#1BHINNEKA TUNGGAL IRA Republic of Indonesia Strengthening Policy Synergy to Maintain Stability and Accelerate Economic Recovery April 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 quarterly basis, answers questions through email, telephone and may arrange direct visit of banks/financial institutions to Bank Indonesia and other relevant government offices. Published by Investor Relations Unit - Republic of Indonesia Website: http://www.bi.go.id/en/iru/default.aspx Contact: 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 5-15 S&P Revised Outlook Indonesia's SCR To Stable; Affirms Rating at BBB ...page 21 Fiscal & Financing Policy Update ...page 65-93 Bank Indonesia Board of Meeting Decision ...page 96-97 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 3.69% (yoy) economic growth in 2021, amidst the Delta Variant Outbreak in the third quarter of 2021. Affirmation of Investment Grade Sovereign Credit Rating Rating Agencies Fitch Rating MOODY'S Rating (Outlook) BBB (Stable) Baa2 (Stable) S&P Global BBB (Stable) Investment grade ratings affirmed by S&P on 27 April 2022 recognizing macro stability and optimism on the growth prospect, as well as policy credibility in handling COVID-19 pandemic. Sources: Fitch, Moody's, S&P 2#4Overview 1 Economic Recovery Program and Its Updates 5 Fiscal Performance and Flexibility: 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 Favourable 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 13#5Section 1 Economic Recovery Program and Its Updates BHINNEKA TUNGGAL IRA#6Indonesia's Economic Improvement Trend Continues GDP Growth (%YoY) PMI Markit Indonesia 60 Total Investment (DDI+FDI) Rp Trillion CCI & Retail Sales 10 130 20.0 55 Expansion >50 51.3 300 5 10.0 50 110 250 0.0 0 45 200 -10.0 -5 40 150 100 -10 35 90 70 -20.0 -30.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contraction <50 50 30 Son of 2019 2020 2021 0 25 Total GDP Household Consumption GFCF Jan-19 Mar-1 Mar-19 May-19 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-21 Sep-21 Nov-21 Jan-22 Mar-22 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2019 2020 2021 2022 Consumer Confidence Index (CCI) Retail Sales-g (rhs) Current Account of GDP (%) 80.00 60.00 2.00 40.00 1.00 20.00 0.00 0.00 -1.00 -20.00 -2.00 -40.00 -3.00 -60.00 -4.00 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2018 2019 2020 2021 Sources: CEIC, BI, BPS, Bloomberg (as of 30 March 2022) Trade Balance (Billion USD) 1 4 7 10 1 4 7 10 1 4 7 10 1 2019 2020 2021 2022 Balance (Billion USD) Export-g (% YoY)-rhs -Import-g (% YoY)-rhs 8.00 6.00 12000 4.00 13000 2.00 14000 0.00 15000 -2.00 -4.00 16000 17000 The Indonesian Rupiah and JCI 5/1/2020 1/1/2020 9/1/2020 1/1/2021 5/1/2021 -IDR/USD 9/1/2021 1/1/2022 JCI-rhs 6000 7500 4000 7000 2000 6500 0 6000 -2000 5500 -4000 5000 -6000 4500 4000 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 Equity Flow (ytd) Bond Flow (ytd) Total 5#7Progress of Vaccination Implementation Vaccination has been carried out since January 2021. As of 27 April, 2022, the 1st vaccination dose was 199,14 million (95,6%), the 2nd dose vaccination was 164 million (78,9%), and the 3rd dose vaccination (booster) was 36,15 million (17,3%) Vaccination Target | Vaccination Progress Coverage of Covid Vaccination Doses 1, 2 and 3 TOTAL 208,265,720 1st Doses: 95.62% HEALTH Vaccination 1 Vaccination 2 Vaccination 3 WORKER 2,029,074 1,468,764 (138.15%) 1,971,572 (134.23%) 1,566,874 (106.68%) Vaccination 3 5,421,075 Gotong Royong Vaccine: Vaccination 1 = 1,161,323 (7.74%) Vaccination 2 = 1,099,887 (7.33%) Vaccination 3 = 382,716 (2.55%) 2nd Doses: 78.93% PUBLIC OFFICERS Vaccination 1 Vaccination 2 18,355,912 16,656,674 2 17,327,167 (105.94%) (96.13%) (31.29%) Vaccination 1 Vaccination 2 Vaccination 3 ELDERLY 17,534,980 13,905,505 3,462,570 30 3 Mi 21,553,118 COMMUNITY & VULNERABLE (81.36%) (64.52%) (16.9%) X Vaccination 1 Vaccination 2 Vaccination 3 113,799,660 4 141,211,181 TEENAGER (80.59%) Vaccination 1 92,607,432 (65.58%) 24,755,314 (17.53%) Vaccination 2 Vaccination 3 25,189,504 5 26,705,490 (94.32%) Total Target 21,619,662 387,746 As of 27 April 2022 (80.96%) (1.45%) 196,354,667 159,025,975 | 21,728,296 (94.28%) (76.36%) (1+2+3+4+5) 208,265,720 Source: Coordinating Ministry for Economic Affairs (10.43%) 3rd Doses: 17.36% 6#8Covid-19 Handling Strategies Efforts to prevent the entry of COVID-19 variant cases DETECTION Increasing epidemiological vs screening tests. tests Increase traced close contact ratio SURVEILLANCE Genomic surveillance in areas with the potential to spike cases and tighten entry points: • SGTF, WGS test & quarantine all travelers •Integration of entrance data at several data collection points, including airline, immigration, PCR tests, quarantine, WGS • Traveler quarantine period • • · THERAPETIC S Conversion of TT 30-40% from total hospital capacity & supply (including oxygen), medical equipment, & human resources. Deploy backup staff: internship doctor, Koas, final year students. Tightening of hospital admission requirements: saturation <95%, shortness of breath. Supervised by officers or volunteers, so that only moderate, severe, critical cases are in the hospital. Increase utilization centralized isolation. of VACCINATION • Vaccination centers in various places that are easily accessible to the public. • Vaccination card requirements for travelers and in public spaces/facilities. • Acceleration of vaccination in vulnerable groups, including the elderly & people with comorbidities. •Implementation of booster vaccines from early 2022 CHANGES IN BEHAVIOR & HEALTH PROTOCOLS Implementation of Community Activity Restriction Utilization of digital technology in the implementation of Health protocols (3M) and Screening Overseas Regulate the Quarantine flow of Arrival /isolation tourist Door discipline arrivals Optimization of testing efforts with the latest science and technology Delaying the mobilization of Indonesian citizens across countries Early anticipation of the readiness of health facilities Intensify testing Community ratio and close contact tracing Improve the discipline of health protocols and vaccinations on all Source: Coordinating Ministry for Economic Affairs fronts 7#9Covid-19 Vaccination Plan in 2022 Primary Vaccine Program (198.2 million doses) Primary and Advanced Program Vaccines (378,1 million doses) 1. Spillover 2021 2. Cohort 12 years 3. 6-11 yrs Notes: *) Booster half dose Direct appointment of the provider business entity 4. Elderly Implementation of Procurement by the Ministry of Health Cooperation with international institutions/agencies Vaccination location: Health Center, Government Hospital Government Program Vaccine Booster* (179.9 million doses) Assignment to State- Owned Enterprises (BioFarma) • The third dose (booster) COVID-19 vaccination program begins on January 12, 2022. • The booster vaccine will be given to people over 18 who have received the second dose of the vaccine more than six months ago. • This program is prioritized for districts/cities with 70% vaccination achievement for dose 1 and 60% for dose 2. • There will be at least 21 million people targeted for the booster vaccine program in January 2022. As of January 3, 2022, the government has secured 113 million doses of booster vaccine stock. • The type of vaccine to be used as a booster awaits recommendations from ITAGI (Indonesian Technical Advisory Group on Immunization) and BPOM. Source: Coordinating Ministry for Economic Affairs 5. Adult Vaccine Booster A 8#10Community Activity Restriction (PPKM) as a Support for Government Vaccination Program The purpose of PPKM is to suppress positive cases of covid-19 as a precondition for success for handling Covid-19 and for national economic recovery. As of April 26th, there is no district or city at level 4. - Large Scale Social Restriction (PSBB) April 2020 PSBB Transition Assessment of the Covid-19 Pandemic Situation Level transmission level response capacity pandemic situation level October 2020 O Community Activities Restriction Level 0 Level 1 Level 2 Level 3 Level 4 Enforcement (PPKM) 11 Jan 8 Feb 2021 Micro-Scale PPKM uncontrolled a situation where transmission does Situation without not occur but there are limitations to preventing transmission situations with low community incidence a community transmission situation with limited response capacity and a risk of inadequate health services transmission with insufficient response capacity 9 Feb 2 Jul 2021 The Emergency PPKM 3 Jul 20 Jul 2021 PPKM Level 1 to 4 21 Jul 2021 - 9 Mei 2022 local transmis sion In line with the implementation of PPKM, government support for the community and small businesses is strengthened through social protection assistance and economic assistance for MSMEs Source: Coordinating Ministry for Economic Affairs#11National 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 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) 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 13.38 million 8 million 2.6 million 2.43 lion 2.29 million Skin diseases 1.71 million Nutritional deficiencies 1.62 million Other infectious diseases 1.34 million Malaria & neglected tropical diseases 934,929.67 HIV/AIDS and STIs 775,832 24 Substance use disorders 382,851.19 371,921.93 Self-harm Maternal disorders 326,556 16 Interpersonal violence 228,972.97 Natural disasters | 93,561.62 Conflict and terrorism 21,562.49 Sources: Burden of Disease - 0 2 million Our World in Data Source: Coordinating Ministry for Economic Affairs Living With Covid-19 16.51 million 1. 2. 2022 3. Health Monitor independently; Testing/screening is done by yourself; Managing your own health (knowing COVID-19 is an additional burden of disease that needs to be taken into account and a reference for the health system going forward Government Response: Creating a Countermeasure Program Providing health facilities and medicine capacity о Ensure Vaccine Availability Community readiness: о Living with COVID-19 (activities with vigilance) Managing individual risk factors when to go to the hospital, when to go to the doctor, also the type of 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 INFLUENZA AND OTHER RESPIRATORY DISEASES 11#13INCREASING THE PRODUCTIVITY AND COMPETENCE OF THE WORKFORCE THROUGH THE PREEMPLOYEMENT CARD PROGRAM Number of Registration 87 Millions Registrants on the Pre-Employment Statistic of Recipients Card site from ALL Regencies and Cities 11.836.582 34 Provinces 514 Regent/City Total Pre-Employment Card Recipients (Batch 1-26) 2020 Recipient 5.509.055 Pre-Employment Card Recipient (Batch 1- 11)* Rp13,36 Triliun Incentives have been distributed 2021 Recipient 5.931.574 Pre-Employment Card Recipient (Batch 12-22)** Rp14,38 Triliun Incentives have been distributed *The number of effective recipients for 2020, namely the designated recipients (5,987,674 people) minus the recipients whose participation was revoked (478,619 people). **The number of recipients effective 2021, namely the designated recipients (6,019,842 people) minus the recipients whose participation was revoked (88,268 people). Source: Implementing Management, As of April 21, 2022 12#14The 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 13#15National 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 14#16Fiscal 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. Pioneer industries are defined as industries that have broad linkages, provide added value and high externalities, introduce new technologies, and have strategic value for the national economy. There are 18 industrial sectors that fall within the scope of pioneer industries Updated: 31 Dec 2020 82 Taxpayers; 14 countries investors Investment plan of IDR 1,356 trillion Realization of IDR 204 Trillion Business locations in 24 provinces Workforce of 112 thousand Source: Coordinating Ministry for Economic Affairs • To encourage investment labor-intensive in a industries, • To increase direct investment activities for certain business fields and/or in certain areas. • The facilities include 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 based on a tax treaty, and compensation for losses of up • to ten years. The criteria are having a high investment value or for export, a large absorption of labor; or have a high local content. support programs for job creation and absorption Indonesian workers. of • 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. . 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 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 15#17Policy Synergy in the Property and Automotive Sector The government, together with BI and OJK, have provided a stimulus to the property and automotive sectors to encourage public consumption and at the same time improve the performance of the business sector and will continue in 2022. Government B Bank Indonesia QJ OJK Automotive Sector Giving VAT Incentives on Luxury Goods Borne by the Government for Motor Vehicles through PMK No. 120 of 2021 which amend PMK No 5/PMK.010/2022 I ⚫ The PPnBM Discount stimulus is given in stages: ➤ For LCGC (<=1500 cc; <= IDR 200 M): 100% during Jan-Mar 2022; 66,6% during Apr-Jun 2022; 33,3% during Jul-Sep 2022 ➤ For Vehicles (<=1500 cc; IDR 200-250 M): 50% during Jan-Mar 2022 automotive Relaxation of down payment requirements on loans/financing to minimum 0% for all new motor vehicles, while I maintaining prudential principles I and risk management as stipulated I by PBI No. 23/2/PBI/2021 effective 1st Mar 2021 31st Dec 2021. Letter of the Chief Executive of Banking Supervision and Non-Bank Financial Institutions : • Relaxation of Risk Weighting Policy for Credit Risk Weighted Assets / Motor Vehicle Financing Exemption from the Maximum Credit Lending Limit to Battery- Based Electric Motor Vehicle Manufacturers 2 Loan/Financing-to-Value Giving VAT Incentives Borne by the Relaxation of Government for the purchase of new landed (LTV/FTV) ratio on housing loans/financing houses and apartement through PMK 21 of 2021 which amend PMK 6/PMK.010/2022 The VAT Discount stimulus is given in stages: ➤ 50% of the VAT where the selling price of the property does not exceed IDR 2 billion I Property Sector I 25% of the VAT where the selling price is I between IDR 2 billion and IDR 5 billion during Jan-Sept 2022 Source: Coordinating Ministry for Economic Affairs to maximum 100% on all residential property (landed houses, apartments and shop I houses/office houses) for banks meeting I specific NPL/NPF criteria, and repealing regulations on the gradual liquidation of partially prepaid property, while maintaining prudential principles and risk management, as stipulated by PBI No. 23/2/PBI/2021 effective 1st Mar 2021 31st Dec 2021. ! Relaxation of Risk Weighted Assets for Credit / Mortgage Funding Depends on the LTV / FTV Ratio through the Letter of the Chief Executive of Banking and IKNB Supervision. 