#1BHINNEKA TUNGGAL IKA Republic of Indonesia Strengthening Policy Synergy to Maintain Stability and Preserve Recovery Momentum amid Heightened Global Uncertainty and Increasing Inflation Pressure December 2022#2About 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, Ministry of Investment, Financial Services Authority, Ministry of State-Owned Enterprises, and The Committee for Acceleration of Priority Infrastructure Delivery. IRU also convenes an investor conference call on a monthly 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: Rosita Dewi (International Department - Bank Indonesia, Ph.: +6221 2981 8232) Thasya Pauline (Deputy Ministry for Macroeconomic and Finance Coordinator - Coordinating Ministry for Economic Affairs, Ph. +6221 352 1843) Putri Rizki Yulianti (Fiscal Policy Office - Ministry of Finance, Ph.: +6221 345 0012) Subhan Noor (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Ph.: +6221 351 0714) E-mail: [email protected] This Presentation Book also can be downloaded from: https://www.bi.go.id/en/iru/presentation/default.aspx 1#3Highlight of the Month What's New Economic Recovery Program and Its Updates ...page 5-18 Bank Indonesia's 2023 Outlook ...page 74 Fiscal & Financing Policy Bank Indonesia Board of Meeting Decision ...page 118-119 Update ...page 83-112 Prudent Pandemic Management and Continued Economic Recovery Big but measured steps including a strong vaccination program Synergy between institutions nationwide Responsive and flexible Government Budget Resilient economic performance Continued National economic recovery momentum, reflected by 5.72% (yoy) economic growth in Q3- 2022, endured on the back of stronger domestic demand and persistently solid exports. Affirmation of Investment Grade Sovereign Credit Rating Rating Agencies Fitch Rating MOODY'S Rating (Outlook) BBB (Stable) Baa2 (Stable) S&P Global BBB (Stable) Sources: Fitch, Moody's, S&P Investment grade ratings affirmed by Fitch on December 14, 2022 recognizing macro stability and optimism on the growth prospect, as well as policy credibility in handling COVID-19 pandemic. 2#4Overview 1 Economic Recovery Program and Its Updates Fiscal Performance and Flexibility: 5 Strong Commitment in Maintaining Fiscal Credibility Accelerated Reforms Agenda Supported by 2 Institutional Improvement and Progressive Infrastructure Development 6 Monetary and Financial Factor: Credible Monetary Policy Track Record and Favorable Financial Sector Economic Factor: 3 Stable Growth Prospects Supported by Continued Economic Recovery Momentum 7 Commitment to Sustainability and Preserving the Environment External Factor: 4 Improved External Resilience 3#5Section 1 Economic Recovery Program and Its Updates BHINNEKA TUNGGAL IKA#6Indonesia's Economic Improvement Trend Continues Current Account GDP Growth (%YoY) PMI Markit Indonesia 60 Total Investment (DDI+FDI) Rp Trillion 10 55 Expansion >50 50.3 350 5 50 300 0 250 45 200 150 307,8 130 110 90 CCI & Retail Sales M 20.0 1.6 10.0 -5 40 150 -10 35 100 70 70 0.0 119.10 -10.0 -20.0 -30.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Contraction <50 50 30 2019 2020 2021 2022 0 25 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Consumer Confidence Index (CCI) Total GDP Household Consumption GFCF 2019 2020 2021 2022 Retail Sales-g (rhs) Trade Balance (Billion USD) of GDP (%) 80.00 10.00 60.00 8.00 2.00 12000 1.28 5.16 40.00 6.00 12500 1.00 13000 20.00 4.00 13500 0.00 14000 0.00 2.00 -1.00 14500 -20.00 0.00 15000 -2.00 15500 -40.00 -2.00 16000 -3.00 -60.00 -4.00 16500 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 17000 -4.00 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2019 2020 2021 2022 Balance (Billion USD) 2018 2019 2020 2021 2022 Export-g (%YoY)-rhs Import-g (% YoY)-rhs Sources: CEIC, BI, BPS, Bloomberg (as of 25 December 2022) 1/16/20 The Indonesian Rupiah and JCI 5/16/20 9/16/20 1/16/21 5/16/21 9/16/21 1/16/22 IDR/USD 6800.67 8000 7500 6000 4000 7000 2000 6500 0 -2000 6000 -4000 5500 -6000 5000 -8000 -10000 15593.00 4500 -12000 4000 5/16/22 9/16/22 JCI-rhs Net Capital flow (Million USD) 1/1/21 3/1/21 5/1/21 7/1/21 9/1/21 11/1/21 1/1/22 3/1/22 77/T/S 7/1/22 Equity Flow (ytd) Bond Flow (ytd) Total 9/1/22 LO 5 11/1/22#7Progress of Vaccination Implementation Indonesia government commits to provide full dose of COVID-19 vaccines for Indonesian citizens aged 6 years old and above. The government aims at 70% of population to be fully vaccinated. As of December 23rd, more than 450 million doses of COVID-19 vaccines have been given as primary doses and boosters. The vaccines are given as homologous and heterologous depending on EUA issued by the Indonesia FDA. Vaccination 1 203,958,661 (86,91%) Vaccination 2 174,678,659 (74.44%) Vaccination 3 68,243,925 (29.08%) Vaccination 4 1,137,409 (4.94%) Vaccination Target | Vaccination Progress TOTAL Source: Coordinating Ministry for Economic Affairs 234,666,020 10 Coverage of Covid Vaccination Doses 1, 2 and 3 As of 23rd December 2022 1st Doses: 86,91% 2nd Doses: 74,44% 3rd Doses: 29,08% 6#8Government and Society Preparation to Live With COVID-19 COVID-19 is a new disease that needs to be faced and prepared for its sustainable handling Strategy on COVID-19 control and prevention Intense intersectoral collaborations under the supervision of President Joko Widodo and coordination of the committee of national economic recovery and COVID-19 control (KPCPEN) Case detection: Intensifying screening and epidemiological tests; Contact tracing; Genomic surveillance; Screening at country entry and exit points Therapeutics: conversion of 30-40% of hospital beds for COVID-19, ensuring adequate logistics and human resources, tightening criteria of hospital admission, establishing a center for isolation Vaccination: allocate more vaccines for high-risk areas, the establishment of vaccination centers, vaccination certificates as entry requirement of the public regions; rate acceleration on elderly and people with comorbidities Public health measures: micro-scale of social activity restriction, implementation of digital tech in public health measures Updates Only people with moderate and severe COVID-19 symptoms are suggested to be hospitalized Drug package delivery for COVID-19 confirmed positive individuals with asymptomatic or mild symptoms based on NAR database Mandatory mask use in only for indoor activities and crowded areas NAAT test (PCR and antigen) are not required for international and domestic traveller with COVID-19 boosters Source: Coordinating Ministry for Economic Affairs 7#9National Economic Recovery (PEN) Program Is Directed For Jobs-stimulating Recovery 2020 2022 ENABLING FACTOR Job Stimulating Recovery: Health System || || Extraordinary Measures. ☐ Handling Covid ☐ Social Protection ☐ Business Protection ☐ Handling Covid ☐ Vaccination Program ☐ Social Protection Business Protection Strengthening || (Vaccinations, 3T and 5M Health Protocols) Financial System Support Structural Reform || Improved Intermediary Job Creation Law HPP Law Role IL 2021 Surviving and Facilitating Recovery: ☐ Handling Covid ☐ Vaccination Program □ Social Protection ☐ Business Protection Source: Coordinating Ministry for Economic Affairs Direct Support to the Community Job Creation Labor Intensive Program Strengthening Economic Structure and Competitiveness, for Medium-Long-Term Growth PreEmployement Card Social Protection • ΡΚΗ BLT Village Fund Grocery Card Stimulasi Kinerja UMKM dan Koperasi Targeted Tax Incentives Business Incentive Business Ease Support Financing Support . KUR Interest Subsidy • Credit Guarantee Strengthening Expenditure Side Strengthening Production Side EMPLOYMENT GDP GROWTH STABILITY 8#10National Economic Recovery Program Will Continue In 2022 To Anticipate The Expansion Of The Impact Of Covid-19 During 2021 (Reached IDR658,6 T or 88,4% of IDR744.77 T) HEALTH Budget IDR.214.96 T Realization IDR.198.5T (78.8%) SOCIAL PROTECTION Budget IDR.186.64 T Realization IDR.171.0T (91,6%) SUPPORT FOR MSME AND CORPORTATION Budget IDR.162.40 T 2022 Potential Risks of the Increased of COVID-19 Impact in 2022 include: Increased testing, tracing, dan treatment Increased Patient Claims as the number of cases increases Expansion of community protection Realization IDR.116.2T (71,5%) TOTAL: The allocation of the Program has the potential to increase in line with the development of handling COVID-19 PRIORITY PROGRAM Budget IDR.117.94 T Realization IDR.105.4T (89,3%) BUSINESS INCENTIVE Budget IDR.62.83 T Realization IDR. 67.7T (107,7%) IDR455,6 T Realization: 61,6% as of November, 18th 2022 SOCIAL PROTECTION: IDR154.76 T HEALTH: IDR122.54 T Realization: 39,7 % STRENGTHENING ECONOMIC RECOVERY: IDR178.32 T Realization: 79,5% Realization: 61,1 % 9#11National Economic Recovery (NER) Program in 2022 With intensive monitoring, the current allocation reaches IDR455.62 T (Realization: IDR 280,7 T or 61.6%) as of October 28th, 2022 Health Treatment ◉ Patient claims ■ ■ Health Workers Incentive Health tax incentives Village fund for handling covid IDR122.54 T (Realization: IDR48,6 T or 39.7%) ☐ Social Protection Family Hope Program (PKH) Non-cash food aid recipients (Sembako Card) ■ Cash Direct Assistance of cooking oil ☐ Village Fund Direct Cash Assistance ■ Cash Assistance to Street Vendors, Stalls, and Fishermen (BT-PKLWN) Program ◉ Pre-Employment Card IDR154.76 T (Realization: IDR 123,1 T or 79.5%) Strengthening Economic Recovery ■ Tourism program ICT MSME Support ■ Tax incentives ■ Food Security IDR178.3 T (Realization: IDR 109 T or 61.1%) Source: Coordinating Ministry for Economic Affairs 10#12Government And Society Prepare To Live With Covid-19 COVID-19 is a new disease that needs to be faced and prepared for its sustainable handling Burden of Disease in Indonesia (2019) Living With Covid-19 16.51 million 1. 2. 3. Health Monitor independently; Testing/screening is done by yourself; Managing your own health (knowing when to go to the hospital, when to go to the doctor, also the type of Cardiovascular diseases Cancers Diabetes and kidney diseases Musculoskeletal disorders Respiratory Infections and TB Digestive diseases Other NCDs Neonatal disorders Mental disorders Respiratory diseases Neurological disorders Enteric infections Transport injuries Unintentional injuries 6.76 million 5.52 million 5.23 million 4.56 million 4.04 million 3.99 million 3.91 million 3.38 million 3.18 million + 2022 COVID-19 is an additional burden of disease that needs to be taken into account and a reference for the health system going forward 12.76 million 2.61 million 2.43 million 2.29 million Skin diseases 1.71 million Nutritional deficiencies 1.62 million Other infectious diseases 1.34 million Malaria & neglected tropical diseases HIV/AIDS and STIs Substance use disorders Self-harm 371,921.93 Maternal disorders 326,556.16 Interpersonal violence 228,972.97 Natural disasters 93,561.62 Conflict and terrorism 21,562.49 934,929.67 775,832 24 382,851.19 Government Response: 。 Creating a Countermeasure Program ○ Providing health facilities and medicine capacity Ensure Vaccine Availability Community readiness: Living with COVID-19 (activities with vigilance) o Managing individual risk factors medicine you need), including a healthy lifestyle and strengthening the immune system. 4. The community is given a guideline for the protocol for daily living with Covid-19, as people live with the previous disease which is shown in the graph below. IN THE NEW NORMAL LIFE, COVID 19 IS INCLUDED IN THE CATEGORY OF RESPIRATORY INFECTIONS, INCLUDING INFLUENS AND OTHER RESPIRATORY DISEASES 0 2 million O Sources: Burden of Disease - Our World in Data Source: Coordinating Ministry for Economic Affairs 11#13Increasing The Productivity And Competence Of The Workforce Through The Pre-Employment Card Program Number of Registration >96 Millions Registrants on the Pre-Employment 34 Provinces Card site from ALL Regencies and Cities 514 Regent/City Statistics & Data Recipient Pre- Employment untill 2021 Employment Statistic of Recipients 2022 5.023.213 Rp8,61 Triliun Total Pre-Employment Card Recipients (Batch 23-47**) Incentives has distributes (Batch 1-22) Pre-Employment Card Ecosystem 11.440.629 Pre Card . 6 Payment Method: • 8 Educational Recipient(Batch 1-22) BNI, BCA, GOPAY, DANA, LinkAja, OVO Institution: Universitas Indonesia, Rp27,74 Triliun Incentives has distributes (Batch 1- Universitas Atma Jaya, • 22) 6 Digital Platform: Indonesia Mengajar, UGM, UNAIR, Institut Pertanian 51%* SISNAKER, Pijar Mahir, Tokopedia, Karier.mu, Bukalapak Bogor, UMM dan Pintaria, Universitas NU Indonesia (UNUSIA) 49%* 87% Unemployment Source: Coordinating Ministry for Economic Affairs 57% Between 18-35* Senior High 68% School or more* From those who work (Employees/Labour/ 74% Freelance Employee) is in the Informal Sector Pre-Employment Card Management, November 22, 2022 • 185 Training Course: 1.083 training course, example: Skill Academy, Baking World, Baba Studio, Cakap, Cariilmu, Arkademi Job Portal: Jobs.id, JobStreet.com, Top Karir, karir.com 12#14National Economic Recovery Strategy Through Import Substitution Program (35% Reduction) in 2022 • • சச AA INDUSTRIAL CONDITIONS Require to deepen Industrial Structure Necessary to be independent on raw materials and production Unsupportive regulations and incentives The P3DN Program is not yet optimal 7 SECTORS FOCUS Food and Beverage Textiles and Clothing Import Reduction STRATEGIC STEPS through Import Substitution in Industries with Large Import Value Encouraging the Deepening of Industrial Structure Increasing Production Utilisation of All Manufacturing Industry Sectors Increase in Investment and Absorption of New Workers 35% IMPORT SUBSTITUTION PROGRAM BY 2020 Source: Ministry of Industry Automotive Chemical Electronic Utilisation 60% (2020) Utilisation Utilisation 75% 85% (2021) (2022) Pharmacy Medical Devices • Absorption of workers affected by layoffs Increased domestic spending capacity • Increase in the export market 13#15Fiscal Incentives Policy to Boost the Economy The government facilitates fiscal incentives to create a conducive investment climate, especially for industry players. Through increased investment, it is hoped that it can strengthen the domestic industrial structure TAX HOLIDAY TAX ALLOWANCE INVESTMENT ALLOWANCE SUPER DEDUCTION TAX The criteria are new investment, taxpayers including pioneer industries, and income received from the main business activities carried out. There are 18 eligible pioneer industries that consist of 169 KBLI. Pioneer industries are defined as industries possessing broad linkages, giving added value and high externality, introducing new technology, as well as possessing strategic value for the national economy. As of September 2022 (year to date): Total Investment: Rp116 Trillion Location: 7 provinces To increase direct investment activities for certain business fields and/or in certain areas. • The facilities include a reduction in net income of 30% of the total investment for six years, accelerated depreciation and amortization, imposition of income tax on dividends paid to foreign tax subjects of 10% or lower and compensation for losses of up to 10 years. . The criteria are having a high investment value or for export, a large absorption of labor; or I have a high local content. . Tax Payer: 16 Tax Payer • Origin of investment: domestic and 5 countries • Total Investment: Rp13.4 Trillion • Tax Payer: 13 Tax Payer • Approval: 16 Minister of Finance Decree Source: Coordinating Ministry for Economic Affairs Source: OSS September 2022 • • To encourage investment in labor-intensive support industries, programs for job creation and absorption of Indonesian workers. • Incentives in the form of facilities to reduce net income by up to 60% for labor-intensive sectors • There are 45 labor- intensive industrial sectors and employ an average of 300 workers in 1 tax year. Total Investment: Rp363 Billion Investment: 2 activities Tax payer: 2 tax payers Source: OSS September 2022 Super Deduction Vocational • Engaging industry in vocational activities to provide knowledge and encourage the transfer of knowledge • A maximum reduction of 200% gross income from costs in the context of providing work practice, apprenticeship, and/or learning activities. • As per September 2022, there are 186 agreement for vocational activities (ytd) R & D Super Deduction . Increase the role of industry in fostering innovation and the use of the latest technology in the production process Maximum gross income deduction of 300% over R&D costs carried out in Indonesia • As per September 2022, there are 13 proposal for research and development activities (ytd), with estimated RnD cost up to Rp97.5 billions 14#16Government Support for MSMEs During the Covid-19 Pandemic In the form of relaxation of asset quality assessments, postponement of principal & interest subsidies, low-interest working capital loans guaranteed by Askrindo and Jamkrindo, tax incentives for MSMEs borne by the government, and Productive Presidential Assistance for Micro Enterprises MSMES CREDIT RESTRUCTURING WORKING CAPITAL CREDIT 1 ASSET QUALITY ASSESSMENT POSTPONEMENT OF PRINCIPAL & INTEREST 2 3 SUBSIDIES According to POJK KUR Super Mikro: Loan up to IDR 10 million No. 11/POJK.03/2020 & • 14/POJK.05/2020 Interest subsidy will be 19% consist of additional interest subsidy 6% and regular interest subsidy 13%, debtors pays 0% interest from Aug – Dec 2020. 4 KUR MKM (SMEs): Asset Quality Arrangement: Loans ≤ . 10 IDR billion can be based only on the accuracy of principal/interest payments Restructurisation: The credit quality for affected debtors is determined to be current restructuring since The restructuring is carried out without a ceiling limit type of financing Loan up to IDR 10 million up to IDR 500 million Postponement of installments and 6% additional interest subsidy for the period from Apr-Dec 2020 to 0%. KUR MSME Credit, non-KUR: • • Loan > IDR 500 million up to IDR 10 billion Postponement of installments and interest subsidies 3% for the first 3 months and 2% for the next 3 months 5 UMi, Mekaar, Pegadaian (Pawnshop) Postponement of principal installments and interest subsidies for 6 months from Apr-Sep 2020 Fintech Loan, Co-op, Farmers, LPDB, LPMUKP, UMKM PEMDA Relaxation is given a 6% interest subsidy for 6 months Based on Coordination Meeting held by Financing Policy Committee for MSME on December 28, 2020, KUR implementation in 2021 are as follows: Additional interest subsidy 3% for 6 months, debtors pays 3% interest. Increase the ceiling of KUR in 2021 to IDR 253 trillion. LOW INTEREST IDR30 Trillion Government Placement of Funds at Bank Himbara GUARANTEE Government support in the form of guarantees by Askrindo and Jamkrindo OTHER SUPPORT Income Tax for MSMEs is borne by Government MSMEs receive a final PPh rate of 0.5% (PP 23/2018) borne by the government (DTP). MICRO BUSINESS PRODUCTIVE 6 PRESIDENT ASSISTANCE Direct assistance to 13 million Micro Enterprises and 1 million street vendors in the amount of IDR 1.2 million per recipient Source: Coordinating Ministry for Economic Affairs 15#17Digitization of MSMES: MSMEs Level Up STRENGTHENING THE MSME ECOSYSTEM STRENGTHENING E-COMMERCE ECOSYSTEMS Permissions Sector Business Climate e-commerce 100 84.8 80 60 35.2 34.4 84,8% MSMEs have 30.4 40 returned to 20 8.1 7.1 normal operations 0 Berjalan normal Berjalan terbatas Belum beroperasi compared to 2020 2020 maret-april 2021 (Survey of 505 MSMEs) % Tax Sertification (Source: Mandiri Institute Survey, June 2021) During the pandemic, MSMEs used various marketplace networks to sell their products, 40% of MSMEs used social media, and the rest used instant messaging (38%), e- commerce (13%), and ride-hailing (5%). (Source: Mandiri Institute, 30 June 2021) MSME Market Access and Empowerment Support Market Access Financing DIGITIZATION MSME Training Accompaniment Payment Logistic ☑ Personal data Protection Control informatics System Operation and Electronic Transaction Raw Material Access Digital Infrastructure Pahlawan Digital PLUT-KUMKM BANGGA BUATAN INDONESIA Source: Kominfo, 2021. sparc sparc campus GRIS QR Code Standar Pembayaran Nasional ASEAN NINDAY PaDi UMKI Pagal UMKM digiku Ogled UMKM E-LEARNING KUMKM 35 Source: Coordinating Ministry for Economic Affairs LKPP ecatalogue பய 8 out of 10 UMKM get to know 84% Get help during the pandemic 70% Experiencing an increase in finance/ banking transactions per day products 71% Get to know digital finance Source: OVO and CORE Indonesia Survey (2021) 16#18The Pre-Employment Card Program to Increase Access to Finance for Entrepreneurs and SMEs Kredit KER Usaha Rakyal People's Business Credit (KUR) credit/financing for working capital is a and/or investment to a productive and feasible 1 individual, business entity, and/or business group debtor that does not have additional collateral or does not have sufficient collateral. KUR is entirely sourced from the financial institution fund that distributed KUR loans. KUR Interest Rate Year 2016-2017 9% Year 2014 22% Micro KUR 13% Retail KUR Year 2007 24% Micro KUR Year 2018-2019 7% Year 2015 12% Low KUR interest amounting to 6% effective annually. Easy requirements for KUR additional collateral. • 2 " . . 2022 KUR POLICY Increase of KUR ceiling to Rp373,17 Trillion 2022 KUR ceiling was initially stipulated at Rp250 trillion. Coordination Meeting of Committee of Financing Policy for MSMEs on 29 December 2021 has decided to add 2022 KUR ceiling from Rp250 trillion to Rp373.17 trillion and will be evaluated on the 1st semester of 2022. KUR Policy Relaxation during Covid-19 Period Small KUR is without limitation in the loan ceiling accumulation until 31 December 2022 Postponement of the production sector target until 31 December 2022 or by the consideration of the Committee of Financing Policy for MSMES • Follow-up incentive provision in the form of KUR restructuring extension Provision of administrative relaxation for prospective KUR debtor during Covid-19 pandemic period based on the objective assessment of KUR Distributor Provision of additional KUR interest subsidy of 3% until 31 December 2022 3 Change of KUR Policy to Expand and Increase KUR Distribution Small KUR and special KUR over Rp100 million is following the policy/assessment of KUR Distributor. Additional collateral is not required for supermicro- KUR, micro-KUR, special KUR up to Rp100 million, and Indonesian Migrant Worker (PMI) placement KUR. Year 2020-2022 6%...... Source: Coordinating Ministry for Economic Affairs, as of January 10, 2021 Change of Micro KUR ceiling (without additional collateral), starting from Rp10 million to Rp50 million to be beginning from Rp10 million to Rp100 million. Change of Special/Cluster KUR without KUR ceiling accumulation limitation for the production sector (non-trade) and interest subsidy by KUR type Increase PMI KUR ceiling, starting from Rp25 million to starting from Rp100 million, withdrawal (KUR disbursement) by the need of PMI and simplification of KUR distribution. Reduction of KUR interest subsidy/margin subsidy for Super Micro KUR by 1% to be amounting to 12%; Micro KUR is reduced by 0,5% to 10%; Small KUR interest subsidy remains at 5,5%, and PMI Placement KUR interest subsidy is reduced by 0,5% to 13,5%. 281.9 198.6 140.1 22.8 KUR 30 Distribution 94.0 100 96.7 110 120.3 120 140 190 285 (IDR Trillion) 2015 2016 2017 Target 2018 2019 2020 2021 Realization 17#19Indonesian Digital Economy Development Framework Concept (2021-2030) The contribution of the Internet Economy reaches IDR 2,711 trillion Increase Efficiency & Productivity (Accelerate) Accelerating the digitization of the economic sector VISION Become a Digital Economy Powerhouse to Realize Inclusive, Connected and Sustainable Economic Growth POTENTIAL ACHIEVEMENTS 2030 The e-Commerce market reaches IDR 1,815 trillion Creating Jobs 35 Million MSMES digitized GOAL Encouraging Innovation STRATEGY (Create) Creating diverse and equitable digital economic opportunities 250 million digital literacy 2 times the worker Creating Inclusivity productivity ratio vs. cost Achieving Digital Economy (Encourage) Encouraging cross- sector/stakeholder coordination MAIN PILLAR 1 2 3 4 5 6 Infrastructure Human Resources Kesearch, innovation & Policies/Regulations Business Development Data Governance & Cybersecurity Funding & Investment Digital Economy Development Program PRIORITY Agriculture & Industry 4.0 Trade Fisheries Education Finance Health tourism and creative economy MSME 18#20Section 2 Accelerated Reforms Agenda Supported by Institutional Improvement and Progressive Infrastructure Development BHINNEKA TUNGGAL IKA#21Rank 2007-2008 Improving Global Perception ...with recent improvements on governance effectiveness Global Competitiveness Index¹ 2008-2009 2009-2010 Higher rank is better 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 20 30 40 50 60 70 80 90 India Indonesia Philippines Bulgaria Corruption Perception Index³ 55 2017-2018 36 41 145 45 2018* 2019* 70 Worldwide Governance Indicators² 60 Higher rank is better 50 50 40 50 50 45 45 40 40 35 30 Higher score is better 65 63 53 47 38 28 30 *New Concepts by using the Global Competitiveness index 4.0 which captures the determinants of long- term growth. 20 10 Colombia 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Voice and Accountability Government Effectiveness Rule of Law Political Stability/Absence of Violence Regulatory Quality Control of Corruption 49 47 44 2012 2013 2014 2015 2016 2017 2018 2019 • Indonesia India Philippines Bulgaria 38 34 2020 2021 Colombia 1. Source: World Economic Forum - The Global Competitiveness Report 2019; Source: World Bank - The Worldwide Governance Indicators 2022 Update 2. 3. Source: Transparency International - Corruption Perceptions Index 2022 Report 20 20#22A Well Maintained of Indonesia's Sovereign Credit Rating in The Midst of Economic Recovery BBB+ BBB BBB 66+ BB BB- Investment Grade B+ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fitch Ratings R&I JCRA SBP Fitch Moody's BBB / Stable December 2022, Rating Affirmed at BBB/Stable "Indonesia's rating balances a favourable medium-term growth outlook and low government debt/GDP ratio against weak government revenue and lagging structural features, such as governance indicators, compared with category peers. 'BBB' T 2020 2021 20Z2 S&P Global Ratings BBB / Stable April 2022, Outlook Revised To Stable; BBB Ratings Affirmed "The stable outlook reflects our expectation that Indonesia's economic recovery will continue over the next two years, supporting the government's continued fiscal consolidation efforts. We expect the pace of the recovery to accelerate further this year. MOODY'S Baa2 / Stable February 2022, Rating Affirmed at Baa2/Stable "The affirmation of the rating is supported by continued economic resiliency and Moody's expectations that monetary and macroeconomic policy effectiveness will be maintained, containing risks as global interest rates rise. Moody's expects economic activity to revert to its historical average in 2023, with growth sustaining at those rates thereafter." BBB+ / Stable R&I July 2022, Rating Affirmed at BBB+/Stable BBB+ / Stable JCR "In R&l view, Indonesia's economy that plunged in 2020 will likely return to a pre- coronavirus growth level in one to two years. The government's structural reform efforts are also expected to boost growth potential in the medium to long term. Despite the pressure on the fiscal side caused by policy responses, the government debt ratio remains relatively low. The economic resilience to external shocks is maintained thanks to flexible policy responses by the government and the central bank and ample foreign reserves". July 2022, Rating Affirmed at BBB+/Stable "The ratings mainly reflect the country's solid domestic demand-led economic growth potential, restrained public debt and resilience to external shocks supported by accumulation of foreign exchange reserves. JCR holds that the debt will gradually decrease as the fiscal balance improves mainly increased revenue from economic growth and higher commodity prices". 21#23Structural Reform Towards "Indonesia Maju 2045" and Out of the Middle-Income Trap GDP 2019 RANKING #16 *World Bank Making Indonesia 4.0 Job Creation Law RANKING TOP 10 WORLD GDP 2030 INDONESIA MAJU 2045 2035 2036 EXIT MIDDLE INCOME TRAP* 2025 BONUS DEMOGRAPHY 2020 2021-2022 2018 2019 ELECTION 2024 Income per capita : US$ 3.911,7 Entering the Political Year REFORM NEW LEADER "New Normal" 2 Years 3 Years 5 Years Income per capita: STIMULUS RECOVERY 2022 US$ 4.174,5 G Income per capita : US$ 6,305* Income per capita : US$ 8,804* Income per capita : US$ 12,233* PRE COVID Source: Coordinating Ministry for Economic Affairs POST *Based on the 2020-2024 National Medium Term Development Plan 22 22#24Indonesia Vision 2045: "Indonesia Maju❞ A Developed Country GDP Per capita (USD) Medium Term Dev. Plan (RPJMN) 2020-2024 2036 Exit from the Middle Income Trap (MIT) 12.233 8.804 6.305 4.546 16.877 GDP Real 23.199 GDP Real /Capita 2015 2020 2025 2030 2035 2040 2045 5.2% 6.0% 6.2% 5.9% Economic Growth in Average Source: Bappenas: Medium Term Development Plan, 2020-2045. 5.6% 5.4% 5.7% 5.0% Year 2045 Target Developed economy and largest GDP rank-5 (USD 7,4 Trillion) Contribution from eastern part of Indonesia % Economic Transformation must start in 2020-2024 to provide a foundation for an Advanced Indonesia (Indonesia Maju) 23 23#25Medium-Term National Development Plan (RPJMN) 2020-2024 President's Vision: "The Establishment of an Advanced Sovereign, Independent and Personality Based on Mutual Cooperation". President's Missions Top 5 Presidential Priorities 1 Improving the Quality of the Indonesian Labour Force 1 HR Development 2 Achieving Productive, Independent and Competitive Economic Structure 3 Attaining Equitable and Prosperous 2 National Development Infrastructure Development Achieving Sustainable 4 Environmental Climate Developing Cultural Progress 3 5 Reflecting the Nation's Personality Regulation Simplification 7 RPJMN Development Agenda Simplification of Bureaucracy Transformation Strengthening Economic Resilience to Achieve Superior Economic Growth Developing More Remote Regions to Reduce Economic Gaps and Improve Equality Improvement of Quality and Competitiveness of the Labour Force Engaging in Mental Revolution and Culture Development Strengthening Infrastructure to Support Economic Development and Improve Basic Services Conservation of Environment, Supporting Climate Change, and Enhancing Disaster Resilience Enhancing Political, Legal, Defense and Stability and Transforming Public Services Developing a Dignified and Trustworthy 6 Legal System Free from Corruption 4 Protection of All Nations and 7 Provision of Security to All Citizens 00 Attaining Good, Effective, and Reliable Governance Economic 5 Achieving Synergy of Governmental 9 Framework with the Regional Government Source: National Development Planning Agency 24 24#26Indonesia's Grand Strategy in Encouraging Sustainable Economic Growth ☐ Indonesia's economic fundamentals are solid and have been able to return to pre-pandemic levels, in line with increased mobility and leading indicators that show bright prospects. □ Furthermore, the government will continue to encourage accelerated growth with various strategies to achieve sustainable growth. Current Conditions: Solid Economic Fundamentals Indonesia's economy is growing strong and has reached pre-pandemic levels Population mobility is starting to increase, in line with the controlled Covid- 19 cases ☐ Leading indicators indicate a convincing economic outlook ☐ Resilient external sector SME Grand Strategy ☐ Government and Society Prepare to L Live With COVID-19 Fiscal Policy as Shock-Absorber ☐ Price Stabilisation Omnibus Law on the Job Creation Act, including IKN development Downstreaming and industrialization of natural resources ☐ Optimization of clean energy sources and green economy L Legal, social, political and economic protection for the people □ MSME'S LEVEL UP Goal Achieving Sustainable Economic Development I 25#27The Framework of Job Creation Law AL New Business Creation GREENFIELD INVESTMENT COMPANY (111> Supply Brownfield PRODUCTION HOUSEHOLD Demand Business Development JOB CREATION LAW New Job Creation Welfare Creation CONSUMPTION Increased Purchasing Increased Income Power Source: Coordinating Ministry for Economic Affairs 26#28Job Creation Law As A Tool For Long-term Structural Reform PROGRESS OF THE JOB CREATION LAW With the Omnibus Law method, 79 laws were revised and simplified to become the Job Creation Law (Law Number 11 2020) was promulgated on November 2, 2020 Clusters in the Job Creation Law 1. Improving the Investment Ecosystem and Business Activities Employment 2. 3. 