GUIDELINE =a APPLICATION OF LOCAL COMPONENT LEVEL CTKON) a FOR EPC OSB & ISL ROMP UV BALIKPAPAN PROJECT 5, LOCAL CONTENT ASSESSMENT 5.1 Method of implementation Method of Implementation of Local Content Verification shall be done by means of Contractor to conduct Self-Assessment. Local Content Self- assessment is made by contractor based on Invoice, Proven of payment. Self-Assessment will then be performed Local Content verification by Independent Surveyor Institution to know actual Local Content performance at the end of the work. 5.2 Basic KDN Grouping and KLN 1) Grouping of LC (Local Content) or FC (Foreign Content) for Manpower based on Citizenship. 2) Grouping of LC (Local Content) or FC (Foreign Content) for Direct Materials (raw materials) and equipment (finished goods) by country of Origin (Country of Origin). 3) Grouping of LC (Local Content) or FC (Foreign Content) for Machinery / Tools / work facilities based on ownership. Classification details of KDN.GUIDELINE = [APPLICATION OF LOCAL COMPONENT LEVEL CTKON) az FOR EPC O30 & 158L ROMP RU V BALIRPAPAN PROJECT ae or KLN for working tools based on the Regulation of the Ministry of Industry of the Republic of Indonesia No.16 /M-IND/PER/2/2011 About the Rules and Procedures for the calculation of Local Content are as follows: a. Local work / work facilities produced locally and owned by Local contractor, rated 100% (one hundred percent) of local components b. Workplaces / work facilities manufactured locally and owned by suppliers of contractor, rated 75% (seven five percent) of Local components ©. Workplaces / work facilities produced locally and owned by cooperation between Local and foreign companies, with 75% (seven five percent) Local components plus 25% (two five percent) proportional to the composition (comparison) Local company shares, d. Work produced abroad, and owned by Local goods / services Providers, is valued at 100% (one hundred percent) of Local components. e. Work tools produced by foreign company, and owned by foreign ‘company, are valued at 0% (zero percent) of Local components. 5.3 Assessment Basis 1) Local Content of Goods : ‘+ Comparison between the price of finished goods minus the price of the foreign component against the price of the finished goods. Mathematically Formulates as follows: ‘% LC of Goods = The Price of Finished Goods - The Price ofthe Foreign Component x 100% “The Price of Fished Goods ‘+ What is meant by price of finished goods is Production cost incurred to produce goods which include: |. Fee material costs (raw materials) ii, Direct labor costs Indirect factory costs (factory overhead) iv. Excludes corporate overhead, profit and output taxes. This cost is calculated up at the location of the work (factory / workshop) for the product of the goods concerned. 2) Local Content of Services * Comparison between the on-site service price minus the price of the Foreign Service component of the total on-site price Mathematically formulated as follows: WLC dl Serces = Onste Service Pee The Prise ha Forian Service Component x 100% COnste servee Pree * What is meant by the price of services are Costs incurred include Project Management and Engineering, Work Tools / Work Facilities, Construction and Fabrication, and General Services without taking,GUIDELINE > = armcarton oro EL ae uve rm pee ear ae into account the company's overhead costs, profits and output taxes. 3) Local Content of Combined Goods and Services * Sum of Local Component level of Goods with Local Component Level of Services. * What is meant by total price of combined goods and services are: * Combined total cost of goods and / or services at the on-site consisting of Direct materials (raw materials), Equipment (finished goods), Project Management and Engineering, Working / Working Facilities, Construction and Fabrication, and General Services , except indirect costs such as corporate overhead, profits and taxes. 5.4 Assessment Criteria 1) Local Content Assessment shall be conducted on self-assessment submitted by Contractor using Local Content Verification Form (appendix 1) in accordance with the scope. 2) Self-assessment submitted by Contractor shall be made on the basis of the project implementation cost which will and / or has been paid. 3) Assessment of Local Content for goods category is done up to Level-2. 4) Local Content component of Goods Level 2 is stated 100% (one hundred percent), if included in 3 things as follows: a) 2nd Level Ground is produced locally; b) Cost of goods Level-2 below 3% (three percent) of the cost of goods Level-2 goods; and ©) Accumulation of all cost of all Goods Level-2 as referred to in letter b shall be at maximum 10% (ten percent) of total Cost of Level-1 goods. 5) Local Component Assessment for raw materials, supply goods, equipment and services held Contractors will be verified to follow the following criteria: a) Raw material will be assessed based on verification result and / or by using, List of Inventory of Local Production Goods / Services or LC certificate. b) Work tools / Work Facilities used will be assessed using depreciation value in the period of use. ©) Use of the workforce will be assessed using the person's timesheet. d) General services related to the execution of projects such as insurance, certification, administration, etc., will be assessed on the basis of PO, WO and Invoice or other documents. 6) In terms of data used in Local Content calculation the combined goods and services referred to in paragraph (1) cannot be given base on time schedule, value of Local Content for corresponding component is rated zero.uipeuine ~ | APPLICATION OF LOS PES OneNT LeveL CDH) Fo ope Oem 816 a= ome RV EALKONPOW PROJECT ima 5.5 Limitation of Verification 1) Verify Local Content conducted by the Contractor based on the data and supporting documents submitted by Contractor, Subcontractor and Vendor, in accordance with the agreed delivery deadiine at the opening meeting. 