16#18Indonesia G20 Presidency 2022: a Snapshot Through G20 Presidency, Indonesia will continue to take the lead on ensuring equitable access to COVID-19 vaccines, promoting sustainable and inclusive economic development through MSMEs participation and digital economy Indonesia G20 Presidency Theme "RECOVER TOGETHER, RECOVER STRONGER" Main Topics of Indonesia's G20 Presidency GLOBAL HEALTH ARCHITECTURE DIGITAL TRANSFORMATION SUSTAINABLE G20 Summit 429 39 Delegation Countries/ International Organizations 20 Main Ministerial Meeting 4.581 Ministerial Meeting Sherpa Meeting Working Group Meeting 17 1.212 56 Meeting WG Meeting + Side Events Delegation Delegation 8.330 Delegation ENERGY TRANSITION Engagement Group Meeting Engagement Group Meeting 6.436 Delegation 90 WORKSTREAM SHERPA TRACK Through the sherpa tracks, 11 working groups, 1 initiative group, and 10 engagement groups meets to discuss and provides recommendation on the G20 agenda and priorities FINANCE TRACK As part of the G20 process, a particular place is reserved for the "Finance Track", which includes the meetings held among Finance and Economy Ministers, Central Bank Governors, Vice Ministers and Sherpas (negotiators) designated by the respective economic ministries, mainly focuses on economic, financial, monetary and tax issues. Source: Coordinating Ministry for Economic Affairs ESTIMATION OF ECONOMIC BENEFITS FOR INDONESIA Rp1,7T Rp7,4T 33k 1,5 - 2x Increasing Domestic Consumption Adding National GDP Involving MSMEs and Adding Labor Absorption Economic benefits compared to the 2018 AM IMF-WB event 17#19Section 2 Accelerated Reforms Agenda Supported by Institutional Improvement and Progressive Infrastructure Development BHINNEKA TUNGGAL IRA#20Rank 2007-2008 2008-2009 Improving Global Perception ...with recent improvements on governance effectiveness Global Competitiveness Index¹ 2009-2010 Higher rank is better 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018* 2019* 20 30 40 50 60 70 80 90 Worldwide Governance Indicators² 36 70 Higher rank is better 41 45 60 50 50 India Indonesia Philippines Bulgaria Corruption Perception Index³ 55 50 50 45 40 40 35 7 40 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 Voice and Accountability Government Effectiveness 48 46 ཆེ པེ ཆེ 47 Rule of Law Higher score is better 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 • Indonesia India Philippines Bulgaria Colombia 39 34 2015 2016 2017 2018 2019 2020 Political Stability/Absence of Violence Regulatory Quality Control of Corruption 1. Source: World Economic Forum - The Global Competitiveness Report 2019; 2. Source: World Bank - The Worldwide Governance Indicators 2021 Update; 3. Source: Transparency International - Corruption Perceptions Index 2020 Report 19 65 55 52 42 39 28#21A Well Maintained of Indonesia's Sovereign Credit Rating in The Midst of Economic Recovery BBB+ BBB BBB- Investment Grade BG+ BB BB- B+ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 JCRA S&P Fitch Moody's Fitch Ratings BBB / Stable November 2021, Rating Affirmed at BBB/Stable "Indonesia's rating balances a favourable medium-term growth outlook and a still low, but rising, government debt/GDP ratio against a high dependence on external financing, low government revenue and lagging structural features such as governance indicators and GDP per capita compared with 'BBB' category peers. 2020 2021 2022 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 April 2021, Rating Affirmed at BBB+/Stable JCR BBB+ / Stable "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". December 2020, 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 flexible exchange rate and monetary policies and accumulation of foreign exchange reserves. Additionally, the government has been maintaining the momentum of economic structural reforms even amid the pandemic, as evidenced by the enactment of the "Omnibus Law on Job Creation". 20 20#22Structural 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 INDONESIA MAJU 2045 WORLD GDP 2035 2036 EXIT MIDDLE 2030 INCOME TRAP* O 2018 2019 2025 BONUS DEMOGRAPHY 2020 2021-2022 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* PRE COVID Source: Coordinating Ministry for Economic Affairs Income per capita : US$ 12,233* POST *Based on the 2020-2024 National Medium Term Development Plan 21 221#23Medium-Term National Development Plan (RPJMN) 2020-2024 President's Vision: "The Establishment of an Advanced Sovereign, Independent and Personality Based on Mutual Cooperation". Strengthening Economic Resilience to Achieve Superior Economic Growth President's Missions Top 5 Presidential Priorities 7 RPJMN Development Agenda 1 Improving the Quality of the Indonesian Labour Force 1 HR Development Achieving Productive, Independent 2 and Competitive Economic Structure 3 Attaining Equitable and Prosperous 2 National Development Infrastructure Development Achieving Sustainable 4 Environmental Climate Developing Cultural Progress 5 Reflecting the Nation's Personality 3 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 Regulation Simplification Simplification of Bureaucracy Attaining Good, Effective, and Reliable Governance Economic 5 Achieving Synergy of Governmental 9 Framework with the Regional Government Transformation 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 Source: National Development Planning Agency 22 22#24The Framework of Job Creation Law AL New Business Creation GREENFIELD INVESTMENT COMPANY (111> Supply Brownfield PRODUCTION Demand Business Development JOB CREATION LAW New Job Creation Welfare Creation CONSUMPTION Increased Purchasing Power Increased Income HOUSEHOLD Source: Coordinating Ministry for Economic Affairs 23 23#25The Government Will Immediately Follow Up The Constitutional Court's Decision On The Job Creation Law COMPREHENSIVE EXPLANATION TO THE PUBLIC, MARKETS, ASSOCIATIONS, AND INVESTORS To affirm that 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, facilities for MSMEs still applies. AMENDMENT OF LAW 12/2011: a. To add the methods and techniques for preparing Law through omnibus approach to fulfill positive legalistic aspects. b. The amendment will be included in the 2022 Priority Prolegnas. IMPLEMENTING REGULATIONS OF THE JOB CREATION LAW: a. b. C. Governmental dan Presidential Regulations, which are issued after the Constitutional Court's ruling, are treated as operational and will utilize other legal bases. For example, Presidential Regulation on the Commodity Balance (Neraca Komoditas) will be based on Trade Law. The Ministerial/Head of Institution Regulations dan Regional/Head of Regional Regulations still need to be completed. The implementation of Risk-Based Business Licensing and Online Single Submission system continues as Source: Coordinating Ministry for Economic Affairs FOLLOW UP PLAN a. REVISION OF THE LAW ON JOB CREATION: a.Will refer to the amendments of Law 12/2011 (adjustment of the methods and techniques of Law preparation) b. To ensure sustainability and legal certainty, the revision of the Law on Job Creation must be completed immediately before the G-20 Summit C. The completion of the Law on Job Creation revision before the G-20 Summit will give a positive impression of Indonesia's consistency in structural transformation. 24 24#26The Job Creation Law Encourages Employment and Facilitates New Business Opening While Recovering the Post-Pandemic Economy D Under the Omnibus Law, 77 Indonesian Laws have been revised through a single law which regulates various sectors. Investment Ecosystem and Business Activities Business Licensing Employment Has simplified into Job Creation Law 186 Article dan 15 chapter 11 Cluster Government Investment & Research and Innovation 用 National Strategic Project (PSN) Land Acquisition nan Economic Zones 0000000 Ease of Doing Business Public Administration Imposition of Sanctions SME and Cooperatives 000 25#27Positive 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 can only be carried out by the Central Government. Investment value for FDI > IDR 10 billion. However, to encourage technology-based startups in SEZS, FDI investment value can be <= IDR 10 billion National strategic project/program Capital intensive Priority Business Activities with the following criteria: Pioneer industry Export oriented Oriented in research, development, and innovation activities 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 Non-Fiscal Facilities 1. Ease of obtaining business licenses 2. Provision of supporting infrastructure 3. Guarantees on availability of energy and materials 4. Immigration 5. Manpower 6. Other non-fiscal supports 26#28Risk-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 Monitoring: - Optimizing Effectiveness and Cost of Low Risk Medium Risk High Risk . NIB Issued = 895.875 Period August 4, 2021 - March 2, 2022 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 and businesses) INSPECTION: excessively costly (for countries • 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). Based on Business Actor: Based on Investment Type: Based on Business Scale: . Business Entity FDI = 3.052 = 139.410 Individual = 756.465 DDI = 892.843 Micro = 831.288 Small = 46.068 Medium = 10.594 Large = 7.925 • Action Plans • Accelerate the reduction of Ex Ante licenses compliance (Risk-Based Approach) • Towards technical regulations for risk management • toward Ex Post - 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 Action Plans OSS RBA system development included monitoring subsystem Short Medium-term 27 27#29Implementing Regulation on Risk-Based Licensing 51 Implementing Regulation 47 4 Government Regulation (PP) Presidential Regulation (Perpres) Implementing Regulations that are directly related to Licensing and Ease of Doing Business: 2. PP No. 5/2021 concerning Implementation of Risk-Based Business Licensing; PP No. 6/2021 concerning the Implementation of Business Licensing in the Regions; 3. PP No. 7/2021 concerning Ease, Protection, and Empowerment of K- UMKM 4. 5. PP No. 8/2021 concerning Company's Authorized Capital and Registration of Establishment, Amendment, and Dissolution of Companies that Meet the Criteria for Micro and Small Businesses PP No. 16/2021 concerning Implementing Regulations of Law no. 28 of 2002 concerning Buildings PP No. 21/2021 concerning the Implementation of Spatial Planning 7. PP No. 22/2021 concerning the Implementation of Environmental Protection and Management 8. 9. PP No. 23/2021 concerning the Implementation of Forestry. Presidential Decree No. 10/2021 concerning Investment Business Sector j.o.Presidential Decree No. 49/2021 The implementing regulation of the Job Creation Law are 194 Ministerial/Agency Regulations, and there are 22 Ministerial/Institutional Regulations that are directly related to the OSS System 28#30Implementing Regulation on Risk-Based Licensing To Start and Carry Out Business Activity ' Basic Requirement for Business Licensing Prior to Law 11/2020 After Law 11/2020 Location Permit Environmental Permit Building Permit (IMB) and Building Function Certificate (SLF) Suitability of Space Utilization Activities (KKPR) Environmental approval Building Approval (PBG) and SLF Risk Based Business Licensing (KBLI) Risk-Based Business Licensing based on KBLI regulated in PP 5/2021. The fulfillment of provisions, requirements and obligations is based on the Sector PP, Presidential Regulation, and Permen/Perban* derivatives of PP 5/2021. - Business Licensing to Support Business Activity (PB UMKU) Previously (OSS 1.1) was known as Commercial/Operational License PB UMKU services are carried out entirely through the OSS system PB UMKU is in the process of finalizing the system with Line Ministries and there is an agreement: • • if the nomenclature and services have been accommodated in the line ministries system, first the system integration will be carried out, however if it has not been accommodated by the line ministries system, the priority is immediately planted in the OSS system. *) Various requirements are regulated in 22 Candy/Bandages that must be accommodated and planted in the OSS system 29 29#31Improving 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 fulfill 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 global market. 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#32Investment Realization in Q1-2022 αι Q II Q III Q IV 01 Q II Q III QIV ΟΙ Q II Q III QIV Οι Q II Q III QIV QI Q II Q III QIV ΟΙ 2017 2018 2019 2020 2021 2022 ■DDI 68.8 61.0 64.9 67.6 76.4 80.6 84.7 86.9 87.2 95.6 100.7 103.0 112.7 94.3 102.9 103.6 108.0 106.2 113.5 119.3 135.2 FDI 97.0 109.9 111.7 112.0 108.9 95.7 89.1 99.0 107.9 104.9 105.0 105.3 98.0 97.6 Total 165.8 170.9 176.6 179.6 185.3 176.3 173.8 185.9 195.1 200.5 205.7 208.3 210.7 191.9 209.0 106.1 111.1 111.7 214.7 219.7 116.8 103.2 122.3 147.2 223.0 216.7 241.6 282.4 DDI: Domestic Direct Investment FDI: Foreign Direct Investment in IDR trillion *) The achievement of investment realization is rounding numbers 2021 2022 Q-1 2022 Target Achievement" Q-I Q-II DDI FDI Q-III Q-IV 108.0 106.2 113.5 119.3 111.7 116.8 103.2 122.3 Q-1 Y-o-Y Q-0-Q 2022** 135.2 25.1% 13.3% 572.4 23.6% 147.2 31.8% 20.5% 627.6 23.5% TOTAL 219.7 223.0 216.7 241.6 282.4 28.5% 16.9% 1,200.0 23.5% JANUARY - DECEMBER 2021 DDI 447.0 FDI 454.0 TOTAL 901.0 JANUARY-MARCH JANUARY-MARCH 2022 2022 Y-o-Y JANUARY - MARCH Q-o-Q 241.6 282.4 16.9% Indonesian Labor Absorption QI 2021 : 311,793 Indonesian Labor Absorption QI In Rupiah Trillion JANUARY - MARCH Y-o-Y 135.2 25.1% 147.2 2022: 319,013 31.8% (2.3%, Y-o-Y) 282.4 28.5% **) 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 Source: Investment Coordinating Board (BKPM) 219.7 282.4 28.5% In Rupiah Trillion 31#33Investment Realization in Q1-2022 (excluding the upstream oil and gas sector and financial services) Top 5 Investors (by country) (in USD billion) Singapore 34.8% Hong Kong 15.