4. Ease, Protection, and Empowerment of Cooperatives and MSME Ease of Business 5. Research and Innovation Support 6. Land Procurement 7. Economic Zone 8. Central Government Investment and Acceleration of National Strategic Derivative regulations of 54 Government Regulations/Presidential Regulations The decision of the Constitutional Court on November 25, 2021 On June 16, 2022, Law No. 13 of 2022 concerning Amendments to Law No. 12 of 2011 concerning the Establishment of Legislation The government prepares improvements to the job creation law following the decision of the Constitutional Court, which involves the technical formation of the job creation law but does not change its substance. Preparation of academic manuscripts and draft law manuscripts It has expected to be completed in 2022. Source: Coordinating Ministry for Economic Affairs . 9. Projects Implementation of Government Administration 10. Imposition of Sanctions a) Revising Law 12/2011 to accommodate the Omnibus Law method b) Change the Job Creation Law based on the revision of Law 12/2011 within two years c) Review the substances that objection to the community The subject matter in the revision includes: a) Omnibus method; b) Strengthen community involvement and meaningful participation; c) Regulatory digitalization d) Improve the technical error of writing in the draft law either that has been agreed upon or after the President receives the bill The Job Creation Law and its implementing regulations are still in effect and no material on the Law has been annulled by the Constitutional Court. Thus, the implementation of the Job Creation Law, which concerns, among others, Business Licensing and OSS, Employment including provincial and district/city minimum wages, and facilities for MSMEs, still applies. 27 27#29The Job Creation Law Encourages Employment and Facilitates New Business Opening While Recovering the Post-Pandemic Economy Under the Omnibus Law, 77 Indonesian Laws have been revised through a single law which regulates various sectors. Has simplified into Job Creation Law 186 Article dan 15 chapter Investment Ecosystem and Business Activities Business Licensing Employment SME and Cooperatives 11 Cluster Research and Innovation Land Acquisition In Economic Zones Ease of Doing Business Government Investment & National Strategic Project (PSN) H Public Administration *The UUCK has been in effect since its promulgation on November 2, 2020. The Constitutional Court Decision No. 91/PUU XVIII/2020 dated November 25, 2021 which states that the Law of Job Creation is unconstitutional with the condition: remains in effect operational but must be formally revised within 2 years. The issuance of Ministerial Regulations/Regional Regulations/Regional Head Regulations which are technical in nature, operational can still be carried out, and the OSS System will continue to run as should be. Source: Ministry of Investment (BKPM) Imposition of Sanctions 28#30STOP More Business Fields Are Open for Foreign Investment >> Further provisions regarding investment requirements are regulated in a Presidential Regulation Number 10 Year 2021 Jo. 49 Year 2021 Pres. Regulation 44/2016 "Investment Negative List" Pres. Regulation 10/2021 Jo. 49/2021 "Investment Business Fields" More Attractive and Competitive The Regulation has come into force since 4 March 2021 (30 days after the regulation enacted) (Article 15 Pres. Regulation 10/2021) Encouraging the Development of Priority Business Fields Mandate of Law Number 11 of 2020 concerning Job Creation Article 77 Number 2 (Amending Law Number 25 of 2007 concerning Investment Article 12) 515 Business Fields Business Restriction oriented Source: Ministry of Investment (BKPM) 29 29#31The Latest Investment Business Field Arrangements Presidential Regulation No. 44/2016 "Investment Negative List" Presidential Regulation No. 10/2021 Jo. 49/2021 "Investment Business Fields" " 0 Business Fields Closed for Investment 20 Business Fields Attachment I PRIORITY Priority Business Fields* 246 Business Fields *Equipped with Tax Holiday, Tax Allowance, and Investment Allowance Attachment II Business Lines Reserved for or Required for Partnerships With Cooperatives and SME 145 Business Fields/KBLI % Business Fields Opened with Conditions 350 Business Fields Source: Ministry of Investment (BKPM) Attachment III % Business Lines Allocated for or Required for Partnerships With Cooperatives and SME 182 KBLI in 106 Business Groups Business Fields Opened with Conditions 37 Business Fields 30 30#32Investment Focus Sectors Sector Downstream Natural Resources Industry Sector Industry Nickel, Copper, Coal Smelting Import Substitution Iron and Steel Export Oriented Industry EV Battery, Automotive Infrastructure Toll road, AilDRorts, Seaports Human Resources Development/ Education Vocation, Higher Education/University Tourism Tourism operator, tourism supporting services, 10 new Bali Labour Intensive Industry Furniture, Electronics, Textile, SME's Digital Economy Data center, Start-ups, marketplace, e-commerce 1 Encouraging Collaboration of Local Entrepreneurs with Foreign Investors BKPM Promotion 2 Encouraging Equitable Investment outside Java Strategy 3 Providing easy incentives based on investor needs % Source: Ministry of Investment (BKPM) 31 1#33Encouraging investment through priority sectors that have added value R 柯 7 Export Oriented - Labor Intensive industries Pharmaceutical and Heath Equipment Automotive Industries Infrastructure R N Source: Ministry of Investment (BKPM) 0 Electronic Indutries Energy, especially renewable energy Mining, That creates added value products 32 42#34Encourage The Industry Downstream To Increase Value-added Commodities Downstream Industry Policy Strengthen and deepen Total Number and Investment Smelter 2021-2024 Number of Smelter Acceleration of Economy Growth industrial Structure through R&D, product innovation, brand, and design. Commodity Total Investment Investment Realization Existing Plan TOTAL (mn $) (mn $) Nickel 11 19 30 7619.3 5508.4 Broaden Working Bauxite 2 6 8 7138.9 2979.5 Opportunity DOWNSTERAM Iron 1 1 2 53.7 47.2 INDUSTRY Country foreign Acceleration of Industrial Copper 2 2 4 4693.3 1046.9 Mangan 1 1 2 23.9 12.5 exchange reduction with Deployment which Lead and Import Substitution 0 2 2 28.8 22.0 covers NKRI territorial Zinc TOTAL 17 31 48 19557.9 9616.6 Increase Local Added Increase foreign Value exchange revenue through Export Supporting Policy For Downstream Industry Provide Industrial Infrastructure / Development of sufficient Industry Area or SEZ (port, energy, land, natural gas, etc.) Create a conducive industrial business environment (Job Creation Law, risk-based business licensing, OSS, etc.) Fiscal incentive and disincentive Technology provision, building advanced human resources, and industrial machinery. Source: Coordinating Ministry for Economic Affairs Coal Development Project The development of the Coal to DME Project aims to increase national energy security by reducing LPG imports. The project in Tanjung Enim will become a Special Economic Zone (SEZ) so that facilities and incentives will support it. With 6 million tons of coal annually, this project can produce 1.4 million DME to reduce LPG imports by 1 million tons annually. Source: Ministry of Energy and Mineral Resources, 2022 Bukit Asam Sepondcows PERTAMINA PRODUCA 8000 COAL TO DME PLAN Gasification COAL 6 MTPA SYNGAS METHANOL DME 1,4 MTPA Tanjung Enim 33#35Government Continues to Support the Development of Downstream Industries Indonesia's Coal Gasification Roadmap until 2045 ♦2021 ♦2025 2030 2035 2045 2021-2025 Establishment of 3 · Gasification Plants for DME and/or Industry • Import of LPG has • decreased by 3,51 million tons by DME substitution Infrastructure and Product Distribution Channel for Coal Upgrading Phase-1 has been built Establishment of Coke Factory for Metallurgy • Increased value-added of around 19.6 million tons of coal in the Downstream Industry. Coal Source: Ministry of Energy and Mineral Resources • • . • 2026-2030 Increased capacity of the Gasification Industry to meet the demand for DME and Industry Establishment of 2 Coal to SNG plants in Sumatra. Establishment of a bio-coal briquette factory and implement the use of bio- coal briquettes. Coal Upgrading industry started operation. Increased value-added of around 22.7 million tons of coal in the Coal Downstream Industry. 2031-2035 • Increased capacity of the Gasification Industry to meet the demand for DME and Industry Establishment of 2 Coal to SNG plants in Sumatra & 1 plant in Kalimantan. • Establishment of the Coal Liquefaction Industry to substitute gasoline Establishment imported of REE industry and Advanced Materials, Agri-Industry, Materials from coal. • Increased value-added of around 28.7 million tons of coal the Coal Downstream Industry. in • . • 2036-2045 Increased capacity of the gasification industry to meet the demand for 19.81 million tons of Methanol for DME and Industry Increased capacity (optimization) in each Coal Downstream Industry There has been an increase in value-added of around 40.7 million tons of coal in the Coal Downstream Industry. 34 =4#36Indonesia Encourages Down streaming of Commodities One of which is Encouraging the Development of Nickel-Based Industries to Become a Global Battery and EV Supplier A. The ban on nickel ore exports maintains the availability of raw materials for downstream industries 1. Potential: Indonesia's Nickel Reserves Are Abundant 2. Strategies Global Nickel Reserve INDONESIA Australia 21,0 M 20,0 M Commodity Brazil Other 16,0 M 14,0 M Russia 6,9 M Nickel Ore (HS 2604) Cuba 5,5 M Philippines 4,8 M Also rich in other battery materials reserve South Africa 3,7 M China 2,8 M Canada 2,8 M Guatemala 1,8 M Madagascar 1,6.M 1.2 billion ton 51 million ton 43 million ton Aluminium Copper Manganese Colombia 0,4 M US 0,1 M Cobalt Lithium Graphite Indonesia's nickel reserves are the largest reserves in the world reaching 21 million nickel ore or with a share of 23.7% of all world reserves. Source: Coordinating Ministry for Economic Affairs Export Value (Million USD) 2019 2020 2021 1.097 Prohibited → 0 Prohibited → 0 600 1.056 Indonesia and the Main Exporting Country B. Invest in End-to-end EV Battery value chain development Estimated total investment of USD 15.3 Billion*) to build End-to-end value chain EV Batteries with a capacity of 140 GWh C. Supporting Regulation Presidential Decree No. 55 of 2019 to Accelerate the Use of Battery Electric Vehicles (BEV) on the Road & Government Regulation No. 74/2021 - Accelerated Development of BEV 3. Benefits and Added Value of Nickel Downstream Value added process Input Nikcel Output Value-added 90 to 150 Batter times 1 35#37Economic transformation from primary sector industry to value added (downstream) based industry Transformation is needed to increase the added value of a product which will later have an impact on national economic growth Raw Materials Export Ban Focus on natural resources which are Indonesia's advantages compared to other countries, ex: nickel Source: Ministry of Investment (BKPM) Nickel (2020) Bauxite (2022) Copper (2023) Natural Resources based economics (primary) Value added based TRANSFORMASI EKONOMI economy Focus on downstream industry 36#38Downstream of Nickel Makes Indonesia the World Electric Car Production Center Electric Car Components Based on Cost 1. 35% Battery 2. 15% Electric Motor 3. 50% Other components Source: Ministry of Investment (BKPM) pp World Nickel Ore Reserve Comparison Guatamela; 2.0% Madagaskar; 1.8% Kolombia; 0.5% nada; 3.0%. Tiongkok; 3.2%. Afrika Selatan; 4.2% Filipina; 5.4% Battery components in widely used electric cars Nickel-Cobalt- Aluminium (NCA) 1. 80% Nickel Nickel-Mangan-Cobalt (NMC811) 1. 80% Nickel 2. 15% Cobalt 2. 10% Mangan 3. 5% Aluminum 3. 10% Cobalt Indonesia; 23.7% Kuba; 6.2% Negara Lainnya; 7.3% Australia; 21.5% Rusia; 8.6% Brazil; 12.4% Indonesia's nickel ore reserves are the largest reserves in the world, accounting for 23.7% of the world's reserves. 37 37#39Risk-Based Licensing Approach Risk Level PREPARATION OPERATIONAL COMMERCIAL Low NIB Low Middle Upper Midle SS* : self declaration verification result NIB as the single license for preparation, operational, and commercial stages Business actors are still required to comply with the implementation of K3L standards For Micro & Small Businesses, guidance is carried out by the Government in the implementation of K3L standards NIB and Standard Certificate (SS) as the license for preparation, operational, and commercial stages Notes: NIB+SS NIB+SS* Standard Certificate in the form of self-declaration to meet business activity standards Business actors are required to meet business standards Supervision is carried out to ensure that business actors meet business standards • Standard Certificate in the form of self- declaration to meet business activity standards * NIB + SS" as the license for preparation stage. verification> SS** SS ** is issued after verification of compliance with business standards by the Government NIB + SS ** as a business license is valid for operational and commercial stages High NIB NIB as the business license for the preparation stage NIB + LICENSE Companies must meet all the requirements before license is issued. NIB + Permit as business license for the operational and commercial stages. Source: Ministry of Investment (BKPM) 38#40Risk-based Business Licensing Deregulation Measures To Encourage FDI Ex-ante Licensing (satisfying all requirements in advance) is effectively replaced by ex-post licensing (the requirements are checked afterward), which will be particularly advantageous for low- and medium-risk businesses. Starting a Business Doing Business The Government implemented OSS-RBA on August 9, 2021, based on Regulation 5 of 2021. RISK-BASED TARGETING Optimizing Effectiveness and Cost of Monitoring: Low Risk Medium Risk High Risk NIB Issued = 3.049.239 Period August 4, 2021 - December 23, 2022 Based on Business Based on Actor: Investment Type: Business Entity • FDI 10.298 = 377.853 DDI = = • Individual 2.671.386 Short Medium-term . . • - 3.038.941 Action Plans Based on Business Scale: Micro = 2.888.733 • Small = 117.477 Medium 16.565 Large = 26.464 Accelerate the reduction of Ex Ante licenses toward Ex Post compliance (Risk-Based Approach) Towards technical regulations for risk management - Third Party System Establish OSS as a national portal for business licenses with legal security Long-term Speed up better development approach (e.g., climate change, etc.) Source: Coordinating Ministry for Economic Affairs • Resource and time limitations Focus on critical hazards that are more likely to arise Consider random inspections because blanket inspections are not appropriate, resulting in excessively costly (for countries and businesses) INSPECTION: . Based on the risk Inspection is carried out to operational and commercial standards ensure the implementation of activities according to business exception in the implementation of supervision for Micro and Small Enterprises implementation of inspections can be carried out by certified professionals (third parties). The Progress of Development Monitoring/Inspection Subsystem Of the 44 modules in the monitoring (inspection) subsystem: • 36 modules have been completed/embedded in the OSS RBA (go-live) 8 modules are still in the process of User Acceptance Testing (UAT) 39#41Implementation of Risk-Based Business Licensing Government Regulation Number 5 of 2021 1 The Risk Based Business Licensing SOP (NSPK) in OSS is a single reference for the Central Government, Local Government and Business Actors. 2 The OSS system must be used by Ministries / Agencies, Local Governments, SEZ, FTZ and Business Actors. The business licensing process is carried out in the OSS system provided by BKPM. oss.go.id The OSS system is divided into 3 subsystems, namely: 1) Information Service 3 Subsystem; 2) Business Licensing Subsystem; 3) Supervision Subsystem 4 Supervision in an integrated and coordinated between Ministries/Agencis, local government, KEK, KPBPB through the OSS System. Source: Ministry of Investment (BKPM) 40 40#42Architecture of OSS System 2. SUB SYSTEM OF LICENSING & FACILITIES Investor 1. SUB SYSTEM OF INFORMATION General Information on Business Licensing 2.a. VALIDATION 2.b. SMART ENGINE Profile of KTP - Dukcapil Paspor-Imigrasi 筆 Akta - AHU Complaint Services OSS Dictionary NPWP-DJP OSS User Manual Investor Requirements/ Obligations லிடிகாவில் Durations/ SLA Basic Requirements Business Activities/ KBLI Investment List Scale of Business Authority Other Criteria Investment INVESTMENT FACILITIES 2.c. OUTPUT BASIC LICENCES RISK-BASED BUSINESS LICENCES (PB) Low Risk: Business Identity Number (NIB) Lower-Middle Risk: NIB + Standard Certificate (SS) Upper-Middle Risk: NIB + Verified SS High Risk: NIB + License (+Verified SS*) 3. SUB SYSTEM OF SUPERVISION Regular Supervision Incidental Supervision Annual Supervision Schedule Assignment Letter Supervision Report/MoS Profile of Investor 11 SUPPORTING BUSINESS LICENCES (UMKU) *) *) As required. Imposition of Sanctions FAQ Business Licensing Simulation Source: Ministry of Investment (BKPM) KKPR Darat - ATR/BPN Risk Parameters Risk Valuations RISK MANAGEMENT ENGINE KKPR Laut - KKP KBLI/ Business Activities- based Risk Matrix : - Risk Assessment from related Ministries Land Area Building Details Other Criteria Input/Evaluation/ Site Visit Verification & Notification Central Regional Government based on Authority (+Supporting IT System) 41#43Investment Policy Direction 2020-2024: Improving Investment Quality To Promote Inclusive and Sustainable Economic Growth Job Creation/ Labor intensive Encouraging investment in labor-intensive business fields and developing business fields that involve the community by utilizing existing human resources Encouraging downstream products and increased use of domestic products Optimizing the use of natural resources and domestic production Encouraging increased investment in business sectors categorized as green investment and having a large positive social impact and equitable investment throughout Indonesia Environmental and Social Equality (ESG) Encouraging investment in export-oriented industries and industries that substitute imports Direction of Investment Policy: Quality Investment 2020-2024 Export Oriented and Import Subtitution Sumber: Strategic Planning of Ministry of Investment/ BKPM (Renstra) 2020 - 2024 Increase Productivity Encouraging increased company efficiency (i.e. Industry 4.0) and improvements to the Incremental Capital Output Ratio (ICOR) Transfer of Knowledge and Technology Encouraging human resource development and increasing R&D in an effort to master technology Improve Competitivenes s and Market Access Encouraging increased perceptions and opening up a wider market for national companies and MSMEs through business partnerships 42#44Investment Realization Target 2020 to 2024 With the direction of President Jokowi to improve the economic growth, the investment realization target will be increased from IDR900T in 2021 to IDR1,200T in 2022 No Strategic Goals and Key Performance Index BKPM 2020-2024 Units 2020 2021 2022 2023 2024 1 Investment Realization Rp Trillion 817.2 858.5 968.4 1,099.8 1,239.3 2 Investment Realization in Secondary Sector Rp Trillion 227.2 268.7 352.5 483.9 646.1 3 Quality Investment Distribution (outside Java) % 48.3% 49.0% 49.7% 50.6% 51.7% 4 Investment Contribution from DDI including SME's % 48.8% 49.7% 50.3% 51.9% 53.1% Total Investment 47,3% Realization Year 2015 to 2019 Rp. 3,381.9 T Source: Ministry of Investment (BKPM) Investment Realization Target Year 2020 to 2024 Rp. 4,983.2 T The increase in investment targets from President Jokowi is expected to come from quality investments, such as processing industries that provide added value 43#45Positive Investment List: Improving the Investment Ecosystem in Indonesia Changes in the licensing process and expansion of business fields for investment will be a game changer in accelerating investment and opening new jobs INVESTMENT Changes in the Regulation of the Investment Business Field Presidential Regulation No 44 of 2016 "Indonesia Negative Investment List" List of Business Fields Closed to Investment 20 business activities Business Activities Allocated for or Requiring Partnership with Cooperatives and MSMEs 145 business activities Business Activities that are Open with Certain Requirements 350 business activities Presidential Regulation No. 49 of 2021 (PR 49/2021), which amends PR 10/2021 "Investment Business Field" Priority Business Activities 246 business activities Business Activities Allocated for or Requiring Partnership with Cooperatives and MSMEs 182 business activities Business Activities that are Open with Certain Requirements Source: Coordinating Ministry for Economic Affairs 37 business activities In principle, all business fields are open to investment, except for business fields that are declared closed for investment or activities that the Central Government can only carry out. • Investment value for PMA > IDR 10 billion excluding the value of land and buildings. However, to encourage technology- based startups in the SEZ, the investment value of PMA can be <= IDR 10 billion, excluding the value of land and buildings Priority Business Activities with the following criteria: National strategic project/program Capital intensive Labour intensive High technology Fiscal Incentives 1. Tax Incentives: • Tax Allowances Tax Holidays • Investment Allowances 2. Customs incentives in the form of import duty exemption for import of machinery and goods for industrial development and expansion Pioneer industry Export oriented Oriented in research, development, and innovation activities Non-Fiscal Facilities 1. Ease of obtaining business licenses 2. Provision of supporting infrastructure 3. Guarantees on availability of energy 4. Guarantees on materials 5. Immigration 6. Manpower availability 7. Other non-fiscal supports of 44#46QUARTER III Investment Realization in Q3-2022 y-o-y In Trillion Rupiah TARGET ACHIEVEMENT 2021 2022 Q-III 2022 307.6 362.2 282.4 42.1% Q-1 Q-II Q-III Q-I Q-II Q-III Y-o-Y Q-o-Q 2022 *DDI 108.0 106.2 113.5 135.2 139.0 138.9 22.5% -0.05% 572.4 72.2% 219.7 223.0 216.7 FDI 111.7 116.8 103.2 147.2 163.2 168.9 63.6% 3.5% 627.6 76.4% Q-I Q-II Q-III 2021 2021 2021 Q-I Q-II Q-III TOTAL 219.7 223.0 216.7 282.4 302.2 307.8 42.1% 1.9% 1,200.0 74.4% 2022 2022 2022 JANUARY- JANUARY - JANUARY - SEPTEMBER SEPTEMBER SEPTEMBER 2022 2021 2022 Y-O-Y DDI 327.7 413.1 26.1% Indonesian Labor Absorption Q III 2021: 288,687 Indonesian Labor y-o-y In Trillion Rupiah Absorption Q III FDI 331.7 479.3 44.5% 2022: 325,575 892.4 TOTAL 659.4 892.4 35.3% (12.8%. y-o-y) JANUARY - SEPTEMBER 35.3% 659.4 2021 2022 Source: Ministry of Investment (BKPM) *) The achievement of investment realization in January - September 2022 period is a rounded number. **) 2022 Investment Realization Target: Rp 968.4 T (Strategic Plan) As regulated in BKPM Regulation Number 2 of 2020 concerning BKPM Strategic Plan 2020-2024 The adjustment of investment realization target for 2022: Rp 1,200 T (President's Instruction) ***) Towards the 2022 investment realization target according to the President's Instruction 45#47Investment Realization in Q3-2022 (excluding the upstream oil and gas sector and financial services) Outside Java IDR 112.5 T (51.9%) Q3-2021 Total: IDR 216.7 T Realization y-o-y Java Java 47.9% IDR 104.2 T (48.1%) Outside Java Outside Java 35.8% TOTAL 42.1% IDR 166.3 T (54.0%) Direct Investments IDR tn FDI DDI TOTAL ။ Q3-2022 Total IDR 307.8 T Java IDR 141.5 T (46.0%) 307.8 138.9 168.9 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 2013 2014 Source: Ministry of Investment (BKPM) 2015 2016 2017 2018 2019 2020 2021 2022 46#48Investment Realization in January-September 2022 (excluding the upstream oil and gas sector and financial services) Top 5 Investors (by country) (in USD billion) By Region in IDR Trillion Riau 71.9 Central Sulawesi 76.4 Singapore 10.5 31.6% East Java 79.5 Special Territory of Jakarta 108.9 West Java 128.4 China 15.5% 5.2 Hong Kong 3.9 11.7% By Sector in IDR Trillion Electricity, Gas, and Water 68.6 Japan 2.8 Housing, Industrial Estate, and Office Building 80.5 8.3% Mining 96.5 Malaysia 2.2 Transportation, Warehouse, and Telecommunication 97.6 6.6% Metal, Metal Goods, Except Machinery, and Equipment Industry 131.8 Source: Ministry of Investment (BKPM) I 47#49Government of Indonesia has ratified a number of significant implementing regulation as part of regulatory reform to ease infrastructure investment Government Regulation No. 42/2021 on Ease of Doing Business for PSN Government Regulation No. 19/2021 on Land Acquisition for Public Interest Government Regulation No. 43/2021 on Spatial Adjustment for Forest and Land Right/Permit JIJ N A Government Regulation No. 21/2021on Spatial Planning Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Government Regulation No. 64/2021 on Land Bank Institution 專 48#50All National Strategic Projects have been given a special facility to ease each of the project's implementation as stipulated in the Pres. Regulation No. 109/2020 PSN Facility Land transfer fee waiver for PSN Local content utilization Electronic permit licensing Government guarantee Spatial planning IT Monitoring system by KPPIP Land aquisition Existing New norm on Presidential Regulation No. 109/2020 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) SOE appointment Debottlenecking Procurement acceleration Law settlement assistance Project acceleration for private investment 49 49#51National Strategic Project (PSN) list is established in 2016, and have undergone several amendments until recently stipulated* Pres. Regulation No. 3/2016 2016 225 Projects 1 Program USD 168,58 Billion PSN List Evaluation Pres. Regulation No. 58/2017 2017 245 Projects 1 Program USD 283,06 Billion PSN List Evaluation Pres. Regulation No. 56/2018 2018 223 Projects 3 Programs USD 265,91 Billion PSN List Evaluation Pres. Regulation No. 109/2020 2020 201 Projects 10 Programs USD 308,7 Billion PSN List Evaluation Coord. Minister Regulation No. 7/2021 2021 208 Projects 10 Programs USD 365,13 Billion Coord. Minister Regulation No. 9/2022 PSN List Evaluation 2022 200 Projects 12 Programs USD 351,22 Billion Project included in the PSN List Proposed project is evaluated by KPPIP and approved through High level Limited Meeting (Ratas) Ongoing project from the previous list and being pushed by the government The project has been declared Complete and there are no issues that need to be resolved The project no longer requires PSN facilities 。 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) * under Coordinating Minister Regulation No.9 / 2022 || || Project excluded from the PSN List 50#52National Strategic Project (PSN) consists of 200 Projects and 12 Programs with estimated investment value of USD 351.22 Billion* 13 Kalimantan 42 Proyek Sumatera Proyek USD 15,4 Billion USD 49,01 Billion A Road 000 Dams 53 Projects 47 Projects Smelter Program 1 81 Program Proyek Jawa USD 126,45 Billion 11 11 Program Project Nasional USD 99,33 Billion 13% State Budget 22 Proyek Sulawesi 13 Proyek Investment 20% Proportion Maluku & Papua 67% USD 36,47 Billion USD 21,48 Billion 18 Bali & Nusa Proyek Tenggara USD 2,92 Billion PSN list covers 14 sectors on project level and 12 Program level Private SOE Budget Irrigation Ind. Estate Railway Plantation Energy Ports Cleanwater, Wastewater, Sea Wall Airport Tourism Education Technology Housing SEZ Sugar & Palm & Projects 18 Projects 14 Projects 1 Project 14 Projects 15 Projects 14 Projects 6 Projects 1 Project 1 Proyek 6 Proyek 2 Proyek Program Program Program Superhub Electricity Program Economic Dev. Program Toll Road Access Program Food Estate Program Strategic Tourism Waste to Energy Program Border Dev. Program Program 1555#53Highlighted PSN Projects which aligned with recent National ESG (Environment - Social - Governance) Agenda (1/2) Electricity Program with focus on Renewables 1 Electricity Infrastructure Development (PIK) (which contains projects listed in RUPTL 2021-2030); Electricity Program 2 National Rooftop Solar Power Plant 3 Large-scale Solar Power Plant in Riau Islands 52#54Highlighted PSN Projects which aligned with recent National ESG (Environment - Social - Governance) Agenda (2/2) EV Battery end-to-end Development Plant The Electric Vehicle Battery Industry is one of the Government's priorities In the next five years, the President's direction is that the government wants to focus on the downstream industry of nickel ore, considering that Indonesia has the largest reserves in the world. Electric Battery Development Program as part of new PSN List in 2022 1. Nickel Smelter in East Halmahera PT Indonesia Battery Corporation in East Halmahera Sowa Soph REK Loc #2 A joint venture project with the LGES consortium to support the supply of nickel for the electric vehicle battery industry in Indonesia at the Batang Integrated Industrial Estate Paralia lli East Sul 2. PT Vale Indonesia Integrated Smelter Development Project in Pomala Contributing the downstreaming of electric battery precursor products up to 40,000 tons/year 53#55Since 2016, 141 National Strategic Projects have been fully operational, and most of the projects have been expedited to move from preparation phase 5th PSN List Amendments: Addition of 13 projects/programs 1st PSN List Amendment: Addition of 55 projects + 1 Aero Industry program 2nd PSN List Amendment: Addition of 2 projects +1 Economic Equity Program 3rd PSN List Amendment: Reduction of 9 projects + 1 program Addition of 88 projects + 5 programs 4th PSN List Amendments: Addition of 7 projects Sept 2022 Legend 2021 2020 2019 2018 104 Projects 128 Projects USD 49,94 B 141 Projects USD 63,87 B Completion 2017 92 projects USD 32,52 B USD 41,09 B 62 projects *85% of 30 projects USD 21,02 B 2016 20 Projects USD 2,32 B USD 6,59 B 37 projects + 32 projects + 28 projects + 24 projects + 1 program 2 programs 2 programs 5 programs 26 projects + 7 programs 28 projects + 9 programs projects have moved from preparation phase Operated Partially Construction 96 projects + 1 Electricity Program 100 projects 95 projects 99 projects+ 86 projects 89 projects 119 projects 1 program Transaction 11 projects 6 projects 13 projects 6 projects 4 projects 10 projects 32 projects + 6 projects 53 projects + 1 aero industry program 36 projects +1 aero industry program 47 projects + 3 programs 66 projects 3 programs 81 projects 59 projects + 1 aero industry program +4 programs 15 projects 29 projects 9 projects + 1 Program Preparation Project excluded from PSN List 54 54#56Government of Indonesia has set various initiatives to drive private sector participation in Infrastructure sector especially for National Strategic Projects 1 4 2 3 I Public Private | Partnership (PPP) Limited Concession Scheme (LCS) Land Value Capture (LVC) Other Creative I Financing for I Infrastructure ! 55#57Government of Indonesia has conducted institutional reforms to establish a conducive PPP ecosystem... 