2) Independent Surveyor does not exercise faimess judgments on quantity (quantity of goods and duration of work) and value. Examination of the amount and value is based on the supporting documents submitted. 3) Local Content value as result of contractor verification consisting of Local Content of Goods, Local Content of Service and / or Local Content of Combined Goods and Services only valid for Local Content assessment of the contract concerned only. 4) Data of cost components not accompanied by supporting documents shall be declared as foreign component. 5) Output income tax, Company Overhead in the framework of billing of work from contractor to company and profit not included component of Local Content calculation. 5.6 Local Content Form In conducting Local Content assessment, LC (Local Content) Form consisting of: a) Raw Material (direct / indirect raw material) b) Raw Material (for related services) ©) Direct Labor d) Direct labor (for other related expenses) ) Cost of Factory (indirect labor / management) f) Factory overhead (for own machine / work too!) 9) Factory overhead (for rented machinery / equipment) h) Factory overhead (for related services) Local Content of Services Form TKDN Services consists of: a) Management Project and Engineering b) Working Too! / Facilities ¢) Construction and Fabrication 4) General Services Local Content Forms Combined Goods and Services consists of: a) Material (Raw Materials) b) Equipment (Finished Goods) c) Project Management and Engineering d) Construction and Fabrication ) General ServicesAPPLICATION OF LOCAL COMPONENT LEVEL CTKON) ez FOR EPC OSB & 188. [ROMP UV BALIKPAPAN PROJECT iia: 5.7 Supporting Document ‘Supporting documents are all data to be prepared by EPC Contractors, EPC Subcontractors and EPC Vendors that will serve as the basis for independent Surveyors to perform Local Content verification. The data is related to the scope of the contract. In general the supporting documents to be provided by the EPC Contractor to Independent Surveyor who will perform Local Content verification. Example cost components in Local Content calculation Goods and Services are Direct Materials and Tools (Bahan (Materia Langsung dan Peralta) i] 1] Piee Olea uote of Raed Gon (ae, Goat wha | machines) used (haga Bol Gare Lirgarg aay Bray Jad (Eoky, Gent da mest Procurement Cost ( LC (Local Content) Charges or Ban Charges) POR (Bea Mesuk cen Pek Da Raga rr) Cost for Unioading and Loading at the Port | cost of Warenouse Rent at the Port | |_Handling and Transportation Cost | Insurance. Receiving & Inspection Cost (Bio Prerinn dan Parerisanr) - lnspection Cost (ya roses rapes) Project Management (Mengéeren Pred) and Engineering Labour . | Working Facies The cost of using goods (Baya Habis Paka) Works Toois / Working Facilites Akt KapFeits Kare) | Cost for Rental Equipment (Sova Prat) 2. | Cost for Working Equipment (Para Ky) ee 3. | Cost for Bullding (Weg Facies Borgen Fats Kore) IV. Construction and Fabrication Costs (Biaya Konstruksi dan Fabrikasi) 1. | Cost of Mobilization and Demobilsation (rerpxten Mitisas/ Osrctisos) 2. | Cost of Labour (Beye Terage heya) 3. | Cost of Consumable (Beye Habs pata) 4. | Cost of Working Equipment (Peralta ha) v. fi 2. lo |» Jo -FPPEE General Services (lese Unum) tities (sti A; Tokers) oe Maintenance, Repair & Spare Part Perawaen Partakan cen Siku Caring) 3. | Quality Assurance (Payarinan My)[APPLICATION OF LOEAL COMPONENT LEVEL (TKD) > FOR EPC OSL A SEL ws [ROMP RU V BALIKPAPAN PROJECT | PERTAMINA 4. | HSE Keaotrnatan Koarrenan dan Kesehatan Lnggurgen) | 5. | Factory Overhead (Biya Tek Largsung Patrk maha gas solr, potimas ar proses coolar | | ering, hydraulic fluid (miyek hata), Gemuk (Grease), Sand Blasting, Painting| Coating Material) l Examples of the above cost components can be adjusted to the conditions of each company | provider of goods and services or scope of work. In general the supporting documents to be provided by Subcontractor and the contractor Vendor are the same as those requested to Contractor. ‘Supporting document attached in Appendix 3. 6. LOCAL CONTENT REPORTING GUIDELINE Local Content report to PERTAMINA consists of: a) Months Report Contractor shall provide Self-Assessment monthly reports to the OWNER on the basis of the achievement of Local Content of Contractor every month. This report shall be submitted to the OWNER within 10 calendar days following the end of the previous month's activities ») 3 Month Report Contractor shall perform Local Content verification every 3 (three) month during the duration of the project. Contractor shall provide this verification reports by Independent Surveyor to the Company within 10 calendar days. All cost for verification by Independent Surveyor will be bear by Owner. ©) Final Report Contractor shall give the final report to OWNER after the end of project. 7. LOCAL CONTENT VERIFICATION GUIDELINE a) In procedures for verification of this Local Content of contractors are required to first determine the scope of materials, equipment, labor, work equipment and work facilities and public services. The form used can refer to appendix 1. ) Collect supporting documents. To check the completeness can use attachment 4. c) Grouping LC and FC for the Local Content assessment. d) Verifikator performs LC verification of self-assessment, data and supporting documents in point a and b. e) Flow process of Local Content verification procedure is submitted as follows