% China 13.2% Japan 8.2% USA 7.3% Source: Investment Coordinating Board (BKPM) By Region in IDR Trillion Central Sulawesi 20 20 East Java 23.6 Riau 23.7 West Java 39.5 Special Territory of Jakarta 40.4 By Sector in IDR Trillion Electricity, Gas, and Water 23.1 Housing, Industrial Estate, and Office Building 24.9 Mining 35.2 Transportation, Warehouse, and Telecommunication Metal, Metal Goods, Except Machinery, and Equipment Industry 39.5 39.7 32 32#34Investment Realization in Q1-2022 (excluding the upstream oil and gas sector and financial services) Q1-2021 Total: IDR 219.7 T Q1-2022 Total: IDR 282.4 T Realization Java Outside Java Java y-o-y 26.9% IDR 105.3 (47.9%) Outside Java Outside Java IDR 114.4 T (52.1%) TOTAL 30% 28.5% IDR 148.7 T (52.7%) Java IDR 133.7 T (47.3%) Direct Investments IDR tn FDI DDI TOTAL 282.4 135.2 147.2 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 2013 2020 2014 2015 2016 2017 2018 2019 2021 2021 Source: Investment Coordinating Board (BKPM) 33 33#35National Strategic Project (PSN) list is established in 2016, and have undergone several amendments until recently stipulated under Coordinating Minister Regulation No.7/2021 Pres. Regulation No. 3/2016 2016 225 Projects 1 Program PSN List Evaluation Pres. Regulation No. 58/2017 2017 245 Projects 1 Program IDR 4.417,6 T PSN List Evaluation Pres. Regulation No. 56/2018 2018 223 Projects 3 Programs PSN List Evaluation Pres. Regulation No. 109/2020 2020 201 Projects 10 Programs IDR 4.817,7 T PSN List Evaluation IDR 2.631 T Project included in the PSN List IDR 4.150 T 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) Π D 2021 208 Projects 10 Programs IDR 5.698,5 T Project excluded from the PSN List 34 ==#36National Strategic Project (PSN) consists of 208 Projects and 10 Programs with estimated investment value of USD 396,23 Billion 44 Projects Sumatera USD 54,13 B *) based on Coordinating Minister Regulation No. 7 /2021 A Toll Road 56 Projects Smelter Program 1 84 Program Projects 16 Projects Kalimantan USD 35,17 B Java USD 137,07 B 9 12 Program Projects National USD 107,33 B 22 Sulawesi 10 Projects Maluku & Papua Projects USD 39,43 B USD 19,27 B 20 Projects Bali & Nusa Tenggara USD 4,08 B PSN covers 12 sectors and 10 program 11% 20% Investment Proportion 69% State Budget 43,5 B Private 273,4 B SOE Budget 79,3 B *1 USD = 14.380 IDR National Tourism Program Dam & Irrigation 57 Projects Industrial Estate 19 Projects Railway 16 Projects Energy 15 Projects Seaport 16 Projects Water & Sanitation 12 Projects - Superhub Program Electricity Program Economic Equity Program Technology 5 Projects Housing 2 Projects C Sea Wall 1 Proyek Border Dev. Program Toll Access Program Food Estate Program x Airport 8 Projects Education 1 Project Waste to Energy Program 35#37The accumulated 130 Projects that have been completed spread across various sector and have significant role in accelerating Economic Recovery during COVID-19 pandemic National ARA 11 Million Estimated Labour Absorption since 2016-2024 & With 1,9 Million Estimated direct labour absorption from 2020-2024 *Notes: Includes direct and indirect labour absorption through PSN Completed in 2016 Completed in 2017 Competed in 2018 32 Projects (USD 14.43 B) Completed in 2019 30 Projects (USD 11,5 B) Completed in 2020 12 Projects (USD 8,57 B) 1 Airport 1 Railway 10 Projects (USD 4,27 B) " 7 Airports 2 Toll Roads 4 Airports 2 Railway 1 Aiport " 1 Toll Roads " 1 Access Road 4 Dams 4 Dams " 4 Ind. Estate " 6 Dams " 1 Airport " 1 Irrigation 4 Smelter 9 Toll Roads " 3 Toll Roads 1 Seaport 1 Gas Facility " 6 Ind. Estate 10 Toll Roads " 1 Marine " 1 Seaport 1 Gas Pipeline 3 Border Dev. 2 Railway 5 SEZ 4 Border Dev. " 1 Dam . 1 Irrigation 1 Seaport " 2 Smelter " 2 Dams " 2 Technology Agriculture 1 Cleanwater Supply . 3 Ind. Estate Completed in 2021 24 Projects (USD 6,2 B) 6 Toll Roads 2 Cleanwater Supply • 11 Dams + 1 Seaport 1 Technology 1 Housing 1 Railway 1 Ind. Estate *1 USD = 14.380 JDR Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 36#38Government of Indonesia has set various initiatives to drive private sector participation in Infrastructure sector especially for National Strategic Projects 1 2 3 4 Limited I Public Private Integrated Land Value | Partnership (PPP) Concession Funding Capture (LVC) Scheme (LCS) Platform 37 34#39Government of Indonesia has conducted institutional reforms to establish a conducive PPP ecosystem... 1 Institutional Reforms for PPP Implementation koop KPPIP: P Coordinating unit in KANTOR BERSAMA KPBU REPUBLIK INDONESIA Public Private Partnership (PPP) decision-making processes and debottlenecking efforts for infrastructure acceleration capacity building to encourage supports the use of PPP schemes project preparation PPP Joint Office: Information center for policy Indonesia Infrastructure IIGF Guarantee coordination and Fund: Provides guarantee and ♥SMi Sarana Multi Mi Infrastruktur: Facilitating infrastructure financing, preparing project, and serving advisory Project Development Facility (PDF) PPP Stages Outline Business Case Determination of Funding Scheme Tender document + Transaction PPP Agreement Financial Close preparation Final Business Case (FBC) Legend P Happ Ministry of National Development Planning Ministry of Finance PIC Government Contracting Agency (PJPK) IIGF PPM/ Kementerian PPM Bapp Bappenas Business Entity KANTOR BERSAMA KPBU REPUBLIK INDONESIA KANTOR BERSAMA KPBU REPUBLIK INDONESIA KANTOR BERSAMA KPBU REPUBLIK INDONESIA IIGF Ckp VSMI P Business Entity Lender Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 38#40... and has issued end-to-end regulations and supports to encourage PPP projects implementation 1 Public Private Partnership Project Development Facility (PDF) Preparation Project development facility assists the Government Agency (GCA) in (PPP) Contracting PPP project preparation (PDF&TA) Managing entity: KPPIP, PT SMI and PT IIF, Ministry of Finance Viability Gap Funding (VGF) Guarantee Scheme Tax Facilities Availability Payment Land Acquisition A facility which contributes to construction cost in order to increase project financial feasibility Managing entity: Ministry of Finance based on GCA proposal Govt's commitment: Max 49% per project cost Guaranteeing govt. contractual obligations under infra. concession agreements and MoF Reg. No. 130/PMK.08 /2016 re: Govt. guarantee for electricity project acceleration Managing entity: Indonesia Infra. Guarantee Fund (IIGF) and MoF Govt's commitment: US$ 450 Mil Bidding Process MoF Reg. No. 150/2018 allowed 100% Tax Holiday for 18 Pioneering Industries for 5 - 20 years depending on the investment value. The tax holiday is not only given to the new investments but can also be obtained by the existing taxpayers who want to expand their business. Managing entity: Ministry of Finance A scheme in which concessionaires receive periodic payments from central or regional government if the service standard is fulfilled. The MoF Regulation and MOHA Regulation on Availability Payment have been stipulated. Managing entity: Ministry of Finance Ministry of Home Affairs Construction A facility to support land acquisition for infrastructure projects particularly projects that involve private sector Managing entity: Ministry of Finance; Ministry of Agrarian and Spatial Planning/BPN, and BLU-LMAN Govt's commitment: US$ 1.2 Bio (2016) US$ 2.4 Bio (2017) US$ 2.6 Bio (2018) The Government has just issued GR No. 78/2019 regarding Tax Allowance Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) US$ 1.6 Bio (2019) Synchronization with 1 Online Single Submission (OSS) System 2 Additional positive list from 145 to 183 type of business sectors 3 Certainty on specific eligible assets allowed to obtain the incentives 39#41Government of Indonesia has stipulated Limited Concession Scheme as an asset recycling scheme for brownfield infrastructure asset 2 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 900 ARR 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 Does LCS serve as privatization? NO It does not eliminate the ownership and control of the Government Government remains the owner of the infrastructure asset LCS limits "super-profits" for concession holders Government will receive upfront payment yet its not selling the asset Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 40#42Limited Concession Scheme as an Alternative of Financing through Presidential Regulation No 32/2020 on Infrastructure Financing through Limited Concession Scheme 2 Limited Concession Scheme (LCS) Definition Limited Concession Scheme of Infrastructure Asset is the asset concession agreement to improve operations of Government assets (BMN) and/or SOEs' assets to generate revenue to improve similar project operations and/or finance other infrastructure provision Infrastructure Financing Priority Revenue generated by the LCS will be used to fund the priority infrastructure projects and/or national strategic infrastructure projects 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) 41#43SDG Indonesia One is launched by PT SMI as an integrated funding platform for private investor 3 Integrated Funding Platform 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 WASTEST BASE ADB AFD gef ACTE • 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 SMI Capital Market USD 700 min Offshore Loan Syndication M Standard MUFG CTBC BANK Maybank HSBC DBS mandiri UOB Chartered BCA Demon ⚫EMTN Program USD 2 billion Shelf Registration Conventional Bonds I Ro 30 trillon ⚫Shelf Registration Conventional Bonds Il Rp 25 trilion 17 Shelf Registration Sukuk Mudharabah Rp 3 million Shelt Registration Green Bonds Rp 3 trillion sh MTN Ruplah Rp 850 bloo ⚫ MTN USD 300 mic Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Infrastructure Projects Source: PT SMI, 2019 MOXSDA'S 2000 PITER Focuses on 15 out of 17 components in SDGs which are related to infrastructure development 42 42#44Indonesia Investment Authority (INA) as an Alternative Source of Economic Development Financing İNA INDONESIA PP Number 73 of 2020 concerning Initial Capital for indonesia Investment Authority • PP Number 74 of 2020 concerning Indonesia Investment Authority Legal basis . • 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 Development of INA's Investment Cooperation INVESTMENT AUTHORITY Development Toll Road Airport Industrial Area • Health Services Seaports Plantation • The commitment covers various strategic sectors in Indonesia, including digital infrastructure, ports, energy and toll roads: • • • • • General: Investment Framework Agreement with ADG in the amount of USD 10 billion: Digital infrastructure: ADG and ADIA participation in Mitratel IPO of ~USD 300 million initial discussion with the Abu Dhabi Fund for Development (ADFD) regarding investment opportunities in the tourism sector with an expected value of USD 50 million in 2022. ADG is planned to be an anchor investor for one of the digitalization thematic funds being formed by INA. • Alliance agreement with DP World for port development and supporting infrastructure of USD 7.5 billion over the concession period • MOU with Mubadala Petroleum regarding the exploration of investment opportunities in Pertamina Balikpapan in the amount of USD 250 million Investment platform with committed ADIA of USD 1 billion of the total platform of USD 3.75 billion 43 Digital Infrastructure Renewable Energy Traditional Energy Source: Coordinating Ministry for Economic Affairs#45Currently KPPIP is developing a Land Value Capture Scheme to further unlock infrastructure investment potential Au Land Value Capture (LVC) 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) Open Housing & Settlement Keep Investing- network Grows " • Human Settlement Improvement Tax based LVC Development Based LVC Land Sale and Rent Land and Property Tax alue Uplift Betterment Levies and Special Assessment Tax Increment Financing (TIF) Air Right Sale Joint Development Land Readjustment Retain a Portion LVC Benefit Local revenue from tax and levy Better city planning and development Regional growth Distributed development in urban area Triple Win LVC Better Urban Mobility Reducing Subsidy Source: KPPIP, Kemenko Perekonomian, Desember 2020 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Creating Fiscal Space 44#46All 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 45 45#47Government 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 ****** TTT טטט ********** الا 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 46#48Government Guarantee For Basic Infrastructure Development Reflects strong commitment to national development planning Credit Guarantee Business Viability Guarantee (BVG) PPP Guarantee Political Risk Guarantee Government Guarantee Program Power (Electricity) - Full credit guarantee for PT PLN's debt payment obligation under FTP 1 10,000MW and 35GW programs*. Clean Water - Guarantee for 70% of PDAM'S debt principal payment obligations. - I Toll road Full credit guarantee for PT Hutama Karya's debt payment obligations for 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. Contingent Liabilities from Government Guarantee as of Q4 2021** Central Government Guarantee for Infrastructure No. Programs Guaranteed Guarantee Party Document Credit Outstanding /Investment Exposure (billion)* 1 Coal Power Plant 10,000MW Fast Track Program (FTP 1) SOE 9 USD 0.75 the 2 Clean Water Supply Program Non SOE 6 USD 0.00 3 Direct Lending from International Financial Institution to SOES SOE 10 USD 2.22 4 Sumatra Toll Road SOE 10 USD 3.08 5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) SOE 7 USD 4.00 SOE & Non 7 USD 6.58 SOE 7 Regional infrastructure financing Non SOE 1 USD 0.22 8 Public Transportation (Light Rail Transit) SOE 2 USD 0.79 9 Electricity Infrastructure Fast Track Program (35 GW) SOE 6 USD 5.28 Total 58 USD 22.94 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 *) MOF provides both credit guarantees and BVGs for 35GW program Source: Ministry of Finance 6 Public-Private Partnerships (PPP) 1 From 2008 to Q4-2021**, the government has issued 93 guarantee documents with total value of USD42.11 billion, there were 35 guarantee documents worth USD5.45 billion have been expired. 