1 Public Private Partnership (PPP) Institutional Reforms for PPP Implementation KPPIP: kpop Coordinating unit in decision-making processes and debottlenecking efforts for infrastructure acceleration Indonesia Infrastructure IIGF Guarantee Fund: Provides guarantee and supports project preparation SMI KANTOR BERSAMA KPBU REPUBLIK INDONESIA Gay of PPP Joint Office: Information center for policy coordination and capacity building to encourage the use of PPP schemes Sarana Multi Infrastruktur: Facilitating infrastructure financing, preparing project, and serving advisory PPP Guarantee As a Single Window Institution to provide Government guarantee for PPP infrastructure projects. Presidential Regulation 78/2010: McF Regulation 8/2016 PPP Project Development Facility Provide project preparation and transaction advisory services for PPP projects assigned by the Minister of Finance (MoF). MoF Regulation 180/2020 National Strategic Project (PSN) Guarantee Project Guarantee against Political Risks that can result in delays in the implementation of PSN and unfavorable financial impact on Business Entities implementing PSN. MoF Regulation 30/2021 SOE Credit Guarantee Credit guarantee against of State Owned Enterprises ISOE default risk on loans and bond issuance to finance infrastructure project MoF Regulation 101/2018 National Economic Recovery Program Corporate Credit Guarantee Credit Guarantee for Corporate working capital as part of National Economic Recovery Program McF Regulation 96/2021 Credit Guarantee for State- owned Enterprises/SOE involved in National Economic Recovery Program MoF Regulation 211/2021 Government Commitment through Fiscal Support o0oll Project Preparation Project Development Facility (PDF) MoF assigns SOE to assist CA in PPP project preparation and transaction Commitment Contracting Agency (CA) Commitment Through conversion from State Budget to PPP financing scheme Viability of Project Viability Gap Fund (VGF) MoF provides support resulting a more viable project to be offered to market Availability Payment (AP) MoF provides periodic payment scheme for non- commercial projects that greatly needed by public Bankability Sovereign Guarantee and Long-Term Financing MoF established SOE in order to provide sovereign guarantee and long-term financing support Land Support MoF established dedicated unit that settle land acquisition payment to be used for strategic infrastructure projects Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 56#58Under National Strategic Project (PSN) there are 214 projects identified to be delivered through Public Private Partnership (PPP) with various project' scales and sectors 1 i PPP Projects under National Strategic Projects (PSN) - incl. PSN Programs (Updated on September 2022) Public Private Partnership (PPP) IL 200 projects under 14 sectors PSN Program #10 Regional Development Program 31 Projects 49 Projects 56 Projects (USD 52,47 Bil) 6 Projects (USD 0,87 Bil) (USD 7,37 Bil) (USD 16,33 Bil) 214 PPP Projects Waste to Energy Programs Central Java Projects 72 Projects (USD 9,12 Bil) East Java Projects West Java Projects Total 30% of the projects are small scale PPP projects initiated by the Regional Government, with investment value under USD 15 Million. PSN Projects 41 out of 56 projects have passed the preparation stage 33 out of 56 projects are from Toll Road Sectors Highlighted Projects Kediri Airport PPP Unsolicited - Initiated by Private Investment Value USD 607 Million (incl. land acquisition) Project Scope - Design Build Finance - Operate - Maintain Transfer (DBFOMT) 50 years concession User Charge Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 44 57#59Government of Indonesia has stipulated Limited Concession Scheme as an asset recycling scheme for brownfield infrastructure asset 2 ㅁㅁㅁ Limited Concession Scheme (LCS) Limited Concession Scheme (LCS) is a concession agreement, that includes asset operations and development, between Government and Private Entities for 20+ years of concession period. LCS Concept 060 AGA Government can get: + • + Upfront payment that can be received at the time of Financial Close, and/or Annuity payment during the concession period Additional incentives in the form of revenue sharing All future CAPEX will be borne fully by the concessionaire, thus easing the burden of Government's budget Government guarantees the issuance of permits and licenses Flexible operations allow private sector to innovate and increase revenue LCS Principles LCS transfers concession rights from brownfield asset owned by the Government and/or SOES to private sector to operate, maintain, and develop the assets; As the rewards, Government and/or SOE will receive upfront payment or annuity payment during the concession period Future CAPEX during the concession period will be borne by the concession holder to ease the Government and SOE budget burdens Technical Criteria for the LCS assets The asset has been fully operated for minimum 2 years The asset needs to improve operation efficiency based on international standard Asset's useful life minimum is 10 years For the SOE's asset, the asset must have positive cash flow for minimum 2 years in a row and has been audited at least 3 years in a row For Government asset (BMN), the asset should be on the Ministry Financial report that has been audited based on the Government Accountancy Standard in the previous period Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 58#60Government of Indonesia try to implement LVC Scheme in order to alleviate government burden on infrastructure development 3 A policy approach that enables communities to recover and reinvest economic value increases and increases in economic productivity that result from public investment and other government actions. (Lincoln Institute of Land Policy) Land Value Capture (LVC) Open Housing & Settlement KeepInvesting- network Grows Human Settlement Improvement $ Tax based LVC Land and Property Tax Value Uplift Betterment Levies and Special Assessment Tax Increment Financing (TIF) Retain a Portion Development Based LVC Land Sale and Rent Air Right Sale Joint Development Land Readjustment LVC Benefit Local revenue from tax and levy Better city planning and development Regional growth I • • |⚫ Distributed development in urban area Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Triple Win LVC Better Urban Mobility Reducing Subsidy Source: KPPIP, Kemenko Perekonomian, Desember 2020 Creating Fiscal Space 59 59#61Government of Indonesia is exploring the potential of pilot project on LVC to encourage Regional Government in implementing LVC Scheme 3 Land Value Capture (LVC) Coordinating Ministry of Economic Affairs in partnership with The World Bank and DFAT- Australia has formulated Piloting Project study (Demo Project) for Land Value Capture initiatives in 5 Cities Bandung, Jawa Barat MRT Station Harmoni, TOD Jurangmangu, Tangerang, Banten Gedebage Area, DKI Jakarta Value Capture Instrument: FAR (Floor Area Ratio) Compensation Betterment Levy Value Capture Instrument: Concession Fee Betterment Levy Value Capture Instrument: Betterment Levy TOD Tawang Station, Semarang, Jawa Tengah Value Capture Instrument: Concession Fee Betterment Levy Sekanak - Lambidaro Area Development, Palembang, Sumatera Selatan Value Capture Instrument: Betterment Levy Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 60 60#62SDG Indonesia One is launched by PT SMI as an integrated funding platform for private investor Other Creative Financing for Infrastructure Profile of PT SMI • . PT SMI is a SOEs' non-bank financial institution with 100% of its shares owned by the Indonesian government. The first financial institution in Southeast Asia accredited by Green Climate Fund (GFC SDGs Initiative THE WORLD BANK AllB ESTEST BASE ADB AFD gef ACTF • The platform was launched in October 2018 • The Pipeline Projects comprise public transportation sector, health care, renewable energy, tourism and drinking water supply system Impact toward SDGs: Increase funds availability for infrastructure projects and project appropriateness. KFW Development Partners Bank Loan VSMi Capital Market USD 700 min Offshore Loan Syndication M MUFG CTBCRANK Maybank нас Standard DBS mandiri UOB Chartered 武道行(税込) BCA Danson ⚫EMTN Program USD 2 billion Shelf Registration Conventional Bonds I Rp 30 cron Shelf Registration Conventional Bonds II Rp 25 trillion use 1.72 Shelf Registration Sukuk Mudharabah Rp 3 trillion ( Shelf Registration Green Bonds Rp 3 trillions MTN Ruplah Rp 850 tale o MTN USD 300 mio Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Infrastructure Projects Source: PT SMI, 2019 MOX SLACK 2000. 0+ 5501 PITER 10 да Focuses on 15 out of 17 components in SDGs which are related to infrastructure development 61#63Other Financing Scheme and Modality - Indonesia Investment Authority (INA) as an Alternative Source of Economic Development Financing Legal basis Other Creative Financing for Infrastructure Development ⚫PP Number 73 of 2020 concerning Initial Capital for indonesia Investment Authority ⚫PP Number 74 of 2020 concerning Indonesia Investment Authority •PP Number 49 of 2021 concerning Tax Treatment of Transactions Involving Indonesia Investment Authority and/or Entities Owned ⚫PP Numbers 110 and 111 of 2021 concerning the Addition of PMN to the Capital of Investment Management Institutions ⚫The Supervisory Board has been formed based on Presidential Decree No. 6/P of 2021 •The Board of Directors has been formed based on the Decree of the INA Council Number 1 of 2021 ⚫An initial capital of IDR 15 T has been allocated in 2020, and an additional capital of IDR 15 T from PMN and from the transfer of shares amounting to IDR 45 T •There have been discussions with more than 50 companies to become strategic partners, and several countries have expressed a desire to partner with INA Main Sectors of Investment Health Services Seaports Toll Airport Road Industrial Area Digital Infrastructure Renewable Energy Traditional Energy Plantation Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Development of INA's Progress The total investment opportunity commitment received up to June 2022 reached >USD 20 billion. At least two investment opportunities are expected to be closed in 2022-2023: Toll Road and Seaport. Current cooperation agreements secured are: . Toll Road: Investment platform with ADIA, CDPQ, and APG for USD 3,75 billion. Hutama Karya's opportunity is expected to close in December 2022, while ADIA is reevaluating the Waskita Karya opportunity. •Seaports: Alliance agreement with DP World to develop ports and support infrastructure amounting to USD 7.5 billion throughout the concession period. ⚫ General: USD 10 billion investment framework agreement with ADG for various sectors in Indonesia Investment opportunity that has been completed: Digital infrastructure: Mitratel's IPO with ADIA, ADG, and GIC for a total of USD 770 million 62 29#64Indonesia Investment Authority (INA) as an Alternative Source of Economic Development Financing Other Creative Financing for Infrastructure Limited Mutual Fund (RDPT - Reksadana Penyertaan Terbatas) Recent Progress • . Capital Market Instrument in a form of Mutual Fund that is offered to limited investors Since 2018, there are already more 1 Example on RDPT Financing Summary of TPJT TPJT is located at East Java where it connects the area of Pasuruan and Probolinggo. The Toll Road will potentially attract traffic from western part of Java going across Surabaya, Probolinggo and Banyuwangi for tourism. TPJT is a subsidiary of PT Waskita Transjawa Toll Road ("WTTR"). Location: East Java Ownership Structure RDPT 60.5% WTTR 99.9% trans-jawa работи jalan tol Toll Road 39.50% than 50 products of RDPT with approximate value of IDR 16 Trillion 2 and USD 125 Million • Most of the sector offered is on Toll Road Sector Waskita Toll Road Raih Rp550 M dari Emisi RDPT Infrastruktur MARKET-Donald Banjamahor, CNBC Indones. la ww Summary of KKDM KKDM was established on December 20, 1996. KKDM obtained the Toll Road Concession Rights for Bekasi-Cawang- Kampung Melayu Toll Road section ("Becakayu") with concession period of 40 years (start concession period: 2016). It is planned to connect to Jakarta Inter Urban Toll Road ("JIUT"). Location: Greater Jakarta Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Ownership Structure RDPT JASAMARGA Toll Road 27.90% 71.80% 0.3% HKKDM JALAN TOL RECAKAVU 63#65Indonesia's Special Economic Zone (SEZs) Encourage Economic Growth, Equitable Development, and Increase Competitiveness. KEK Anno Best Lithonia, est P50017 F Beroperasi Csere-20-2 Keglat Ulama -Troustri Eneny - Faris dan mam Iran forgater Kapu Lic 2 KEKS M Jah Sangun, Su -PP No. 23/2012 F1202 10:33 - A Induri Rada So Induced Fangola son Kand -Fer lege & KET 14K 4.KEK Kell 11. KEN Seg 2. KEH MBTK Kab. Malang, Timur PN. EM010 kab. Lam4 Tonga, T 11211 Ju K 2017 gaton Jr. - Oktober 2 Нитрила Арт Katany PP101014 Bad Sauber 2017 Porta nduan Peng when ap Pak C Induct Loger D Logistic 5LoC Malacca Kellen utome: Ka. SUMMARY OF THE 18 SPECIAL ECONOMIC ZONES PERFORMANCE KKT Mine (PP 8419-December 2014 Haria KEH Mogul Utara PP No 322014-2014 13019 Kelan Ulame sudri Faber Park 7. SEK Merola kha, Mackl PP214 1.-2014 Erper Apr 201 - Fim Pr Investment Commitment USD 9.3 B Investment Realization by Tenant (USD Billion) USD 6.5 B 2019-2022 Investment Realization (Tenant & Developer) 2019 2020 5.2* Ratio of Foreign and Domestic Investment 3.4 AH, K -PP N 47/2001-320210 stan Utam Industri HSC (H. Gul Rewar 4. KEH Kolat, Kelan ki IFF No. 64/222-Juni 2010 العام الحال المالية -IT- -Forwa ALKI-T B. KEM Botang Kepler FF No. 43.2017 Oktober 2017 Вопорогов Desember 2010 Kelton Lana -Ingatk &PEKT Kong Kab. Bellar, Bare IFF No 29-Mar 201 Benoper March 2019 Ken Do For 2. KEK Hab. Perlegar. Berter PP 2012 2012 BF315 P ALKI-II ALAI-II KEL - MW. G: -Pa Incudn MAIN TARGET OF SEZS Import Substitution & Export Promotion Industry 4.0 Acceleration industrialization Source: Coordinating Ministry for Economic Affairs Regional Development - - Lodi !.KEH Sorong Sang Parat (PP 2015-201 Ecopos Cktober 20 Ram: -cari Fal -Incastri Fengolahan Kelas Sent -incustri salon bl -Logidik KIKAI OKEK Kah Mendal Jag Hah link, w mur FF No. 20'S D lampus Ni ا الله اول -Inout Duca -hard fabr I Thouni aten nour En Logsok Regatan Utano ret Edderk Indust ma ndug -k Domestic Investment (28%) USD 1,8 B USD 4,7 B Foreign Investment (72%) Export Performance (Sept 2022) USD 324.7 Million (USD Million) 1.7 0.8 Number of Employment 47,287 660.6 367.4376.9 324.7 258.7270.1 181.2 Services Industry Development 34.3 Improve Trade Balance ïll 2015 2016 2017 2018 2019 2020 2021 2022 64 *) up to September 2022 USD1 = Rp15,569.05 64#66Government Guarantee For Basic Infrastructure Development Reflects strong commitment to national development planning Government Guarantee Program Credit Guarantee Business Viability Guarantee (BVG) PPP Guarantee Political Risk Guarantee Power (Electricity) - Full credit guarantee for PT PLN's debt payment obligation under FTP 1 10,000MW and 35GW programs*. 1 Clean Water - Guarantee for 70% of PDAM'S debt principal payment obligations. - Toll road Full credit guarantee for PT Hutama Karya's debt payment obligations for the development of Sumatra Toll Roads. Infrastructure Full credit guarantee on SOE's borrowing from international financial institution & guarantee for PT SMI's local infrastructure financing. - Public Transportation (Light Rail Transit) Full credit guarantee for PT Kereta Api Indonesia's debt payment obligations for the development of LRT Jabodebek. - Power (Electricity) - Guarantee for PT PLN's obligations under Power Purchase Agreements with IPPS (off-take and political risk) under FTP-2 10.000MW and 35GW programs* - Infrastructure Guarantee for Government- related entities obligations (line ministries, local governments, SOEs, local SOEs) under PPP contracts/agreements Infrastructure Guarantee against infrastructure risks for National Strategic Projects (Presidential Decree No.58/2017) which are not covered by other type of guarantees Source: Ministry of Finance Contingent Liabilities from Government Guarantee as of Q3 2022** No. Central Government Guarantee for Infrastructure Programs Guarantee Document Credit Outstanding /Investment Exposure (billion)* 1 2 Coal Power Plant 10,000MW Fast Track Program (FTP 1) Clean Water Supply Program 5 USD 0.36 6 USD 0.00 3 Direct Lending from International Financial Institution to SOEs 11 USD 2.33 4 Sumatra Toll Road 10 USD 2.85 5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) 7 USD 4.00 6 Public-Private Partnerships (PPP) 7 USD 6.38 7 Regional infrastructure financing 8 Public Transportation (Light Rail Transit) 9 Electricity Infrastructure Fast Track Program (35 GW) 5 Total 54 1 2 USD 0.20 USD 0.90 USD 6.25 USD 23.27 1 From 2008 to Q3-2022**, the government has issued 94 guarantee documents with total value of USD41.59 billion, there were 40 guarantee documents worth USD9.20 billion have been expired. 1 The Maximum Guarantee Limit for the period 2022-2025 is set at 6% of GDP. Starting from 2008 the Government has allocated a contingent budget with respect to these guarantees. Any unused budget allocation may be transferred to a guarantee reserve fund. This reserve fund, together with the relevant annual budget allocations, serves as reserves for any claim that arises from these guarantees. *) MOF provides both credit guarantees and BVGs for 35GW program **) Currency conversion of IDR15,247.00/USD1 and IDR14,716.42/EUR1 (as of end September 2022) 65#67Improving National Logistics System Resiliency: "Key Priorities In Encouraging The Investment The government established an integrated logistics system through The National Logistic System Development Policy (SISLOGNAS). This system aims to facilitate the flow of goods to fulfil the community's basic needs and increase the competitiveness of national products. LOGISTICS PROGRAM FOR 2022-2024 1 Commodity-based improvement framework 1. Specify a specific commodity. 2. 3. Identify demand patterns, supply patterns and logistics costs. Set logistics efficiency targets for these commodities, for example: a. Lead time for domestic goods delivery; Increasing national logistics efficiency, focusing on food and health products This focus aims to ensure the availability and reliability of logistics services to support the smooth distribution of goods at the district and city levels. Increasing efficiency and effectiveness of export/import flows of national leading products and imports of priority industrial raw materials. This focus aims to improve the smooth flow of exports and imports, both goods and documents, to increase Indonesian products' competitiveness in the market. global Source: Coordinating Ministry for Economic Affairs 2 3 b. Lead time at the port for import-export goods. Strengthen Key-Enabler 1. Mapping and collaborating stakeholders and off-takers to implement the action plans. 2. Establish a responsible organization to ensure the implementation of action plans to support the achievement of logistics efficiency targets. Organizing action plans based on 6 key drivers Preparing action plans based on the six key drivers to achieve efficiency in national logistics and the effectiveness of export/import flows. 6. Regulations, Rules and Legislation 5. Human Resource Management 4. ICT 3. Logistics Service Provider 2. Transportation Infrastructure Competitiveness and Social welfare 1. Main Commodity Sources: RPJMN 2020-2024; Presidential Regulation No.26/2012 Concerning Blueprint of National Logistics System Development Key Drivers: Logistic Action Plan Transportation Infrastructure → There are +90 projects of infrastructure development spread across Indonesia, such as toll roads, ports, airports and railways, to support the improvement of the logistics process Logistics Service Provider → Through Government 5/2021, of the total 81 standard classifications of business field in overall logistics sectors, 72 (around 89%) required NO LICENSE but only identification business number and/or standard certificate. Furthermore, through Presidential Regulation 10/2021, there are relaxations toward foreign investment requirements. In the logistics sectors, the relaxations take form in the allowability of foreign investment equity to fully own a business. ICT NLE is a system to provide one-stop services for the transmission of data, trade logistics documents, and secure and reliable information to serve G2G, G2B, and B2B transactions for domestic and international trade Human Resource Management → Some programs include (a) The establishment of the National Occupational Map for Logistics and Supply Chain (b) Legalization of the Indonesian National Occupation Competency Standards#68Section 3 Economic Factor: Stable Growth Prospects Supported by Continued Economic Recovery Momentum HINNESA TUNGGAL IKA#69Conducive Environment Underpinning Stable Growth Fundamentals Amid Temporary Moderation Largest Economy in South East Asia Manageable Inflation Rate 4th Most Populous country in the World; 64% in productive age Rising Middle Class and Affluent Customers From commodity-based to manufacturing and service sectors via infrastructure development From consumption-led to investment- led growth via a stronger manufacturing sector and more investment initiatives Policies to maintain purchasing power to stimulate domestic economy in the midst of weakening macroeconomic conditions Large and Stable Economy Consistent Budget Reform Reform-Oriented Administration New Economic Structure High Infrastructure Investments Budget reform as a part of larger economic reform initiative Tax base to be broadened from one reduce dependency on commodities Fuel subsidies significantly reduced and spending redirected to more productive allocation Prudent debt management Three main sources of financing for investment needs: State and regional budget, State Owned Enterprises and PPP Continuing from 2015 policy, infrastructure spending will be higher than fuel subsidy Infrastructure spending focused on basic infrastructure projects Fiscal and non-fiscal incentives to attract infrastructure investment and promote PPP 68#70National Economic Recovery Continue to Accelerate Strong GDP Growth¹ 8.0 QoQ YoY 7.07 5.72 5.02 5.01 3.72 1.5506 1.81 5.05 4.01 3.14 4.01 4.21 3.19 3.09 4.20 3.06 B.31 (1.730.36) (1.81 0.30) (1.7.41) (1.69.52) (1.742.41) (0.42 0.96) (419) (0.96) 3.83.27 3.7431 (2.07) (0.16) 6.0 4.0 2.0 0.04 0.0 -2.0 -4.0 -6.0 -8.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2014 2015 2016 2017 2018 2019 Favourable GDP Growth Compared to Peers² 10.00 % yoy 5.00 2020 2021 2022 7.40 6.70 5.80 5.30 0.00 3.20 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -5.00 National economic performance in Indonesia continued to gain momentum in Q3-2022 despite global economic moderation and rising inflation at home. This was confirmed by domestic economic growth accelerating to 5.72% (yoy) in the reporting period from 5.45% (yoy) in the second quarter of 2022. Solid economic performance was supported by ongoing improvements in terms of domestic demand, coupled with persistently strong exports. National economic improvements were also reflected by the sound performance of various economic sectors and all regions of the archipelago. Moving forward, economic growth is expected to remain intact on the back of domestic demand in line with improving mobility and the ongoing completion of national strategic projects (PSN). Notwithstanding, the impact of global economic moderation on export performance and potentially restrained household consumption due to rising inflation demand vigilance. In terms of spending, nearly all components recorded positive growth in the reporting period. Household consumption expanded 5.39% (yoy) despite moderating from 5.51% (yoy) in the previous period. Strong growth was consistent with increasing public mobility, the limited impact of fuel price adjustments as well as disbursements of social assistance (bansos) and energy subsidies. Investment improved to 4.96% (yoy), primarily driven by non-building investment in machinery and equipment. Meanwhile, government consumption experienced a 2.88% (yoy) contraction due to lower procurement spending for Covid-19 handling and the national economic recovery program. Exports continued to increase, with growth reaching 21.64% (yoy), underpinned by persistently strong demand in Indonesia's main trading partners, together with policy to accelerate exports of crude palm oil (CPO). Import growth was also high at 22.98% (yoy) in the reporting period to meet solid domestic and export demand. Nearly all economic sectors expanded in the third quarter of 2022, primarily driven by the Manufacturing Industry, Mining, Agriculture as well as Wholesale and Retail Trade. Furthermore, Transportation and Storage as well as Accommodation and Food Service Activities also posted strong growth on greater public mobility and a surge of arrivals by international travellers. Regionally, economic improvements were bolstered by growth in all regions of Indonesia, led by Sulawesi-Maluku-Papua (Sulampua), followed by Bali-Nusa Tenggara (Balinusra), Java, Kalimantan and Sumatra. 2022 Growth Projection *) 2022 Budget Bank Indonesia Institutions GDP growth 4.8-5.5 4.5-5.3 -10.00 Bulgaria India Colombia Indonesia IMF (WEO, October 2022) 5.3 -15.00 Philippines Consensus Forecast (December 2022) 5.2 1. 2. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption Source: World Economic Outlook Database - July 2022; * indicates estimated figure World Bank (GEP, June 2022) *) Consensus Forecast number will be given later ADB (ADO, December 2022) 엄업 5.1 5.4 69#71GDP Growth Breakdown GDP Growth Based on Expenditures (%, YoY)¹ 2017 2018 2019 2020 2021 2022 By expenditure Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 HH. Consumption 4.9 5.0 4.9 5.0 4.9 5,0 5,2 5,0 5,1 5,1 5,0 5,2 5,0 5,0 5,0 2,8 -5,5 -4,0 -3,6 -2,6 -2,2 6,0 1,0 3,6 2,0 4,3 5,5 5,4 Non profit HH. consumption Government consumption Gross Fixed Cap. Formation 8.1 8.5 6.0 5.3 6.9 8,1 8,8 8,7 10,9 9,1 17,0 15,3 7,4 3,5 10,6 -5,0 -7,8 -1,9 -2,1 -4,2 -3,7 4,0 2,8 3,3 1,6 5,8 5,0 6,1 2.7 (1.9) 3.5 3.8 2.1 2,7 5,2 6,3 4,6 4,8 5,3 8,2 1,0 0,5 3,3 3,8 -6,9 9,8 1,8 2,0 2,5 8,1 0,6 5,2 4,2 -6,9 -4,9 -2,9 4.8 5.3 7.1 7.3 6.2 7,9 5,8 6,9 6,1 6,7 5,0 4,6 4,2 4,1 4,5 1,7 -8,6 -6,5 -6,2 -5,0 -0,2 7,5 3,8 4,5 Exports Imports GDP 8.4 2.7 16.5 8.4 4.8 0.2 15.4 11.9 5.0 5.0 5.1 5.2 5.1 Source: Central Bureau of Statistics of Indonesia (BPS), 8.9 8.1 5,8 7,4 8,3 4,6 6,5 -1,1 12,5 15,2 14,2 7,4 12,1 -5,8 -1,2 0,9 0,6 -0,5 0,2 -12,4 -13,0 -6,9 -8,1 6,9 31,5 ** -5,9 -8,5 -8,1 -7,1 5,1 5,3 5,2 5,2 5,2 5,1 5,1 5,0 5,0 5,0 Including non-profit household consumption -5,4 -20,7 -24,5 -15,8 -16,7 4,4 3,0 -5,3 -3,5 -2,2 -2,1 -0,7 7,1 31,8 3,8 4,1 3,1 5,0 29,2 29,8 24,0 16,7 20,0 21,6 29,9 29,6 23,3 15,9 12,4 23,0 3,5 5,0 3,7 5,0 5,4 5,7 GDP Growth by Sector (%, YoY) 2017 2018 2019 2020 2021 2022 By sectors Agriculture, forestry, and fishery Mining and Quarrying Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 7.1 3.3 2.8 2.4 3.9 3,3 4,7 3,6 Q4 Tot | Q1 3,8 3,9 1,8 Q2 5,3 Q3 Q4 Tot Q1 Q2 3,1 4,2 3,6 Q3 Q4 Tot Q1 Q2 0,0 2,2 2,2 2,6 1,8 3,4 0,5 Q3 Q4 Tot Q1 Q2 Q3 1,4 2,3 1,8 1,2 1,4 1,6 (1. 2.1 1.8 0.0 0.7 Manufacturing Construction 3) 4.3 3.5 4.9 4.5 6.0 7.0 7.0 7.2 22 1,1 2,6 2,7 2,2 2,2 2,3 -0,7 2,3 0,9 1,2 0,4 -2,7 -4,3 -1,2 -2,0 -2,0 5,2 7,8 5,2 4,0 10 3,8 4,0 3,2 4.3 4,6 3,9 4,4 4,2 4,3 3,9 3,5 4,1 3,7 3,8 6.8 7,4 5,7 5,8 5,6 6,1 5,9 5,7 5,6 5,8 5,8 2,1 6,2 -4,3 -3,1 -2,9 -1,4 6,6 2,9 -5,4 -4,5 -5,7 -3,3 -0,8 4,4 3,7 4,9 3,8 3,9 3,4 2,8 4,8 1,0 0,6 5,1 4,0 4,8 Wholesale and Retail Trade, Repair of Car and Motorcycle 4.6 3.5 5.2 4.5 4.5 5,0 5,2 5,3 4,4 5 5,2 4,6 4,4 4,2 4,6 1,5 7,7 -5,1 -3,7 -3,8 -1,3 9,5 5,2 5,6 4,7 5,7 4,4 5,3 Transportation and Storage 8.1 8.8 8.9 8.2 8.5 8,5 8,7 5,7 5,5 7 5,4 5,8 6,7 7,6 6,4 1,3 -30,8 16,7 -13,4 -15,0 -13,1 25,1 -0,7 7,9 3,2 15,8 21,3 25,8 Information and communication 10. 11.1 8.8 8.3 9.6 7,8 5,1 8,1 7,1 7 9,1 9,6 9,2 9,8 9,4 9,8 10,8 10,7 11,0 10,6 8,7 6,9 5,5 6,2 6,8 7,2 8,1 6,9 5 Financial service 6.0 5.9 6.1 3.8 5.5 4,3 3,1 3,1 6,2 4,2 7,2 4,5 6,2 8,5 6,6 10,6 1,1 -0,9 2,4 3,2 -3,0 8,3 4,3 -2,6 1,6 1,6 1,5 0,9 Other Services GDP 4.2 3.5 4.8 6.0 5.0 5.0 5.1 5.2 4,6 5,4 6,2 6,7 6,4 6,2 6,8 7,3 6,4 6,2 5.1 5,1 5,3 5,2 5,2 5,2 5,1 5,1 6,7 5,0 5,0 5,0 3,0 -5,3 -3,5 -2,2 -2,1 -0,7 7,1 4,6 -6,3 -1,4 -1,7 -1,2 -2,5 9,8 -0,8 3,4 2,4 3,3 4,0 7,9 3,5 5,0 3,7 5,0 5,4 5,7 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 70#72Economic Performance Improved In Almost All Regions Growth of Regional Economic (GDRP) of the Third Quarter of 2022 (%, yoy) 0.85 Sumatra 5.29 4.96 4.56 4.71 3.80 4.04 ACEH 2.13 North Sumatera 431 Kalimantan 6.32 5.67 4.54 4.31 4.3 3.28 2.23 TV R " 2021 2022 2001 2022 RIAU 4.63 West Sumatera 4.54 BENGKULU 4.37 JAMB 5.26 Q3'22 Q2'22 Java 7.94 South Sumatera 5.34 Riau Islands 6.03 Babel Islands West Kalimantan 6:48 4.51 North Kalimantan 5.39 East Kalimantan 5.28 3.44 6.01 Sulampua 9.05 8.23 8.04 6.93 2821 -802 GORONTALO 4.09 North Sulawesi 6.62 North Maluku 24.85 West Papua 3.70 Central Kalimantan 6.74 South Kalimantan 5.59 West Sulawesi 3.39 Central Sulawesi 19.33 South Sulawesi 5.67 LAMPUNG 3.91 DKI 5.94 West Java Central Java BANTEN 5.71 6.07 5.28 East Java 5.58 BALI 8.09 DIY 5.82 Q3'22 Q2'22 Q3'22<Q2'22 5.67 5.76 4.82 5.07 3.07 -0.87 T " N 2101 2002 Source: Central Bureau of Statistics of Indonesia (BPS), calculated 3.75 2001 0.10 South East Sulawesi 5.40 West Nusa Tenggara 7.10 East Nusa Tenggara 3.35 Balinusra 6.69 3.97 8.45 1.90 MALUKU 6.01 " 2002 Source: BPS, calculated. PAPUA 5.78 71#73% 100,0 Taxes Information and Communication Construction Agriculture, Forestry, and Fishery Source: Central Bureau of Statistics of Indonesia (BPS), calculated 2010 2011 2012 2013 2014 2015 2016 2017 2018 Manufacturing Other Services 2019 ■Transportation and Warehousing Q1-2020 Q2-2020 Q3-2020 Q4-2020 90,0 17,5 17,6 17,8 18,0 18,2 18,6 18,6 18,4 18,3 18,6 19,0 18,8 19,1 19,8 19,2 18,4 18,5 17,0 0 18,1 18,0 17,0 16,5 16,0 80,0 70,0 60,0 3,49 3,46 3,72 3,88 3,86 4,03 4,19 4,20 4,15 4,24 4,70 4,44 4,32 3,73 3,60 3,61 3,57 3,50 3,52 3,62 3,78 3,77 3,96 4,25 4,66 4,56 3,57 3,53 3,63 3,93 4,42 5,02 5,20 5,41 5,38 5,57 5,17 3,584,39 13,46 13,61 13,21 13,21 13,43 13,30 13,19 13,02 13,02 13,01 13,19 12,82 12,81 4,56 4,57 4,67 12,84 4,51 4,58 4,42 4,26 4,37 4,51 4,58 4,44 4,47 4,27 4,21 3,90 13,02 12,92 13,08 13,08 4,12 4,34 4,34 4,14 3,98 4,34 4,10 4,01 4,41 4,28 4,56 4,24 4,62 4,79 5,01 12,71 12,97 13,09 12,70 12,74 50,0 9,13 9,09 9,35 9,49 9,86 10,21 10,38 10,38 10,53 10,75 10,70 10,56 10,60 10,95 10,71 10,79 10,12 10,39 10,48 10,44 10,42 9,14 9,45 40,0 22,04 21,76 21,45 21,03 21,08 30,0 20,99 20,52 20,16 19,86 19,70 19,98 19,86 19,85 19,80 19,87 19,83 19,29 19,15 17,84 17,88 18,80 19,25 19,19 20,0 10,0 10,46 11,81 11,61 11,01 9,83 7,65 7,18 7,58 8,08 7,26 6,82 13,93 13,51 13,37 13,36 13,34 13,49 13,48 13,16 12,81 12,71 12,84 15,45 14,67 11,97 13,70 13,23 14,29 14,32 11,39 13,28 12,56 12,98 12,91 6,28 6,16 6,48 6,44 7,64 8,09 9,55 10,43 8,98 10,48 13,06 13,47 Indonesia's GDP Share (%) Indonesia's GDP Share (%) Economic Performance in Most Sectors Continue to Improve Strong national economic growth is driven by increasing domestic demand, particularly household consumption, amid persistently solid export performance. National economic improvements were also reflected in the main economic sectors, namely the manufacturing industry, transportation and storage as well as wholesale and retail trade.. 