Company in
managing the knowledge it has for use by the company in the face of intense competition in the future.

• Cafe Leader

Leader Cafe is consistently and continuously presented as a means of sharing knowledge and experience
from senior leaders with other leaders, usually carried out by Directors, Commissioners, or external
figures who are qualified in an aspect of competence.

• SMI D’Forum

SMI D'Forum is a learn and share activity, which is a place to share experiences / experience sharing and
discussions that present external speakers and internal expertise as speakers.
Industrial relations

The Company has a Collective Labor Agreement (PKB) document as a result of an agreement with the
Semen Indonesia Employees Union. The Company ensures that the rights of all employees at GIS are
guaranteed in the points of the Collective Labor Agreement.

Global economic strategy

a. Indonesian global macroeconomic policy (BI). In 2019, Bank Indonesia recorded a cut of the BI 7 Days
Reverse Repo Rate four times each by 25 basis points (bps) to 5.0%. This policy is expected to be able to
attract loan interest rates to a lower level, so that businesses can intensify investment or expand to
eventually be able to encourage production.

b. In addition to lower interest rates, macroprudential policy was taken to encourage bank credit growth
by loosening the Loan to Value / Financing to Value ratio of 5-10% on average for home and vehicle
ownership, loosening the provisions of the Macroprudential Intermediation Ratio (RIM) ) to 84-94%,
from 80-92% previously, and to expand banking funding, including prudent foreign loans above 1 (one)
year.

Global economic strategy

a. To increase the competitiveness of its products so that they can compete in the global market.
Source: https://mediaindonesia.com/read/detail/182676-strategy-cope with-certainty-economics-global

b. Increasing economic growth, this year will be even harder. The reason is, there is a significant increase
in global economic risk. There are at least three global economic risks that will haunt the performance of
our economy this year, namely the negative effects of the United States (US) -China trade war, tensions
in the Middle East, and the negative effects of the corona virus outbreak that began in China.

c. First, 'survival first'. The government does not need to target high and ambitious economic growth
rates. In the midst of increasing global economic uncertainty, holding on to a growth rate of 5% for a
while is good enough. Under these conditions of uncertainty, the government will lose two main sources
of growth, namely foreign investment and exports.

KONTAN.CO.ID - JAKARTA. The spread of the Corona virus (Covid-19) is believed to have an impact on all
sectors, including the manufacturing sector, including the cement industry.

a. In the disclosure of information on the Indonesia Stock Exchange website, Friday (20/3), Corporate
Secretary of PT Semen Indonesia Tbk (SMGR) Vita Mahreyni said the economic pressure and slowdown
caused by the Covid-19 pandemic will affect the conditions and performance of these state-owned
companies.
b. Also Read: Note, trading on the IDX will close faster starting Monday (3/30)

c. One impact is in terms of sales and supply chains as a result of lockdowns in China and delayed
exports, as well as potential delays in projects. "The company estimates that sales will not be better
than 2019," Vita wrote.

d. Data compiled by Kontan.co.id, throughout 2019 the issuers of the Kompas100 Index have managed
to sell 42.61 million tons of cement, up 28.46% annually.

e. The production process of this cement issuer also has the potential to slow down and decrease
utilization. This is also in line with the potential for delays in imported raw materials and spare parts
which can affect the production process.

Corporate Culture

The initiative and objective of managing the Company's Human Capital is a series of strategies to achieve
the success of GIS as a "Holding" company supported by Culture. The Company continues to improve
understanding of the corporate culture that has been formed as the foundation for the Company's work.
With the same corporate culture, it is hoped that the Company's steps will be more synergistic and can
move together in achieving the vision that has been set. One such effort is strengthening the CHAMPS
culture. CHAMPS culture continues to be strengthened throughout.

HRD STRATEGY

a) To ensure that this paradigm change occurs, the Company, through the Human Capital Directorate,
has identified and scheduled it

b) changes in 3 strategic areas of HR management, namely:

c) Change the Mindset of Human Capital in carrying out business processes

d) Review and Improve the Human Capital Master Plan, through improving the HC Management System

e) Improve HC Competency Development Patterns ’