1 The Maximum Guarantee Limit for the period 2020-2024 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. **) Currency conversion of IDR14,269.01/USD1 and IDR16,126.84/EUR1 (as of end December 2021) 47#49Section 3 Economic Factor: Stable Growth Prospects Supported by Continued Economic Recovery Momentum BHINNEKA TUNGGAL IRA#50Conducive 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 49 49#5150 50 National Economic Recovery Expected to Continue Strong GDP Growth¹ % yoy 40.00 30.00 6.176.035.565.014.885.035.075.17 5.02 2.97 20.00 10.00 (10.00) (20.00) (30.00) 2011 2012 2013 2014 2015 2016 2017 2018 2019 GDP-rhs Government Expenditure Export Q1-2020 (2.17) (3.49) (5.32) Q2-2020 Q3-2020 Q4-2020 Favourable GDP Growth Compared to Peers² 15.00 % yoy 10.00 5.00 0.00 -10.00 Bulgaria Indonesia Colombia Philippines (0.70) (2.07) 2020 Q1-2021 % yoy 7.07 5.02 3.69 3.51 Q2-2021 Q3-2021 Q4-2021 Private Consumption 2021 Gross Fixed Capital Formation Import 8.50 6.50 4.50 2.50 0.50 National economic recovery momentum has continued in 2022. In the fourth quarter of 2021, Indonesia's economy expanded 5.02% (yoy), improving from 3.51% (yoy) in the previous period. Broad gains were recorded across most economic sectors and GDP components on the expenditure side in line with the domestic economic recovery from the Delta outbreak in the third quarter of 2021. Overall, the economy grew 3.69% in 2021 to reverse the 2.07% (yoy) contraction experienced in 2020. Spatially, stronger economic growth in 2021 occurred in all regions, led by Sulawesi-Maluku-Papua (Sulampua), followed by Java, Sumatra and Kalimantan. The national economic recovery process is (1.50) expected to persist in 2022, though the recent spike in Omicron cases demands (3.50) heightened vigilance. Several economic indicators in February 2022 are still solid, including retail sales, consumer expectations and Manufacturing PMI, though (5.50) community mobility improvements are fading. The domestic economy, therefore, is expected to accelerate to 4.7-5.5% in 2022, supported by a faster vaccination program, broader reopening of the economy and maintained policy stimuli by Bank Indonesia, the Government and relevant authorities. (7.50) In terms of spending, nearly all GDP components recorded positive and stronger growth in the fourth quarter of 2021. Household consumption grew 3.55% (yoy) in the reporting period, up significantly from 1.02% (yoy) in the previous period given increasing public mobility in various regions of Indonesia. Investment grew 4.49% (yoy), boosted by non-building investment. Government consumption growth stood at 5.25% (yoy), supported by increased spending on the national economic recovery program, including Covid-19 handling and containment measures. Meanwhile, export growth remained solid at 29.83% (yoy) on strong demand in Indonesia's major trading partners. On the other hand, imports also recorded high growth in the fourth quarter of 2021 at 29.60% (yoy). 6.90 6.30 6.00 4.50 2022 Growth Projection *) 3.60 Institutions 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023* 2022 Budget -5.00 GDP growth 5.2 India Bank Indonesia 4.5-5.3 -15.00 IMF (WEO, April 2022) 5.4 1. 2. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption Source: World Economic Outlook Database - April 2022; * indicates estimated figure World Bank (GEP, Jan 2022) 5.2 ADB (ADO, April 2022) 5.0 *) Consensus Forecast number will be given later#52GDP Growth Breakdown GDP Growth Based on Expenditures (%, YoY)¹ 2016 2017 2018 2019 2020 2021 By expenditure HH. Consumption Non profit HH. consumption Government consumption Gross Fixed Cap. Formation Exports 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8,1 8,8 8,7 3.4 6.2 (3.0) (4.0) Imports GDP 4.7 4.2 4.2 4.8 (3.1) (1.5) (5.9) 3.9 (5.0) (3.4) (4.1) 2.7 4.9 5.2 5.0 4.9 (0.1) 2.7 (1.9) 4.5 4.8 5.3 (1.7) 8.4 2.7 (2.4) 4.8 0.2 5.0 5.0 5.0 3.5 3.8 2.1 2,7 5,2 7.1 7.3 6.2 7,9 16.5 8.4 8.9 5,8 6,9 6,1 6,7 7,4 8,3 4,6 6,5 15.4 11.9 8.1 13 15 14 7,4 12 5.1 5.2 5.1 5,1 5,3 5,2 5,2 5,2 5,8 -5,8 5,1 Q1 Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 5 5,2 5 5,1 5,1 5,0 5,2 5,0 5,0 5,0 2,8 -5,5 -4,0 11 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 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 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 3,8 -1,1 -1,2 0,9 0,6 0,5 0,2 -12,4 -13,0 -6,9 -8,1 6,9 31,5 29,2 29,8 24,0 -5,9 -8,5 -8,1 -7,1 -5,4 -20,7 -24,5 -15,8 -16,7 4,4 31,8 29,9 29,6 23,3 5,1 5,0 5,0 5,0 3,0 -5,3 -3,5 -2,2 -2,1 -0,7 7,1 3,5 5,0 3,7 Q1 Q2 Q3 Q4 Tot Q1 -3,6 -2,6 -2,2 Q2 Q3 Q4 Tot 6,0 1,0 3,6 2,0 2,8 3,3 1,6 0,6 5,2 4,2 ** Source: Central Bureau of Statistics of Indonesia (BPS), Including non-profit household consumption GDP Growth by Sector (%, YoY) 2016 2017 2018 2019 2020 2021 By sectors Q1 Agriculture, forestry, and fishery Mining and Quarrying Manufacturing Construction Q2 Q3 Q4 Tot. Q1 Q2 Q3 Q4 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 (1. 1.2 1.0 0.2 1.4 0.9 2.1 1.8 0.0 0.7 4.7 4.6 4.5 3.3 4.3 4.3 3.5 6.8 5.1 5.0 4.2 5.2 6.0 7.0 Tot. Q1 Q2 Q3 Q4 Tot 3.9 3,3 4,7 3,6 3,8 3,9 Q1 Q2 Q3 Q4 Tot Q1 1,8 5,3 3,1 4,2 3,6 0,0 Q2 Q3 Q4 Tot Q1 2,2 2,2 2,6 1,8 3,4 Q2 Q3 Q4 Tot 0,5 1,4 2,3 1,8 1,1 2,6 2,7 2,2 2,2 2,3 -0,7 4.9 4.5 7.0 7.2 4.3 4,6 3,9 4,4 4,2 4,3 3,9 3,5 6.8 7,4 5,7 5,8 5,6 6,1 5,9 5,7 4,1 3,7 5,6 5,8 2,3 0,9 1,2 3,8 5,8 0,4 -2,7 -4,3 -1,2 -2,0 -2,0 5,2 7,8 5,2 4,0 22 2,1 6,2 4,3 -3,1 -2,9 -1,4 2,9 -5,4 -4,5 -5,7 -3,3 -0,8 4,4 6,6 3,7 4,9 3,4 3,8 3,9 2,8 Wholesale and Retail Trade, Repair of Car and Motorcycle 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5 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 Transportation and Storage 7.4 6.5 8.2 7.6 7.4 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 3,2 969. 4,7 Information and communication 10. 7.6 9.3 8.9 9.6 8.9 11.1 8.8 8.3 9.6 7,8 5,1 8,1 7,1 7 9,1 9,6 Financial service 9.3 13.6 9.0 4.2 5 8.9 6.0 5.9 6.1 3.8 5.5 4,3 3,1 3,1 6,2 4,2 7,2 4,5 Other Services GDP 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5,4 6,2 6,7 6,4 6,2 6,8 7,3 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5,1 5,3 5,2 5,2 5,2 5,1 5,1 9,2 9,8 9,4 9,8 10,8 10,7 11,0 10,6 8,7 6,9 6,2 8,5 6,6 10,6 1,1 -0,9 2,4 3,2 -3,0 8,3 6,4 6,2 6,7 5,0 5,0 5,0 3,0 -5,3 -3,5 -2,2 -2,1 -0,7 7,1 5,5 6,2 6,8 4,3 -2,6 1,6 4,6 -6,3 1,4 -1,7 -1,2 -2,5 9,8 -0,8 3,4 3,5 5,0 2,4 3,7 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 51#53Economic Performance Improved In Almost All Regions Regional GDP of The Fourth Quarter of 2021 (%, yoy) ACEH 7.39 North Sumatera 3.81 SUMATRA 32 KALIMANTAN 450 ERO 554 41 RIAU 3.81 Riau Islands 5.27 West West Kalimantan 4.31 North Kalimantan 7.08 East Kalimantan GORONTALO 5.26 2.91 10,70 12.17) NATIONAL 7.07 5,02 151 W North Sulawes 3.38 North Maluku 21.00 2020 2021 West Papua 1.03 Sumatera 4.38 JAMBI 3.62 Babel Islands 6.32 Central Kalimantan 7.61 BENGKULU 5.57 South Sumatera South Kalimantan 5.55 West Central Sulawesi Sulawesi 3.32 11.90 5.12 DKI 3.64 South East Sulawesi 7.66 South MALUKU 5.33 Sulawesi 7.89 LAMPUNG 5.15 Central East Java Java West 5.42 4.59 JAVA BANTEN Java BALI 0.51 5.19 6.21 West Nusa Tengrana DIY East Nusa Tenggara 3.10 086 2.82 BALINUSRA 3.75 1.00 10.30 482 (0,871 (7.63 W ICH Q4 2021 > Q3 2021 Q4 2021 < Q3 2021 Source: BPS Source: Central Bureau of Statistics of Indonesia (BPS), calculated 1 MAY 5,10 4:00 PAPUA 17.16 SULAMPUA 5.05 PA 2441 52 2#54Economic Performance in Most Sectors Continue to Improve Indonesia's main economic sectors maintained positive momentum, an the performance was driven by several major sectors, namely the Manufacturing Industry, Trade and Construction. Sectors associated with mobility, namely Accommodation and Food Service Activities as well as Transportation and Storage also posted gains. % 100.0 Indonesia's GDP Share (%) 90.0 17.55 17.64 17.88 18.03 18.20 18.64 18.66 18.47 18.35 18.68 19.09 18.83 19.12 19.87 19.23 18.49 18.51 17.06 18.18 18.05 80.0 3.73 3.49 3.46 3.72 3.88 3.60 3.86 4.03 3.61 3.57 3.50 3.52 70.0 3.57 3.53 3.63 3.93 4.42 5.02 4.19 3.62 5.20 13.46 13.61 13.21 13.21 13.43 60.0 13.30 13.19 13.02 13.02 13.01 13.19 4.20 4.15 4.24 4.70 4.44 4.32 3.78 3.77 3.96 4.25 4.66 4.56 5.41 5.38 5.57 5.17 3.58 4.39 12.82 12.81 4.56 4.57 4.67 4.58 4.51 4.51 4.58 4.47 4.42 4.26 4.34 4.12 4.37 4.44 4.28 4.41 3.90 4.27 4.21 4.56 4.24 13.02 12.92 13.08 13.08 12.71 12.97 12.84 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 40.0 22.04 21.76 21.45 21.03 21.08 19.86 20.99 20.52 20.16 19.86 19.70 19.98 19.85 19.80 30.0 6.28 6.16 20.0 10.46 11.81 11.61 11.01 9.83 6.44 7.65 7.18 7.58 8.08 7.26 6.82 6.48 10.0 13.93 13.51 2010 2011 2012 2013 13.37 13.36 13.34 13.49 13.48 13.16 Taxes Transportation and Warehousing Mining and Quarrying Other Services Wholesale and Retail Trade Agriculture, Forestry, and Fishery Source: Central Bureau of Statistics of Indonesia (BPS), calculated 2014 2015 2016 2017 2018 15.45 14.67 12.81 12.71 12.84 2019 ◆ Q1-2020 Q2-2020 Q3-2020 Financial and Insurance Services Construction Q4-2020 2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Information and Communication Manufacturing 2021 10.39 10.71 10.79 10.12 10.48 10.44 19.15 19.87 19.83 19.29 18.80 19.25 8.09 9.55 8.98 7.64 10.43 11.97 13.70 13.23 14.29 14.32 11.39 13.28 53#55Stronger Fundamentals Facing the Headwinds Inflation Rate (%) Inflation controlled within the target range 1998 2008 12.1 Mar 2022 2.64 (yoy) 1998 82.4 2008 IDR Movement (%) IDR depreciated year-to-date -197 -35 18 Apr 22 -0.70 (ytd) -300 -200 -100 0 1998 Non-Performing Loan/NPL (%) NPL level (gross) is below the maximum threshold of 5% 30 2008 3.8 Feb 2022 3.08 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 Foreign Reserves (USD bn) Significantly higher than 1998 & 2008, ample to cover 7.0 months of import and external debt repayment 1998 17.4 2008 50.2 Mar 2022 139.1 More Liquid Market (%) Overnight interbank money market rate is relatively lower 62 10.5 2.79 1998 2008 Mar 2022 External Debt/GDP Higher than 2008, but significantly lower than 1998 8.6x 3.1x 2.94x 100.0% 27.4% 40.39% 116.8% 33.2% 34.99% 2008 Feb 2022 2021 2008 Mar 2022 2008 1998 1998 1998 54 .....#56Outlook of Domestic Economy Remains Robust ...the domestic economic recovery is continued to strengthen in 2022 2022 Economic Outlook • Bank Indonesia projects economic growth in 2022 to accelerate to 4.5-5.3% in 2022. Bank Indonesia projects inflation in 2022 to remain under control and within the 3.0±1% target corridor. • Bank Indonesia projects current account deficit of approximately in the range 0.5-1.3% of GDP in 2022. ● Bank Indonesia projects credit growth in 2022 will be around 6.0-8.0% LOAN Π Rp Economic Growth 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% 0.5-1.3% 6-8% Source Bank Indonesia 55#57Section 4 External Factor: Improved External Resilience BHINNEKA TUNGGAL IKA#58External Sector Remains Resilient Supported by Adequate Reserves and Sound Balance of Payments Current Account Recorded Surplus in Q4-2021 2018: CA Deficit 2019: CA Deficit (US$30.3bn) 2015: 2016: 2017: CA Deficit CA Deficit CA Deficit (US$17.5bn) (US$16.9bn) (US$16.2bn) (US$30.6bn) Balance Of Payment Remains Solid US$bn 20 15 10 5 0 -5 -10 -15 དུ། US$bn 160 144.91 US$bn 23 и 120 18 13 1.42 80 8 (0.84) (2.35) 3 40 (2) 0 (7) (12) Q1/Q2Q3041020304010203040102030401020304010203041020304 2015 2016 Current Account Overall Balance 2017 2018 2019* 2020* 2021** I Capital and Financial Account --Reserve Asset (rhs) Source: Bank Indonesia Trade Balance Surplus Continues 2016: Surplus US$bn US$8.83bn 2017: 2018: Surplus Deficit US$11.83bn (US$8.65bn) 2019: Deficit (US$3.24bn) 2020: 2021: Surplus Surplus (US$21.81bn) (US$33.84n) 8 6 4 2 0 HTTTTTTTTT -2 -4 357911 2016 OG Non-OG Total 2017 Source: BPS Preliminary Figure 2018 13579-13 2019 ** Very Preliminary Figure 2020 2020; CA Deficit (US$4.4bn) 2021: CA Surplus US$3.3bn 2.00 1.00 0.45 12.43 (1.00) 1.95 (2.00) (8.89) (3.00) (4.08) (4.00) Q1Q2Q3Q4Q1QZQ3Q4Q1Q2Q3Q4Q1Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2Q3Q4Q1Q2Q3Q40 2015 2016 2017 2018 2019* Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020* 2021** Goods Services Primary Income Secondary Income Current Account (%GDP) (rhs) Source: Bank Indonesia Official Reserve Assets Increased to Reinforce External Sector Resilience FX Reserves as of March 2022: US$139.1 bn (Equiv. to 7.0 months of imports + servicing of government debt) Month of Import & Debt Service (RHS) Month 15 14 US$bn FX Reserves (LHS) 6.62 150 140 4.53 130 120 110 100 90 80 -2.09 70 60 50 911357911 1 3 5 7 9 13579 11 1 3 5 7 9 11 11 2021 2022 2017 2018 2019 Source: Bank Indonesia 1 3 5 7 9 1 3 5 7 9 13 11 2020 11 2021 2021 543210 13 12 11 10 LECTII987654321, 57 40#59TRY 36.53 JPY EUR KRW INR PHP MYR SGD THB IDR CNY ZAR BRL Exchange Rate In Line with Fundamentals Movement of Rupiah Quarterly Average IDR/USD 17,000 Monthly Average 16,500 15-Jan-20 4-Feb-20 24-Feb-20 15-Mar-20 4-Apr-20 24-Apr-20 14-May-20 