2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Financial and Insurance Services I Wholesale and Retail Trade I Mining and Quarrying 2021 Q1-2022 Q2-2022 Q3-2022 72 22#74Stronger Fundamentals Facing the Headwinds Inflation Rate (%) Inflation above the target range, but below the 1998 projection 2008 12.1 Nov 2022 5.71 (yoy) 1998 82.4 2008 21 Dec 22 IDR Movement (%) IDR depreciated year-to-date -197 Foreign Reserves (USD bn) Significantly higher than 1998 & 2008, ample to cover 5.60 months of import and external debt repayment 1998 17.4 2008 50.2 -35 -8.56 (ytd) Nov 2022 -300 -200 -100 0 134.0 1998 Non-Performing Loan/NPL (%) NPL level (gross) is below the maximum threshold of 5% 30 More Liquid Market (%) In the markets, the IndONIA rate is in line with the higher BI7DRR and strengthening the monetary operations strategy of Bl 62 2008 3.8 Oct 2022 2.72 0 5 10 15 20 20 External Debt (Public & Private) to FX Reserve Ratio Significantly lower than 1998 crisis 25 30 30 35 40 Government Debt/GDP Consistently well-maintained 10.5 4.80 1998 2008 21 Dec 2022 External Debt/GDP Significantly lower than 1998 crisis 8.6x 3.1x 3..0x 100.0% 27.4% 38.7% 116.8% 33.2% 30.1% 2008 Oct-2022 2008 Nov 2022 2008 Q3-2022 1998 1998 1998 73 33#75Outlook of Domestic Economy Remains Robust ...the domestic economic recovery is continued to strengthen in 2023 2023 Economic Outlook • Bank Indonesia projects economic growth in 2023 continue to accelerate to the range of 4.5-5.3% in 2023. • Bank Indonesia projects inflation in 2023 back to within the range of 3.0% ±1% target. Inflation is expected to return to the target corridor in the first half of 2023. ● Bank Indonesia projects current account will post a surplus of 0.4% - deficit 0.4% of GDP in 2023. ● Bank Indonesia projects credit growth in 2023 will be accelerate to 10.0-12.0% Ap LOAN Economic Growth π Inflation CAD (% of GDP) Credit Growth 2018 Realisation 5.17% 3.13% 2.98% 11.75% 2019 5.02% 2.72% 2.71% 6.08% Realisation 2020 -2.07% 1.68% 0.4% -2.4% Realisation 2021 3.69% 1.87% surplus 0.3% 5.24% Realisation 2022 4.5-5.3% > 3.0±1% surplus 9-11% 0.4% -1.2% 2023 4.5-5.3% 3.0±1% surplus 0.4% - 10-12% deficit 0.4% Source Bank Indonesia 74#76Section 4 External Factor: Improved External Resilience BHINNEKA TUNGGAL IKA#77External Sector Remains Resilient Supported by Adequate Reserves and Sound Balance of Payments Balance Of Payment Remains Solid US$bn Current Account Overall Balance I Capital and Financial Account Reserve Asset (rhs) 20 15 10 5 0 -5 -10 -15 Current Account Recorded Surplus 2020: 2021: 2021: 2015: 2016: 2017: 2018: 2019: CA Deficit CA Deficit CA Deficit CA Deficit CA Deficit (US$17.5bn) (US$16.9bn) (US$16.2bn)(US$30.6b) (US$36.36) Surplus CA Surplus CA Surplus (US$4.4bn) US$3.5bn US$8.9bn US$bn 160 130.78 US$bn 23 120 18 4.38 13 80 8 (1.30) 3 40 (6.07) (2) (7) 0 (12) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 2015 2016 2017 2018 2019* 2020* 2021** 2022** Source: Bank Indonesia Trade Balance Surplus Continues 2017: 2018: Surplus Deficit US$11.83bn (US$8.65bn) US$bn 15 10 LO 5 0 -5 2019: Deficit (US$3.24bn) 2020: 2021: 2022: Surplus Surplus Surplus (US$21.81bn) (US$33.8bn) (US$50.65bn) OG Non-OG ―Total 2017 2018 2019 2020 2021 2022 Source: BPS Preliminary Figure ** Very Preliminary Figure Goods Services 2.00 1.28 1.00 ---------- 17.51 (1.00) 1.41 (2.00) (9.27) (3.00) (5.27) (4.00) Q1/Q2Q3/Q41 Q2Q3 Q401 02 03 04Q1Q2Q2Q41 Q2Q3041 Q2Q3/Q401 02030401 02 03 2015 2016 Source: Bank Indonesia 2017 2018 2019* 2020* 2021** 2022** Official Reserve Assets Increased to Reinforce External Sector Resilience FX Reserves as of October 2022: US$134.0bn (Equiv. to 5.8 months of imports + servicing of government debt) US$bn FX Reserves (LHS) 150 Month of Import & Debt Service (RHS) Month 15 140 130 6.83 120 110 5.16 100 90 80 70 60 54321 STILLI987654321 14 13 -1.67 50 1 3 5 7 9 1 3 5 7 9 11 1 3 5 7 9 11 11 1 3 5 7 9 1 3 5 7 9 11 1 3 5 7 9 11 11 2017 2018 2019 2020 2021 2021 Source: Bank Indonesia 76#78Exchange Rate In Line with Fundamentals Movement of Rupiah 21-Dec-22 14120 14893 14669 14064 14219 Quarterly Average IDR/USD 15561 14935 14566 14373 14157 14339 14399 6.00 14259 14344 ~H 17,000 16,500 16,000 15500 15588 15,000 14,500 14,000 13,500 13,000 20 21 Thanks to the stabilization instituted by Bank Indonesia, rupiah stability has been maintained despite elevated global financial market uncertainty. Pressure on Rupiah exchange rate in November- December 2022 decreases, influenced by foreign capital inflows in SBN market and stabilization measures taken by Bank Indonesia. Rupiah performance is relatively positive in the middle of strong US dollar and high global financial market uncertainty. US dollar index (DXY) is recorded high at the level of 104.16 on 21 December 2022. With such development, Rupiah exchange rate until 21 December 2022 is depreciated by 8.56% (ytd) compared to the level at the end of 2021. The depreciation of Rupiah exchange rate is comparatively lower than the depreciation of currencies in some other countries in the region, such as China 8.96% (ytd) and India 10.24% (ytd). Moving forward, Bank Indonesia will continue to strengthen rupiah stabilization policy in line with market mechanisms and the currency's fundamental value in order to support measures to manage inflation and maintain macroeconomic stability. Rupiah Exchange Rate Volatilty 27.92 Data s.d 21 Des 2022 % 30 26.51 ■Oct-22 22.21 25 20.63 19.63 Nov-22 18.65 16.19 ■Dec-22 15.59 15.72 15.12 13.42 13.9413.04 13.61 9.47 11.302 11.50 15 6.655 8.94 9.24 7.8217 5.91 10 6.49 5.66 3.0679 1.17 BRL ZAR TRY IDR KRW THB MYR INR SGD PHP Source: Reuters, Bloomberg (calculated) 77#79Global Regional Bilateral Ample Lines of Defense Against External Shocks Ample Reserves Swap Arrangement FX Reserve • Ample level of FX reserves to buffer against external shock • FX Reserves as of of November 2022: US$134.0 bn Japan Singapore China Malaysia Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2021 ● The facility is available in USD and JPY Renewed a 1 year SGD/IDR swap arrangement with the size up to SGD 9.5 bn / IDR 1000 tn (equivalent) in November 2022 . Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 250 bn / IDR 550 tn (equiv.) in January 2022 Established a 3 year RM/IDR swap arrangement with a size up to RM 8 billion / IDR 28 trillion (equiv.) in October 2022 Chiang Mai • Initiative Multilateralization (CMIM) Agreement • Came into effect in 2010 with a pool of US$120 bn • Doubled to US$240 bn effective July 2014 Source: Bank Indonesia Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool created under the agreement IMF Global Financial Safety Net - GSFN Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL) 78#80Healthy External Debt Profile External Debt Structure Private External Debt Public External Debt 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2011 2013 2015 2017 The Structure of External Debt is Dominated by Long-Term Debt Short Term External Debt Long Term External Debt 100% 90% 80% 48.2 70% 60% 50% 40% 30% 51.8 20% 10% Nov-21* Jan-22* Mar-22* May-22* Jul-22* Sep-22* Mar-21* May-21* Jul-21* Sep-21* Q1-2020* Q3-2020* Jan-21* Q3-2019 Q1-2019 0% 2009 2011 2013 2015 2017 83.8 16.2 Sep-22* Q3-2019 Q1-2020* Q3-2020* Jan-21* Mar-21* May-21* Jul-21* Sep-21* Nov-21* Jan-22* Mar-22* May-22* Jul-22* Q1-2019 External Debt to GDP Ratio & Debt to Export Ratio 35.133.7 37.338.139.39.137.637.12 34.334.736.036.736.536.136.1 34.4 36.1 32.90 29.10 214209.4 206.9 197.2 بلا 31.30.1 40 35 30 222222250 15 131.8 10 121.1 1684616872684727783377.2 139.5 190.0 157.4 External Debt/ Export Ratio (rhs) 145.5 External Debt/ GDP Ratio External Debt Remains Manageable Million USD % % Q3.0 450,000 17.1 400,000 350,000 11.5 1.32.0 10.2 10.1 300,000 5.4 5.9 6.5 250,000 2.9 200,000 0.71.22.6 1.3 2.1 150,000 -1.00 1.6 3.9 100,000 50,000 External Debt External Debt Growth (yoy) - rhs 20.0 240 15.0 220 31.8 10.0 200 26.525.0 27.4 180 5.0 0.00.00.41.20.60.80.60.90.60.7 160 0.0 140 -5.0 120 -10.0 100 2114.9 113.8 123.1 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2020* Q2-2020* Q3-2020* 2018 Q1-2019 Q2-2019 Q3-2019 2019 Q1-2020* 2021** Q1-2021* Q2-2021* Q3-2021* Source: Bank Indonesia, External Debt Statistics of Indonesia Q2-2022* Jul-22* Aug-22* Q3-2022** Apr-22* May-22* Q1-2022* 2009 2011 101.0 2013 2015 2017 *Provisional Figures **Very Provisional Figures Q1-2019 Q3-2019 Q1-2020* Q3-2020* Q1-2021* Q3-2021* 80 Q1-2022* Q3-2022** 12 79#81Strengthened Private External Debt Risk Management Debt Burden Indicator (External Debt/GDP) Remains Comparable to Peers Rating Encouraging Corporates Compliance on Hedging Ratio & Liquidity Ratio External Debt/GDP (%) Uruguay Philippines Panama 609 Hedging Ratio* 161 corporates (6.5%) 67.7 79.4 87.2 277 corporates (11.1%) 2022 50195.2 2021 2020 ≤ 3 months 81.3 88.996.2 346 37.6 Mexico 42.7 Kazakhstan I Indonesia Colombia 313339 534-15 57.2 Source: Moody's Credit View Fundamental Data, September 2022 Regulation on Prudential Principle in Managing External Debt Regulation Key Points Object of Regulation 1 Jan 17 & beyond Governs all foreign currency Debt Hedging Ratio ≤ 3 months > 3-6 months Liquidity Ratio (≤ 3 months) Credit Rating Hedging transaction to meet hedge ratio Sanction 25% 25% 70% Minimum rating of BB- (State-owned Enterprises) Must be done with a bank in Indonesia Applied Source: Bank Indonesia 2217 corporates (88.9%) Liquidity Ratio* 331 corporates (13.3%) > 3-6 months 2333 corporates (93.5%) 2163 corporates (86.7%) ■Comply ■Not Comply *Data as of Q2-2022, with total population 2.,494 corporates Source: Bank Indonesia 60 80#82Solid Policy Coordination In Managing Financial Markets Volatility CMP BSF Source: Ministry of Finance The enactment of Law No. 9/2016 regarding Prevention and Mitigation of Financial System Crises as a legal foundation for the government to serves at the time of financial crisis in the form of Financial System Stability Committee (KSSK) KSSK members: the Ministry of Finance, Bank Indonesia, the Financial Services Authority, and the Deposit Insurance Corporation Swap facility arrangements based on international cooperation Enhancing coordination between government institutions and continuous dialogue with market participants Implementing Crisis Management Protocol (CMP) Gov't Securities Crisis Management Protocol (CMP) Indicators: - Yield of benchmark series; - Exchange rate; - Jakarta Composite Index; Foreign ownership in government securities Policies to address the crisis at every level : - Repurchase the government securities at secondary market Postpone or stop the issuance State's Budget Bond Stabilization Framework State Owned Enterprises (BUMN)'s Budget Social Security Organizing Agency (BPJS)'s Budget State's Budget First Line of Defense Buyback fund at DG of Budget Financing and Risk Management Investment fund at Public Service Agency (BLU) (min. level Aware) Related SOES (min. level Aware) BPJS (min. level Aware) Second Line of Defense State General Treasury Account (Rekening KUN) (min. level Alert) Accumulated cash surplus (SAL) (min. Level Crisis) Implementing Bond Stabilization Framework (BSF) 81#83BHINNEKA TUNGGAL IKA Section 5 Fiscal Performance and Flexibility: Strong Commitment in Maintaining Fiscal Credibility#84Amidst Escalating Uncertainty Risk Of Global Economy, Budget Will Be Optimized As Shock Absorber Amid increasing commodity prices and escalating uncertainty risk of global economy "The Budget must be Vigilant, Anticipative, Responsive" The Budget as Shock Absorber Momentum of Strengthening Fiscal Resilience Maintaining priority expenditures (strengthening productivity and national economic foundation) Preparing fiscal buffer to anticipate uncertainty Controlling inflation and maintaining people's purchasing power Maintaining momentum of recovery (alleviating unemployment & poverty) Expenditure Optimization: Subsidies, Compensation, Social Protection, and priority spending (infrastructure, health, education and support for structural reforms) Source: Ministry of Finance Maintaining Budget Health in the Middle & Long term Rp Strengthening foundation for fiscal consolidation and sustainability FISCAL CONSOLIDATION AND REFORM 83#85Strong Budget Performance Continued In 2022 Revenue is very strong supported by the economic recovery and global commodity prices 2021 2022 Account (IDRtn) Revised YTD Audited Budget % of Budget Growth Budget 14 Dec (%) (Perpres 2022 % of Perpres 98/2022 Growth (%) 98/2022) A. Revenue I. Tax Revenue 2,011.3 115.4 22.1 2,266.2 2,479.9 109.4% 36.9 1,547.8 107.2 20.4 1,784.0 1,927.4 108.0% 38.1 1. Tax 1,278.6 104.0 19.3 1,485.0 1,634.4 110.1% 41.9 2. Custom & Excise 269.2 125.2 26.4 299.0 293.1 98.0% 20.6 II. Non-Tax Revenue 458.5 153.8 33.4 481.6 551.1 114.4% 33.2 B. Expenditure 2,786.4 101.3 7.4 3,106.4 2,717.6 87.5% 11.9 Central Government 2,000.7 102.4 9.1 2,301.6 1,967.9 85.5% 16.2 II. Regional Transfer & Village 785.7 98.8 3.0 804.8 749.7 93.2% 1.9 Funds C. Primary Balance (431.6) 68.2 (31.9) (434.4) 129.0 -29.7% (145.0) D. Surplus (Deficit) (775.1) 77.0 (18.2) (840.2) (237.7) 28.3% (61.5) % to GDP (4.57) 80.2 (5.6) (4.50) (1.22) E. Financing 872 86.6 (27.0) 840.2 469.8 55.9% (28.5) F. Financing Surplus 96.67 232.2 Source: Ministry of Finance The Government revenues grew significantly, supported by increased economic activity, the impact of the implementation of the tax reform (HPP law), and rising commodity prices. The government expenditures are directed towards the distribution of various social assistance & subsidies, funding for national strategic projects, as well as economic recovery programs, including Transfers to Regions. The Budget Deficit and Primary Balance are still within the responsive corridor to face market pressures and the dynamics of the budget Budget Financing is managed efficiently and carefully amidst global economic uncertainty. 84#86The 2022 Budget Is Able To Effectively Reduce Economic Turbulence And Promote Faster Economic Recovery 1 Government spending grew positively (11.9% yoy), able to stimulate the economy Government Spending (IDR Trillion) 2,429.4 11.9% 2 Revenue grew high (36.9% YoY), supported by a stronger economic recovery and high commodity prices Government Revenue (IDR Trillion) 1,812.0 36.9% 2,717.6 ■ Economic growth remains strong ■ Inflation is • • 2021 * 2022 Line and Ministries spending reached IDR 954.4 T for the distribution of social assistance, National Economic Recovery programs to the community, construction of roads, networks, irrigation, and bureaucratic operational activities. Non-Line Ministries' spending reached IDR 1,013.5 T for subsidies, fuel and electricity compensation, and health insurance. Transfer to Region reached IDR 749.7 T to support public services and infrastructure in the regions. relatively low, purchasing power is maintained Poverty fell to 9.54% A new workforce was absorbed as of August: 4.2 million people Source: Ministry of Finance Note: *realization up to 14 December 2022 2,479.9 2021 2022* 3 Smaller deficits, faster fiscal consolidation Deficit Realization (% GDP) * 2021 2022 -3.64 -1.22 85#87Revenue Collection Continued To Strengthen Supported by high commodity prices, stronger economic activity and gain from the recent tax reforms Strong Recovery in Revenue Collection 0.3% 7.4% -12.0% 41.9% 1,634.4 1,217.8 1,072.1 1,151.5 2019 2020 2021 2022 Realization Growth (y-o-y) The strong tax revenue collection in January-Dec 14th 2022 was largely contributed by: The trend of increasing commodity prices; Expansive economic growth; Low base in 2021 due to fiscal incentives; Impact of the implementation of the HPP Law. ■ The best performing sectors in the economy (i.e. manufacturing, trade, and mining) are also translated into the tax revenue and recorded the highest growth among sectors. Much improved economic recovery and activities are also reflected in all sectors of tax receipts, which significantly grew higher compared to the same period last year. Performance (cumulative growth y-o-y) Jan-14 Dec 2021 Jan-14 Dec 2022 Strong Performance In Tax Collection Across Sectors 135.3% 66.8% 35.1% 17.5% 30.5% 44.9% 27.3% 12.1% 0.1% 9.2% 16.6% 14.9% 20.5% 2.0% -0.2% Manufacturing Trade Finance Mining -6.2% Construction Information & Communication Transportation Business Services Share 29.2% 23.7% 10.9% 8.6% 4.0% 3.8% 3.6% 3.0% 86 Source: Ministry of Finance#88Tax Reform Will Raise Tax Ratio And Maintain Fiscal Sustainability Tax reform will improve tax collection; anticipate social, economic, and demographic dynamics and implement best practices Tax Administration Reform Tax Policy Reform Tax Reform Details Progress Update on Tax Reform J Healthy and Fair Taxation System 1 Voluntary Disclosure Program (Jan-June 2022) J I J 247,918 Taxpayers IDR61.01T IDR594.82T Tax Collected Total Net Assets I 308,059 IDR512.57T Report Domestic Declaration Declaration from and Repatriation overseas IDR59.91T IDR22.34T J Investment | I . GENERAL PROVISIONS AND PROCEDURES Integration of the ID Number with the Taxpayer Number, • Appointment of third parties as withholding, collecting, depositing and/ or reporting tax (including e-commerce) CARBON TAX Introduction of the carbon tax in 2022 in steps according to a roadmap taking into account the development of a carbon market, achievement of NDC targets, sector readiness, and economic conditions. Source: Ministry of Finance . • INCOME TAX New bracket for income >IDR 5 billion at 35% tax rate, Corporate Income Tax in 2022 remains at 22%, Income Tax rate at 0.5% for MSME (threshold IDR 500million), Employee fringe benefits become tax object. EXCISE Strengthening the mechanism for determining excisable goods; and applying criminal sanctions as a last resort in excise crime. VALUE ADDED TAX 2 Tax on digital economy (up to Dec 14th) J I • • VAT rate hike from VAT on Ecommerce IDR9.66 T . 10% to 11% from 1 April 2022, and to 12% by 2025, Reducing the VAT exemptions and facilities. VOLUNTARY Tax on Fintech - IDR121.65B IDR88.15B I P2P Lending Starting May 2022 Domestic Taxpayer Foreign Taxpayer | Tax on Crypto IDR110.44B Starting May 2022 Income Tax IDR121.31B VAT | J DISCLOSURE PROGRAM | • Improve taxpayers' 3 VAT Rate Hike (Starting April 2022) (IDR Trillion) 1.96 5.74 6.25 7.15 7.28 6.87 7.62 7.57 2.57 compliance through voluntary disclosure program for unreported tax obligations at a final income tax rate. April May June July Aug Sept Oct Nov 14-Dec 100 87#89Custom and Excise Revenue Realization Significantly Grew Driven by the trend of improving national import performance, high commodity prices, increasing export volume, and the effectiveness of tariff policies Excise Revenue (as of Nov 30) Up to 14 Dec 2022: IDR 198.02 T Import Duty Revenue (as of Nov 30) Export Duty Revenue (as of Nov 30) (16.83%,yoy) Up to 14 Dec 2022: IDR 48.18 T (33.09%,yoy) Up to 14 Dec 2022: IDR 39.17 T (21.65%,yoy) 33.2 16.9 10.8 7.5 8.4 18.2 195.7 167.5 151.1 139.5 45.8 819.5 -49.1 3.9 27.3 38.7 30.4 2019 2020 -8.3 -13.5 33.6 34.4 29.1 3.2 3.3 2021 2022 2019 2020 2021 Growth (%) I Import Duty (IDR Trillion) 2022 Growth (%) 2019 2020 2021 2022 I Export Duty (IDR Trillion) Growth (%) Excise (IDR Trillion) Influenced by the effectiveness of the tariff policy, the surge in production in March (the effect of the increase in VAT rates) and the effectiveness of supervision. Affected by the improved import performance and underpinned by trade and manufacturing sectors. Source: Ministry of Finance Driven by high commodity prices, the increase in export duty tariffs for palm oil products, and the Flush Out policy. 88#90Non-tax Revenue Grew Strongly Supported By An Increase Almost In All Components Driven by the increase in commodity prices, good performance SOEs, and improvement of public services Oil & Gas Revenue up to 14th Dec 2022 Non - Oil & Gas Revenue up to 14th Dec 2022 56.5 29.8 (39.8) 87.8 136.4 T 87.1 T (17.4) 121.8 109.6 T 7.8 T 67.1 T 109.0 T 49.4 T 69.7 T 48.1 T 19.0 T 2020 17.5 T 2021 27.4 T 2022 26.3 T 6.5 T 19.8 T 7.4 T 42.0 T 101.8 T 2020 2021 Mineral & Coal Non-Mineral & Coal 2022 Growth (%) Natural Gas Oil Growth (%) Non-Mineral & Coal: Forestry, Fisheries, Geothermal SOE's Revenue up to 14th Dec 2022 Other Non Tax Revenues Up to 14th Dec 2022 32.3 37.3 Public Service Agency (BLU) Revenue 14th Dec 2022 (8.3) (13.9) 33.1 85.2 (53.8) 187.6 T 37.5 136.6 T (30.1) 66.0 T 103.2 T 10.0 T 110.0 T 21.5 T 30.5 T 40.6 T 106.0 T 76.9 T 89.8 T 10.1 59.4 T 0.7 44.6 T 1.6 30.5 T 40.6 T 67.5 T 2020 2021 2022 12.7 T 2020 29.0 T 2021 2022 2020 2021 2022 SOE'S Dividend Central Bank Surplus % Growth (YoY) Sales of DMO mining products Line & Ministries Revenue % Growth (YoY) BLU % Growth (YoY) Source: Ministry of Finance 89 99#91Maintained Acceleration Of Government Spending The success of controlling Covid-19 reduces overall costs and increases capacity for other government spending Personal Spending¹ Material Spending¹ (in IDRtn¹) 12.0 2.5 3.8 -3.2 (in IDRtn¹) Capital Spending¹ (in IDRtn¹) 25.0 19.3 38.7 23.7 9.7 0.3 6.0 12.1 -4.8 -15.6 -29.1 23.7 24.1 -4.8 -1.8 18.5 215.7 121.4 157.7 249.2 241.1 247.1 256.4 156.8 172.1 291.9 132.7 207.0 219.4 246.0 126.4 2019 2020 Personal Spending Pre-Employment Card Realization (IDRtn)1 99.0 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 Growth (%) Material Spending PEN Program Growth (%) Regular Growth (%) Capital Spending -Growth (%) Project Carry Over Subsidy Spending¹ (in IDRtn¹) 4 IDR 17.8T 181.4 -14.2 155.6 Realization Social Assistance¹ IDR 333.8tn (Regular) IDR 23.1tn (Additional Social Assistance) Source: Ministry of Finance. Note: 1. Realization up to YTD 14 December 2022 9.4 170.3 21.5 283.7 207.0 206.9 Growth Reguler (%) Compensation¹ (in IDRtn¹) 293.5 268.1 91.191.1 48.0 7.5 17.9 18.5 2019 2020 2021 2022 2019 2020 Budget Revised Budget Bugdet Compensation 2021 2022 Realization up to 14 Dec Realization up to 14 Dec Growth (%) 90 90#92Transfer To Region Performance Was Improved Transfer to Region Fund - (January 14 December) 2022 2021 Profit Sharing Funds (DBH) Physical Special Allocation Fund (DAK Fisik) I Regional Incentive Fund (DID) ■Village Fund (Dana Desa) IDR749.75tn (93.2% from budget) 1.9% IDR735.78tn (92.5% from budget) ■General Allocation Funds (DAU) Non-Physical Special Allocation Fund (DAK Non Fisik) Special Autonomy Fund (OTSUS) Local Government Performance¹ Local government compliance on meeting administrative requirements have improved, driving higher realization on various items of transfer Several items of transfer realization, such as DID was lower compared to previous year, mainly due to lower budget allocation REVENUE Local Gov't revenue was 54.1 SPENDING 53.4 206.2 191.5 dominated by local tax 8.9 9.4 6.9 6.9 (73.9%) Up to Sept, local Gov't spending grew by 0.2% 91.6 105.9 Local tax performance was (yoy) contributed by 221.9 237.0 195.7 improved and grew high 178.9 increasing in capital and return to pre-pandemic level. Tax on consumption goods booked excellence performance along with economic recovery operational spending. 323.9 323.7 2021 2022 The spending reached 61.2% to local budget 2021 2022 Local Tax Retribution Personal Spending Return of Local Gov't Other Revenue ■Capital Spending Material Spending Other Spendings 91#932023 Government Budget To Increase Productivity And Respond To Risks Of Global Economic Uncertainty The budget deficit is back below 3 percent and for the first time the tax target is above IDR 2 thousand trillion 2020 2021 5.1 5.0 5.0 5.2 5.3 Account (IDR T) Audited Audited Budget 3.7 State Revenue* Tax Revenue 1,647.8 1,285.1 2,011.4 1,846.1 1,547.9 1,510.0 2022 Perpres 98/2022 2,266.2 1,784.0 2023 Outlook Budget Growth* (%) 2,436.9 2,463.6 1.1 1,924.9 2,021.2 5.0 -1.8 -2.2 -2.5 -2.8 Non Tax Revenue 343.8 458.5 335.6 481.6 510.9 441.4 (13.6) (269.4 -4.6 O -2.1 ) (341.0) (348.7) State Expenditure 2,595.5 2,786.4 2,714.2 3,106.4 3,169.1 3,061.2 (3.4) Central 2017 2018 2019 -6.1 (775.1) (732.2) (947.7) 2020 2021 2022 Outlook 2023 Budget (598.2) Government 1,833.0 2,000.7 1,944.5 2,301.6 2,370.0 2,246.5 (5.2) Expenditure Regional Transfer & 762.5 785.7 769.6 804.8 799.1 814.7 2.0 Village Funds Primary (633.6) (431.6) (462.2) (434.4) (328.4) (156.8) (52.3) Balance Surplus (Deficit) (947.7) (775.1) (868.0) (840.8) (732.2) (598.2) (18.3) Deficit (IDR Triliun) Economic Growth (%) -Deficit to GDP (%) % to GDP (6.14) (4.57) (4.85) (4.50) (3.92) (2.84) Financing 1,193.3 871.7 868.0 840.2 732.2 598.2 (18.3) Economic Growth Inflation Exchange Rate 10Y T-Bonds Rate 5.3% 3.6% IDR 14,800/USD 7.9% ICP 90 USD/Barrel Oil Lifting 660 Thousand bpd Gas Lifting 1,100 million bpd Source: Ministry of Finance Note: *% Growth of 2022 Budget Outlook 92#942023 Budget Priority To Support Structural Reform BUDGET DEVELOPMENT ON PRIORITY PROGRAM (IDR TRILLION) Covid-19 Pandemic 612.2 476.0 392.1 178.7 Protection 14% EDUCATION ✓ To create competitive human capital ✓ Increasing access by strengthening compulsory study and expanding access to underdeveloped regions ✓ Levelling the quality of education across region ✓ Renovation and revitalization education infrastructure ✓ Improving teaching factory model SOCIAL PROTECTION ✓ Improving data and targeting system on social protection and subsidy distribution ✓ Empowering the poor to escape from poverty ✓ Strengthening social protection for all age ✓ Strengthening adaptive social protection INFRASTRUCTURE ✓ Acceleration on basic infrastructure project ✓ Infrastructure and IT access equal distribution ✓ Developing infrastructure to support economic transformation ✓ Integrating financing between government and PPP scheme ✓ Supporting the strategic national project HEALTH ✓ To support health system transformation: focusing on preventive measures ✓ Strengthening universal health insurance and premium subsidy (PBI) for the poor ✓ Acceleration reducing stunting prevalence program ✓ increasing the vigilance of health services 2013 2014 2015 % to total budget (avg 2013-2023) -Education 20% Source: Ministry of Finance 2016 2017 Health 2018 2019 -Infrastructure 5% 14% 2020 2021 Soci Outlook... 2023 93#95Optimizing State Revenues To Maintain The Investment Climate Sustainability Continuing tax reform, service innovation, and optimizing asset management Government Revenues 13.1 13.0 12.3 12.4 11.9 11.7 10.7 1666.4 11.6 311.2 1943.7 15.6 1960.6 409.3 5.5 409.0 1647.8 18.8 343.8 2011.3 5.0 458.5 2436.9 1.0 510.9 2463.0 0.4 441.4 2021.2 1924.9 1518.8 1546.1 1547.8 1343.5 1285.1 2017 2018 2023 Taxation Policies 1. Boosting taxation revenue increasing trend by maintaining the effectiveness of the implementation of the HPP Law; 2. Providing fiscal incentives for strategic economic activities that have a strong multiplier effect on the economy; 3. Paying attention to people's purchasing power to increase taxation revenue; 4. Exploring the tax potential by extensification and intensification activity-based to strengthen the tax base and increase taxpayer compliance; 5. Strengthening supervision and law enforcement more optimally; Ensuring the achievement of taxation revenue targets is carried out carefully to support fiscal consolidation running well. 6. 2019 2020 2021 Outlook 2022 2023 Budget Non-Tax revenue (IDR Trillion) Taxation (IDR Trillion) Grant (IDR Trillion) State Revenue (%GDP) 2023 Non-Tax Revenue Policies 1. Optimization of the use of natural resources through improvement of policies, managerial improvement of natural resources utilization, and increase of added value, while still paying attention to environmental sustainability; 2. Optimizing SoEs' dividends by encouraging performance and efficiency improvements as well as determining dividends by considering profitability, company funding needs, investor perceptions, regulations, and covenants; 3. Improving the innovation and service quality of work units and Public Service Agencies as well as optimization of SoEs' asset management; 4. Strengthening governance through synergies, expanding the use of technology and information, and increasing supervision and compliance. Source: Ministry of Finance 94#96Strengthening Spending Better Focus on priority spending, based on results, and improving the quality of fiscal decentralization Government Spending 16.8 17.0 16.4 14.8 14.9 14.6 Policies on Central Government Spending 2023 1. Improving HR to be more skillful, productive, and competitive by advancing education quality, transforming health system, and accelerating social protection system toward lifelong and adaptive social protection; 14,6 3169.1 3061,2 2786.4 2595.5 2. 799.1 2309.3 2213.1 814,7 2007.4 785.7 3. Acceleration of infrastructure development which support economic transformation; Supporting the revitalization of value-added and export-oriented industries; 762.5 757.8 813.0 742.0 2370.0 2246,5 1833.0 2000.7 1455.3 1496.3 1265.4 4. Supporting green technology adaptation, renewable energy development and energy transition; 5. Improving the accuracy of targeting the distribution of social assistance programs and subsidies; 6. 7. Improving the effectiveness of the implementation of bureaucratic reform; Continuing the efficiency of spending on non-priority goods; 2017 2018 2019 2020 2021 Outlook 2022 Budget 2023 8. Improving the synchronization and sharpening of government aid spending; CG Spending (T Rp) Transfer-TKD (T Rp) Gov't Spending (% GDP) 9. Anticipating and mitigating fiscal risks in the implementation of the APBN, disasters, and other urgent activities. 1. 2345 Policies on Transfer to Region (TKD) 2023 Increasing the synergy of central and regional fiscal policies as well as harmonization of central and regional expenditures; Strengthening the quality of directed, measurable, accountable and transparent transfer TKD management; Strengthening the use of TKD to support priority sectors (health, education, social protection, and infrastructure); Improving the local taxation power; Utilization of financing instruments to overcome limited fiscal capacity and the need for accelerated development through: a) creative financing; b) integrated funding; and c) sustainable financing development. Source: Ministry of Finance 95#972022 Budget Financing Economic Recovery and Structural Reform Macroeconomic Assumption Description (IDR Trillion) Budget 2022 Perpres 98/2022 for 2022 Budget ע The main points of fiscal policy : 1. Consolidating economic recovery while still prioritizing the handling of the health sector as the key to economic recovery; A. State Revenue 1,846.1 2,266.2 1. Tax Revenue 1,510.0 1,784.0 Economic Growth 5.2% ICP US$ 63 per barrel 2. Social Non-tax Revenue 335.5 481.6 Oil Lifting 703 thousand barrel/day 3. Grants 0.6 0.6 B. State Expenditure 2,714.2 3,106.4 Inflation 3.0% Central Government 1. 1,944.5 2,301.6 Expenditure Regional Transfer & 2. 769.6 804.8 Village Fund Exchange Rate 14.350 IDR/USD C. Primary Balance (462.2) (434.4) D. Surplus (Deficit) (868.0) (840.2) oil equivalent/day 10 years T-Bonds % of GDP (4.85) (4.50) E. Financing 868.0 840.2 Rate 6.80% Gas Lifting 1.036 thousand barrel of that protection programs strengthen the foundations of social welfare, alleviate poverty and vulnerability, including strengthening the leverage of MSMEs and the business world to be able to rise again stronger and more resilient; 3. Supporting increased competitiveness and productivity by implementing structural reforms (UU Cipta Kerja) and fiscal reforms; and 4. Optimizing revenue and strengthening spending better, both in the Central Government and in regional governments, as well as financing innovations in the context of equitable and sustainable fiscal consolidation. Source: Ministry of Finance 96#98Budget Financing Growth IDR Trilion 1193.3 402.1 31.5 196.8 871.7 840.2 -3.6 -26.9 2019 2020 2021 2022*) Financing Growth (%) *) Perpres 98/2022 Source: Ministry of Finance 2019 Consistently implementing expansionary fiscal policy, but always controlling the budget deficit within safe limits and within the level of risk appetite. Prior to the Covid-19 pandemic, budget financing had been successfully reduced by IDR 402.1 trillion 2021 The 2021 Outlook budget deficit continue gradually decrease, through the implementation of fiscal consolidation and budget refocusing 2020 There was a widening of the budget deficit above 3% of GDP along extraordinary steps in dealing with the Covid-19 pandemic in 2020 Budget financing increased to finance the widening of the deficit related to spending on the Covid- 19 pandemic 2022 Debt financing targets to be under control and decline with fiscal consolidation and budget refocusing Continuing coordination with Bank Indonesia in fulfilling financing 97#992022 Financing Needs President Regulation no.98/2022 Budget Deficit 2022 IDR840.2 T Outlook: IDR732.2T (Outlook: 3,92% of GDP) Investment financing Lending Liabilities Other financing Matured debt Source: Ministry of Finance GROSS GS Financing Source Foreign Denominated Debt (18%-20%) Domestic Debt (80% - 82%) Foreign Loan Foreign Denominated Bonds Domestic Loan Domestic GS (Through auction & non-auction) GDS Sukuk 69%-72% 28% -31% + 2022 Matured T-Bills Issuance 98#100Deficit Financing 2022 Through Net SBN Issuance IDR Trillion -2.2 -348.7 2019 Deficit -4.6 -4.5 -775.1 -6.1 -840.2 -947.7 2020 2021 2022*) GDP (%) *) President Regulation no.98/2022 Source: Ministry of Finance Debt Management Strategy Prudent Controlling debt risk and managing debt carefully and prudently to support fiscal consolidation and APBN sustainability Portfolio balance Priority for issuance of SBN in the domestic market to control risk ➤Flexibility Optimizing non-debt sources Utilizing cash loans within the framework of flexibility Efficient Market development and deepening (including supporting the issuance of regional bonds/ sukuk) coordination with BI in financing fulfillment 99#101Budget Financing Apply Prudent, Flexible, And Opportunistic Principle Financing anticipating the ongoing volatility Financing Realization Up to 14 Dec 713.8 (40.5%) 723.3 (38.7%) Financing Realization Up to 30 Nov 2022 Government Securities IDR 504.3 T 540.3 (24.3%) (Net) Loan IDR 6.0 T (Net) 531.4 (26.5%) -9.6 (146.5%) (192.9%) 8.9 2022 2021 Loan (nett) Securities (nett) Domestic Loan (Nett) IDR 4.1T Domestic Loan Withdrawal (Gross) IDR 5.8 T Domestic loan principal installment financing IDR (1.7) T Foreign Loan (Nett) IDR 1.9 T Foreign Loan Withdrawal (Gross) IDR 72.0 T Foreign loan principal installment financing IDR (70.1) T INVESTMENT FINANCING REALIZATION: IDR 82.1 T* *up to 14 Dec 2022 Source: Ministry of Finance Lembaga Manajemen State Asset Aset Negara Management Agency LDKPI (LMAN) IDR 28.8T Housing Finance EP TAPERA Liquidity Facility (FLPP) IDR 19.1T Governance is improved with the Key Performance Indicator (KPI) of Investment Financing International Development Fund Cooperation Agency (FLPP) IDR 1T Sarana Multigriya SMF Finansial IDR 2T Education Fund Management Agency GOLD NOW Garuda Indonesia IDR 7.5T (LPDP) IDR 20T Disbursement of Investment Financing allocation is based on performance and priority analysis#102GS Financing Realization 2022 Source: Ministry of Finance (Trillion IDR) Realization (ao. Nov 30, 2022) 899.54 Government Securities (GS) Gross Government Debt Securities (GDS) IDR Denominated GDS 527.46 464.51 -Coupon GDS 333.26 - Conventional T-Bills 67.06 - Private Placement (+ Voluntary Disclosure Program) 12.20 - Retail Bonds 52.00 Foreign Denominated Bonds 62.95 - SEC USD-EUR ( - Buyback LM) 53.23 - Samurai Bond - SDG Bonds - Valas Voluntary Disclosure Program 8.76 0.00 0.95 Sovereign Sharia Securities (Sukuk) 276.66 Domestic Sovereign Sharia Securitoes 227.16 - IFR/PBS/T-Bills Sukuk (Islamic Fixed Rate Bond/Project Based Sukuk 169.62 - Retail Sukuk 45.42 - Private Placement 12.12 Global Sukuk 49.51 BI Purchase (SKB III) 95.42 101#103Republic of Indonesia USD1.75 Bn Global Bonds Issuance & Liability Management USD1.57bn 19% 42% Investor Breakdown by Region 10Y 16 US Issuer Issuer Rating 34% 40% Format 30Y APAC Pricing Date EMEA 50% Investor Breakdown by Investor Type 23% 9% 3% 10Y AM/FM 8% Settlement Date Republic of Indonesia Baa2 Moody's (Stable) BBB S&P (Negative) BBB Fitch (Stable) SEC-Registered Shelf Take-Down March 22, 2022 March 31, 2022 Issue Size USD1,75 bn Tenor 10year 30year Insurance / PF 27% 30Y Maturity Tranche Size March 31, 2032 March 31, 2052 USD1,0 bn USD750 milion ■ Bariks 65% 65% Coupon (p.a.) 3.550% 4.300% ■CB/SSAS Price 99.583 Yield (p.a.) Listing 3.600% Tender Offer Result • On March 29, 2022, Republic of Indonesia announced the results of its second Tender Offer Exercise (the "Tender Offer" or "Liability Management Exercise") launched on nine series of Notes (the "Old Bonds"). • The Republic repurchased a total nominal amount of USD 467,485,000, accepting in full instructions received on its 5.375% Global Bonds due 2023, 5.875% Global Bonds due 2024, and 4.450% Global Bonds due 2024, while applying a pro-ration factor of 21.06% on its 4.750% Global Bonds due 2026. The Republic did not accept instructions received on the other series of the Old Bonds. The total cash consideration amounted to USD 499,999,756. ⚫ The table below sets forth, for each series of Old Bonds accepted for purchase, the principal amount accepted for purchase, and where applicable, the proration factor: Principal Amount Accepted Old Bonds 2.360 due 2023 3.375% de 2023 Proration Factor for Purchase U.3.50 U.5.50 N'A NA 5.375 .223 US$61,444,000 100查 5.5/5 dc 2024 US8272,500 100% 99.167 4.450% due 224 4.350% 4.125% due 2025 1.750 due 2025 1.350 due 2027 37 LIS $52,152,000 U.3.30 100% N US $BC,268,000 U.3.50 16.50 21.05% NIA NA Transaction Highlights • • Skillfully navigated through the challenging market backdrop and a 30-year tranche represents the longest tenor issued by an Asian Sovereign in 2022YTD. Strong orderbook allowing significant price tightening from IPG Source: Ministry of Finance Use of Proceeds Singapore, Frankfurt Stock Exchange To repurchase certain of the Republic's outstanding global bonds pursuant to its tender offer separately announced on March 22, 2022, including related costs and expenses thereof, and any remaining net proceeds for the general purposes of the Republic • This Liability Management Exercise is a part of the Republic's general cash management program and its broader program to manage its external liabilities. This is the second buyback exercise by the Republic in the past 12 months following the first Liability Management Exercise conducted in September 2021 and is in line with the Republic's goals of extending its debt maturity profile and achieving cost savings through the reduction of interest expense. 