3-Jun-20 13-Jul-20 2-Aug-20 23-Jun-20 1-Oct-20 21-Oct-20 10-Nov-20 22-Aug-20 11-Sep-20 15,711 14,673 14,494 14893 15,500 15,179 14,53 14,80€ 14,322 14,708 14373 14358 14,180 14157 14,529 14339 14399 14,252 14,265 14,357 13,714 14,387 14,855 14,201 14,378 14669 14,34815,000 14.500 14344 14,000 14,105 14,122 14259 14219 14,023 14344 13,500 14,044 13,000 30-Nov-20 20-Dec-20 9-Jan-21 29-Jan-21 18-Feb-21 10-Mar-21 19-Apr-21 30-Mar-21 9-May-21 29-May-21 18-Jun-21 8-Jul-21 2020 2021 2021 2022 Rupiah Exchange Rate Fared Relatively Well Compared to Peers 2022 vs 2021 (YTD) -30.0 -40.0 -20.0 Source: Reuters, Bloomberg (calculated) 28-Jul-21 17-Aug-21 6-Sep-21 26-Sep-21 16-Oct-21 5-Nov-21 -9.16 -9.06.60 -5.83 -3.67 -5.25 --2.535 ■point-to-point average -4.47 -245 -2₁197 18-Apr-22 -8.88 39.77 -0.70 -0.35. -0.14 1.56 18.55 -2.04 18.60 4.96 -10.0 0.0 10.0 20.0 30.0 25-Nov-21 4-Jan-22 13-Feb-22 24-Jan-22 35 % 40 5-Mar-22 14-Apr-22 25-Mar-22 16,000 on Rupiah exchange rate stability has been maintained despite persistent global financial market uncertainty. Rupiah stability throughout April 2022 was supported by adequate domestic supply of foreign exchange, foreign capital inflows and positive perception surrounding Indonesia's economic outlook despite ongoing global financial market uncertainty. As of 18th April 2022, the rupiah depreciated by just 0.70% the level recorded at the end of 2021, comparatively less than the several other currency depreciation experienced in developing economies, such as Thailand (0.77%), Malaysia (2.10%) and the Philippines (2.45%). Moving forward, the value of the rupiah is expected to remain stable in line with solid economic fundamentals in Indonesia, account particularly deficit. Furthermore, Bank Indonesia will continue to strengthen rupiah exchange rate stabilisation policy in line with market mechanisms and economic fundamentals. the Rupiah Exchange Rate Volatilty lower current 2021 YTD 2022 37.20 30 221 25 23.45 18.91 19.2893 20 13.81 15 10 5 As of 18 Apr 22 13.59 10.34 10.57 9.34 7.52 11.55 7.22 5.72 5.71 5.19 2.83 2.92 ZAR BRL TRY IDR THB PHP INR MYR 58#60Global Regional Ample Lines of Defense Against External Shocks Ample Reserves FX Reserve Swap Arrangement Bilateral • Ample level of FX reserves to buffer against external shock • FX Reserves as of of March 2022: US$139.1 bn Japan Singapore China Malaysia Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2021 • The facility is available in USD and JPY · Renewed a 1 year SGD/IDR swap arrangement with the size up to USD10 bn (equivalent) on November 2021 Renewed a 3 year swap arrangement and increased the size of swap line up to CNY250 bn / IDR550 tn (about USD 38.8 bn equiv.) in January 2022 ● Established a 3 year RM/IDR swap arrangement with a size up to USD2 bn (equivalent) in September 2019 Chiang Mai Initiative Multilateralization (CMIM) Agreement • Entitled to a maximum swap amount of US$ 22.76 bn under the ASEAN+3 (Japan, China, and Korea) FX reserves pool created under the agreement Came into effect in 2010 with a pool of US$120 bn . Doubled to US$240 bn effective July 2014 Source: Bank Indonesia 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) 59#61Healthy External Debt Profile External Debt Structure 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Private External Debt ■Public External Debt The Structure of External Debt is Dominated by Long-Term Debt ■Short Term External Debt ■Long Term External Debt 100% 90% 80% 50.5 70% 60% 50% 40% 30% 49.5 20% 10% 85.0 15.0 0% 2009 2010 2011 2012 2013 2014 2015 2016 External Debt Remains Manageable Million USD 2017 2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q2-2020* Q1-2020* Q3-2020* Q4-2020* Jan-21* Feb-21* Mar-21* Apr-21* May-21* Jun-21* Jul-21* Aug-21** Sep-21* Oct-21* Nov-21* Dec-21* Jan-22* Feb-22** External Debt to GDP Ratio & Debt to Export Ratio 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 X Q3-2019 Q4-2019 Q1-2020* Q2-2020* Q3-2020* Q4-2020* Jan-21* Feb-21* Mar-21* Apr-21* May-21* Jun-21* Jul-21* Aug-21** Sep-21* Oct-21* Nov-21* Dec-21* Jan-22* Feb-22** do % 39.3 % % External Debt External Debt Growth (yoy) - rhs 20.0 240 36.1 32.9 O 36.0 36.7 36.5 36.1 36.1 37.3 38.1 37.0 37.6 37.0 35.0 34.4 34.3 34.7 220 31.8 450,000 17.1 15.0 29.10 27.4 200 26.5 25.00 400,000 11.5 11.312.0 10.0 10.2 10.1 180 350,000 6.5 300,000 5.9 5.0 160 176.1 168.4 5.4 3.0 2.9 2.6 2.1 250,000 0.7 1.2 1.3 0.0-0.1-0.4 140 -1.0 -1.6 0.0 139.5 200,000 3.9 120 123.1 -5.0 121.8 150,000 100 114.90 113.8 101.0 100,000 -10.0 80 50,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 Q3-2019 2019 Q1-2020* Q2-2020* Q3-2020* 2020* Q1-2021* Q2-2021* Q3-2021* 2021** 2009 2010 2011 2012 2013 *Provisional Figures **Very Provisional Figures 2014 2015 2016 2017 2018 Q1-2019 168.6172.4168.472.0 77.03.177.2 189.6 175.1 175.5 - 20 P 157.15 External Debt/ Export Ratio (rhs) External Debt/ GDP Ratio 214.6 206.9 197.2 Q2-2019 Q3-2019 2019 Q1-2020* Q2-2020* Q3-2020* 2020* Q1-2021* Q2-2021* Q3-2021* 40 40 35 30 522250 10 2021** Source: Bank Indonesia, External Debt Statistics of Indonesia 09 60#62Strengthened 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 83.5 86 89.7 269 corporates (10.6%) Hedging Ratio* 144 corporates (5.7%) Philippines Panama Mauritius Kazakhstan Indonesia Colombia 0 20 25 26.2 27.2 35.2 36.5 38 37.7 39.2 39.4 40 56.3 54.9 56.3 80.8 86.7 95.4 ≤ 3 months 2022F 2021F 56.1 53.3 57 2021 60 80 100 120 Source: Moody's Credit View Fundamental Data, August 2021 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 2,275 corporates (89.4%) Liquidity Ratio* 297 corporates (11.7%) > 3-6 months 2,400 corporates (94.3%) 2,247 corporates (88.3%) Comply Not Comply *Data as of Q3-2021, with total population 2.,544 corporates Source: Bank Indonesia 61#63Solid 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) 62 14#64BHINNEKA TUNGGAL IKA Section 5 Fiscal Performance and Flexibility: Strong Commitment in Maintaining Fiscal Credibility#65Government Budget Is Flexible To Respond To The Uncertainty National Economic Recovery (PEN) program was initiated to respond to the COVID-19 pandemic as well as to stabilize and stimulate the economy; 2020: Extraordinary Policy 2021: Pandemic Handling & Recovery 2022: Accelerating Economic Recovery & Reforms Covid-19 timeline Covid-19 as pandemic & Large social restriction was 1st case covid-19 confirmed in Indonesia declared Several 1st stage of vaccination rolled out and PPKM was region loosened the imposed Emergency PPKM was imposed Delta Varian' confirmed in Indonesia 'Omicron Variant' confirmed in Indonesia mobility restriction Fiscal Initial Feb-20 Mar-20 Apr-20 Deficit (%GDP) Budget -1.76 FEB-APR APR -5.07 1st adjustment 2nd adjustment in early stage development of of pandemic May-20 Jun-20 due to Jul-20 Aug-20 100,000 cases confirmed pandemic -6.34 JUN National Initial measures to Formalized PEN through Reallocating and refocusing budget. Realization: Economic Recovery (PEN) mitigate pandemic risk PP23/2020 Sep-20 Oct-20 -6.14 -5.7 JUL-DEC DEC JAN Nov-20 Dec-20 Realization Budget for 2020 2021 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 JUL Nov-21 Dec-21 Jan-22 Realization for 2021 -4.65 Feb-22 Mar-22 Budget 2022 -4.85 2022 FEB-MAR IDR IDR 405.1 T IDR 575.2 T 403.94T PEN continue in 2021 IDR The amount increased due to surging cases and vaccination program IDR 699.43T PEN is strengthened due to the new wave, for social protection expansion and hospital costs Realization for 2021 IDR 744.75 T IDR 658.6 T PEN will continue and adjusted to pandemic development, which focused on health, social protection and strengthening economic recovery IDR 455.6 T 695.24 T Source: Ministry of Finance 64#66The National Economic Recovery Program (PEN) Has Effectively Cushioned The Impact Of The Pandemic The program continues to offer support for communities during hard times and accelerate the economic recovery PEN 2020: IDR 575.9tn (realized) National Economic Recovery Program (PEN) was enacted in response to the Covid-19 pandemic handling and was aimed at saving lives and supporting the economy HEALTH SECTOR IDR62.7tn SOCIAL PROTECTION IDR216.6tn PEN 2021: IDR 658.6tn (realized) PRIORITY PROGRAMMES IDR65.2tn CORPORATION & MSMES SUPPORT IDR173.0tn BUSINESS INCENTIVES IDR58.4tn Initial PEN 2021 figures were lower than 2020, however, due to new developments of the Covid-19 outbreak, particularly on the delta variant in July, PEN was strengthened for social protection expansion and hospital costs HEALTH SECTOR IDR198.5tn SOCIAL PROTECTION IDR171.0tn PRIORITY PROGRAMMES IDR105.4tn CORPORATION & MSMES SUPPORT IDR116.2tn BUSINESS INCENTIVES IDR67.7tn ALLOCATION PEN 2022: IDR 455.6tn (realized*: IDR 52.6tn) HEALTH SECTOR Allocation IDR 122.5 T Vaccination Program, Treatment Cost, Pandemic Handling, and Health Worker incentives. Realized* IDR 2.5 T SOCIAL PROTECTION IDR 154.8 T Social Assistance Programs, pre- employment program, and Job Loss Support IDR 45.1 T ECONOMIC RECOVERY IDR 178.3 T Labor Intensive Program, Tourism Supports, Food Security, Industry and IT- related program, and Business Incentives and Supports IDR 5.1 T The allocation for Health Sector and Social Protection will later be adjusted, following the development of Covid-19 pandemic. Government is frontloading PEN in Q1 2022 to maintain continuation of economic recovery from 2021 Source: Ministry of Finance 65 55#67Strong Budget Performance Continued In 2022 Strong revenue collection has been broad-based, expenditures needs to be accelerated to strengthen the recovery 2021 2022 Account (IDR tn) YTD as of YoY Growth YTD as of YoY Growth Budget % of Budget 31 March (%) 31 March (%) A. Revenue 379.4 0.8 1,846.1 501.0 27.1 32.1 I. Tax Revenue 228.1 (5.6) 1,265.0 322.5 25.5 41.4 II. Customs & Excise 62.3 62.7 245.0 79.3 32.4 27.3 III. Non-tax Revenue 88.6 (7.9) 335.6 99.1 29.5 11.8 B. Expenditure 523.0 15.6 2,714.2 490.6 18.1 (6.2) I. Central Government 350.1 26.0 1,944.5 314.2 16.2 (10.3) 1. Line Ministries 201.6 41.2 945.8 150.0 15.9 (25.6) 2. Non-Line Ministries 148.5 9.9 998.8 164.2 16.4 10.6 II. Regional Transfer & Village Funds 173.0 (0.9) 769.6 176.5 22.9 2.0 1. Transfer to Region 162.4 (2.9) 701.6 165.7 23.6 2.0 2. Village Fund 10.6 46.3 68.0 10.8 15.9 2.1 C. Primary Balance D. Surplus (Deficit) % to GDP (65.3) 2,908.1 (462.2) 94.7 (20.5) 245.1 (143.7) 89.0 (868.0) 10.3 (1.2) 107.2 (0.85) (4.9)1 0.061 E. Financing 332.8 293.7 868.0 139.4 16.1 (58.1) F. Surplus of Financing 189.2 149.7 Source: Ministry of Finance Budget performance continued to improve in 2022 Strong revenue growth from all components Expenditure to be accelerated especially for social protection to minimize the impact from commodity prices Regional Transfer and Village Funds distribution has improved compared to the same period in 2021 Financing takes into account market conditions and ample liquidity 66#68IN Q1 2022, Tax Revenue Collected IDR322.5TN Grew by 41.36% or 25.49% from the budget Income Tax (non-oil and gas) reached IDR 172.1T (27.2% from target) VAT (including for luxury goods) reached IDR130.2T (23.5% from target) Property Tax and others reached ID2.3T (7.7% from target) Income Tax (oil and gas) reached IDR 17.9T (37.9% from target) Monthly Tax Revenue Growth (yoy) 70 59.4 Net 47.5 50.0 Gross 50 35.7 24.6 28.1 24.9 31 32.8 30 12.6 6.8 8.7 10 16.28 (10) -6.9 (30) -15.3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2021 2022 ☐ The performance of tax revenue in the first quarter of 2022 was supported by the economic recovery, which was reflected in the expansive PMI and rising commodity prices, as well as well-performed export- import. Monthly revenue fluctuations during January-March 2022 are influenced by the 2021 revenue base which is also volatile. Revenue growth in March increased, apart from the low- based effect from March 2021, increased imports, and the voluntary disclosure program. Normalization will occur in the following months because the revenue base in 2021 continues to increase until the end of the year approaching the pre-pandemic level (21st growth since April has always been positive, May-Aug growth > 20%, and Sep-Dec growth > 30%) Source: Ministry of Finance 67#69Tax Revenue Grew Outstandingly Up to Mar 2022, the increase in tax revenue was broad-based in all types and sectors 160 120 80 18.8 40 TAXES REVENUE -40 GROWTH BY -5.6 -80 TYPES (% YOY) Distribution -38.5 140 99.3 13.1 -40.5 136 YTD as of Mar 2022 YTD as of Mar 20222 41.8 25.2 26.5 1.6 0.6 0.3 4.1 8.2 12.7% 5.6% 2.2% 15.1% 3.4% Income Tax Art Income Tax Art 21 22 (Imported Goods) 8.9% 21.1% 17.6% Personal Income Tax Corporate Income Tax Income Tax Art Final Income Domestic VAT Import VAT 26 Tax 200 154.7 150 TAXES REVENUE 100 GROWTH BY 58.1 44.1 50 SECTORS (% 14 8.2 28.8 12.4 9.6 15.1 3.3 YOY) 0 -7.3 -5.5 -7.1 -50 -14.6 -18.3 -14.3 Distribution 29.3% 25.9% 10.7% 7.2% 4.9% 3.8% 3.9% 3.3% Manufacturing Trade Financial Services Mining & Insurance Construction & Real Estate Information & Communication Transportation & Warehousing Corporate Services Source: Ministry of Finance 68#701 Total Assets in No the Tax Return Voluntary Disclosure Program Has Been Utilized By More Than 37k Taxpayers STATISTIC OF PARTICIPANTS PPS IN NUMBERS various sectors NUMBERS AND FACTS PPS is utilized mostly by personal taxpayers having less than 10 billion assets 2 Participants come from Number of participants % (SPT) 37,435 TAXPAYERS 42,932 Profession al services 1.8% Other Sectors 1 Up to 10 million 2,456 6.62% DOCUMENTS 7.0% 2 10 100 million 723 1.95% Manufacturing 3.3% Wholesale Employees Tax Collected Total Net Assets 3 100 million 1 billion 3,886 10.47% 45.0% and retail IDR6.65T IDR65.28T 4 1-10 billion 15,186 40.92% 34.1% Other Domestic Declaration and Investment Repatriation 5 10 100 billion 12,301 33.14% individual IDR65.13T Declaration from overseas IDR4.17T services 6 100 billion 1 trillion 2,385 6.43% 8.8% IDR4.97T 7 1-10 trillion 171 0.46% 8 Over 10 trillion 7 0.02% 4 PPS PLACEMENT IN GOVT SECURITY 1. Gov't Bonds IDR46.35bn and USD650 thousand 2. Gov't sharia security: IDR25.66bn 3 Increasing Trend Over Time 3.24 Note: PPS = Voluntary Disclosure Program *As of 25 March 2022 Source: Ministry of Finance 1.2 0.77 11.7 32.1 Net Assets 1.45 Total Tax 14.5 ► Jan Feb Mar 1-17 Apr will keep optimizing through: 1. Data analysis which has been conducted in both internal and external data. 2. The result of data analysis which contains list potential of taxpayers participating in PPS has been delivered to tax office. 69#71Overall Export Duty & Export Receipts From Palm Products (a.o March 2022) Grew positively driven by commodity prices in copper and CPO EXPORT DUTY 2021 2022 Growth yoy Trillion Rupiah 227.75% 151.70% 73.86% JAN-MAR YOY 3.88 3.65 3.18 2019 1.08 -27.54% 2020 0.73 -32.56% 2.23 2021 4.61 534.85% 1.26 2022 10.70 132.22% Jan Feb Mar 1.11 PALM OIL REALIZATION 2021 2022 Growth -33.96% -31.62% -47.01% 8.66 Trillion Rupiah JAN-MAR YOY 5.72 2020 3.43 3.46 4.81 3.29 2021 20.01 483.02% 2022 12.47 -37.67% Jan Feb Maret 6.54 Commodities Minerals - Copper 1,638.71 393.58 0.00 204.42% Export duty reached Rp10.70 trillion or grew significantly by 132.22% (yoy), the highest since pre-pandemic; ■ Revenue performance is still dominated by CPO Derivatives and Copper; 209.08% ■ Revenue from Palm Oil Products grew by 120.79% (yoy), driven by high prices which resulted in maximum export tariffs and the imposition of export duty on derivative products; 181.04% PERFORMANCE BY COMMODITIES (Billion Rupiah) Jan-March Growth 2021 2022 667.60 2,032.29 530.20 - Bauxite Others Palm Products - Kernel CPO CPO Products Other Export Duty Total 2,484.56 36.91 4,608.92 140.04 -2.63 3,904.41 440.00 979.85 -100.00% 8,620.40 1,214.17 951.47 6,454.76 50.15 10,702.84 120.79% 175.95% -2.90% 159.80% 35.87% 132.22% ■ Revenue from Copper grew by 209.08% (yoy) driven by increased export volume and high copper prices; ■ In January and February the Palm Oil Fund experienced a decrease in the impact of a decrease in volume, but in March the Palm Oil Fund began to increase resulting from widening progressive tariff to USD 1500/ton. Source: Ministry of Finance 70#72Excise Revenue Resiliently Grew Driven by Revenue from Tobacco Products and Alcoholic Drinks as the Effect of Payment Policy and Relaxation of People's Activity TOBACCO EXCISE REALIZATION 2021 ■2022 Growth yoy 24.73 Trillion Rupiah JAN-MAR YOY 98.66% 17.04 2019 20.31 191.91% -37.71% 32.85% 12.95 2020 27.73 36.56% • 18.61 20.78 2021 48.22 73.92% 8.83 • 2022 55.65 15.39%1 • lan Feb Mar ALCOHOLIC DRINKS (MMEA) REALIZATION Trillion Rupiah 2021 2022 Growth yoy 10.68% JAN-FEB YOY 75.52% -2.44% 599.40 2019 1.18 13.90% 480.94 432.86 2020 1.30 10.20% 541.57 246.61 492.95 2021 1.28 -1.61% 2022 1.60 25.15% Jan Feb Mar Source: Ministry of Finance TOBACCO EXCISE a. The realization of Tobacco Excise Jan - Mar 2022 stood at IDR 55.65 Trillion or grew by 15.39% (yoy); b. The performance was affected by: The increase of weighted tariff by 14.7%, from the average tariff in 2022 (12.5%) Production increase of tobacco products by 9.9%; Carry over revenue from 2021 due to tariff adjustment for 2022.. ALCOHOLIC DRINKS (MMEA) a. The realization as of Mar 2022 reached IDR1.6 Trillion or grew by 25.15%; b. The positive performance is the result of production increase, especially domestically as the national economy improved c.q. hotels and tourism; c. MMEA production/companies are predominantly domestic (99.2%). d. March revenue slightly slowed due to declining production of Type A in February. 71#73The Performance Of Kawasan Berikat/KB (Bonded Zone) & Import Ease For Exports Destination (KITE) KB-KITE's contribution to Total Exports Keeps Increasing CONTRIBUTION RATIO OF KB-KITE (in Billion USD) KB-KITE CONTRIBUTION TO NON-OIL&GAS SECTOR (in Billion USD) NET EXPORTS PERFORMANCE (in Billion USD) YEAR RATIO % NATIONAL EXPORTS 9.14 El Export Non-Oil & Gas E Export KB-KITE National 7.84 7.24 7.17 24.98 2018 2.70 19.30 6.68 41.51% 17.83 18.03 5.37 4.86 5.26 2019 3.14 41.06% 9.14 2.38 2.47 2.47 7.24 7.84 1.91 7.17 2020 2.86 40.24% Avg 2021 Jan 2022 Feb Mar 2021 3.09 41.28% 2022* 3.53 38.76% Avg 2021 Jan 2022 Feb Mar Net Ekspor (USD) Impor KB KITE Ekspor KB KITE • • • The ratio of exports to imports of KB/KITE throughout 2022 increased to 3.53 with a contribution to national exports of 38.76%; KB/KITE export performance in March 2022 reached USD9.14 billion or 9.14%, National Non-Oil and Gas Exports with an increasing trend at the beginning of the year (Quarter I); The improvement in the Industrial Sector affected the performance of KB/KITE exports/imports, which continued to improve at the beginning of the year (Quarter I); Net exports of KB/KITE in March reached USD 6.68 billion or the highest since the beginning of the year and an average of 2021. Source: Ministry of Finance 72#74Non-Tax Revenue As Of March 2022 Increased Mainly supported by natural resources Non-Tax Revenue Rp99.1 T (29.5% of the budget target) Oil & Gas Non-Tax Revenue grew by 113.2% (37.9% of the budget) → ICP's Increase Oil & Gas Non-Tax Revenue Realization as of Mar 2022 Non Oil & Gas Non-Tax Revenue grew by 70.3% (41.8% of the budget) → minerals and coal price increase Non Oil & Gas Non-Tax Revenue Realization as of Mar 2022 113.2 7.4 (46.7) 32.6 T 28.6 T 15.3 T 28.6 T 32.6 T 15.3 T 2020 2021 2022 Oil Gas Growth (%) Driven by ICP realization in the past 2 months: ICP Average Dec'21 - Jan'22 US$84.99 per barrel (up by 58.1%) ICP Average Dec'20 – Jan'21 US$53.77 per barrel Oil lifting Feb 2022: 611 thousand barrel per day → under budget target of 703 thousand bpd 38.1 (22.2) 6.4 T 1593 8.8 T 1.6 T 1.4 T 13.4 T 7.5 T 2021 2022 Non-Minerals &Coal Growth (%) 1.0 T 5.4 T 2020 Minerals &Coal Non-Minerals &Coal: Forestry, Fishery, and Geothermal Non-Tax Revenue of Minerals & Coal Rp7.1 T (up by 79.6%) ✓ Coal price avg Jan-Mar 2022: $173.4/ton (2021: $81.8/ton) Nickel price avg Jan-Feb 2022: $20,651/ton (2021: $16.987/ton) Non-Tax Revenue of Fishery: Rp287.3 Bn (up by 218.1%) The highest in the past 5 years (partly due to HPI adjustment) The increased activities in the fishery sector ■Fishery business license increased: 1) Fishery boats: 696 licenses (Mar 2021: 273). 2) General fishery: 1,502 licenses (Mar 2021: 963) ■Fishery exchange value Jan-Mar 2022 increased to 107 (2021: 103) HPI Fishery Reference Price Source: Ministry of Finance 73#75Maintained Acceleration Of Government Spending The success of controlling Covid-19 reduces overall costs and increases capacity for other government spending Operational Spending (IDR tn)¹ 40 35 30 0.2 25125050 30 70 60 50 40 R220 19.1 44.5 20 42.4 37.7 35.1 10 2019 2021 2022 PEN Program 2020 Operational Spending (Goods & Services) Capital Spending (IDR tn)1 17.3 16.9 18.7 9.1 12 2019 2020 2021 2022 ■Capital Spending Project Carryover Social Protection Spending (IDR tn)1 Education Spending (IDR tn)1 Subsidy Spending (IDR tn)1 100 120 50 80 100 40 51.0 22.6 10.2 60 80 30 23.7 23.82 40 60 20 2.3 58.3 20 35.0 42.1 91.5 100.6 103.5 6.9 2.5 28.3 41.7 40 10 71.6 15.0 16.2 19.1 0 20 0 2019 2020 2021 2022 2019 2020 2021 2022 0 Non-PEN Program PEN Program 2019 2020 2021 2022 ■Regular Subsidy Source: Ministry of Finance, 1Realization up to YTD March, 2Characterized similar to PEN Programs 74#76Up To March 2022, Transfer To Region Was Recorded Higher Compare To 2021 Supported by higher disbursement of Non-Physical Special Allocation TKDD Realization and percentage to APBN 121.04 104.02 • Highlights The realization of the transfer to regions and village funds up to March 31st 2022 reached IDR 176.46 Trillion or equivalent to 22.9% of the budget, increased by 2.0% compared to 2021 realization. • Revenue sharing in 2022 is lower because the higher disbursement base in 2021. • . Physical special allocation began to this disbursed this month due to the execution of the assignment project (from the central government) Various transfer has been realized this month as the administration requirement issue has been sorted out. Transfer to Region and Village Fund (TKDD) 2021 2022 IDR 2.0% 172.96 T 176.46 T 21.7 % 22.9 % ( IDR Trillion) 12.61 Revenue Sharing (DBH) 30.03 General Allocation (DAU) Physical Special Allocation (DAK Fisik) 0.09 0.07 Non-Physical Special 31.43 Allocation (DAK Non Fisik) 27.95 2022 2021 Incentive for Local 0.3 Government (DID) 0.12 Special Autonomy & 0.2 Privilege Allocation for... 0.2 10.78 Village Fund 10.56 Source: Ministry of Finance 75 5#77Local Government Performance Need To Be Optimized Revenue increasing while spending remain low, resulting on higher local government saving in banks Local Gov't Revenue Local Gov't Spending (budget ceiling: 37.99 Local Tax 33.67 Up to March 2022 93.45 IDR 1,103.91 T) -11.8% 8.47% from local gov't budget (budget ceiling: 1.02 Up to March 2021 105.94 IDR 1,134.64 T) Local Retribution 1.63 9.34% from local gov't budget up to March 2022 Spending by Type 1.67 Return of Local Govt Investment up to March 2021 2.73 Personnel Exp 5.42 Others Revenue 9.91 51.5 59.71 21.89 Operational 22.63 Capital Exp 4.47 5.05 Other Exp 15.59 18.54 As of March 2022 As of March 2021 • Local tax revenue, particularly on consumption-related activities is increasing, indicating the recovery of economic activities in the region. While the local tax revenue outturn is increasing, the local government will maintain its good performance. The central government will continue to pursue local taxing power through the intergovernmental transfer law (HKPD) • Local gov't spending is lower compared to previous year, particularly due to delay personnel expense disbursement, while other type of spending also remain low. The lowest growth of spending realization is Sulawesi island Source: Ministry of Finance 76#78Macroeconomic Indicators Development 2021 2022 INDICATOR Budget Realization Budget Latest update Economic Growth (%, yoy) 5.0 3.69 5.2 N/A Inflation 3.0 1.87 3.0 (%, yoy) Exchange Rates (Rp/US$) 14,600 14,312 14,350 10-years treasury bond -0.06 (mtm) 0.54 (ytd) 14,341(eop) 14,342(ytd) (as of March 25th) 6.74 (eop) 6.47 (ytd) (based on latest auction on Mar 15th) 45 68 63 95.72 (eop) 90.81 (ytd) yield 7.29 6.35 6.80 (%) ICP (Oil Price) (US$/Barrel) Oil Lifting (thousand barrel per 705 662 703 day) Gas lifting (thousand barrel - 1,007 982 1,036 equal oil per day) 572.8 (as of Jan 2022) 981.6 (as of Jan 2022) Economic Indicator Development 2022 Economic growth: GDP for the fourth quarter of 2021 grew by 5,02%, or by 3.69% (yoy) for the 2021 whole year. Inflation rate: inflation in March was recorded at 2.64% (yoy), or 0.66% (mtm) Rupiah Exchange Rate: As of 14 Aril 2022, the Rupiah (ytd) was at IDR14,345, or depreciated by 0.60 % compared to the initial exchange rate in 2022. SBN 10 Years: The weighted average yield of 10-Year Government Securities is 6.61% (ytd). The last auction was on April 13 2022, with a yield of 6.89%. Indonesian Crude Oil Prices: The ICP price increased because of increasing demand, supply disruption, and geopolitical tension. Oil and Gas Lifting: Oil lifting recorded at 572.8 bopd by January 2022 or decreased from lifting in December, while gas lifting increased to 981.6 boepd. Source: Ministry of Finance 77#79Enhancing Post-Pandemic New Sources Of Growth To Bolster Long-Term Potential Growth Enhancing Post-Pandemic New Sources Of Growth To Bolster Long-Term Potential Growth Key Emerging Trends 'New normal' lifestyle • Healthy lifestyle • The surging of digital technology application Health Services, Pharmacy and health industry, digital economic • World Trade Map, New Investment • Green Economy • • Supply Chain diversification Regional Supply Chain initiation Machinery, electronics, communication devices, chemical, and mineral downstreaming Net Zero Emission Policy Demands on green investment Acceleration on Government Priorities Program Structural Reform Agenda Human Capital Development (Reforms on Education, Health sector, and Social Safety Net) Infrastructure Development Simplification on Regulation Simplification on Bureaucracy • Implementation on Job Creation Bill Fiscal Reform Reforms Agenda . Logistic Reform (LNSW) Economic Values on Carbon, renewable energy technology • Reforms on Financial Sector Budgeting Reforms UTILIZATION OF KEY EMERGING TRENDS AND STRUCTURAL REFORM OPPORTUNITIES FOR ACCELERATION OF ECONOMIC GROWTH Acceleration of Information and Digital Technology Adoption High Value Added Industry Revitalization Source: Ministry of Finance Green Economy Developments 78#80Investment Financing For Higher Assets Value And Benefits INVESTMENT FINANCING REALIZATION: IDR 15 T* (equivalent to 8.18% from budget target) • . A STATE ASSET MANAGEMENT AGENCY (LMAN) IDR 10 T Financing for National Priorities Project (PSN) as of April 14 reached IDR 3.87 T for toll road project, dam, train, harbor, irrigation and sanitation During 2016-2022, LMAN has finance 104 PSN in amount of IDR 93.49 T, which dominated by toll road project, amounted to IDR80.32 T for 50 projects. • Governance and accountability is improved with the Key Performance Indicator (KPI) of Investment Financing Disbursement of Investment Financing allocation is based on performance and priority analysis FLPP HOUSING FINANCE LIQUIDITY FACILITY (FLPP) IDR 2 T Disbursement of FLPP as of April 11 is reached 47,912 houses worth of IDR 5.3 Trillion Total of FLPP projects during 2010-2022 is 991,495 houses worth of IDR 80.5 Trillion LDKPI INTERNATIONAL DEVELOPMENT FUND COOPERATION AGENCY IDR 1 T The return of investment on DKPI up to March 31st 2022 reached IDR 442.04 billion. LDKPI has provided grants for humanitarian aid related to Covid-19 handling for Asian and African countries amounting to IDR 32.02 billion, of which IDR15.21 billion came from non tax revenue. up tp April 14th 2022 Source: Ministry of Finance 79#812022 Budget Financing Economic Recovery and Structural Reform Description (IDR Trillion) Budget 2022 A. State Revenue 1. Tax Revenue Macroeconomic Assumption for 2022 Budget 1,846.1 1,510.0 Economic Growth 5.2% 2. Non-tax Revenue 335.5 3. Grants B. State Expenditure C. Primary Balance 0.6 Inflation 3.0% 2,714.2 1. Central Government Expenditure 1,944.5 Exchange Rate 14.350 IDR/USD 2. Regional Transfer & Village Fund 769.6 (462.2) 10 years T-Bills 6.8% (868.0) (4.85) 868.0 D. Surplus (Deficit) % of GDP E. Financing ICP US$ 63 per barrel Oil Lifting 703 thousand barrel/day Gas Lifting 1.036 thousand barrel of oil equivalent/day 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; (2) Social protection programs that 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. 