102#104Republic of Indonesia Global Sukuk US$3.25bn Summary of Terms & Conditions Issuer Issue Format Country of Transaction Republic of Indonesia through Perusahaan Penerbit SBSN Indonesia III 144A/Reg S, Senior, Unsecured, Wakala US$ Trust Certificate ("Sukuk") issued under a USD$35 billion Trust Certificate Issuance Programme Baa2 stable (Moody's) / BBB stable (S&P)/ BBB stable (Fitch) Indonesia Issuer Ratings (M/S/F) Issue Ratings (M/S/F) Pricing Date Settlement Date Tenor Baa2 (Moody's)/BBB (S&P) BBB (Fitch) 24 May 2022 06 June 2022 (T+8) 5Y Sukuk Orderbook Distribution 5-Year USD US$ 5.7bn+ From 241 accounts Investors by Geography 10Y Green Sukuk 6-Jun-32 17% 18% 35% 20% 10-Year USD US$ 5.1bn+ From 225 accounts Maturity Date Tranche Size Profit Rate Re-Offer Price Reoffer Spread 6-Jun-27 USD1.75 billion 4.40% Fixed, Semiannual, 30/360 100.00% UST + 164.4bps US71567PAU49 USD1.50 billion 4.70% Fixed, Semi-annual,30/360 100.00% General financing requirements 144A ISIN Reg S ISIN US71567RAU05 Use of Proceeds Other Details SGX-ST and Nasdaq Dubai Listing Joint Bookrunners Co-Managers Achievement USD200k/1k denoms., English / Indonesian Law 15% 30% UST + 193.3bps 27% US71567PAV22 Asia Middle East Europe United States US71567RAV87 In line with ROI's SDGs Government Securities Framework Investors by Type 8% 1% 1% 13% 30% CIMB, Deutsche Bank (B&D), Dubai Islamic Bank, HSBC, and Standard Chartered Bank PT BRI Danareksa Sekuritas and PT Trimegah Sekuritas Indonesia Tbk The largest ever Global USD Sukuk transaction from the Republic The largest Green Sukuk tranche ever printed by the Republic The largest issuance from Indonesia year to date The first Green Sukuk tranche in 10 year maturity by the Republic Transaction Highlights The final order size amounted to US$10.8 bn combined, or an oversubscription 41% 20% 49% Banks CBs/Ols Fund Managers Ins/Pension PBS/Others The green tranche was issued under the 10 year tenor, which is also the largest green want ever Issutu by the Republic. This aptly demonstrates the Republic's dedication and commitment to Green and sustainable finance, as well as diversifying financing methods in the effort against climate change. Source: Ministry of Finance 38% 30% 7% 103#105Republic of Indonesia Samurai Bond JPY 81.0bn Summary of Terms & Conditions Issuer Expected. Bond Rating Format Pricing Date Settlement Date Deal Size Series Tenor Coupon Tranche Size Re-offer Spread over TONA Yen Mid Swap Joint Lead Arrangers 3yr Life Ins. 10% Others International 16% 5% Shinkire, etc. 5% Regional 20% Cerbal 63% Regional BK 11% Pub. Funds (central) 3% Republic of Indonesia Baa2 Moody's BBB S&P / BBB Fitch Samurai June 2, 2022 June 9, 2022 JPY 81.0bn RIJPY0625 RIJPY0627 3-year 0.96% 5-year 1.13% JPY 68.2bn JPY 5.1bn RIJPY0629 7-year 1.27% JPY 1.7bn YMS+90 YMS+100 YMS+105 5yr Prop. Ins RIJPY0632 10-year 1.45% JPY 6.0bn YMS+110 Daiwa/Mizuho/Nomura/Morgan Stanley Investor Breakdown by Amount 7yr International 12% Transaction Highlight • • The largest Samurai bond transaction issued in 2022 so far. This deal represents Rol's eighth consecutive year accessing the Samurai market with benchmark sized transaction since 2015 With the global market volatility being high on the back of tightening monetary policies and heighted geopolitical risk, Rol took the strategy to swiftly access to the market by shortening the marketing period Even with the shortened 2-day official marketing period compared to previous issuance, Japanese investors were ready to invest in Rol Samurai and giving order from early stage of the marketing. Orderbook grew solidly during the marketing; the final order book exceeding the issuance size Others 174 10yr Total Life Is 9% Prop. Ins. 0.2% International 17% City BVK 12% City AM 22% FUK 157 International 43% Central 21% Shirkins, etc. Regional 33% AM Central Cooperative 15% 20% 素 Source: Ministry of Finance Others Regional B8% Others 88% Regional 17% Central NEW Others 9% Regional Shinkins, etc. 22% Central 61% 4% Regional AMM 25% BIK AM 9% 83% Pub. Funds (central) 3% Central Cooperative 12% 104#10630% Switch And Cash Tender Offer & Republic Of Indonesia USD2.65 bn Global Bonds Issuance 5Y Investor Breakdown by Region 49% 10Y 24% 52% 30Y ooo 37% 33% 27% EMEA Asia Pacifik US Investor Breakdown by Investor Type 105Y 8% 10% 1% 8% Settlement Date Republic of Indonesia Aggregate Aggregate Principal Tender Offer Result Aggregate Principal Issuer 26% Issuer Rating Baa2 Moody's (Stable) BBB S&P (Negative) BBB Fitch (Stable) Principal Old Bonds Amount of Proration Amount of Format SEC-Registered Shelf Registered Amount of Preferred Tenders Preferred Factor Tenders Accepted Non- Preferred Tenders Aggregate Principal Amount of Non- Preferred Proration Factor Aggregate Principal Amount to be Acquired Tenders Accepted 22% Pricing September 7, 2022 Group 1 Bonds Date 5.375% Global September 20, 2022 Bonds due Oct 17, U.S.$ U.S.$ 11,408,000 11,408,000 100% U.S.$0 U.S.$0 N/A U.S.$ 11,408,000 Issue Size USD2.65 bn 2023 1% Tenor 5year 10year 30year 5.875% Global Bonds U.S.$ Maturity Sep 20, 2027 Sep 20, 2032 Sep 20, 2052 due Jan 15, 2024 U.S.$ 45,559,000 45,559,000 100% U.S.$ 5,300,000 U.S.$ 5,300,000 100% U.S.$ 50,859,000 30Y Tranche Size USD750 milion USD1.4 bn USD500 milion Group 2 Bonds 4.750% Coupon (p.a.) Global 4.150% 5.450% Price 98.889% 98.820% 98.547% Bonds U.S.$ U.S.$ due 77,043,000 77,043,000 Jan 8, 2026 100% U.S.$ U.S.$ 21,725,000 21,725,000 100% U.S.$ 98,768,000 Yield (p.a.) 4.400% 4.800% 5.550% 8.500% Central Banks/SSAS Global Listing Use of Proceeds Singapore, Frankfurt Stock Exchange Repurchase certain of its outstanding global bonds pursuant to the Switch Tender Offer, including related costs and expenses thereof, and any remaining net proceeds for the general purposes of the Republic Bonds U.S.$ U.S.$ due 33,004,000 33,004,000 100% U.S.$ 4,335,000 U.S.$ 4,335,000 100% U.S.$ 37,339,000 Oct 12, 2035 6.625% Global Bonds due U.S.$ U.S.$ 58,267,000 58,267,000 100% U.S.$ U.S.$ 13,971,000 13,971,000 100% U.S.$ 72,238,000 Feb 17, 2037 000 20% 63% 11% Asset Managers/FM 10Y Insurance/Pension Funds Private Banks/Others 72% Banks/Brokers 4.650% Transaction Highlights The transaction marks the Republic's twelfth SEC-registered issuance in USD, a milestone solidifying its status as one of the most active global issuers in the region. Final orderbooks for the Notes Offering exceeded USD2.5bn for the 5-year tranche from 146 accounts (representing a 3.3x oversubscription), USD3.5bn for the 10-year tranche from 160 accounts (representing a 2.5x oversubscription) and USD3.0bn for the 30-year tranche from 139 accounts (representing a 6.0x oversubscription). 7.750% Global Bonds U.S.$ U.S.$ due 38,441,000 38,441,000 100% U.S.$ U.S.$ 16,161,000 16,161,000 100% U.S.$ 54,602,000 Jan 17, 2038 105#107GS Primary Market Performance 2021 - 2022 Through Auction In 2022, average incoming bid = IDR32.35 tn/auction, while average awarded bid = IDR12.39 tn/auction [IDR Trillion] Source: Ministry of Finance 450 400 350 300 Average Incoming Bid 2021 - IDR56,77T/ auction 250 200 150 100 50 338-21 2.03 2.27 7.79 Feb-21 Mas-21 Apr-21 1.85 May.21 1.30 Incoming Blids $2.801 www 274 Average Awarded Bid 2021 - IDR18.57T/ auction - 1 3.36 2.96 3.06 #-21 Aug.21 Sep-21 4.92 Awarded Bick 12.17 3.56 3.11 Nov-21 339-22 Feb-22 Mac-22 173 245 .24 Bid to Cover Ratio (AHSI לוו. 14.00 12.00 101.001 8.00 6.00 4.0000 2.62 2.60 1.81 .96 2.00 Apt 22 May.22 log-22 Ju#-22 Aug-22 Sag-22 J.LK Oct-22 106#108Ownership of IDR Tradable Government Securities MUTUAL FUND INSURANCE & PENSION FUND FOREIGN 2,85% 16,86% 14.27% INDIVIDUAL OTHERS 6,67% 9,04% Description Dec-18 Banks* 481.33 20.32% Dec-19 581.37 21.12% Dec-20 1,375.57 35.54% 15,61% Govt Institution Govt Institutions (Bank Indonesia**) 253.47 10.70% 262.49 9.54% 454.36 11.74% 34,70% BANK 49,69% Bank Indonesia (gross) GS used for Monetary Operation Non-Banks Mutual Funds 217.36 9.18% -36.11 -1.52% 1,633.65 68.98% 118.63 5.01% NON-BANK Insurance Company and Pension Fund Foreign Holders 414.47 17.50% 893.25 37.71% Foreign Govt's & Central Banks Individual Others Total 163.76 6.91% 73.07 3.09% 134.22 5.67% 2,368.45 100% 2,752.74 100% 3,870.76 273.21 9.93% 10.72 0.39% 1,908.88 69.34% 130.86 4.75% 471.67 17.13% 1,061.86 38.57% 194.45 7.06% 973.91 874.88 22.60% 420.51 10.86% 2,040.83 52.72% 161.32 4.17% 542.82 14.02% 25.16% 1,220.73 26.09% 419.27 8.96% 2,286.40 48.87% 157.93 3.38% 655.24 14.00% 891.34 19.05% Dec-21 1,591.12 34.01% 801.46 17.13% (IDR tn) Nov-22 1,791.15 34.70% 805.88 15.61% 1,325.09 25.67% 519.21 10.06% 2,565.43 49.69% 147.00 2.85% 870.35 16.86% 736.93 14.27% 178.31 4.61% 233.45 4.99% 205.36 3.98% 81.17 2.95% 131.21 3.39% 221.41 4.73% 344.38 6.67% 163.32 5.93% 231.57 5.98% 100% 360.47 7.70% 4,678.98 100% 5,162.46 100% 466.78 9.04% holders reach a record high 64,62% IDR 1.092,02T on January 24, 2020, foreign in nominal terms. Portion of foreign ownership in the mid & long term sector (≥ 5 years). Note: 1) 2) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company, and Pension Fund. Others such as Securities Company, Corporation, and Foundation. *) Including the Government Securities used in monetary operation with Bank Indonesia. **) net, excluding Government Securities used in monetary operation with Banks. Source: Ministry of Finance 107#109Holders of Tradable Central Government Securities Balanced Ownership In Terms of Holders and Tenors Holders of Tradable Gov't Domestic Debt Securities 38.2% 37.5% 39.8% 37.7% 38.6% 37.8% 39.9% 36.8% 42.0% 40.3% Foreign Ownership of Gov't Domestic Debt Securities by Tenor 14.3% 19.0% 25.2% 29.4% 29.6% 29.8% 30.0% 27.89% 28.4% 26.9% 27.1% 24.2% 24.27% 24.19% 24.80% 51.0% 46.9% 39.3% 34.8% 36.2% 36.9% 38.52% 39.5% 39.55% 40.08% 39.83% 39.0% 38.4% 37.8% 36.7% 23.8% 23.8% 23.1% 18.7% 19.87% 21.8% 22.1% 22.3% 22.8% 22.33% 22.17% 21.39% 35.5% 34.0% 34.7% 23.9% 19.0%-18.97% 18.82%-17.57% - 17.03% 16.56% 16.09 % 15.65 % 15.24% 14.31 % 13.90 % -14.27% 22.5% 23.4% 20.3% 21.1% 10.3% 10.2% 9.9% 10.14% 8.7% 8.6% 9.29% 9.15% 9.04% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Nov-22 4.8% 5.3% 5.1% 1.0% 1.9% 4.1% 4.3% 3.59% 4.8% 4.9% 5.0% 5.0% 4.57% 4.41% 4.95% Dec-21 Jan-22 Feb-22 Mar-22 Apr 22 May-22 Jun 22 Jul-22 Aug 22 Sep-22 Oct-22 Nov-22 Foreign Holders Domestic Non-Banks Domestic Banks 10-1 >1-2 1>2-5 1>5-10 >10 % Foreign Ownership of Total Source: Ministry of Finance 108#110Disciplined and Advanced Debt Portfolio Management Stable Debt to GDP Ratio Over the Years Prudent Fiscal Deficit IDR Tn Government Debt / GDP (%) 1,500 39.4% 40.7% 38.7% 8,000.00 7,000.00 41% 1,000 29.4% 29.8% 30.2% 856.36 442 446 31% 500 6,000.00 819.86 358 852.91 14 5,000.00 21% 4,000.00 764.48 3,000.00 2,000.00 1,000.00 3,248.930 746.32 3,612.69 C 810.74 4,014.80 5,221.65 6,091.85 6,697.83 (20)56) [6] (9)(35) (269) (500) (341) (319) 11% -1.80% -2.50% -2.20% (1,000) 1% (1,500) -9% 2017 2018 2019 2017 2018 2019 2020 2021 Nov-22 IGS Nett ILoan Nett Non Ucbt Bond Loan Debt to GDP Weighted Average Debt Maturity of ~8.39 years 8.68 2017 8.37 8.52 8.5 8.6 10% 1,177 8% 878 G 4% 296 53 (36) (10) U -2% -4% [784] (948) 4.65% -6% -6.14% 2020 -8% 7021 Surplus (Deficit] Budget --Ratio Deficit to GDP Well Diversified Across Different Currencies % of Yearly Issuance 1% 1% 1% 1% 1% 6% 6% 50% 50% 1% 5% 4% 3% 29% 30% 27% 23% 20% 21% 8.39 59% 58% 62% 66% 70% 70% 2018 2019 2020 2021 Nov-22 2017 2018 2019 2020 2021 Nov-22 IDR USD EUR JPY OTHER 109 Source: Ministry of Finance#111Well Balanced Maturity Profile with Strong Resilience Against External Shocks Interest Rate Risks (%) VR Prop Non SKB VR Prop SKB 9.2 8.9 6.6 Declining Exchange Rate Risks (%) FX to GDP Ratio FX Proportion 41.3 41.0 37.9 33.5 30.0 29.6 12.1 12.2 13.2 11.4 12.2 11.5 10.6 10.6 9.8 7.6 7.4 7.9 2017 2018 2019 2020 2021 Nov-22 2017 2018 2019 2020 2021 Nov-22 Debt Maturity Profile IDR tn 800 700 600 177 184 211 200 500 185 158 400 300 517 474 453 454 200 400 367 100 9 2022 Source: Ministry of Finance 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Domestic Currency Debt Foreign Currency Debt 125 122 110 120 35 54 13 290 278 43 238 227 151 154 29 34 11: 2229 $། 2037 2038 2039 Upcoming Maturities (Next 5 Years) 39.3 40.4 41.0 42.1 39.6 40.1 25.0 25.5 322 24.3 25.0 22.8 22.8 9.9 10.6 8.1 7.8 7.8 6.4 3 38 242 94 70 47 26 34 143 129 3 در 54 28 2017 2018 2019 2020 2021 Nov-22 2040 2041 2042 2043 2044 2045-2071 1 Year 3 Year 5 Year 110#112Strengthened Synergy Between Monetary and Fiscal Policy Background ☑1. The increase in the spread of Covid-19 including the delta variant requires large financing, among others, for handling health and humanity as a result of the COVID-19 pandemic 2. The government and Bank Indonesia (BI) are coordinating solidly, in which BI actively participates in the purchase of SBN in the primary market, including the contribution to health and humanitarian financing. 3. The agreement between the Government and Bl is. stated in the Joint Decree of the Minister of Finance and the Governor of Bank Indonesia concerning the Scheme and Coordination Mechanism between the Government and Bank Indonesia in the Context of Financing for Health and Humanitarian Management to Handle the Impact of the Corona Virus Disease 2019 (COVID-19) Pandemic through Purchases in the Market Initial by Bank Indonesia on Government Securities and/or Government Sukuk (or referred to as SKB III) Principles 1. Maintaining fiscal space and fiscal sustainability in the medium term 2. Reduce the APBN deficit gradually below 3% in accordance with the provisions of the legislation 3. Maintaining the exchange rate stability, interest rate and inflation under control 4. Prioritizing credibility and integrity of fiscal and monetary management 5. Encouraging sustainable economic growth Maintaining financial sustainability of the Government and Bank Indonesia 6. Source: Ministry of Finance 111#113Strengthened Synergy Between Monetary and Fiscal Policy Policy Synergy Between Bank Indonesia and the Government Contributes to the Acceleration of Economic Recovery The Enactment of Emergency Law No.1/ 2020 (Becoming Law No.2 / 2020) Allows BI to Buy GS in the Primary Market 1st Joint Decree between Minister of Finance and Governor of Bank Indonesia (BI) on April 16, 2020 (SKB I). The role of Bl is to act as backstop buyer in the primary market 2nd Joint Decree between Minister of Finance and Governor of BI on July 7, 2020 amended with Joint Decree on July 20, 2020 (SKB II) puts in place the burden sharing scheme between Government and Bl 3rd Joint Decree Between Minister of Finance and Governor of BI on August 23, 2021 (SKB III) The Third Joint Decree concerns the scheme and coordination between the Government and Bank Indonesia in the context of financing healthcare and humanitarian handling as a response to the current condition of the COVID-19 pandemic GOVERNMENT SECURITIES (SBN) ISSUANCE AND BI CONTRIBUTION SCHEME Bl contributes all interest costs on the financing for vaccination and healthcare with a maximum amount of IDR58T (2021) and IDR40T (2022), taking into account Bl's balance sheet capacity and capability Cluster A Cluster A : 2021 IDR58 T 2022 IDR40 T Healthcare includes vaccination program and other healthcare financing related to COVID-19 pandemic Interest Rate Bl reverse repo 3 Months Tenor Healthcare related to COVID-19 pandemic other than Cluster A Humanitarian handling in the form of various protection programs for affected communities/ small businesses BANK INDONESIA Interest Rate BI reverse repo 3 Months Tenor GOVERNMENT The issuance of Government Securities is done through a private placement: reducing the target for SBN auction and manage cost of debt All Government Securities are issued at variable rate using BI 3-month Reverse Repo Interest Rate. SBN is tradable and marketable The remaining interest costs for financing other health care as well as humanitarian handling will be covered by the Government with a reference interest rate for Bl RR 3M (below market rate) Cluster B : Cluster B 2021 2022 IDR157 T IDR184 T • Source: Ministry of Finance, Bank Indonesia 12#114Section 6 Monetary and Financial Factor: Credible Monetary Policy Track Record and Favourable Financial Sector BHINNEKA TUNGGAL IKA#115Bank Indonesia's Policy Mix Synergy Maintaining Stability and Strengthening National Economic Recovery BB BANK INDONESIA BANK MENTRAL REPUBLIK IRENESA Source: Bank Indonesia Monetary policy towards maintaining stability ■Policy rate increase as as a front-loaded, pre-emptive and forward-looking measure to lower inflation expectations, which are currently overshooting and return core inflation to the 3.0% 1% target range earlier, specifically in the first half of 2023 ■Strengthening rupiah stabilisation policy as part of the measures to control inflation, primarily imported inflation ■Continue buying/selling SBN In the secondary market to strengthen transmission of the B17DRR by increasing the attractiveness of SBN yields for foreign portfolio investment inflows to strengthen exchange rate stabilisation measures ■ Accelerating liquidity policy normalization by incrementally raising Rupiah reserve requirements to 9% on 1*September 2022 Accommodative macroprudential policy stance to reignite bank lending to the corporate sector and drive the national economic recovery, while maintaining financial system stability Incentivize banks to disburse financing to priority sectors and promote inclusive financing ■ Strengthen implementation of macroprudential Inclusive Financing Ratio (RPIM) to increase economic inclusion. unlock financial access, while strengthening MSMEs contribution to the national economic recovery Accommodative macroprudential policy stance, among others by: relaxing LTVFTV, relaxing down payment requirement, CCB0%, Macroprudential Intermediation Ratio (MIR) 84-94%. Macroprudential Liquidity Buffer (MLB) at 6% with 6% repo flexibility, Sharia Macroprudential Liquidity Buffer (SMLB)at 4.5% with repo flexibility at 4.5% ■Accelerating paymentsystem digitalization to stimulate economic recovery and Implementation of the Indonesia Payment System Blueprint 2025 ■Strengthening and expand digitalization through social programs, e-payment for Government ■Increasing the number of participants, expand services and garner greater acceptance of BI-FAST for more efficient transactions between banks and members of the public Monetary Policy Macro- prudential Policy Payment System ■ Expanding cross-border QRIS by, among others accelerating implementation, piloting local currency settlement (LCS) with other Asian countries and organising National CRIS Week to achieve the target of 15 million new users Policy ■Money market deepening by expanding underlying DNDF to boost liquidity and reinforce JISDOR as a reference for the exchange rate in the FX market Accelerate key infrastructure development including Electronic Trading Platforms (ETP) and a Central Counterparty (CCP) 2 3 4 ■Continue to develop the Money Market Development Blueprint 2025 ■Promote inclusiveness and the green economy in finance ■Controlling inflation through Inflation Control Team in national and regional level, and accelerating implementation of the National Movement for Food Inflation Control (GNPIP) ■Supporting the State Budget through SBN purchases in the primary market while maintaining macroeconomic stability ■Supporting the national economic recovery program through cooperation and collaboration with the MOF ■■■Strengthening the coordination with the Govemment and related authorities to revive bank Intermediation function ■ Strengthening policy coordination with the Government and Financial System Stability Committee to maintain macroeconomic and financial system stability Financial Market Deepening LA 5 Coordination with other Authorities#116Bank Indonesia Policy Mix: December 2022 B BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA The Bl Board of Governors agreed on 21st and 22nd December 2022 to raise the BI 7-Day Reverse Repo Rate (BI7DRR) by 25 bps to 5.50%, while also raising the Deposit Facility (DF) and Lending Facility (LF) rates by 25 bps to 4.75% and 6.25% respectively. % Rp Raise the Bl 7-Day Reverse Repo Rate to 5.50% Strengthening monetary operations by increasing the interest rate structure in the money market in accordance with the higher BI7DRR Source: Bank Indonesia •Strengthening Rupiah exchange rate stabilization policy as part of the measures to control inflation, primarily imported inflation, through foreign exchange intervention, including spot and DNDF transactions, as well as buying/selling SBN in secondary market; •Continuing to buy/sell SBN in the secondary market to strengthen transmission of the higher BI7DRR by increasing the attractiveness of SBN yields for foreign portfolio investment inflows to strengthen Rupiah exchange rate stabilization measures. • Issuing new foreign exchange monetary operation (MO) instruments to boost placement of Export Proceeds, especially from Natural Resource, domestically by banks and exporters to strengthen stabilization, including Rupiah exchange rate stability and national economic recovery. The foreign exchange MO instruments are applied with competitive yields based on a transparent market mechanism and incentives given to banks •Strengthening accommodative, and inclusive, sustainable macroprudential policy to boost the growth of credit/financing by banks, primarily non-recovering priority sectors, People's Business Credit (KUR), and green credit/financing, to support economic recovery through amendment the reserve requirement (GWM) incentive to be applied from 1 April 2023 rate • Continuing prime lending rate (PLR) transparency policy with a focus on bank's interest responses to the policy rate • Strengthening payment system policy to increase efficiency in order to maintain economic recovery momentum • Strengthening international cooperation with other central banks and partner country authorities, and facilitation of investment and trade promotion implementation in priority sector in cooperation with the institutions. • Bank coordinates relevant • Taking strategic steps to ensure orderly national payment system to anticipate Christmas and New Year: • Ensuring the availability of quality rupiah currency fit for circulation throughout the territory of the of relevant Republic Indonesia Indonesia with the Ministries/ • Maintaining continuity of payment system operation by Bank Indonesia and payment system industry. Institutions for successful 2023 ASEAN Chairmanship, especially through financial track 115#117Ample Liquidity in the Banking Industry and Economy Remains . this condition helps to boost credit/financing and continued economic recovery... In November 2022, ratio of Liquid Assets to Third Party Fund remains high, standing at 30.42%, so that it supports availability of funds for banks to extend credit/financing for businesses. Economic liquidity is also in line with economic activities, as reflected from circulation of narrow money (M1) and broad money (M2) which grows by 11.7% (yoy) and 9.5% (yoy), respectively. The implementation of the Joint Decree between Bank Indonesia (BI) and Ministry of Finance, BI continues to purchase SBN in the primary market to fund the national economic recovery and finance the health and humanitarian aspects of the Covid-19 pandemic. Until 21st December 2022, BI has purchased SBN of Rp144.53 trillion, consisting of the implementation of KB I of Rp49.11 trillion and KB III of Rp95.42 trillion. According to KB III, BI will also remain purchasing SBN in the primary market of Rp128.58 trillion. Principles for Long Term Government Bond Purchasing by Bank Indonesia in the Primary Market SBN Purchases by Bank Indonesia for State Budget Financing Source: Bank Indonesia Market Mechanism Prudent Maintaining the Credibility of Monetary Policy and Maintaining Economic Stability Tradable & Marketable Tradable SUN SBSN Measured Last Resort Considering the Impact on Inflation standby buyer for Non-Public Goods GOVERN Uphold Good Governance SUSTAINABLE Trillion IDR 400 358.32 2021 ■2022* 350 300 250 200 144.53 150 100 50 0 Purchase of SBN for State Budget Funding & Healthcare and Humanitarian Financing Source: Bank Indonesia. * Data as of 21 December 2022 116#118Well Maintained Inflation Ensured Price Stability Manageable Monetary Environment amid Heightened Global Uncertainty Strengthened Monetary Policy Framework 20 20 (%) 19 August 2016 CPI (%, yoy) rhs 8.00 13.01 The New Monetary LF Rate: 7.00 7.00 Operation Framework •Core (%, yoy) - lhs 15 7.00 BI Rate 60 Volatile Food (%, yoy) - lhs2 Administered (%, yoy) - lhs 6.00 10 5.00 5 H 5.7 3.3 4.00 5.42 3.00 0 2.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 Nov-22 Rupiah Exchange Rate Fared Relatively Well Compared to Peers Jan-16 May-16 Q3-2016 Credit Growth Profile Q3-2017 2022 vs 2021 (YTD) TRY 46.25 -28.73 % yoy 20.0 JPY -16.6212.54 EUR -6.93 15.0 -12.34 KRW -7.53 -11.56 PHP -9.68.48 10.0 ZAR -7.76 -9.63 THB ■point-to-point average -3.74 5.0 -8.90 INR -10.19 -5.97 MYR As of 21-Dec-22 15 0.0 .85 CNY -8.79 -4.27. IDR -8.56 -3.74 SGD -0.10 -2.60 BRL 7.16 -10.0 4.39 -50.0 -40.0 -30.0 -20.0 -10.0 0.0 10.0 Source: Reuters, Bloomberg (calculated) -5.0 Total Growth Investment Loans Q3-2018 Q3-2019 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 DF Rate: 4.75 LF Rate: 6.25 BI 7Day RR Rate: 5.50 Jul-22 Nov-22 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Mar-21 May-21 Working Capital Loans Consumption Loans Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 11.16 Sep-22 Nov-22 13.15 11.27 9.1#119Monetary Policy will focus on stability .. to stabilize Rupiah and manage inflation towards the target corridor, as part of mitigation measures against the impact of global spillover MITIGATING THE IMPACT OF GLOBAL SHOCK SPILLOVER STAGNATION - RECESSION - HIGH INFLATION GLOBAL POLICY RATE "HIGHER FOR LONGER" STRONG US DOLLAR AND WEAKENING CURRENCY ACROSS THE WORLD MONETARY POLICY TRILEMMA POLICY RATE FOR INFLATION Monetary Policy "Pro Stability": Front Loaded, Pre-emptive, Forward Looking 1 HIGH RISK PERCEPTION AND "CASH IS THE KING" 2 TARGET Policy Rate BI7DRR Exchange Rate Stabilization CORE INFLATION WITHIN TARGET 3+1% ON THE FIRST HALF OF 2023 AND RUPIAH EXCHANGE RATE STABILIZATION POLICY On a front loaded, pre-emptive and forward looking basis to lower inflation expectation and core inflation ealier, in the first half of 2023 Stabilization of Rupiah exchange rate to control inflation, particularly imported inflation, through spot intervention, DNDF, and SBN transaction in secondary market SBN sale/purchase in secondary market to maintain the attractiveness of SBN yield to draw foreign portfolio investment in order to strengthen the stabilization of Rupiah exchange rate COORDINATION WITH GOVERNMENT 1. Inflation control with TPIP/TPID and GNPIP 2. Fiscal-Monetary coordination 3. Development of priority sector B Twist Operation RUPIAH STABILIZATION FOREIGN EXCHANGE RESERVE ADEQUACY STRENGTHEN THE STRATEGY OF INTEGRATED MONETARY POLICY 9999 MANAGEMENT OPTIMIZATION OF FOREIGN EXCHANGE RESERVE MANAGEMENT Source: Bank Indonesia RUPIAH AND FOREIGN CURRENCY MONEY MARKET DEEPENING SYNERGY AND COORDINATION 118#12015% 10% 5% 0% -5% -10% Jan-19 YoY Source: Financial Service Authority (OJK) 0% -2% -4% -6% Jan-19 Apr-19 Jul-19 Oct-19 MSMEs Jan-20 Apr-20 Jul-20 Oct-20 Signs of Recovery in Financial Intermediations Apr-21 Jul-21 Amidst the slowing-down in economic recovery, bank loans continued to grow, supported by Working Capital and Corporation loans, while the funding side grew relatively steady, indicating a growing lending appetite. Loan LOAN In October 2022, bank loans continued to grow by 11.95% (yoy), while Third-Party Funds (Total Deposits) steadily grow at 9.41% (yoy). YOY 14% 12% 10% 8% 6% TT 4% YOY Third-Party Fund (Deposits) 20% 11.95% 15% 9.41% 10% 5% 2% All types of loans continued their positive trend, particularly Investment loans, which grew by 13.65% (yoy) in October 2022, indicating gradual recovery for businesses. Working Capital Investment Consumption - Total 13.65% 12.92% 11.95% 8.79% Loan growth by segmentation continued to improve in October 2022, driven by Corporation loans, which grew by 14.85% (yoy). Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Consumption Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 1 Corporation - Total YoY 14.85% 30% 11.95% 25% 9.78% 20% 8.79% 15% 10% 5% Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 -5% 0% 0% -5% -10% Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-2 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 1 As corporate expenditure and household consumption increased, Third-Party Funds (Total Deposits) grew relatively high in October 2022, supported by Demand Deposits and Savings, which increased by 22.33% and 8.49% (yoy), Deposits Savings Demand Deposits - Third-Party Fund Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 M Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 119 22.33% 9.41% 8.49% 1.05%#121543 210 Jan-19 % 180 160 140 120 100 80 60 threshold LA/ NCD= 50% 40 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Manageable Credit Risks with Ample Liquidity Liquid Assets to Non-Core Deposits and Liquid Assets to Third-Party Funds (Total Deposits) remained well above the thresholds. *) The banking industry has ample liquidity, strong capitalization, and manageable credit risk below thresholds. Profitability is also recorded at a steady level. Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 The banking NPL ratio continued to decline to 2.72% gross and 0.78% net as of October 2022, well below the threshold. A The Capital Adequacy Ratio (CAR) of the banking sector was steadily high with a value of 25.13% and Tier-1 capital stood at 23.47% as of October 2022.