80 60#82Budget Financing Growth IDR Trillion 31,5 196,8 -19,4 -9,7 402,1 1.193,3 1.006,4 961,5 868,0 2019 2020 2021 APBN 2021 Outlook 2022 APBN Financing Growth (%) 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 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 2021 The 2021 Outlook budget deficit continue gradually decrease, through the implementation of fiscal consolidation and budget refocusing 2022 Debt financing targets to be under control and decline with fiscal consolidation and budget refocusing Continuing coordination with Bank Indonesia in fulfilling financing 81#832022 Financing Needs Financing Source Budget Deficit 2022 Foreign Denominated Debt IDR868.0 T Domestic Debt Foreign Loan Foreign Denominate Domestic Loan Domestic GS d Bonds (4.85% of GDP) + Investment financing Lending ■Liabilities Other financing GROSS GS (Through auction & non-auction) Matured debt GDS Sukuk + 2022 Matured T-Bills Issuance 82#84Deficit Financing 2022 Through Net SBN Issuance IDR Trillion 24,5 163,8 -15,7 -0,2 T 1.177,2 1.207,3 992,8 446,3 991,3 2019 2020 2021 APBN 2021 Outlook 2022 APBN GS Growth (%) 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 83 83#85GS Financing Realization 2022 (Trillion IDR) Realization (ao. March 31, 2022) 278.72 Government Securities (GS) Government Debt Securities (GDS) IDR Denominated GDS 200.77 182.36 - Coupon GDS - Conventional T-Bills 133.55 20.70 - Retail Bonds - SEC USD-EUR ( - Buyback LM) - Private Placement (+ Voluntary Disclosure Program) Foreign Denominated Bonds 3.05 25.07 18.41 18.40 - Samurai Bond - SDG Bonds - Valas Voluntary Disclosure Program Sovereign Sharia Securities (Sukuk) 0.00 0.00 0.01 77.94 Domestic Sovereign Sharia Securitoes 77.94 - IFR/PBS/T-Bills Sukuk (Islamic Fixed Rate Bond/Project Based Sukuk 55.00 - Retail Sukuk 18.41 - Private Placement 4.54 Global Sukuk BI Purchase (SKB III) 84#86Republic Of Indonesia USD1.75 Bn Global Bonds Issuance & Liability Management USD1.57bn Investor Breakdown by Region 19% 42% 23% 16% US Issuer Issuer Rating 34% 40% Format 10Y APAC 30Y Pricing Date EMEA 50% 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 Investor Breakdown by Investor Type Issue Size USD1,75 bn 3% Tenor 10year 30year Insurance/PF 27 30Y Maturity Tranche Size March 31, 2032 March 31, 2052 USD1,0 bn USD750 milion 9% ■Bariks 65% 65% Coupon (p.a.) 3.550% ■CB/SSAS Price 99.583 Yield (p.a.) Listing 3.600% 10Y 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: OM Bonds Principal Amount Accepted 4.300% 2.360% due 2023 3.375% due 2023 5.375 d. 2023 5.5/5 dac 2024 99.167 4.450% due 2024 4.125% due 2025 4.350% 1.750 due 2025 1.350% due 2027 3. 2007 for Purchase U.3.50 U5.50 US$1,448,00 US8273,55000 LIS $52,152,000 U.3.50 US $80,258.000 U.3.50 LL6.50 Proration Factor NA NA 100% 100 100% NIA 21.05% NA NIA 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 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. 85#87GS Primary Market Performance 2021 - 2022 Through Auction In 2022, average incoming bid = IDR50.52 tn/auction, while average awarded bid = IDR16.10 tn/auction 450 [IDR Trillion] Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS) 400 350 300 250 200 150 100 2.27 2.23 2.30 50 2.03 1.85 Source: Ministry of Finance 12.17 14.00 12.00 10.00 8.43 8.00 6.00 4.92 4.00 3.56 3.86 2.96 3.11 3.06 2.73 2.00 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Jan-22 Feb-22 Mar-22 86#88Ownership of IDR Tradable Government Securities (a.o Feb 2022) MUTUAL FUND INSURANCE & PENSION FUND FOREIGN 3,19% 15,22% 17.57% INDIVIDUAL 5,61% OTHERS 8,22% Description Dec-18 Dec-19 Dec-20 Dec-21 Banks* 481.33 20.32% 581.37 21.12% 1,375.57 35.54% 1,591.12 34.01% (IDR tn) 31-Mar-22 1,691.41 35.03% Govt Institutions (Bank Indonesia**) 253.47 10.70% 262.49 9.54% 454.36 11.74% 801.46 17.13% 731.62 15.15% 15,15% Govt Institution 35,03% BANK Bank Indonesia (gross) GS used for Monetary Operation Non-Banks Mutual Funds 49,82% NON-BANK Insurance Company and Pension Fund Foreign Holders 893.25 37.71% Foreign Govt's & Central Banks 163.76 6.91% Individual Others 73.07 3.09% Total 130.86 4.75 % 471.67 17.13% 1,061.86 38.57% 194.45 7.06% 81.17 2.95% 134.22 5.67% 163.32 5.93% 2,368.45 100% 2,752.74 100% 217.36 9.18% 273.21 9.93% -36.11 -1.52% 10.72 0.39% 1,633.65 68.98% 1,908.88 69.34% 118.63 5.01% 414.47 17.50% 874.88 22.60% 420.51 10.86% 2,040.83 52.72% 161.32 4.17% 542.82 14.02% 973.91 25.16% 1,220.73 26.09% 419.27 8.96% 2,286.40 48.87% 157.93 3.38% 655.24 14.00% 1,230.45 25.48% 498.83 10.33% 2,405.62 49.82% 154.25 3.19% 735.15 15.22% 891.34 19.05% 848.29 17.57% 178.31 4.61% 233.45 4.99% 226.55 4.69% 131.21 3.39% 221.41 4.73% 270.79 5.61% 231.57 3,870.76 5.98% 100% 360.47 7.70% 4,678.98 100% 397.14 8.22% 4,828.65 100% IDR 1.092.02T on January 24, 2020, foreign holders reach a record high in nominal terms. 66,66% 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 Portion of foreign ownership in the mid & long term sector (≥ 5 years). 87#89Disciplined and Advanced Debt Portfolio Management Stable Debt to GDP Ratio Over the Years Prudent Fiscal Deficit IDR Tn Government Debt / GDP (%) 1,500 10% 8,000.00 39.39% 40.73% 40.39% 45% 1,177 8% 7,000.00 40% 1,000 6,000.00 27.46% 28.34% 29.40% 29.81% 30.18% 819.86 829.56 6% 35% 500 407 442 446 852.91 362 358 4% 5,000.00 24.68% 30% - 2% 19 14 50 764.48 25% 4,000.00 810.74 746.32 3,000.00 2,000.00 1,000.00 734.85 755.12 1,931.22 2,410.01 2,780.86 3,248.93 3,612.69 4,014.80 5,221.65 6,091.85 6,222.94 4 20% -58 -69 (20)56) (66) (9135) (36) - 0% -298 15% (500) (308) (269) (341) (349) -2% -1.8% -2.2% 10% -2.6% -2.5% -2.5% -4% (1,000) 5% (956) -6% -6.1% 0% (1,500) -8% 2014 2015 2016 2017 2018 2019 2020 2021* Mar-22 2015 2016 2017 2018 2019 2020 Bond Loan Weighted Average Debt Maturity of ~8.66 Years Debt to GDP IGS Nett Loan Nett Non-Debt Surplus (Deficit] Budget --Ratio Deficit to GDP Well Diversified Across Different Currencies 9.75 9.39 9.13 8.68 8.52 8.6 8.66 8.5 8.37 % of Yearly Issuance 1% 1% 1% 1% 6% 1% 1% 4% 9% 6% 5% 5% 5% 5% 4% 4% 4% 29% 30% 27% 23% 20% 20% 59% 58% 62% 66% 70% 71% 2014 2015 2016 2017 2018 2019 2020 2021 Mar-22 2017 2018 2019 2020 2021 Mar-22 Source: Ministry of Finance IDR USD EUR JPY ■OTHER 88#90Well Balanced Maturity Profile with Strong Resilience Against External Shocks Interest Rate Risks (%) Declining Exchange Rate Risks (%) 50.0 43.4 44.6 42.6 41.3 41.0 37.9 40.0 33.5 30.0 29.45 30.0 8.9 8.7 6.6 20.0 14.8 13.7 12.1 106 106 13.2 12.2 12.1 12.1 12.2 10.7 11.4 12.2 11.9 9.8 7.6 7.4 7.6 10.0 2014 2015 2016 2017 2018 2019 2020 2021 Mar-22 0.0 2014 2015 VR Prop Non SKB VR Prop SKB 2016 2017 2018 2019 2020 2021 Mar-22 FX to GDP Ratio ■FX Proportion Debt Maturity Profile Upcoming Maturities (Next 5 Years) IDR tn 700 600 163 500 17487 175 145 400 114 144 144 300 502 109 119 56 200 366 431405 400 32 347 100 171 30025910 217 20740 11 50 3 35 32 113 11115427 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2037 N 2038 0 64 87 4.143 64 21 11124 31 3120 13328 0 76 33 69 45.0 40.4 41.0 39.3 39.6 40.1 39.66 40.0 IDR Denominated (Trilion Rp) 36.0 33.9 34.7 35.0 30.0 25.0 25.5 24.3 25.0 22.7 21.4 22.8 22.8 21.74 20.1 20.0 15.0 172 9.9 10.6 26 10.0 7.7 8.4 8.1 7.8 6.5 6.4 5.26 90 2039 2040 2041 2042 2047 w 2048 5.0 2049-2071 0.0 2014 2015 2016 2017 2018 2019 2020 2021* Mar-22 1 Year 3 Year 5 Year Source: Ministry of Finance 89#91Holders 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% Foreign Ownership of Gov't Domestic Debt Securities by Tenor 19.0% 17.6% 25.2% 37.0% 34.8% 33.5% 29.4% 29.6% 29.8% 30.0% 38.6% 46.9% 47.4% 39.3% 34.1% 35.6% 36.8% 39.0% 38.4% 37.8% 36.7% 35.8% 37.8% 39.9% 36.8% 42.0% 40.3% 39.8% 37.7% -38.6% 22.0% 25.2% 3.8% 23.8% 23.1% 18.7% 17.3% 18.4% 35.5% 34.0% 35.0% 19.0%-18.97% · 18.82% · 17.57% 23.9% 22.5% 23.4% 20.3% 21.1% 22.1% 10.3% 5.1% 1.9% 6.7% 4.0% 5.0% 4.8% 5.3% 5.1% 4.3% 2.4% 4.6% 3.0% 2.9% 4.1% 4.3% Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Jan-22 Feb-22 Mar-22 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Mar-22 >10 Foreign Holders Domestic Non -Banks Domestic Banks >2-5 10-1 Source: Ministry of Finance >5-10 >1-2 % Foreign Ownership of Total 90 90#92Strengthened Synergy Between Monetary and Fiscal Policy Background 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 = 91#93Strengthened 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 42 92#94Section 6 Monetary and Financial Factor: Credible Monetary Policy Track Record and Favourable Financial Sector BHINNEKA TUNGGAL IKA#95☐ Bank Indonesia's Policy Mix Synergy Maintaining Stability and Strengthening National Economic Recovery Strengthening exchange rate policy to maintain Rupiah stability in line with the market mechanism and economic fundamental. Normalizing liquidity policy by gradually increasing rupiah reserve requirement for conventional banks and shariah banks/business unit, effective 1st March 2022 Low interest rate until early sign of pressure in core inflation Continuing the strengthening strategy for monetary operations to reinforce the effectiveness of the monetary policy transmission 2 " 1 Monetary Policy Macro- prudential Policy BB BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA Coordinatio other Authorities 5 Controlling inflation through Inflation Control Team in national and regional level Supporting the State Budget through SBN purchases in the primary market in line with Act No. 2/2020, while maintaining macroeconomic stability Supporting national economic recovery program in cooperation with the MOF Strengthening coordination with the Government and related authorities to revive bank intermediation function Strengthening policy coordination with the Government and Financial System Stability n with Committee to maintain macroeconomic and financial system stability Accelerating foreign exchange market deepening to support rupiah exchange rate stability, while expanding the availability of hedging instruments and promoting international trade and investment. Financial Market Deepening Strengthening money market deepening by expanding underlying DNDF to boost liquidity and reinforce JISDOR as a reference for exchange rate setting in the forex market Accelerating infrastructure development, including Electronic Trading Platforms (ETP) as well as a Central Counterparty (CCP) Developing Money Market Development Blueprint 2025 Promoting inclusive and green economy and finance Source: Bank Indonesia " " Payment System Policy " Strengthening the accommodative macroprudential policy stance in 2022 to revive bank lending to the corporate sector and drive the national economic recovery, while maintaining financial system stability Offering incentives for banks disbursing financing to priority sectors and inclusive financing and/or banks achieving the Macroprudential Inclusive Financing Ratio (RPIM) target in the form of a 100bps reduction in the daily reserve requirement, effective 1st March 2022 Strengthening implementation of the RPIM, primarily through bank commitment to the RPIM target, based on the expertise and business models available Accommodative macroprudential policy stance by: " ☐ " " Relaxing the Loan / Financing-to-Value (LTV / FTV) ratio on housing loans / financing Relaxing down payment requirements on automotive loans / financing Holding the countercyclical buffer (CCB) at 0% Macroprudential Intermediation Ratio (MIR) in the 84-94% range Macroprudential Liquidity Buffer (MLB) at 6% with 6% repo flexibility, and the Sharia Macroprudential Liquidity Buffer (SMLB) at 4.5% with repo flexibility at 4.5% Relaxing credit card policy Accelerating payment system digitalization to stimulate economic recovery, particularly household consumption, while advancing an inclusive and efficient economy and finance Increasing the QRIS transaction limit from Rp5 million to Rp10 million per transaction, from 1st March 2022, to drive private consumption and accelerate the national economic recovery Extending the 0% QRIS merchant discount rate (MDR) for micro merchants until 30th June 2022 to maintain QRIS acceptance and uptake as well as industry sustainability. Strengthening and expanding electronification: Social program, e-payment for Government Increasing the number of participants, expanding the services and garnering greater acceptance of BI-FAST for more efficient transactions between banks and members of the public#96Bank Indonesia Policy Mix: April 2022 B BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA The BI Board of Governors agreed on 18th and 19th April 2022 to hold the BI 7-Day Reverse Repo Rate at 3.50%, while also maintaining the Deposit Facility (DF) rates at 2.75% and Lending Facility (LF) rates at 4.25%. % Rp Hold the BI 7-Day Reverse Repo Rate at 3.50% Strengthening exchange rate policy to maintain rupiah stability in line with market mechanisms and economic fundamentals. Ensuring adequate availability of currency fit for circulation, maintaining seamless currency distribution and prime cash services, while preparing BI-FAST implementation during the holy fasting month of Ramadan and Eid- ul-Fitr 1443H. Raising the maximum deposit limit for registered electronic money from Rp10 million to Rp20 million and the monthly transaction limit from Rp20 million to Rp40 million, effective from 1st July 2022. • Maintaining prime lending rate transparency in the banking industry with a focus on sources of operating income in the banking industry Maintaining an accommodative macroprudential policy stance by holding the CCyB at 0%, (ii) MIR in the 84- 94% range, (iii) MPLB at 6% with 6% repo flexibility and the Sharia MPLB at 4.5% with 4.5% repo flexibility. Strengthening international policy by expanding cooperation with other central banks and international organisations, promoting trade and investment in conjunction with the relevant institutions as well as ensuring the success of the six priority agendas in the Finance Track of Indonesia's G20 Presidency in 2022 in conjunction with the Ministry of Finance. Source: Bank Indonesia 95#97The Policy to Normalize Liquidity Continues Without Disrupting Liquidity in The Banking System Principles for Long Term Government Bond Purchasing by Bank Indonesia in the Primary Market Prudent Maintaining the Credibility of Monetary Policy and Maintaining Economic Stability Measured Last Resort Market Mechanism Tradable & Marketable Tradable SUN SBSN Considering the Impact on Inflation standby buyer for GOVERN Uphold Good Governance SUSTAINABLE Non-Public Goods SBN Purchases by Bank Indonesia for State Budget Financing 358.32 17.81 2021 2022* • · • Trillion IDR 400 350 300 250 . 