*) % CAR Tier 1 25.13 ■NPL Net ■NPL Gross 2.72 20 20 23.47 16 Liquid Assets to Non-Core Deposits Liquid Assets to Third-Party-Fund/Deposits (rhs) 29.46 25 130.17 threshold LA to TPF (rhs) = 10% OGEENNUS % 4 35 30 20 20 15 10 *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Source: Financial Service Authority (OJK) Jan-19 Oct-22 0.78 10 10 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 T Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Net Open Position was maintained well below the maximum limit of 20% and $ stood at 2.01% in October 2022. 2543210 Jan-19 Apr-19 Jul-19 Oct-19 Apr-19 Net Interest Margin Jan-21 % Net Interest Margin and Return on Assets of the banking industry remained stable at 4.7% and 2.47%, respectively, in October 2022. Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 120 Oct-21 Return on Assets 2.47 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 2.01 4.7#1221 2 3 4 % Jan-19 Apr-19 Jul-19 Oct-19 Multi-finance Companies' Performance Continues to Improve IDR tn Net Financing 500 400 300 200 100 0 Jan-191 The performance of multi-finance companies continues to improve, as shown by growing financing, a manageable Non-Performing Financing (NPF) ratio, and a stable gearing ratio. In October 2022, net financing increased to IDR402.64 Tn and continued its positive growth at 12.17% yoy. The NPF ratio of multi-finance companies improved, as shown by a decrease from 2.58% to 2.54% in October 2022, well below the 5% threshold.*) % Growth (rhs) YOY 12.17% 15% 10% 402.64 5% 0% -5% -10% 654ENTO 3 2 1 -15% -20% The gearing ratio of multi-finance companies stayed below the threshold and stood at 2.01 times in October 2022. Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 250 200 2.01 150 100 50 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Multi-finance companies' exposure to domestic debt slightly increased, whereas exposure to foreign debt was kept relatively stable in October 2022. *) IDR Trillion Domestic Debt Foreign Debt Source: Financial Service Authority (OJK) *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 121 Oct-22 Apr-22 178.047 62.351 Jul-22 Oct-22 2.54#1232° % 40 30 20 10 0 Manageable Insurance and Pension Risks with Adequate Performance Insurance and pension funds continue to improve, shown by adequate performance and manageable risks. is In October 2022, insurance premiums marked a total increase of IDR21.45 Tn (mtm) with General and Life insurance added premiums at IDR8.63 Tn and IDR12.82 Tn, respectively. General insurance Life insurance In October 2022, the Investment Adequacy Ratio of both Life Insurance and General Insurance experienced an increase. Life Insurance General Insurance Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 220 200 180 160 140 120 100 80 12.82 60 40 20 8.63 threshold Investment Adequacy Ratio= 100% Risk-Based Capital (RBC) of the insurance industry remained well above the minimum threshold with Life Insurance at 464.24% and General Insurance at 313.71% in October 2022. In October 2022, insurance and pension fund investment values continued the upward trend and stood at IDR1,427.98 Tn and IDR325.95 Tn, respectively. Life Insurance (Lhs) General Insurance (rhs) IDR Tn 1000 400 ୮ 313.71 350 1,500 800 300 1,200 600 464.24 250 900 200 400 150 600 threshold Insurance RBC (rhs)=120% 100 200 threshold Insurance RBC (Lhs)=120% 300 50 0 0 0 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-19 Apr-19- Jul-19 Oct-19- Jan-20 Apr-20 - Jul-20 Oct-20- Jan-21 Apr-21 Jul-21 Oct-21 - Jan-22 Apr-22 - Jul-22 Insurance Source: Financial Service Authority (OJK) *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Pension Funds (rhs) IDR Tn 1,427.98 400 325.95 350 300 250 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 200 122 Oct-22- 191.22 112.32#124Jan-19 Mar-19 May-19 Jul-19 Source: Reuters and Ministry of Finance Sep-19 Nov-19- Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Domestic Capital Market Performance Amid Global Challenges Despite the rising FFR, investors are still optimistic for a steady economic recovery, supported by positive external performance and growing domestic demand. 10900 TURK Most global stock indices remain in negative territory as the hawkish stance of major central banks is expected to continue. Stock Index Performance as of 16 December 2022 (compared to 31 Dec'21) The positive performance of the Composite Bond and Stock Index in December 2022, supported by Indonesia's resilient fundamentals. economic 92.05% BRAZ 360 INDO 11.02% 6.77% 340 SIN 0.71% THAI -4.70% 320 JPN -5.82% 300 US -9.70% MAL -10.30% 280 EU -11.52% 260 PHIL -16.71% CHIN -16.91% 240 HKN -24.18% (% YTD) S KOR -25.01% 220 WORLD -25.41% 200 Comp Bond Index Comp Stock Index (rhs) 8000 7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 -40% -20% 0% 20% 40% 60% 80% 100% Jan-19May-19Sep-19Jan-20May-20Sep-20Jan-21May-21Sep-21 Jan-22May-22Sep-22 Government bond yields remained competitive, followed by a stable rupiah as the risk premium was maintained. The Net Asset Value (NAV) of equity mutual funds was stable with low volatility, reflecting a steady movement in the capital market. Yield (%) 10 5-yr Yield 10-yr Yield USD/IDR IDR Tn NAV Equity Mutual Funds JCI (rhs) 20-yr Yield IDR (rhs) 700 8,000 18,000 600 7,000 6 500 6,000 14,000 8 7 6 5,000 400 10,000 4,000 300 - 3,000 200 6,000 2,000 100 1,000 5 2,000 0 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21- Apr-21- Jul-21 Oct-21 Jan-22 Apr-22 Jul-22- Oct-22- 123#125Domestic Capital Market Performance (continued) Several capital market indicators still show good performance and remain stable. 10900 ⚫Equity market recorded a net buy of IDR65.74 Tn as of 14 December 2022 (YTD), meanwhile non-resident portfolios of equity and government bonds recorded a net sell of IDR67.07 Tn (YTD). Total securities issuance reached IDR260.30 Tn (YTD) as of 13 December 2022, indicating maintained trust in economic recovery. 100 50 0 -50 -100 -150 Jan-19 Mar-19 May-19 ■Gov't Debt Securities ■ Equity IDR Tn ΠΙΡΟ Rights Issue Corporate Bond & Sukuk 220 21.6 200 180 155.20 160 140 -15.74 120 100 80 60 72.80 32.30 40 20 0 2016 2017 2018 2019 2020 2021 2022* Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-22 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 4 10 8 6 Capital Market Investors continued to grow to 10.15 million by the end of November 2022, representing a 41.96% (yoy) increase. 2 1.121.62 Total Investor (million) 2.48 9.98 10.15 0 2017 2019 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Source: Source: Financial Service Authority, KSEI 124#126Manageable NPL within Fintech Intermediation Peer to Peer Lending (P2PL) Fintech intermediation grows with a manageable NPL ratio and Securities Crowdfunding fundraising continues to rise. LOAN The outstanding loan of P2PL Fintech continued to increase and stood at IDR49.34 Tn or grew by 76.8% (yoy) as of October 2022. IDR Tn 60 50 40 30 32 20 10 10 0 Jan-19 Apr-19 Jul-19 Oct-19 Outstanding Loan YOY 10% Growth 200% 49.34 8% 150% 6% 100% 76.80% 50% 4% 0% 2% -50% 0% -100% Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 In October 2022, the Non-Performing Loan ratio of P2PL Fintech remained manageable at 2.90%. Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Peer to Peer NPL Ratio 2.90% Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 The total number of investors and issuers in Securities Crowdfunding increased and stood at 129,958 and 314, respectively, as of November 2022. Number of Investors Number of Issuers Continuing the positive trend, the total value of SCF fundraising stood at IDR661.32 billion as of November 2022. ■Total Fundraising 140,000 700 120,000 600 661.32 413.19 100,000 129,958 500 80,000 400 60,000 93,777 300 184.90 40,000 1,380 5,063 51,414 200 20,000 64.15 314 14 49 127 195 100 0 6.47 2018 2019 2020 2021 2022 0 2018 2019 2020 2021 2022 Source: Financial Service Authority (OJK) 125#127The Indonesian Financial Services Sector Master Plan (2021-2025) Enhancing Financial Services Sector's Resilience and Competitiveness The 2021-2025 MPSJKI STRENGTHENING RESILIENCE AND COMPETITIVENESS Strengthening capital and accelerating consolidation of Financial Services Institutions (FSI) Strengthening governance, risk management and market conduct Synchronize FSS regulations and supervision by referring to the best practices and/or international standards Strengthening Integrated Supervision of Financial Conglomerates and Cross Cutting Issues DEVELOPMENT OF FINANCIAL SERVICES SECTOR (FSS) ECOSYSTEM Increasing the role of the FSS in supporting priority economic sectors, MSMEs, job creation and regional development Establish FSS integration to add value of Sharla Finance in the development of halal industry and sharia economic ecosystem Expand the financial access and foster public financial literacy Strengthening consumer protection in the FSS Accelerating financial market deepening Supporting FSI business expansion to carry out multi-activities business Increase the role of financial services in the sustainable finance to achieve the SDGs DIGITAL TRANSFORMATION ACCELERATION Support FSS digital transformation innovation and acceleration Developing regulatory framework which supports digital financial sector ecosystem Improving human capital capacity in the financial services sector in line with the development of the digital industry Strengthening the role of research to support FSS digital innovation and transformation Accelerate the implementation of IT-based supervision (Suptech) in OJK and use of Regtech by FSS Perform Business Process Reengineering to increase the quality of licensing, regulation and supervision Source: Financial Service Authority (OJK) COLLABORATION AND COOPERATION AMONG STAKEHOLDERS (ENABLER) 126#128Indonesian Financial Literacy National Strategy (SNLKI) 2021 - 2025 Taking into account some strategic programs of Strategi Nasional Literasi Keuangan Indonesia (SNLKI) 2013, SNLKI (Revisit 2017), results from SNLIK 2019, and recommendations from various parties, SNLKI 2021-2025 was launched. VISIONS Creating Well Literate Indonesian Society to be Able to Get Suitable Financial Products and Services to Achieve Sustainable Financial Prosperity I 2021 3 STRATEGIC PROGRAMS Financially Competent Wise Financial Attitude And Behavior Access To Finance 2022 I 10 priority targets in the SNLKI 2021-2025 1. Students; 2. Youths; 3. Employees; 4. Farmers and fishermen; 5. Migrant workers; 6. MSMEs; ROADMAP SNLKI STRATEGIC PROGRAMS 2023 7. People with disability; 8. People in 3T (Foremost, Outermost, Behind) areas; 9. Women/housewives; 10. Community 2024 2025 . Conduct the 4th National Survey on Financial Literacy and Inclusion (SNLIK) • Curriculum Intensification • Implementation of Affirmative Action in Financial Literacy and Education for 3T Area and the Disabled Source: Financial Service Authority (OJK) • Intensifying the use of LMS through Inter- Agency Strategic Alliances Expand the scope of Financial Literacy and Inclusion, specifically in generic financial inclusion products • Enhance Digital Financial Literacy and Education (Smartphone-based Dashboard Application and Tools) Evaluate the Effectiveness of SNLKI 2021 Implementation 127#129Loan Restructuring Extension under POJK No.17/2021 Rationality > Avoid Cliff Effect Push factor to the economy * Higher certainty in preparing 2022 Business Plan POJK 11/2020 1 48/2020 POJK 2 POJK 17/2021 March 2020 December 2020 Key Points on the Stimulus September 2021 Applicability Extension period from 31 March 2022 to 31 March 2023 ✓ Applicable for Commercial Banks and Rural Banks LOAN QUALITY ASSESSMENT Loan quality assessment with 1 pillar only for loan with a ceiling of ≤IDR 10 Billion □ Loan quality on restructuring of loan and/or financing to Covid-19 affected debtors is determined to be “Current” since restructured Banks can provide new loan/financing/providing other funds to debtors affected by COVID-19 without applying uniform classification RISK MANAGEMENT Specific Criteria for Restructuring Debtors ❖ Adequacy of Loan Provision ✰ Dividend Distribution Prerequisites ✰ Stress testing: The impact of restructuring on capital and liquidity Source: Financial Service Authority (OJK) 128#130Digital Banking Transformation Blueprint The Blueprint for Digital Banking Transformation, which was released on 26 Oct 2021, will provide directions for the development of banking digitalization which includes the following aspects: Data Technology Data Protection IT Governance Technology Architecture Data Transfer Data Governance Emerging Technology & Application Machine Learning • ΑΙ • Cloud Computing • Open API • Block Chain / Distributed Ledger Technology Regtech Suptech Customer Engagement Source: Financial Service Authority (OJK) Risk Management Collaboration Institutional Arrangement IT Risk Management Platform Sharing Finance & Investment Outsourcing Cooperation Cybersecurity between financial institutions and non- financial institutions Culture Leadership Organizational Design Talent Customer Customer Experience Customer Insight Customer Trust and Perception Customers with Disability 129#131Macroprudential Policy remains accommodative in 2023 to increase bank lending to support the national economic recovery, while maintaining financial system stability MACRO-FINANCIAL LINKAGES: OPPORTUNITIES AND CHALLENGES ECONOMIC GROWTH AND INFLATION- PERFORMANCE OF CORPORATE AND HOUSEHOLD MACROPRUDENTIAL POLICY TRILEMMA BALANCED INTERMEDIATION 咽 NORMALIZATION OF FISCAL AND MONETARY POLICY EXCHANGE RATE VOLATILITY AND FOREIGN DEBT INCREASE OF SON YIELD AND MARKED TO MARKET BALANCE SHEET MACROPRUDENTIAL POLICY "Pro Growth" Balanced Intermediation, Sound and Resilience Financial System, Economic-Financial Inclusion TARGET Accomodative Macroprudential Policy Macro systemic surveillance on financial system stability Economic 1 CREDIT GROWTHAT 10-12%, MAINTAINED FINANCIAL SYSTEM STABILITY'S RESILIENCE AGAINST RISKS, AND GROWING MSME Loosening all instrument of macroprudential policy and providing incentive on credit/financing provision to banis Strengthening systemic surveillance on bank resilience against liquidity risks, market risks exchange rate and SBN yield), and credit risk Expanding MSMEs Go Export and Go Digital program, as well as strengthening financial literacy and consumer protection on products under Bank Indonesia's licensing 2 FINANCIAL SYSTEM STABILITY COMMITTEE (KSSK) 1. Strengthening resilience and financial system stability risk's prevention 2. Increasing credit/financing to real sector 3. Financial sector reform BOK MAINTAINED FINANCIAL STABILITY ECONOMIC AND and Financial Inclusion Policy FINANCIAL INCLUSION CREDIT SUPPLY BANK Source: Bank Indonesia 미미미미미 MIR MPLB CCyB RR Incentive Transparency of SBDK LTV & DP CREDIT DEMAND RPIM Policy Synergy ㅁㅁㅁ ㅁㅁㅁ ㅁㅁㅁ FINANCING 130#132Bank Indonesia's Comprehensive Financial Deepening Program Strengthening the Effectiveness of Monetary Policy Operations and Transmission, integrated with the modern and efficient money market to support the financing of the economy STRENGTHENING INTEGRATED MONETARY OPERATION STRATEGY OPTIMIZATION OF FOREIGN EXCHANGE RESERVE ASSET MANAGEMENT MONEY MARKET AND FOREIGN EXCHANGE MARKET SINERGY & COORDINATION DEEPENING Money Market Deepening Policy "Pro-Growth" Integrated, Modern, Efficient 3 BPPU MAIN INITIATIVES TARGET 2025 PARTICIPANT PRODUCT PRICING INFRASTRUCTURE 1 INTEGRATION OF MODERN AND EFFICIENT MONEY MARKET WITH MONETARY MANAGEMENT TO IMPROVE MONETARY OPERATION TRANSMISSION AND ECONOMIC FINANCING Consolidation of monetary operation participants and market participants having classification primary dealer (PD) into systemic, critical, and general in line with SIFIs, cross-border and future "wholesalers" Accelerating the development of strategic money market Instrument for effective monetary policy instrument, rupiah stability, hedging and short term financing Developing efficient market mechanism to support interest rate structure formation (IndONIA and Repo), exchange rate (DNDF), and hedging (interest rate swap and exchange rate) Infrastructure of monetary operation, money market and payment system which are 31 (integrated, interoperable. Interconnected) as pre-requisite for CBDC 2 COORDINATION FORUM FOR DEVELOPMENT FINANCING THROUGH FINANCIAL MARKETS IFK-PPPK 1. Stabilization of Financial Market 2. Development of Economic Financing Instruments 3. Financial Literacy and Consumer Protection B CIK LPS Bak Source: Bank Indonesia 131#133Bank Indonesia's Continue to Expand Payment System Digitalization in 2023 ..to accelerate payment system digitalization for further integration in the national economic-financial digital ecosystem, developing Digital Rupiah, as well as expanding cross-border payment system cooperation. NATIONAL DIGITAL FINANCE AND ECONOMY: OPPORTUNITIES AND CHALLENGES CLEAR VISION AND POLICY ON THE DIGITALIZATION OF THE NATIONAL PAYMENT SYSTEM POLICY TRILLEM PAYMENT SYSTEM ACTIVE INDUSTRY PARTICIPATION IN THE DIGITALIZATION OF FINANCIAL SERVICES AND PAYMENTS TO CONSUMERS ACCELERATION OF PUBLIC ACCEPTATION OF FAST. CONVENIENT, AFFORDABLE SECURE, AND RELIABLE DIGITAL PAYMENT TRANSACTIONS DIGITAL TECHNOLOGY SPACE VS HIGH INVESTMENT COSTS. HUMAN RESOURCE SCARCITY. AND CYBER RISK "Pro-Growth" Payment System Policy: National Digital Economic-Financial Integration, Digital Rupiah PENETRATION OF GLOBAL DIGITAL FINANCE PLAYERS, THE NEEDS FOR INTERNATIONAL COOPERATION 2 SOUNG COMPETTITE AND INNOVATIVE PROMENT SYSTEM IHULSTRY PAYMENT SYSTEM INDUSTRY 1 3 SOUND EFFICIENT, AND PUE MARKET PRACTICE 2 ENTEGRATED INTROAALLE, INTERCONNECTED SAFE, AND BONUST PAYMENT SYSTEMS INFRASTRUCTURE TARGET Strong Competitive, and Innovative of Payment System Industry 31 Payment System Infrastructure Integrated Interoperable Interconnectedi Efficient, Healthy, Transparent of Payment System Pricing Policy Digital Rupiah Design Process, & Technology 1 ACCELERATION OF NATIONAL DIGITAL ECONOMIC-FINANCE INTEGRATION RUPIAH DIGITAL DEVELOPMENT INTERNATIONAL PAYMENT COOPERATION Accoration of regulatory reform unit and to and consolidation of the payment system industry to build dosta unicorn that and strong, competitive outlive, and moody to boce Digital Rupiah "wholesale" Development of Interoperable, Interconnected retail and wholesale payment system infrastructure to accelerate itional digital economic-financial integration and Digital Rupiah Efident, pro-business, and transpunt payments Pricing Policy in accordance with payment service clusters to support national interests, conturbers, and Industrial competitiveness nationally and regionally Finsiization of contratual des development of business models and wholesaler participants, development of the Digital Rupiah technology pro SYNERGY AND COORDINATION I BANK BIDONESIA-GOVERNMENT: ELECTRONEFICATION OF DOICIAL ASSISTANT AND GOVERNMENT FINANCE I: BANK INDONESIA-INDUSTRE IMPLEMENTATION OF BSPI 2013 AND RUPIAH DIGITAL DEVELOPMENT BANK INDONESIA-DUR: STRENGTHENING OF ITS REGULATION AND SUPERVISION IDIGITAL FINANCIAL INNOVATIONI 4 BANK INDONESIA-INTERNATIONAL: INTERNATIONAL PAYMENT COOPERATION AND DEVELOPMENT OF CROC 5 Initiatives Indonesia Payment System Blueprint 2025 BSPI 2025 Source: Bank Indonesia Open Banking Retail Payment System Financial Market Infrastructure Data Regulatory, Licensing. and Supervisory 132#134Section 7 Commitment to Sustainability and Preserving the Environment BHINNEKA TUNGGAL IKA#135Global Trends Strengthening Attention to Climate Change UNFCCC-COP26 GOALS B G20 FORUM The G20 has encouraged countries' commitments on the issue of climate change, including phasing out subsidies on fossil fuels. 01 Secure global net zero by mid- keep 1.5 phase-out of 02 Adapt to protect communities 03 Mobilise finance 04 Work together to deliver ⚫ finalise the Paris Rulebook century and degrees within and natural reach habitats ⚫ accelerate the protect and restore coal ecosystems ⚫ curtail build defences, ⚫developed countries mobilise at least $100bn in climate finance per year by warning to systems and resilient electric vehicles infrastructure financial institutions unleashing ⚫ collaboration between governments, businesses civil society. and the encourage and agriculture trillions in private investment in and public finance sector deforestation speed up the switch 2020. •International EUROPEAN UNION The European Union is discussing a Border Carbon Arrangement policy (part of the EU Green Deal) or the imposition of import taxes on goods that produce emissions according to the amount of emissions produced INTERNATIONAL FINANCE INSTITUTIONS Global financial institutions such as Goldman Sachs, have committed to start reducing and even stopping financing for projects related to fossil fuels. The global trend of ESG funds (funds that pay attention to ESG principles in their investment activities) has been increasing rapidly since 2020. renewables Countries will be encouraged to achieve Net Zero Emissions by 2050 in COP26 Source: Ministry of Finance 134#136Indonesia is Highly Vulnerable To The Impacts Of Climate Change Indonesia is an archipelagic country with >17,000 islands and is vulnerable to climate change risks such as rising sea levels. From 2010-2018, national GHG emissions experienced a growing trend of around 4.3% per year. Very Vulnerable Vulnerable Intermediate Less Vulnerable Least Vulnerable Unrated Sovereigns Source: Standard and Poor's, 2014 Indonesia is one of the countries vulnerable to climate change impacts RISKS OF CLIMATE CHANGE WATER SCARCITY Increasing levels of floods and severe drought will exacerbate the scarcity of clean water. LAND ECOSYSTEM DAMAGE It is scientifically predicted that severe forest fires will occur. This can lead to loss of ecosystems, biodiversity, and changes in Biomass. MARINE ECOSYSTEM DAMAGE Rising sea surface temperatures cause the extinction of coral reefs, seaweed, mangroves, some biodiversity and marine ecosystems. From 1981-2018, Indonesia experienced increasing temperature of 0.03 °C per year. Indonesia experiences a sea-level rise of 0.8-1.2 cm/year, while approximately 65% of the population lives in coastal areas. HEALTH QUALITY DECREASE Floods can cause the spread of vector-borne diseases and death from drowning. An increase in temperature can cause death from heatstroke. FOOD SCARCITY Changes in the production of biomes and ecosystems can lead to food scarcity for all living things. Source: MoF, BP Statistical Review of World Energy 2021 Climate Change may increase the risk of hydrometeorological disasters, which currently reach 80% of the total disasters that occurred in Indonesia. Source: NDC, 2016 Indonesia's potential economic losses can reach 0,66% to 3,45% of GDP in 2030 Source: Roadmap NDC Adaptasi, 2020 JUDICE. Courumaling milliy Tu LCUTIUIIC alls 135#137Climate Governance in Indonesia Ministry of Finance is responsible for climate fiscal policy Ministry of Finance c.q. The Fiscal Policy Agency is also the National Designated Authority of the Green Climate Fund (NDA- GCF) as the core interface between the country and the GCF -Climate Change National Focal Point (NFP- UNFCCC) *Leading role in Climate Policy Formulation and Coordination -Coordinating climate program implementatir and MRV Source: Ministry of Finance Coordinating Ministries Coordinating Ministry of Economic Affairs Coordinating Ministry of Maritime and Investment Ministry of Environment and Forestry Ministry of Finance (Focal Point) Technical Line Ministries & *Climate Finance Policy Formulation & Coordination *Planning & Budgeting for Climate Programs +Climate Budget Tagging *Mobilizing other financing source for climate actions Central Bank and Financial Sector Authority Also coordinating with Central Bank (BI) and FSA (OJK) to promote green and resilience development through fiscal, monetary, and financial policy mix National development plan related to Climate Programs Planning & Budgeting for Climate Programs ■Climate Budget Tagging Ministry of National Development Planning Agencies Implementing role in climate programs and climate budget Implementing role in climate policy and targets 136#138The Government's commitment to climate change mitigation has been formulated in the Nationally Determined Contribution (NDC) and Net Zero Emission (NZE) INDONESIA'S CLIMATE CHANGE AGENDA Paris Agreement and Nationally Determined Contribution (NDC) 2030 MITIGATION GHG Emission Reduction Target Per NDC Sector (MTon CO₂e) INDONESIA N EMISSION REDUCTIO N TARGET FORESTRY ENERGY & TRANSPORTATION * WASTE AGGRICULTUR E IPPU 29% 497 314 11 9 3 Target: 29% national effort 41% 692 446 40 4 3.25 41% with international support Policy Strengthening and Implementation Carbon Trade Stated in: Carbon • First NDC (2016) Pricing Carbon Tax • Updated NDC (2021) (initial rate: Rp30/Kg CO2e) Climate Resilience Capacity Climate Technology Finance Development and Building Transfer Long-Term Strategy for Low Carbon and Climate Resilience 2060 Mandate from: Paris Agreement Article. 4.19 • Dec.1/CP.21 Para 35 LCCP Scenario: • Peak emission 5 sector in 2030 = 540 Mton CO2e • Net-Sink FOLU in 2030 • Net Zero Emission in 2060 or sooner Toward Net Zero Emission 2060 Economic Resilience 2 Social Resilience and 3 Ecosystem and Livelihood Landscape Resilience ADAPTATION 137#139Commitment to Sustainability and Climate Change Mitigation Republic of Indonesia's Commitment to Sustainability which Includes Climate Change Mitigation Commitment to Sustainability Successfully implemented the Sustainable Development Goals by achieving the 2030 development agenda introduced by the United Nations (UN). The Indonesia's Presidential Regulation no. 59/2017 concerning the implementation of SDGs in Indonesia mandated the Ministry of National Development Planning to provide the Roadmap of SDGs in Indonesia Background of Commitment Combining public and private funds to support Sustainable Development Goals (SDG)s The Government of Indonesia through the Ministry of Finance and PT Sarana Multi Infrastruktur (SMI) seeks to achieve the SDGs through the establishment of an integrated platform called "SDG Indonesia One"1 which combines public and private funds through blended finance schemes to be channeled into infrastructure projects related to the achievement of SDGs The President's Nawacita Programme The Nine Agenda Priorities of the President's priority actions. Shifting to a low-carbon and climate-resilient development path is an integral part of this mission and is integrated in development policies, strategies and programs POVERTH CLAME DOINFRASTRUCTURE 10 NOWS 12 13 14 15H PLACE JUSTICE SUSTAINABLE DEVELOPMENT GOALS Mitigation Based on the Paris Agreement and Indonesia's NDC, Gol has committed to reduce greenhouse gas emission by 29% in 2030 on unconditional mitigation scenario using self-financing, and by 41% in 2030 on conditional mitigation scenario using international financing support Based on National Energy Policy, increase New Renewable Energy to 23% of national energy mix by 2025 Strengthen the Core Actions through strengthening the policy framework, human and institutional capacity, socializing, and researching With regards to forestry, the actions should include deforestation prevention, forest degradation prevention, conservation, and others Note: (1) SDG Indonesia One, PT Sarana Multi Infrastruktur Environment Commitment and Objectives Adaptation Climate Change: Significant risks for Indonesia's natural resources that will impact the production and distribution of food, water, and energy National Action Plan on Climate Change Adaptation: National framework for adaptation initiatives mainstreamed the National Development Plan into Medium-term Goal of Indonesia's climate change adaptation strategy: reduce risks on all development sectors by 2030 through local capacity strengthening, improved knowledge management, convergent policy on climate change adaptation and disaster risks reduction Biodiversity Indonesia is the world's largest archipelago comprising over 16,056 islands with unique ecosystems containing a large number of diverse species. Contains the world 3rd largest area of rainforests Biodiversity Strategy and Action Plan 2015-2020 was launched to provide an outline on how biodiversity could be utilized sustainably to improve economic and development opportunities. Source: Ministry of Finance 138#140Commitment to Handling Climate Change NATIONAL CLIMATE CHANGE POLICY TIMELINE 1994 UNFCCC ratification to UU No.6/1994 2004 Kyoto Protokol ratification to UU No.17/2004 2011 and RAN-GRK and RAN-API 2014 FISCAL POLICY RESPONSE TO CLIMATE CHANGE ISSUES Mitigation Fiscal Framework Tax Incentives for NRE and clean technology development Revocation of Fuel Subsidy Implementaion of Climate Budget Tagging NEXT STEP OF CLIMATE RELATED FISCAL POLICY CO2 Eli-O CLIMATE CHANGE AGENDA NATIONAL AND GLOBAL 置 13 Preparation of fiscal instruments related to Carbon Tax and Carbon Trading Nationally Determined Contribution (NDC) SDGs 13: Climate Action updating Mitigation Fiscal Framework Paris Agreement ratification 2016 to UU No.16/2016 2016 Submission of Nationally Determined Contribution (NDC) to UNFCCC Indonesia's Green Bond/Sukuk Framework Mainstreaming Climate Budget Tagging in local government budget Ecology-based Fiscal Transfer Integration of Climate Change Planning, Budgeting and MRV Systems Preparation of SDGs Government Securities Framework Low Carbon Development Planning in RPJMN 2020- 2024 NET ZERO CO, EMISSIONS 2050 2020 RPJMN 2020-2024 Prioritas Nasional 6 Source: Ministry of Finance Agenda Net-Zero Emission 139#141Green Economy Has Become One Of Indonesia's Economic Transformation Strategies The energy transition is inevitable, and we have to face it. As a country that still relies on fossil energy, Indonesia views the energy transition to reduce the share of fossil energy in the energy mix. This decline in share shortly will not necessarily reduce the amount of fossil energy used. For doing so, Indonesia has several policies on compensation and incentives, i.e., clean energy acquisition, energy transition mechanism (coal-fired PP early retirement), conversion of dirty energy sources, carbon trading, carbon tax. The Carbon Tax will be enforced from April 1, 2022, based on Law Number 7 of 2021 concerning the Harmonization of Tax Regulations. Fossil fuel share will be decrese, but the magnitude not recessarily reduced • Corporate that still use non-renewable energy b) Upgrading technology to clean technology Use of CCS (Carbon Capture Storage); • Renewable energy share will increase and dominate the energy mix. Early retirement Coal power plant; d) Carbon trading; and e) Clean energy R&D investment • New corporation a) Clean energi utilization b) Carbon trading Clean Energy R&D Investment Policy - Compensation & Incentives Clean Energy Acquisition Incentives to companies that will conduct R&D and invest in clean/renewable energy (hydrogen, hydro, PLTS, etc.) 1 2 Energy Transition Mechanism (Coal-fired PP Early Retirement) Compensation for early retirement of dirty/non- renewable energy plants (PLTU) Source: Coordinating Ministry for Economic Affairs 3 Conversion of Dirty Energy Sources Incentives to convert dirty energy sources into clean energy sources (Coal to DME) 4 Carbon Trading The mechanism for buying and selling carbon, and emission certificates as securities that can be traded on the carbon exchange Carbon tax Dis-incentive on the use of dirty/non-renewable energy, and the use of funds from carbon tax to encourage the development and utilization of 5 ean/renewable energy 140#142The Government Has Committed to Address Climate Change Impacts The National Climate Change Policies: 1994 2004 2011 & 2014 The ratification of UNFCCC Law 6/1994 The ratification of Kyoto Protocol to Law 17/2004 RAN-GRK dan RAN-API Enhanced Nationally Determined Contribution (NDC) is an enhanced national commitment to contribute the reduction of GHG emission from the Bau scenario by 2030: 31,89% by self-effort and 43,20% with international cooperation Mitigation GHG Reduction Emission Target per NDC Sector (Mton CO2e) Long-Term Strategy for Low Carbon and Climate Resilience (LTS-LCCR) 2050 A mandate of the Paris Agreement Article. 4.19 NDC achieving guideline in the future; 2016 The ratification of Paris Agreement to Law 16/2016 Target 2016 Delivery of first NDC to UNFCCC Forest Energy & Transportatio Waste Agricult IPPU n ure 2020 2021 2022 The Medium-Term National Development Plan 2020- 2024 6th National Priority Delivery of Update NDC and LTS-LCRR 2050 Submitted the Enhanced NDC (ENDC) to UNFCCC 31,9% 500 358 40 10 7 43,2% 729 446 43,5 12 9 Estimate cost of mitigation IDR 4.002 trillion or +/- USD 281 billion* (accumulated cost from 2018 until 2030) Source: *Third Biennial Update Report LCCP (low carbon compatible with Paris Agreement) Scenario: Forestry and Other Land Uses (FOLU) Net-Sink 2030; Net Zero Emission (NZE) 2060 or sooner. Road to Net Zero Emission (NZE) 2060 or sooner 141#143Enabling Factors To Achieve Enhanced NDC Requirements to Reduce Emissions 01 ENERGY DIVERSIFICATION Development of RE Power Plants RUPTL: Additional 20.92 GW until 2030 bli Beyond RUPTL: Rooftop Solar, RE PPs for non-PLN Business Areas, Large-Scale hydro. 01 Biofuel Utilization 02 Implementation of the B40 Program starting in 2025, with a target of biofuel production reaching 30 million KL in 2030 02 Early Retirement Coal PP 03 Starting in 2027, the total capacity of the Coal PP that will be "retired” is 9.1 GW. Requires an NRE baseload generator as a 03 replacement Utilizing New Energy as Baseload 04 Encouraging the use of new energy, including nuclear (every 1 GW of nuclear power plants will reduce 6.7 million tons of CO2), as an alternative provider of base load electricity 04 Source: Coordinating Ministry of Economic Affairs ENERGY CONSERVATION ISO ISO 50001 Application of Energy Management Implementation of energy management compliance in all sectors, including industry, transportation, and buildings through the Revised GR on Energy Conservation which was completed this year. Electric Vehicle □ 13 million two-wheeler by 2030 2 million four-wheeler by 2030 Electric Stoves and Gas Network Electric Stove for 19 Households Expand Gas Network until 10,2 million SR by 2030 Implementation of policies on Minimum Energy Performance Standards (Standar Kinerja Energi Minimum -SKEM), Fuel Switching, and Clean Generation Technology. 142#144GHG emissions Net Zero Emission (NZE) 2010 ليليلي <2°C BUSINESS AS USUAL NET-ZERO 2020 2030 2040 2050 2060 2070 2000 2090 2100 Source: World Resource Institute Net Zero Emission is a more ambitious Long Term Strategy to keep the global temperature rate below 1.5 degrees. 10 Key Solutions to Achieve NZE 2050 1. PHASE OUT coal plants 6. INCREASE public transport Emissions Reduction 2. INVEST in clean energy & efficiency 7. DECARBONIZE aviation and shipping Gross Emissions Net Emissions Carbon Removal 3. 4. RETROFIT buildings DECARBONIZE Cement, steel & plastics 8.000 9.101 HALT deforestation & RESTORE degraded lands REDUCE food loss and waste 5. 10. EAT more plants & lesa mest NET ZERO EMISSIONS ipcc INTERGOVERNMENTAL PANEL ON climate change In 2018, the Special Report on Global Warming of 1.5°C, the Intergovernmental Panel on Climate Change (IPCC) stated the importance of achieving the NZE by 2050 or earlier to prevent the worst effects of climate change. PARIS2015 CLIC COP21-CMP11 SHIFT totric vehicles Sumber: World Resource Institute Long Term Strategy was mandated ini Paris Agreement Article 4.19 "All Parties should strive to formulate and communicate long-term low greenhouse gas emission development strategies...." Source: Ministry of Finance 143#145Indonesia's Net Zero Emission Currently, there are 48 Parties (with a global emission share of 54%) that have SUBMIT communicated to the UNFCCC regarding the target NZE. Indonesia and 148 other Parties (with a global emission share of 46%) have not submitted the document The Government of Indonesia is drafting the Long Term Strategy on Low Carbon and Climate Resilience 2050 (LTS-LCCR) document and sectoral strategies to support the commitment to Net-Zero Emission 2050. Source: Ministry of Finance 33,3% of global emissions Source: World Resource Institute 18,8% of global emissions 46% of global emissions 1,9% of global emissions Net-zero Target in Law 5 Parties Net-zero Target in Policy Document 27 Parties Net-zero Target in Political Pledge 16 Parties No Document Submitted 149 Parties 144#146Roadmap New Renewable Energy (NRE) to Net Zero Emission The NRE Roadmap towards Net Zero Emission is a form of energy transition roadmap from fossil energy to renewable energy to achieve net zero emission in the energy sector. Some of the important points in this roadmap include: NRE development to reach 100% in the national energy mix, Reducing the operating emissions of PLTD which is getting bigger, Reducing fossil energy consumption, both in the residential, transportation, and power generation sectors, Utilization of energy efficiency equipment on a large scale. 2021: President decree RNE, President decree Retirement Coal, Cofiring electric Steam Pwr Plant, CCT, conversion Diesel Pwr Plant to gas & EBT 2022: Act NRE, Electric stove 2 millon household/year 2024: Interconnection, smart grid & smart meter 2025: NRE 23% dominate by Solar Power Plant Electrification ratio 100% Electricity .217 kWh/kapita. 2031: Retirement Steam Pwr Plant Phase I sub-critical, interconnection inter-island start COD 2035: RNE 57% dominate by Solar Pwr Plant, hydro, geothermal - Electricity 2.085 kWh/kapita 2045: First Nuclear Pwr Plant start COD 2050: RNE 87% dominate Biomass & Solar Pwr Plant - Stop selling conventional car Electricity 4.299 kWh/kapita 2021-2025 2026-2030 2031-2035 2036-2040 2041-2050 2051-2060 2027: Stop import LPG 2030: NE 42% dominate Solar Pwr Plant No New PLTS fosil pasca 2030 - - - EV 2 million car & 13 mil motorcycle Gas fuel vehicle 300.000 Household Gas 10 million - DME fuel Electric 1.548 kWh/kapita 2037: Retirement Steam Pwr phase 2 sub-critical, critical & some super critical 2040: NRE 71% dominate Solar pwr plant & biomass - Stop selling conventional motorcycle No Diesel pwr plant - LED lamp 70% Electricity 2.847 kWh/kapita 2054: Last Steam pwr plant retired 2055: Last Steam gas pwr plant retired 2060: NRE 100% dominate Solar pwr plant, hydro - All vehicle electricity basis Electric stove 52 million household - Household gas 23 milion Electricity 5.308 kWh/kapita Source: Coordinating Ministry for Economic Affairs 145#147The ETM Mechanism To Address The Energy Transition Challenges The Main Objectives CO₂ Shortening the economic life of the PLTU project (early retirement of coal) Getting additional reduction of greenhouse gas emissions to achieve Indonesia's NDC (CO2 emission avoidance) Limitation: Does not provide additional burden from the fiscal side/APBN (minimum fiscal burden) Does not change the electricity tariff as stated in the Electricity Sale and Purchase Agreement (PJBL) / Power Purchase Agreement (PPA) which will increase the electricity rates Gaining access to financing with lower cost of fund Ⓡ Solution Support for Cost of Capital Reduction 01 Support to reduce the Cost of Equity 02 Support to reduce Cost of Debt 146#148Energy Transition Mechanism Overview Energy Transition Mechanism (ETM) Carbon Reduction Fund (CRF): to accelerate coal fired power plants retirement Clean Energy Fund (CEF): to support development of new renewable energy power plants Through Indonesia ETM Country Platform Through SDG Indonesia One Platform Note: To support fulfilment of NDC and NZE The CRF is not bundled with CEF, but there will be a commitment to use the proceeds of CRF directly and indirectly to develop new renewable energy projects 147#149INDONESIA ENERGY TRANSITION MECHANISM COUNTRY PLATFORM (Carbon Reduction Fund) Carbon Credit CO, ENERGY TRANSITION PROJECTS PT PLN Projects Loan prepayment IPP Projects PPU Projects Asse t spin IO Projects SPV IUPTLSK Projects TAX Carbon Market Mechanism (Carbon Trading, Carbon Bond, RBP, Stand By Buyer, Sustainability Linked Bond/Loan) Carbon Tax Impact to Carbon Market COUNTRY PLATFORM Steering Committee (CMMI, MOF, MOEF, MEMR, Low Cost Refinancing MSOE) Country Platform Manager AME Equity Commercial Loan Secretariat Facilitie S T Cash/Revenue Recycling Non-Tax Revenue Blended Finance SOURCE OF FUNDS Government of PMN, Low Cost Loan, Indonesia Guarante Commercial / INA Or directly to projects (DPL, Sustainability Philanthropies Multilateral / Linked Loan, Support for Bilateral Development finance, Climate Asset Spin- finance, Impact fund De- risking TA Off, etc) 148#150ETM Transaction Mechanism Kementerian Energi dan Sumber Daya Mineral ETM Roadmap MINISTRY OF FINANCE REPUBLIC OF INDONESIA RUPTL Fiscal Support MEMR Technical Team ENERGY TRANSITION PROJECTS PT PLN Projects IPP Projects PPU Projects IO Projects IUPTLSK Projects BU BADAN USA MLIK NEGARA INDONESIA Key Performance Indicator Stakeholders Government Policy MSOE Technical MOF Energy Team PLN Implementation Level Team coordinatio n SOURCE OF FUNDS ETM COUNTRY PLATFORM - Steering Mechanism/ Steering Committee Secretaria Fund Manager (PT SMI) SMI Refinancin g 0% Facilities DGFRM IIGF De-risking MINISTRY OF FINANCE REPUBLIC OF INDONESIA Fiscal Support Blended Finance Government of Indonesia Commercial / INA Philanthropies Multilateral / Bilateral Or Development directly to finance, Climate finance, Impact projects fund Analysis and Recomendation CO ETM transaction Scheme Carbon Tax Budget spending Carbon Equity injection Credit Social Economical impact Gov contingent liability risk De-risking instrument Electricity system impact 149#151Indonesia Energy Transition Mechanism Country Platform ENERGY TRANSITION PROJECTS PT PLN Projects IPP Projects PPU Projects IO Projects IUPTLSK Projects COUNTRY PLATFORM Penasihat (Advisory Board) Pimpinan (Steering Board) Ketua: Kemenkeu Wakil Ketua: KemenESDM, KemenKLHK, KemenBUMN Anggota (Member) unsur-unsur yg mewakili Kemenkeu, KemenESDM, KemenKLHK dan KemenBUMN ditambah dengan undangan Steering Committee SC Secretariate Country Platform Manager SMI Facilities Blended Finance SOURCE OF FUNDS PMN,Low Cost Loan, Guarantee Government of Indonesia Commercial / INA Or directly to projects (DPL, Sustainability Linked Loan, Support for Asset Spin-Off, etc) Philanthropies Multilateral / Bilateral Development finance, Climate finance, Impact fund The Steering Committee (SC) provides directions, sets targets and KPIs, and makes critical decisions regarding the provision of financing instruments (facilities) to energy transition projects. The SC Secretariate plays role in carrying out daily tasks related to the SC function. The Country Platform Manager manages the related funds and provides the facilities to the projects according to the direction of the SC. 150#152Phasing Out Coal Scenario 120 17 7? 100 180回 60 Skenario Zero Carbon 20601%) | 8回 -8回 97 29 45 500 53 40 20 687 627 597 24 07 2020 2025 2030 2040 117 2045 77 2050 2060 PLTU PLTGU Nuklir ■PLTA PLTP EBT?Lain PLTSPP LTB 1800 1600 1400 1200 1000? 8007 6007 Skenario?Zero Carbon 2060 TWh) 400 200 Ов 2020 2025 2030 PLTU PLTGU Nuklir ■ PLTA 2040 PLTP 2045 2050 EBT?Lain 2060 PLTSCH?P LTB In 2060 All Power Plants in Indonesia are Using Clean Energy 1. The market size utility in 2060 is 1,800 TWh, currently electricity production is 300 TWh plus the launch of 120 TWh from the 35 GW program, so there is room for 1,380 TWh for additional New Renewable Energy (NRE) generating capacity. 2. From 2020 onwards, the portion of PLTU capacity will be reduced (in the graph, it can be seen from the decreasing black color). 3. Efforts to retire fossil power plants will start in 2030 and significantly decrease in number by 2040, following the completion of the power plant contract. 4. Nuclear plants will enter in 2040 to maintain system reliability as nuclear technology becomes more secure. 5. Phase out all coal-fired power plants in 2056, because they have been replaced by NRE. 6. Meanwhile, the development of NRE power plants will experience a massive increase starting in 2028 due to the advancement of battery technology which is getting cheaper. Then it will increase exponentially starting in 2040. And by 2045, the portion of NRE will already dominate the total power plant. The next decade, all power plants in Indonesia came from NRE. Source: PT PLN 151#153The Roadmap To Net Zero Emission In The Electricity Sector Without carbon abatement, the electricity sector is estimated to contribute 0.92 billion tCO2e/year emissions by 2060. Business As Usual 0.92 Projection of Electricity Sector Emission (Billion tCO2e/year) Generation share based on technology, % (carbon neutral scenario) • • 2020 Source : PLN 14% 27% 20% 49% 4% 11% 66% 66% 2060 Carbon Neutral 62% 60% 35% 6% 26% 27% 16% 8% 2020 2030 2040 2050 2060 2060 COAL DIESEL GAS CCS RES • In the business as usual scenario, Electricity contributed 0.92 billion tCO2e/year in 2060. • Getting around this needs to be devised a strategy to reduce emissions through increased RE and decrease in fossil-based generation. According to PLN's estimation, current best scenario is a shift in power generation to 66% based on EBT and 26% CCS technology in 2060. This scenario also supports the PLTU phasing down program in the future. The PLTU early retirement scheme through the ETM has the potential to be carried out. 152#154Carbon Pricing or Carbon Economic Value (NEK) is a part of a comprehensive policy package for climate change mitigation Emission Trading System First Period Entity A and Entity B have the same allocation at the beginning of the period Gra DY anak Emission MN Allocation Certificate Emission Obtained 01. Trading instruments, consists of 2 types: a. Emission Trading System (ETS) an entity that emits more buys emission permit from other entities that emits less b. Crediting Mechanism: entities undertaking emission reduction activities can sell their carbon credits to other entities requiring carbon credits Emission Offset 02. Non-trading instruments, consists of 2 types: B C Emission Reduction Certificate Initial Emission Final Emission Emission Obtained End of Period A A has an allocation surplus that can be sold to B B Eva Emal B is a business entity that is subject to a cap C is a business entity that is not subject to a cap a. Carbon tax, imposed on carbon content or carbon emitting activity b. Result Based Payment (RBP): payment is given as a result of emission reduction Carbon Tax Carbon Content GRK Emitting Activities Result-Based Payment Non-Trading No carbon rights transfer 153#155Carbon tax is one of the instruments of Carbon Economic Value (NEK) OBJECTIVES 1 CHANGE BEHAVIOR Aims to change the behavior of economic actors to switch to low-carbon economic activities. PRINCIPLES green 2 SUPPORTS EMISSION REDUCTION Support GHG emission reduction targets in the medium and long term. 3 ENCOURAGE INNOVATION AND INVESTMENT Encouraging carbon markets development, technological innovations, and investments that are more efficient, low-carbon, and environmentally friendly. 1 JUST Based on the polluters-pay-principle. 2 AFFORDABLE Paying attention to affordability aspect for the benefit of the wider community. 3 GRADUAL Paying attention sector readiness so as not to burden the community. 154#156Carbon Tax as one concrete step, the policy of carbon taxes is regulated in the Law 7/2021 concerning the Harmonization of Tax Regulations (UU HPP) to support NDC target by 2030. PARISZUS CO2 TAX Source: Coordinating Ministry of Economic Affairs Background: • GHG emission controlling to decrease climate change risk and disaster in Indonesia. · • • Through NDC, Indonesia committed to reduce 29% of its GHG emissions against the BAU or 41% of its emission with international support by 2030. Indonesia climate change mitigation strongly needs fiscal instrument. Economic behavior transformation that leads to low carbon development. Key Points of The Carbon Tax Regulation on the Law 7/2021 (UU HPP): The Carbon Tax will be carried out in stages according to a roadmap that will take into account the development of the carbon market, achievement of NDC targets, sector readiness, and economic conditions. The implementation will prioritize the principles of justice and affordability by taking into account the business climate and small communities. The carbon tax rate is set higher or equal to the carbon price in the carbon market with a minimum rate of IDR 30.00 per kilogram of carbon dioxide equivalent (CO2e) and will be evaluated periodically, in line with the development of the GHG emission rate and the national economy's performance. Starting in 2022, it will be imposed on the coal-fired power plant sector with a cap and tax scheme that is in line with the implementation of the carbon market which has already started running in the coal-fired power plant sector. 55#157Principles of Rate Arrangement and Basis for Carbon Tax Imposition 1. 2. 3. 4. Carbon Tax Implementation The Carbon Tax will be imposed for the first time on entities operating in the coal-fired power plant sector with a tax mechanism based on emission limits. The implementation of the carbon tax was decided to be postponed to July 1, 2022 from the initial plan of April 1, 2022, taking into account the Indonesia conditions The Government focused on ensuring the availability and stabilization of energy and food prices, ensuring the acceleration of the national economic recovery after the pandemic, as well as to harmonize with efforts to improve various technical regulations for implementing carbon market schemes. Technical regulations related to the carbon tax need to be implemented immediately to support the implementation of the carbon market that has been started in the coal-fired power plant sector. The Ministry of Finance is currently preparing a Government Regulation on the Carbon Tax Roadmap which will be aligned with the Carbon Market Roadmap. The Government Regulation on Carbon Tax Roadmap will be issued in 2022.This is conveyed to comply with the provisions of the HPP Law, that the determination of the Draft Minister of Finance Regulation (RPMK) on Tariffs and Basis for Imposition of Carbon Taxes requires prior consultation with the parliament. Tax Base Excess Carbon Emission within 1 tax year above the emission technical approval issued for the emitting unit 2022 Tax Rate IDR30/kg CO2e 2023 1.2 x average carbon price* *in the previous tax year's carbon market or IDR30/kg CO2 (whichever is higher) Carbon Market Definition "The place where carbon trading takes place which is integrated in the National Registry System for Climate Change Control (SRN-PPI)1 Refers to carbon trading that is already running and determined by the relevant minister or carried out through the PPI sub- SRN which is registered and registered at the PPI SRN1 Stages of Application in Coal-fired Power Plants 2022 limited to the State Electricity Company (PLN) and IPP* generating units with a capacity of > 100 MW 2023 Coal-Fire Power Plant with a capacity of ≥ 25MW Source: Ministry of Finance ¹If carbon trading has not been integrated into the SRN PPI 156#158Connectivity NDC And Carbon Pricing 1 In-scope NDC 2 Out-scope NDC 3 Beyond NDC Voluntary Carbon Market o Sector, sub-sector and activities included on the 29% NDC target; 。 Sector, sub sector and activities baseline; 。 Financing sources from APBN/APBD, Green Sukuk, SDG Bonds, Carbon bonds, Carbon pricing; 。 Sector/sub-sector not included yet on the 29% NDC target; 。 Potential to become NDC upgraded commitment; Examples: Blue economy, blue carbon, sea grass submitted on the 2021 NDC updated, 。 Energy Efficiency through CCS and CCUS submitted on the 2021 NDC updated, o Sector, sub-sector and activities already included on the 29% NDC target and beyond achievement; o Basic requirement: beyond achievement, government authorization and registered on the SRN; PATHWAYS IN SCOPE, OUT SCOPE and BEYOND NDC Source: draft Ministerial Regulation on NDC, 2022 157#159Indonesia's Green PPP Project Priority Sector ☐ Indonesia realizes that investment in sustainable infrastructure. infrastructure is becoming is becoming important in post-pandemic. green and increasingly ☐ Regarding the NDC targets in reducing carbon emission, Indonesia has outlined the PPP priority sectors of 2020-2024, in which two sectors are related to climate issue, respectively: Environment Dimension . Urban Transport, and • Waste Management ESG Framework Social Dimension Governance Dimension • 10 ESG Standards • 4 standards cover 11 scopes in environmental dimensions 4 standards cover 11 scopes in the social dimension 2 standards cover 6 scopes in the governance Environmental quality aspects of projects are considered since the beginning of PPP project cycle, notably in planning and preparation stage, such as climate change issues and promoting green financing. The Project Development Facility (PDF) from MoF is focused to assist those priority sectors while considering environmental and other quality aspects during project preparation and its implementation.. ESG FRAMEWORK AND MANUAL LAUNCHING to MoF launched the ESG Framework and Manual in November 2022 be implemented to projects which involve private financing and receive government supports Frameworks and manual Roadmap 2022 2023 dimension Piloting on the PPP project receiving the PDF (water and housing sector) Implementation on the PPP project receiving the PDF Implementation on 2024 the all PPP project receiving the PDF and Government Support 2025 Implementation on non-PPP projects that apply for and receive Government Support are developed in collaboration with UNDP Source: Ministry of Finance and the World Bank UN DP The detailed Framework and Manual can be accessed here 158#160The Role of Fiscal Policy in Green Economic Transformation Rp TAX State revenue policy is directed to support the development of renewable energy as well as environmentally friendly business areas The Ministry of Finance provides tax facilities in the form of tax holiday, tax allowance, import duty exemption, VAT reduction, government borne income tax, and reduction of property tax to support the development of geothermal and other renewable energy State expenditure policy is directed to support low-carbon and climate-resilient government spending (spending better). The Ministry of Finance implements the Mechanism of Climate Budget Tagging at the national and regional levels to determine the contribution of the State Budget and Sub-National Budget to tackle climate change. Implementation of climate budget tagging in the region in collaboration with the Ministry of Home Affairs and Local Government. Source: Ministry of Finance Financing policy is directed to support expansive fiscal policy through the development of innovative financing instruments The Ministry of Finance issues Sovereign Green Sukuk (Green Islamic Bond) both global green sukuk and green sukuk retail to finance climate mitigation and adaptation projects. 159#161Recent Policies CCFF is a framework for formulating fiscal policies and strategies to mobilize funds outside the Budget Financing Supply Analyze current spending on climate activities from public sector. NDC sectors Ministries Financing Needs Financing Gaps Climate Fiscal Strategy Map next- decade need for climate finance. Identify total finance gap for all Ipublic and private sectors). Strategy to mobilize public finance Strategy to mobilize private finance Facing the existing challenges, the Government continues to develop innovative policies. Two of them are: a. Climate Change Fiscal Framework (CCFF) Indonesia Commitment to Climate Change Non-ministries Map current spending on climate activities from private sector. b. Carbon Pricing Fiscal and non-fiscal policies affecting climate action Policy and governance of climate finance actors, mandates and coordination Identify barriers. enabling environments, and innovative public private financing mechanisms. Improved coordination mechanism across actors to deploy climate finance and monitor impact URGENCY - Strengthening Fiscal Functions - Supporting NDC, SDGs & RPJMN commitments - Mobilizing funding sources - Strengthening the framework of funding institutions Climate Finance Mobilization, Governance and Impact 160#162State Expenditure for Climate Change IDR Trilion 140.00 120.00 100.00 80.00 2.8% 60.00 40.00 4.2% 5.7% 3.6% 2.0% 6.0% 5.0% 4.0% 3.8% 3.0% 2.0% 1.0% 20.00 52.42 85.01 126.04 83.54 50.99 104.85 0.00 0.0% 2016 2017 2018 2019 2020 2021 Percentage Climate Expenditure (LHS) Climate Expenditure on State Budget (RHS) ⚫Nominally, the climate change budget in Indonesia experienced an increasing trend from 2016-2018. • • For the year 2019 to 2020, there was a decline as a result of the shifting energy policy to diversify renewable energy infrastructure development by private sectors or through PPP. In 2020, due to Covid-19 pandemic, GOI implement the budget reallocation and activity refocusing policy into health sector and social safety net. Along with the economic recovery, the climate change budget bounce back in 2021 with a total budget ceiling of IDR 110.65 trillion and already spent IDR 104,85 trillion (disbursement rate 94,8%. • During the last 6 years, the average climate change expenditure has reached IDR 83.8 T per year or 3.7% of the state expenditure per year. Source: Ministry of Finance, calculated 161#163IDR Trillion Government Expenditure for Climate Change Climate Expenditure by Climate Activities 100.00 80.00 60.00 52.42 40.00 20.00 85.01 83.47 Climate Expenditure dominated by Capital Expense ■Capital Exp Goods Exp Social Assistance Exp 3.6% 89.58 16.2% 20.2% 20.6% 26.0% 25.4% 22.8% 46.46 33.25 33.39 33.88 14.99 11.94 9.33 3.68 2.12 3.32 74.0% 83.8% 79.8% 74.6% 79.4% 73.5% 2017 2018 2019 2020 2021 Adaptation Expenditure Co-Benefit Expenditure 2016 2017 2018 2019 2020 2021 2016 Mitigation Expenditure Source: Ministry of Finance, calculated Climate Expenditure FY 2021 by Output Type 2021 Percentage (%) 120.00 100% 98.4% 98% 100.00 97.4% 96% IDR Trillion 80.00 94.5% 60.00 94% 92% 91.4% 91.1% 40.00 90% 20.00 8.55 8.41 88% 100.83 95.27 1.04 0.95 0.19 0.17 0.05 0.05 0.00 86% Infrastructure Public Services Regulation and Investment Policy Human Capital and Social Investment Govt. Administration Spending ■Budget Allocation (LHS) Budget Realization (LHS) ◆ Disbursement Rate (RHS) Source: Ministry of Finance, calculated Source: Ministry of Finance, calculated Decreasing trend of mitigation expenditure due to diversification renewable energy infrastructure financing policy and some of multiyear infrastructure projects already done. But still, government need to pay attention on mitigation action particularly on energy and FOLU to support ENDC target. • Increasing trend of adaptation expenditure due to climate resilience development policy particularly to develop water resilience infrastructure and blue sector infrastructures. Most of climate expenditure is in the form of capital expense with average 77,5% per year or IDR 75,91 trillion per year. In 2021, 91% climate budget directed to develop green infrastructures, and already disbursed IDR 95,27 trillion (94,5% disbursement rate). 162#164Fiscal, Monetary, and Financial Sector Policy Mix for Green Economy Fiscal Policy: KEMENTERIAN KEUANGAN REPUBLIK INDONESIA 1. Mitigation Fiscal Framework 2. Implementation of Govt. Expenditure for Climate Change 3. Tax Facilities 4. Republic of Indonesia's Green Bond/Sukuk Framework 5. Indonesia SDGs Government Securities Framework 6. Sustainable Finance Platform: SDG Indonesia One, Green Climate Fund, BPDLH 7. Development of Climate Change Fiscal Framework 8. Government support for new and renewable energy (NRE) development BB BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA Central Bank Policy: 1. Macroprudential Policy that encourages financing in green building and environmentally friendly vehicles 2. Technical Assistance/Capacity Building to increase awareness about sustainable and green finance 3. International Cooperation Forum (Network for Greening the Financial System/NGFS) OK OTORITAS JASA KEUANGAN Financial Sector Authority Policy: 1. Roadmap of Sustainable Finance, 2. Regulation of Sustainable Finance Implementation, 3. Green Bond/Sukuk Regulation, 4. Capability Enhancement to market participants with support from the International Finance Corporation (IFC) and the Sustainable Banking Network (SBN) Source: Ministry of Finance 163#165National Climate Financing INGS EI NONSE 9085-0704 13 PEMB Funding support to achieve the targets of the climate agenda can come from the public, private and international sectors towards "a just and affordable transition" SOURCE OF FINANCING STATE BUDGET DOMESTIC Carbon Tax/Excise • Central Government Expenditure . TKDD Expenditure • Financing (Green Sukuk, SDGs Bond) • • NON-STATE BUDGET Carbon Trading Private Investment and CSR BPDLH SDG Indonesia One . ICCTF ⚫ Financial Services sector (Bank and Non Bank) • Capital market Philanthropy .⚫ State Owned Enterprises Source: Ministry of Finance NET ZERO CO, EMISSIONS 2050 • CHALLENGES AHEAD, ESPECIALLY DUE TO THE COVID-19 PANDEMIC Limited fiscal space Strengthening the fiscal reform agenda and fiscal consolidation will be the key to fiscal sustainability onward. Optimal mobilization of non-state budget climate change funding sources. Ensure that the economic recovery and transition to a green economy is Just and Affordable. INTERNASIONAL BILATERAL Government Private MULTILATERAL • Green Climate Fund ⚫ Global • Environment Facility Adaptation Fund ⚫ MDBs ⚫ IFIS Strengthen the viability of green projects so that they can be financed by the financial sector and receive international support. The current market mechanism has not been able to reflect the price difference between the Green and non-Green sectors. Currently, it is still limited to Green Financing, it is necessary to strengthen Greening the Finance in order to support the sustainable development agenda. 164#166The Need of Climate Change Funding Indonesia's commitments are derived into each sector's agenda. The commitments have significant financial consequences Reference Second Biennial Update Report, KLHK (2018) Roadmap NDC Mitigation Indonesia, KLHK (2020) Cost Estimation of Climate Change Mitigation Scope The cost of mitigating climate change to achieve NDC Cost of climate change mitigation to achieve NDC (using mitigation action cost approach) Cost/Impact Estimation Accumulated mitigation cost reaches IDR3.461 trillion until 2030 Accumulated mitigation cost in 2020-2030 reaches IDR3.779 trillion (IDR343,6 trillion per year) The Need of Climate Change Mitigation Funding, by Sector NDC Mitigation Roadmap (Rp trillion) Sectors Second BUR (Rp trillion) Forestry Energy and Transportation 77,82 3.307,20 93,28 3.500,00 IPPU 40,77 0,92 Waste 30,34 181,40 Agriculture 5,18 4,04 Total 3.461,31 3.779,63 Source: Second Biennial Update Report (2018) & Roadmap NDC Mitigasi (2020) Source: Ministry of Finance Policies are required to ensure that financing requirements are met. 165#167Role of The Ministry of Finance in Mobilizing Funds From Non-State Budget GREEN CLIMATE FUND SDG Indonesia One bpdlh Ingunn • The GCF is the implementing entity for the UNFCCC financial mechanism which was established by the Conference of Parties (COP) in 2010. • • Has the potential to help Indonesia achieve its Nationally Determined Contribution (NDC) target without burdening the state budget. The world's largest climate change fund. • Intended for developing countries. • Have a variety of financial instruments. • Have a balanced target between mitigation and adaptation • SDG Indonesia One is an integrated funding cooperation platform managed by PT. SMI by combining public funds and private funds through a blended finance scheme to be channeled into infrastructure projects in Indonesia related to the achievement of the SDGs. • SDG Indonesia One funding sources come from the private sector, donors/philanthropy, financial institutions, institutional investors, and bilateral and multilateral institutions. • BLU BPDLH or Indonesia Environment Fund (IEF) is a merger between the BLU of the Center for Forest Development Financing and the environmental conservation program of the Ministry of Environment and Forestry. • IEF manages and provides the funds needed for environmental and forestry protection, • preservation and conservation, biodiversity management, and climate change mitigation and adaptation. IEF not only manages funds in the environmental & forestry sector, but also in the fields of energy, agriculture, transportation, marine & fisheries, and industry. Source: Ministry of Finance 166#168GCF Approved Indonesian Projects/Programs 1 GCF Readiness Programs I and II for NDAs and Nationally Accredited Agencies GGGI Project Preparation 2 Grants: (PPF) for Bus Rapid Readiness | USD850.000 Readiness II USD998.000 Transit Development in Semarang SMi Result-based Payment UN 3 (RBP) REDD+ Indonesia (2014-2016) Grant: USD788.000 RBP: USD103,8 m 4 Geothermal Resource Risk Mitigation Facility (GREM) Funding Scheme (in million USD) 7.5 2.5 Climate Investor 5 THE WORLD BANK One (CIO) ■ GCF - Loan ■GCF Reimbursable Grant ■GCF - Grant 310 Funding Scheme (in million USD) FMO F 100 26.5 - GCF - Reimbursable Grant ■ Co-Financing - Development Fund (Grant) ■ Co-Financing - Global Subnational Climate Finance (SnCF) Funding Scheme (in million USD) IUCN PEGASUS 18.5 150 9.5 GCF Grant ■GCF - Equity 222 225 GCF Funding: USD100 m; Co-financing: USD310 m. IBRD - Loan Ministry of Finance/ PT. Sarana Multi Infrastruktur 310 GCF Funding: USD100 m; CEF Tier 1 (Grant) ■ Co-Financing - CEF Tier 2 Co-financing: USD721,5 m. (Equity) 600 GCF Funding: USD168,5 m; Co-financing: USD609,5 m IUCN Grant Pegasus Capital Advisors - Equity Source: Ministry of Finance 167#169Indonesia Environment Fund /BPDLH 13 PRIORITY PROGRAMS In accordance with the Regulation of the Minister of Finance No. 124 of 2020 concerning Procedures for Management of Environmental Funds bpdlh Ingungen CO₂ 1. Climate change control (including the REDD+ program) 2. Sustainable forest management (including the REDD+ framework) 3. Forest and land fire control and peatland restoration (including the REDD+ framework) 4. Social forestry and environmental partnership (including the REDD+ framework) 5. Forest and land rehabilitation activities and other supporting activities (including the REDD+ framework) 6. Conservation of biodiversity and ecosystem (including the REDD+ framework) 7. Control of pollution and/or environmental damage(including the REDD+ framework) E AA 8. Increasing the competitiveness of natural resource-based industries 9. Treatment of solid, liquid and hazardous waste 10. Use of environmentally friendly and low-carbon materials and technologies 11. Increasing the application of energy efficiency, NRE, and social energy conservation and environmental partnership 12. Reducing disturbances, threats, and violations of environmental and forestry laws 13. Other environmental protection and management activities Source: Ministry of Finance 168#170Funding Gap for Climate Change Management NDC Unconditional Target (avoiding emission in 2030 as much as 29% of BAU) Total Cumulative 2020-2030 Fiscal Policy Responses 100% 100% 90% anx 70% EU SUA 40% 30% 20.4 10% -27% 40% 53% U The need of green investments Estimate of green investments by Estimate of green investments by Government Sector Private Sector [365 milyar USD) (97 milyar USD) 170 mi var 1.5 Gap [145 milyar..50 (1) The effects of covid are estimated to be apparent until 2023. (2) The need for green investment refers to the actual amount of green investment per tonne of emissions averted in the past, as well as the ratio of investment in mitigatied sector vs adaptation in the past. (3) does not take into account the role of local governments. (4) The cost of non-field works is factored into the calculations. CCFF Optimization of budget utilization Optimal mobilization of non-Budget climate change funding sources, domestically and internationally. Taxation and Excise incentives • to stimulate the role of the private sector, for example through efforts to develop EBT and electric vehicles Ministries/Agencies Budget for Climate Change Mitigation and Adaptation • CBT in planning and budgeting systems Transfer to Regions and Village Funds (TKDD) . TKDD also encourages the increase of regional governments role in dealing with climate change : a. Physical DAK (food, water, health, environment and forestry sectors) b. Non-Physical DAK (waste management) c. Regional Incentive Fund (incentive from waste management performance) d. Village Funds (use of low-emission alternative energy) e. Ecology Based Fiscal Transfer (financial assistance for environmental improvement) Innovative Financing for Sustainable Development . Strengthening green infrastructure financing and deepening the Islamic financial market through Green Bond/Sukuk Framework dan SDGS Government Securities Framework bpdlh GREEN CLIMATE FUND SDG Indonesia One PISP 169#171Government Support for New and Renewable Energy PISP Fund & Government Guarantee for Electricity Projects To promote new and renewable energy development, the Government provides fiscal support in the form of government guarantee for electricity projects (credit guarantee and business viability guarantee), guarantee for SOEs direct lending from international financial institutions, and Geothermal Fund Facility (PISP Fund). Several guarantees has been provided to renewable energy power plant construction and Power Purchase Agreement (PPA), i.e hydropower, geothermal, and solar PV. PISP funds (and its co-finance), can be used for geothermal development in the exploration stage and eligible for Government Drilling, SOE Drilling/Public Window, and Private Drilling/Private Window. PISP Fund Exploration Financing Facilities (MOF Regulation 80/2022) Objective Fund Manager Unlocking geothermal market by providing support and financing for geothermal exploration PT Sarana Multi Infrastruktur (SMI) Total Funds IDR 3,1 Trillion (revolving fund) Loans and data provisions Main feature Fund Distribution Governance ◉ De-risking facility for exploration stage ■ Minister of Finance's Assignment Letter (SK) to PT SMI to finance exploration project. Monitoring and supervision by The Joint Committee between MoF and MEMR. Engaging academic, professional experts, and independent appraisal to provide review and assessment for strategic decision of the Joint Committee. ■ Strengthening the role and synergy of MOF's Special Mission Vehicles PISP Co-financing (Collaboration with international funding) Geothermal Energy Upstream Development Project (GEUDP) World Bank Geothermal Resource Risk Mitigation (GREM) CTF grant (USD49million) and GEF grant (USD6,25million). Aims to support the government's geothermal data and information provisioning facility (Government Drilling). PT SMI as fund manager & PT GDE as implementing agency. Total USD655 million (loan, grant, and PISP co-finance) Aims to support exploration on the SOE Drilling & Private Drilling scheme. 170#172Sustainable Finance Initiatives Ex www. www Br IN OK Sustainable Finance Roadmap Phase I (2015-2019) OJK is committed to supporting the Indonesian Government's target to achieve Net Zero Emission and enhancing stakeholders' awareness on the importance of development. Phase I Achievement Strategic Policies 1. Implementation of 8 sustainable finance principles. 2. Reports of SF Action Plan from financial institutions. 3. Corporate Social Responsibility fund allocation. 4. Financial institutions' Sustainability Report. Enhancing Awareness sustainable finance 1. Capacity building for OJK's supervisors and stakeholders. 2. Guideline on Sustainable Credit, Financing, Investment for palm oil plantation and industry, clean energy, green building, and organic farming with sharia scheme. Institutional Collaboration 1. Collaboration with ministries and other national/international organizations, including universities and research centers. Regulation on Sustainable Finance OJK stipulated some regulations to support SF a. POJK No.51/2017 regarding the Implementation of SF for Financial Institutions, Issuers and Public Companies, which aims to enhance awareness of the financial industry, regulate financial institutions' obligation to submit action plan for enhancing sustainable finance and to publish sustainability report. b. POJK No.60/2017 regarding framework and incentives for issuance of green bonds. In 2020, OJK also issued supervisory guidance and policy regarding incentives for electric vehicle-related financing. C. Source: Financial Services Authority (OJK) DONGMAN CHAM DERRY AN AFTANTI 13831-27031 Green Taxonomy Sustainable Finance Roadmap Phase II (2021-2025) focuses on sustainable finance ecosystem development consisting of 7 components. The Roadmap reflects OJK's commitment to realizing transparent regulations, building synergies in cooperation with relevant ministries/agencies and stakeholders, as well as improving the capabilities of the financial industry. ESG Risk Integration in Financial Institutions Risk Management Developing Incentives Guidance of Sustainable Finance Implementation in the Capital Market and NBFI • Supporting Infrastructure Development • Product Innovation . Policy Product Guidebook of Credit/Financing/ Investment in Sectors National Campaign - Indonesia Sustainability Week Sustainable Finance Inclusion Program Informative Publications for New Investors Awareness Human Resources SUSTAINABLE FINANCE INDONESIA Non- Government Support Market Infrastructure Coordination among related Ministries/ Institutions Development of Sustainable Finance Information Hub • • • Sustainable Finance Training and Training of Trainers E-learning development Developing Research Centers • Pilot Project on Sustainable Finance Sustainable Finance Taskforce Monitoring and Evaluation of the Implementation of Sustainable Finance 171#173OJK's Support for Sustainable Finance Development 1 OJK strategic actions to ensure effective implementation of Sustainable Finance principles and to respond to climate change: 1. Developing a Green Taxonomy 2. Preparing for carbon exchange operations, in line with the Government's policy 3. Developing a reporting system for financial institutions, including green financing/instruments in accordance with the Green Taxonomy 4. Developing a risk management framework for financial services industry and a risk-based supervision guideline for supervisors to implement climate-related financial risks 5. Developing innovative and feasible project financing schemes 6. Enhancing awareness and providing capacity building programs for all stakeholders Source: Financial Services Authority (OJK) 2 The establishment of the Financial Services Sector Sustainable Finance Task Force as a forum for cooperation and coordination with the industry to respond to developments in sustainable finance at national, regional and global forums. 172#174Urgency of the Development of Green Taxonomy Urgency of Green Taxonomy Development at OJK - To standardize green definitions and criteria. - To regularly monitor credit/financing disbursement to the green sectors. - To improve reporting process carried out by the Financial Services Industry. Targets - Policy in the green sector, as the basis for developing innovative products and/or sustainable financial services as well as incentive and disincentive mechanisms for financial services sector. Availability of database for green sectors. Strategic Goals To develop standard definitions and green criteria of economic sector activities that support sustainable development, and climate change agenda in Indonesia. - To encourage innovation and investment in economic activities that have a positive impact on improving the quality of the environment. - To encourage the financial sector to provide financing for green economy activities. - To provide a reference for financial services sector, investors, business players (national and international) to disclose information related to financing, funding, or investment in green economy activities. Source: Financial Services Authority (OJK) 173#175Green Taxonomy . Proposed Definition of Green Taxonomy Classification of sectors based on business activities that support environmental protection and climate change mitigation and adaptation. The Green Taxonomy is used as a guideline for information disclosure in the Financial Services Sector and can be used as a reference for creating innovative sustainable financial products and/or services. In developing the Green Taxonomy, OJK actively participates in the Financial Stability Board, particularly regarding sustainable financial disclosure for Financial Services Institutions in the Financial Stability Board - Workstream on Climate Disclosures/WSCD and the ASEAN Taxonomy Board. The finalization of the Green Taxonomy involved 43 Directorate Generals in 8 related ministries to confirm the thresholds and to categorize around 2,700 sectors and sub-sectors classification. Green Taxonomy Definition Green taxonomy is a classification system that establishes a list of environmentally sustainable economic activities. (EU Green Taxonomy, 2019) A classification tool for the financial industry (banking) to protect the environment and reduce greenhouse gas emissions. (China Green Catalogue, CBRC, 2013). Benefits of Green Taxonomy As a guideline for allocating capital, a tool to support risk assessment, and a reference for other stakeholders in supporting efforts to mitigate and adapt to climate change. In its development, the green taxonomy is flexible and dynamic so that it can adapt to investment strategies and patterns and changes in technology, science, activities and new data. Source: Financial Services Authority (OJK) (ASEAN Taxonomy for Sustainable Finance ver.1, Nov 2021) 174#176Indonesia's Existing Green Bond and Sukuk Framework Existing Green Bond and Sukuk Framework under which the Republic of Indonesia can Finance and Refinance Selected Eligible Projects 1 2 Use of proceeds of Green Bond and Green Sukuk Eligible Green Projects must fall into one of the nine eligible sectors Project Evaluation and Selection Review and approval process by Ministry of Finance and National Development Planning Agency Project selection will utilize the Climate Budget Tagging (CBT) mechanism 3 Management of Proceeds Management - Ministry of Finance The Green Bond and Green Sukuk proceeds will be credited to a designated account of relevant ministries for funding exclusive projects as previously defined. Allocation is managed by Ministry of Finance Line Ministries The line ministries utilizing the proceeds shall track, monitor and report to Ministry of Finance, on the environmental benefits of the Eligible Green Projects 4 Reporting Ministry of Finance will prepare and publish a Green Bond and Green Sukuk annual report on the list of projects, amounts of proceeds allocated to such projects and estimation of beneficial impacts The Framework has received a second opinion from the Centre for International Climate Research (CICERO) and is awarded medium green shading, which allows the possibility of light, medium and dark green project types. This shade also shows that eligible listed projects are representing the country ongoing efforts towards the long-term vision in carbon emission reduction Source: Indonesia's Green Bond & Green Sukuk Framework 175#177Indonesia's Existing Green Bond and Sukuk Framework (cont'd) Existing Green Bond and Sukuk Framework under which the Republic of Indonesia can Finance and Refinance Selected Eligible Projects Eligible Sectors Green Shading according to CICERO's second-party opinion Dark Green Renewable Energy Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction Medium to Dark Sustainable Transport Waste and Waste to Energy Management Green Tourism Sustainable Agriculture Light to Medium Energy efficiency Sustainable Management of Natural Resources The Framework Excluded Use of Proceeds for New Fossil Fuel- Based Electric Large Scale Power Source: Green Sukuk Allocation and Impact Report - May 2021 Light Green Green Building Hydropower Plants > 30 MW Nuclear Assets 176#178Innovative Financing: Sovereign Green Sukuk and SDGs Bond Sovereign Green Sukuk and SDG Bond No Issuance Value Global Green Sukuk Proceeds Allocation by Sector 1 Global Green Sukuk (Mar 2018) USD1.25 billion 2 Global Green Sukuk (Feb 2019) USD750 million 3 Green Sukuk Retail (Nov 2019) IDR1.46 trillion Energy Effiency 4 Global Green Sukuk (Jun 2020) USD750 million 21.96% 30.14% only si 38.57% Projected Emission Reduction: First Issuance 2018 3,7 millio Second Issuance 2019 3.2 millions tante 11% 33% 5 Green Sukuk Retail (Nov 2020) 2016 Sustainable Traport Faslience to Climate Chang Third issuance for Highly Vinerals Arese and SactoryDater Risk Reduction 2019 2020 2000 1.4 miles tance 2021 IDR5.42 trillion 6 Global Green Sukuk (Jun 2021) USD750 million Renewable Energy Waste and Waste to Energy Mant Green Bulding Four Issuance 2021 7 SDG Bond (Sep 2021) 292.614092- EUR500 million SDGs Financing Needs in Indonesia In USD Bion, 2020-2030 Est. SDGs Financing Distribution 8 Green Sukuk Retail (Nov 2021) IDR5.00 trillion In USD Bilon, 2020-2030 770 New Government 4.710 Everet 700 9 Global Green Sukuk (Jun 2022) 365 USD1.50 billion 317 500 1,400 10 PBSG001 (Sept-Dec 2022) 990 IDR5.73 trillion 147 302 39 000 203 372 11 FRSDG001 (Oct-Nov 2022) 12 Green Sukuk Retail (Dec 2022) 227 192 343 IDR3.26 trillion 314 201 200 263 100 247 226 20% 171106 IDR10.00 trillion ALL + Hệ 0 2000 2001 2022 2003 2004 2005 2006 2007 2008 2029 2010 BALL High • • Total global green sukuk financing: USD5.00 billion Sovereign green sukuk is Indonesia's main financing instrument for climate actions. • Total green sukuk retail financing: IDR21.88 trillion • • Green sukuk has financed various projects in 6 sectors, mostly for sustainable transportation and resilience to climate change projects . • In June 6th, 2022, Rol has successfully issued its 5th global green sukuk by the amount of USD1.5 billion (10y tenor). In September and October 2022, ROI issued the first green sukuk series and the first SDG bond series offered through auction mechanism in the domestic primary market • In December 7th, 2022, Rol issued its 4th green sukuk retail by the amount of IDR10.00 trillion (2y tenor). Source: Ministry of Finance 177#1792022 Republic of Indonesia Global Green Sukuk USD1.50 Billion Issuer Issuer Rating Format Settlement Date Tenor Maturity Date Issue Size Profit Rate Reoffer Price Use of Proceeds Listing Joint Bookrunners Co-Managers Republic of Indonesia through Perusahaan Penerbit SBSN Indonesia III Moody's: Baa2 (Stable) / S&P: BBB (Stable) / Fitch: BBB (Stable) 144A / Reg S June 6th, 2022 10 Year June 6th, 2032 USD1.50 billion 4.70% p.a 100.00% In line with Rol's SDGs Government Securities Framework SGX-ST and Nasdaq Dubai CIMB, Deutsche Bank, Dubai Islamic Bank, HSBC, and Standard Chartered Bank PT BRI Danareksa Sekuritas Tbk and PT Trimegah Sekuritas Indonesia Tbk Transaction Highlights ■The USD1.50 billion 10-year global green sukuk issuance was part of two-tranches USD3.25 billion Rol sukuk issuance in international market at June 2022. ■ The largest green sukuk issuance in international market has received a very positive response from investors, indicated by the total order more than USD5.1 billion, reflecting an oversubscription of 3.4x ■ The first green sukuk issuance in 10-year maturity by the Rol. ■The successful 5th issuance of global green sukuk demonstrates the Rol's dedication and commitment to green and sustainable finance, as well as diversifying financing methods in the effort against climate change. Source: Ministry of Finance 178#180Indonesia's Green Initiatives: Financing Green Projects Indonesia's Green Projects Financed by a Combination of Green Sukuk and Other Funding Sources The Government of Indonesia has issued five sovereign global green sukuk, consecutively in March 2018, February 2019 and June 2020, 2021 & 2022, with the total amount of USD5.00 billion In 2019-2021, the Government of Indonesia issued three retail green sukuk (all issuances held in November), with the total amount of IDR11.88 trillion. Global Green Sukuk Proceeds Allocation by Sector (in percentage) 8% 27% 66% 48% 83% 38.57% 30.14% 22% 11% Use of Proceeds 2021 Global Green Sukuk Issuance Breakdown by Sector Renewable Energy 0.20% 21.70% Resilience to Climate Change for Highly Vulnerable Areas And Sectors/Disaster Risk Reduction Use of Proceeds 2020 Retail Green Sukuk Issuance (ST-007) Breakdown by Sector Sustainable Transport 12.24% Renewable Energy Sustainable Transport 21.96% 46.33% 17.90% 22.81% TT 11% 5% 7% 9% 8.33% 2018 Energy Efficiency Sustainable Transport Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction 2019 2020 2021 1% Green Building 1.00% Energy Emclency 0.01% Resilience to Cumate Change for Highly Vulnerable Areas andSectors/Disaster Risk Renewable Energy Waste and Waste to Energy Management Green Building 27.22% Waste Management 11.35% 8.33% Financing of Fiscal Year 2021 Projects Refinancing of Fiscal Year 2017 Projects Project Owner Note: Ministry of Public Works and Housing Ministry of Transportation Ministry of Energy and Mineral Resources Reduction 3.07% 27.18 Financing of Fiscal Year 2020 Projects Refinancing of Fiscal Year 2017 Projects Project Owner Ministry of Public Works Ministry of Agriculture Ministry of Transportation Cumulative (2018, 2019, 2020, and 2021) Green Sukuk Issuance Proceeds per Sector Cumulative (2018, 2019, 2020, and 2021) Green Sukuk Issuance Proceeds per Activity Energy Efficiency 8.8% Green Building 0.2% Renewable Energy 8.7% Waste and Waste to 8.4% Energy Management 35.6% Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction Mitigation Adaptation 64.5% 35.5% 38.4% Sustainable Transport Information extracted from Green Sukuk Issuance Allocation and Impact Report 2022, which has obtained a limited assurance statement from EY Projects were financed in Indonesian Rupiahs and the currency exchange rate is based on the State Budget Assumption for 2021 budget year of IDR 14,600 per USD. Source: Ministry of Finance 179#181Indonesia's Green Initiatives: Projected Environmental and Social Impacts Environmental Benefits Arising from 2021 Global Green Sukuk Projected Environmental and Social Impacts For 2021 Global Green Sukuk Renewable Energy Expected to: Reduce 136.86 tCO₂e and generate 150kWp clean electricity Reduce 4,972 tCO₂e, generating 2,456,654 KVA of clean electricity Resilience to Climate Change Expected to . Improve drinking water supply debit serving 180,000 household connections or 900,000 individuals Benefit 58,624 ha, 1,175 ha and 3,650 ha irrigated rice/crop areas in Central Java, DI Yogyakarta and South Sulawesi, improving cultivation intensity 685 building units benefitting low-income labours, vulnerable communities and students Sustainable Transport Expected to: • The railway infrastructure and facility development shows insignificant GHG reduction due to the decline of public transportation demand resulted from lockdown and work from home policies, and changes in lifestyle and movement pattern during the COVID- 19 pandemic period Waste Management Expected to: Benefit 865,357 households due to the improved waste management Benefit 75,780 households from sewerage systems • • Green Buildings Expected to Reduce electricity consumption at 10,371m2 floor-sized green buildings Benefit 670 MSMES Indonesia is highly committed to the achievement of the Sustainable Development Goals, which have been integrated into the national mid-term development plan. The Green Sukuk proceeds have contributed to the achievement of these goals: SUSTAINABLE DEVELOPMENT GOALS NO 1 POVERTY 7 AND CAM NINGY DECENT WORK AND ECONOMIC GROMTH 3:30 555 INDUSTRY INHOWTI 9ND RESISTRUCTURE GOOD HEALTH AND WELL BEINS ARHITE MINIM CLEAN WATER AND SANITATION 10 FIED 11 S 13 CLIMATE ACTION Source: Joint Second Party Opinion from CICERO and IISD on the Republic of Indonesia SDGs Government Securities Framework, Ministry of Finance Note: (1) CICERO is a global, independent, research-based second party opinion provider on green bond frameworks, (2) IISD is a Second Party Opinion provider offering practical solutions to the growing challenges and opportunities of integrating environmental and social priorities with economic development 180#182Tangible Results from Indonesia's Green Sukuk Initiatives Green Projects Refinanced and Financed with Proceeds from Indonesia's Green Sukuk Issuance in 2021 Proceeds from Indonesia's Green Sukuk Initiative has been successfully deployed to a range of eligible Green projects Renewable Energy Resilience to Climate Change Sustainable Transport Jakarta, Java, Sumatera Waste Management Sumatera, Sulawesi Selatan, Yogyakarta, Riau Green Buildings North Sumatera, Jakarta, Lampung Locations DKI Jakarta Across the country Amount Committed to Finance 2021 New Projects USD 2.0 million USD 204.4 million USD 91.9 million USD 62.6 million Amount Committed to Refinance 2017 USD 162.9 million USD 85.2 million USD 134.4 million Projects Relevant SDGs Project Examples Financed/Refinanced Note: USD 7.5 million Planning, Development, and Supervision of New, Renewable Energy and Energy Conservation Infrastructure Installation of 23 units of rooftop solar PV plants on the State's border stations and 2 volcano observation stations Provision and revitalisation of solar PV powered aids to navigation at sea to enhance the sea safety transportation and traffic services Flood and Lava Control, Urban Drainage Management, and Coastal Protection • Construction of seawalls, sea dikes or breakwaters of 160 meters in length, and were built to protect the housings inhabited by 758 residential areas and public facilities of fishermen settlements, as one of the climate vulnerable communities Development of Drinking Water Supply System Construction, expansion and improvement of reservoirs, intakes, transmission pipes, water treatment plants serving 3 to 4 neighbouring municipalities. The development is prioritized at areas prone to prolonged drought or flooding due to the impact of climate change and improve the drinking water supply debit Construction and Management of Railways Infrastructure and Supporting Facilities Improvement of operational facilities of the Palembang Light Rail Transit (LRT), to reduce traffic congestion and reduce duration of commute, with use of electricity as the LRT's system main source of power Development of electric- powered railway systems in other urban areas, including an airport railway system in Jakarta, Medan, and Yogyakarta Improvement of Municipal Solid Waste Management System at Regional- and City-scale Development of sanitation services, which cover municipal solid waste (MSW) management and sewerage management systems Development of Green Building Construction and rehabilitation of buildings that meet the green and environmental friendly criteria and indicators set by the Government; Reconstruction of the Aksara Traditional Market buildings with a green building concept The Aksara Traditional Market in Medan provides 670 kiosks benefiting for 670 MSMEs. Information extracted from Green Sukuk Issuance Allocation and Impact Report 2022, which has obtained a limited assurance statement from EY Projects were financed in Indonesian Rupiahs and the currency exchange rate is based on the State Budget Assumption for 2021 budget year of IDR 14,600 per USD. Green Sukuk issued in 2018-2021 will follow the Rol Green Bond and Green Sukuk Framework. Going forward, Green and SDGs Securities will follow the SDGs Framework. Source: Ministry of Finance 181#183Overview of the Indonesia SDGs Government Securities Framework The SDGs Government Securities Framework is the Key to the Issuances of Green and SDGs Securities Journey of The Republic of Indonesia SDGs Government Securities Framework ("SDGs Framework") January 2018 Published a Green Bond and Green Sukuk Framework & obtained a Second Party Opinion from CICERO 2018 - 2021 Successfully issued 4 Green Sukuk based on ROI Green Bond and Green Sukuk Framework SDGs Government Securities Framework August 2021 SDGs Framework developed to demonstrate how ROI intends to issue Green and Blue Bonds and Sukuk ("Green Securities") and Social and Sustainability Bonds and Sukuk ("SDGs Securities") Aligned with International Standards & Principles Use of Proceeds 1 New or existing Eligible SDGs Expenditures with Green and/or Social focus ("Eligible Expenditures") All Green and SDGs Securities issued under The Republic of Indonesia ("ROI") SDGS Government Securities Framework will align with international standards and principles Process for Project Evaluation and Selection 2 Budget Tagging Process to select Eligible SDGs Expenditures for Green and SDGs Securities Management of Proceeds 3 The Managed within the Government's general account; allocation register will be established The Green Bond Principles Sustainability Bond Guidelines The Social Bond Principles ACMF 4 Reporting Annual allocation reporting and impact reporting Source: Republic of Indonesia SDGs Government Securities Framework Source: Ministry of Finance 182#184Indonesia SDG Government Securities Framework (cont) Updated Green Bond and Sukuk Framework which the Republic of Indonesia can Finance and Refinance Selected Eligible Projects (of social (SDGs), green or blue projects) Eligible SDGs Expenditures with Green and Blue focus Dark Green Renewable Energy* Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction* Medium to Dark Sustainable Transport Waste and Waste to Energy Management* Green Tourism* Sustainable Water and Wastewater Management Light to Medium Energy efficiency* Sustainable Management of Natural Resources on Land Light Green Green Building Eligible SDGs Expenditures with Green focus can be further linked to Blue (ocean related) projects Alignment with the Rol's 2030 SDGs Target Sustainable Management of Natural Resources on Ocean* 6 DIGIT Source: Indonesia SDG Government Securities Framework 11 12 13557 14 15 HH со 183#185Indonesia SDGs Government Securities Framework (cont) Updated Green Bond and Sukuk Framework which the Republic of Indonesia can Finance and Refinance Selected Eligible Projects (of social (SDGs), green or blue projects)arecfv D7YC34E Eligible SDGs Expenditures with Social focus Employment Generation including through the Potential Effect of SME Financing and Microfinance Access to Essential Services Socioeconomic Advancement and Empowerment Alignment with the Rol's 2030 SDGs Target 1 2 FLIEL GURLION 4 5 舞團 EDUCAT I Food Security and Sustainable Food Systems Affordable Basic Infrastructure 10 11 The Framework Excluded Use of Proceeds for New Fossil Fuel- Based Power Electric Large Scale Hydropower Plants > 30 MW Source: Indonesia SDG Government Securities Framework Nuclear Assets 184#186External Review of Indonesia SDGs Government Securities Framework Engaged with CICERO and IISD to Adhere to the Best Market Practice of External Reviews Joint Second Party Opinion from CICERO Shades of Green¹ and IISD² "CICERO °C Shades of Green IISD International Institute for Sustainable Development Republic of Indonesia 9DCs Framework Become Opinion -די --- -יש Extracts of Republic of Indonesia SDGs Framework Second Opinion The Green Bond Principles The Social Bond Principles The "In alignment with the green bond principles, social bond principles, and sustainability bond guidelines." Sustainability Bond Guidelines "CICERO Shades of Green governance procedures in the Republic of Indonesia's framework to be Good." "Eligible social projects credibly aim for enabling sustainable development that will be supported by proposed comprehensive reporting of impacts" "We rated Republic of Indonesia's green bond and sukuk issuances under this framework CICERO Medium Green". Aligned with Best Practice and to Obtain Assurance on Post-Issuance Annual Reporting The Republic of Indonesia will engage an independent third party to provide assurance on its annual reporting on Green and SDGs Securities and the compliance of each Green and SDGs Securities issued with this Framework Source: Joint Second Party Opinion from CICERO and IISD on the Republic of Indonesia SDGs Government Securities Framework Note: 1. 2. CICERO is a global, independent, research-based second party opinion provider on green bond frameworks IISD is a Second Party Opinion provider offering practical solutions to the growing challenges and opportunities of integrating environmental and social priorities with economic development Source: Ministry of Finance F IISD 185#187Republic of Indonesia Sustainable Development Goals (SDG BOND) EUR500 Million Issuer Issuer Rating Format Settlement Date Republic of Indonesia Moody's: Baa2 (Stable) / S&P: BBB (Negative) / Fitch: BBB (Stable) SEC-Registered September 23, 2021 Tranche Currency USD Tap of 2031s USD USD 40 Year USD EUR Long-12 Year EUR Issue Size $650 million €500 million (SDG) Original Principal $600 million Amount Reopening Size $600 million Maturity July 28, 2031 September 23, 2061 March 23, 2034 Coupon (p.a.) 2.150% 3.200% 1.300% Reoffer Yield Reoffer Price Use of Proceeds Listing 2.180% 99.734% 3.280% 98.225% Repurchase certain of its outstanding global bonds pursuant to its tender offer announced on September 13, 2021 1.351% 99.419% Invest in projects that may qualify as Eligible SDGs Expenditures SGX-ST and Frankfurt Stock Exchange Transaction Highlights ■ Debut Sustainable Development Goals (SDG) EUR issuance by an Asian Sovereign ■ Debut Liability Management transaction and Debut US$ 40 Year issuance by ROI ■ Tightest ever spread achieved by ROI for a US$ 10Y issuance to date yet again (implied spread of +85.8 over 10Y UST) ■ Tightest ever spread achieved by ROI for a EUR 12 / long-12 Year issuance ■ Achieved zero to negative new issue concessions across all 3 tranches despite a crowded primary market on the day of bookbuild ■ The successful debut SDG Offering demonstrates Rol's commitment towards financing environmental and social projects in contribution to the 2030 National Development Agenda and to be aligned with the SDGs. Source: Ministry of Finance 186#188Likupang, North Sulawesi findonesia.travel @indtravel indonesiatravel @indtravel wonderful indonesia www.indonesia travel