200 150 100 50 0 The first stage of increasing the rupiah reserve requirement, coupled with the Reserve Requirement (RR) incentive since 1st March 2022, has not reduced the banking industry's ability to disburse loans/financing to the corporate sector or participate in SBN purchases to finance the State Revenue and Expenditure Budget (APBN). In March 2022, the ratio of liquid assets to deposits remained high at 32.11%, despite retreating from 32.72% one month earlier, with deposit growth recorded at 9.92% (yoy). Meanwhile, through fiscal-monetary coordination in accordance with the Joint Decree of the Minister of Finance and Governor of Bank Indonesia, effective until 31st December 2022, Bank Indonesia has continued to purchase SBN in the primary market to fund the national economic recovery as part of the State Budget in 2022 totalling Rp17.81 trillion (as of 14th April 2022) via primary auction, greenshoe options and private placement. SBN purchases by Bank Indonesia take careful consideration SBN market conditions and the impact on liquidity in the economy. into In March 2022, liquidity in the economy remained ample, as reflected by narrow money (M1) and broad money (M2) aggregates, which grew 18.68% (yoy) and 13.27% (yoy) respectively. Purchase of SBN for State Budget Financing Source: Bank Indonesia. * Data as of 12 April 2022 Source: Bank Indonesia 96#983 a 7 Assessment of Policy Rate Transmission to Prime Lending Rates in the Banking Industry Bank Indonesia published the “Assessment of Policy Rate Transmission to Prime Lending Rates in the Banking Industry" to accelerate monetary policy transmission and expand the dissemination of information to corporate and individual consumers in order to enhance governance, market discipline and It market. Key Takeaways • The prime lending rate still shows a decline, supported by a decrease in the cost of loanable funds (CoLF). The decrease mainly occurred in the regional banks. • In line with the decline in the prime lending rate and improvement in the perception of banking risk, new loan rates continues the downward trend. The decline in loan interest rates occurred in almost all bank groups, except foreign bank branch office. • Loan interest income still dominates banking operating income with an increasing share compared to the previous year. Meanwhile, the share of fee-based income is still relatively low, so banks still have room to increase their sources of income. Pursuant to OJK Regulation (POJK) No. 37/POJK.03/2019 concerning Bank Report Transparency and Publication, the PLR consists of three components, namely; i. the cost of loanable funds (COLF), incl. the cost of funds, cost of services, regulatory costs and other costs; ii. overhead costs (OHC), incl. labour costs, education and training costs, R&D costs, rental costs, promotion and marketing costs, maintenance and repair costs, fixed asset and inventory depreciation costs as well as other overhead costs; and iii. profit margin, which is determined by the respective bank for lending activity. Graph 2. Prime Lending Rates by Bank Group Prime Lending Rate and Deposit Rate Response to BI7DRR Bank Indonesia has maintained an accommodative monetary and macroprudential policy stance in order to stimulate economic growth. • • 12 10 8 Graph 3. Prime Lending Rate Performance by Component 8 6 6 Prior to the Covid-19 pandemic, from June 2019 until Feb 2020, BI lowered the BI7DRR policy rate five times by a total of 125bps from 6.00% to 4.75%. From March 2020, Bank Indonesia lowered the policy rate another four times (100bps) to a level of 3.75% in November 2020, and lower another 25 bps in Februari 2021 to 3.50%. In terms of liquidity, accommodative monetary and macroprudential policy significantly boosted liquidity in the banking industry in order to maintain financial system stability and the bank intermediation function. Graph 1 Prime Lending Rate, BI7DRR and 1 Month Term Deposit Rate Performance 9.05 8.64 8.61 5.55 5.18 5.11 5.79 3.50 Sources: Financial Services Authority, Bank Indonesia BUNN BUSH BCBA 1942 87184 5.70 330 3 1.70 JEG 2 23 1 Jan-19 Apr-19 BPD Jul-19 6L-DO Jan-20 BUMN Apr-20 Jul-20 Od-20 Jan-21 Apr-21 BUSN 1.00 4 3.61 3.36 1.15 2.95 201 2 3.18 2.57 233 0 1.95 1.47 143 LZ-IN Od-21 Jan-22 Jan-19 Feb-19 Mar-19 Apr 19 Feb-22 KCBA Spread (SBDK BIZIDAR) Deposito 1 bulan May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Spread (SBDK- Sb depo 1 bin) ***** SBOK B17 DRR 350 Nov-20 Dec-20 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct 21 Nov-21 Dec-21 Jan-22 Feb-22 97 2.82#99Stable Monetary Environment Despite Challenges Well Maintained Inflation Ensured Price Stability Strengthened Monetary Policy Framework (%) 20 20 ICPI (%, yoy) rhs 8.00 •Core (%, yoy) - lhs 19 August 2016 The New Monetary Operation Framework 7.00 LF Rate: 7.00 15 Volatile Food (%, yoy) - lhs2 6.00 BI Rate: 6.50 Administered (%, yoy) - lhs 5.00 10 10 2.34 4.00 5 H 2.03 3.00 1.81 2.00 2.06 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 Mar-22 Rupiah Exchange Rate Fared Relatively Well Compared to Peers 2022 vs 2021 (YTD) Credit Growth Profile % yoy 20.0 Jan-16 Apr-16 Jul-16 Q4-2016 Q3-2017 -9.16 15.0 -9.06.60 Q2-2018 Q1-2019 Q4-2019 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 TRY 36.53 JPY EUR KRW INR PHP MYR SGD THB IDR CNY ZAR BRL -40.0 -5.28 -5.83 -5.25 3,67 --2,535 ■point-to-point average 4.774 -245 -21197 18-Apr-22 ±3.39.7 0.77 -0.70 -0.35 -0.14 1.56 18.55 -2.04 18.60 4.96 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 Source: Reuters, Bloomberg (calculated) 10.0 5.0 0.0 -5.0 -10.0 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Total Growth Working Capital Loans Investment Loans Consumption Loans Jul-17 Jan-18 Jul-18 Jan-19 LF Rate: 4.25 BI 7Day RR Rate: 3.50 DF Rate: 2.75 Sep-21 Dec-21 וווווו Mar-22 Jul-19 Jan-20 Jul-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 7.68 I 6.03 5.58 6.65 98 Apr-22#100Regional Inflation Remains Under Control ...supported by a well maintained inflation in all regions Regional Inflation, March 2022 SUMATRA 3.11 114 Aceh 3.6 3.3 2 NATIONAL INFLATION MARCH 2022: 2.64% (yoy) Inf >4% Riau Islands 3.2 North Sumatra 3.3 Bengkulu 2.8 Riau 3.2 West Sumatra 3.2 Lampung 2.4 Babel Islands 3.9 South Sumatra 3.0 Jambi 2.8 2.49 2.03 3% <Inf≤4% 191 1.35 130 2% <Inf≤3% 200 Inf ≤2% Banten 3.0 DKI Jakarta 2.0 West Java 2.7 Central Java 2.4 East Java 3.0 Source: BPS, calculated JAVA 2.49 DI Yogyakarta 3.0 Source: Central Bureau of Statistics of Indonesia (BPS), calculated KALIMANTAN 3.37 West Kalimantan 3.1 SULAWESI 2.60 13 South Kalimantan 3.7 East Kalimantan 2.9 Central Kalimantan 4.3 North Kalimantan 4.6 100 253 1.36 Bali 2.4 2.01 West Nusa Tenggara 2.5 ER East Nusa Tenggara 2.9 BALI-NUSA TENGGARA 2.52 18 147 173 2.30 2.1 2.52 2.37 Manit 2.00 Gorontalo 1.8 North Sulawesi 1.8 Central Sulawesi 3.3 West Sulawesi 3.2 South Sulawesi 2.5 South-East Sulawesi 2.3 www MALUKU-PAPUA 2.52 Maluku 4.3 North Maluku 1.0 Papua 1.5 West Papua 2.8 99 60#1015 Strategies to Achieve the Inflation Target 2022 Target Achieving inflation at 3,0%±1% Maintaining core inflation Maintaining volatile food inflation less than 4% Controlling administered price inflation 5 Strategies Strengthening policy coordination to maintain macroeconomic stability and nurture national economic recovery momentum Mitigating the impact Controlling inflationary pressures on volatile of upside risks, including global liquidity policy normalisation and rising international commodity prices, on inflation and public purchasing power food within the 3.0-5.0% range by maintaining supply availability and orderly distribution, particularly during national religious holidays. Strategy implementation is focused on optimising the use of technology and end-to-end agricultural digitalisation, increasing connectivity and strengthening interregional cooperation Strengthening policy communication synergy to anchor public inflation expectations Strengthening coordination between the central and regional governments to control inflation through the National Coordination Meeting on Inflation Control 2022, entitled Food MSME Digitalisation for Access and Price Stability Source: Bank Indonesia 100#102YoY 15% 10% 5% 0% -5% -10% 61-uer Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Source: Financial Service Authority (OJK) Oct-19 Nov-19 Dec- Jan-20 Feb-20 YoY 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% MSMEs Feb-19. Jan-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Sep-19] Aug-19 Nov-19 Oct-19 Dec-19 Jan-20 Feb-20 Mar-20 ⚫Loan Signs of Recovery in Financial Intermediations Third-Party Fund As the economy continues its recovery, bank loans experience growth while the funding side grows at a slower pace, indicating a growing lending appetite. LOAN In February 2022, bank loans continued to grow by 6.33% (y-on-y) while TPF grew at a slower pace by 11.11% (y-on-y). Based on types of loans, bank credit grew higher than the previous year, particularly Working Capital loans with 7.57% (y-on-y) growth in February 2022, indicating that businesses are gradually back on track. Loan growth by segmentation continued to improve in February 2022, which was driven by the Micro, Small, and Medium Enterprises (MSMEs) loans growing by 8.75% (y-on-y). Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 YoY Consumption Corporation - Total 30% 25% 8.75% 6.33% 20% 5.83% 15% Mar-20 Apr-20 Jun-20 Aug-201 Sep-20 Oct-20 Nov-2 Dec-2 Jan-21 Feb-21 Mar 21 Apr-21 Jul-211 Jun-211 May-21 5.21% 10% Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 5% 0% -5% Jul-19 Aug-19 ] Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Jan-22 Feb-22 YoY 20% 11.11% 15% 10% 6.33% 5% 0% Working Capital - Investment -5% -10% Jan-19 Feb-19 Mar-19 May-19 ] Apr-19 Jun-19 Jul-19 Aug-19. Sep-19. Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-201 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar 21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 In February 2022, TPF grew slower as lending appetite started to recover, supported by Current Account and Savings which grew by 20.03% and 14.06% (y-on-y), respectively. Deposits Savings Current Account -Third-Party Fund Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20. Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 101 20.03% 14.06% 11.11% 3.28% Consumption - Total 7.57% 6.33% 5.49% 5.21%#103% 25 + 3 ~10 4 2 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 NPL Net Liquid Assets to Non-Core Deposits and Liquid Assets to Deposits remained well-above the thresholds, following banks' cautious appetite for lending. *) Nov-20 % Liquid Assets to Non-Core Deposits Liquid Assets to Deposits (rhs) % 16 9 .70 147.3 40 60 4 32.72 30 120 110 2 20 threshold LA to Deposit (rhs) = 10% 0 10 threshold LA/NCD = 50% 0 Jan-19Apr-19 Jul-19 Oct-19Jan-20Apr-20 Jul-20 Oct-20Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Source: Financial Service Authority (OJK) 2843210 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19_ Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 T Manageable Credit Risks with Ample Liquidity 25 NPL Gross 3.08 20 0.87 15 10 The banking industry is equipped with ample liquidity, strong capitalization, and manageable credit risk. Profitability is also recorded at a steady level. Banking NPL ratios remained stable and below the threshold at 3.08% gross and 0.87% net as of February 2022. A Liquidity remained ample with CAR at 25.82% and Tier-1 capital at 24.24% as of February 2022.*) Dec-21 Jan-22 Feb-22 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 CAR % Profitability of the banking industry was recorded at a steady level, reflected by stable NIM and ROA at 4.47% and 2.32% respectively in February 2022. Net Interest Margin Return on Assets Net Open Position continued to stay well below the maximum limit of 20% and was recorded at 1.45% in February 2022. Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Dec-21 Jan-22 Feb-22 102 1.45 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Feb-22 4.47 2.32 ■Tier 1 25.82 24.24#1040 1 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 2 3 Aug-19 Sep-19. Oct-19 Nov-19 Dec-19 4 % ון Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 0 IDR tn 500 400 300 200 100 Jan-19 Feb- Mar- Apr-19 Oct-19 Aug-2 Sep-20 Oct- Nov-20 Financing In February 2022, financing stood at IDR372 trillion and maintained its positive growth (2.43% y-on-y). Multi-finance Companies' Performance Continues to Improve Multi-finance companies' performance continues to improve, shown by growing financing and manageable NPF, supported by a stable gearing ratio. Gearing ratio of multi-finance companies remained stable and below the threshold with a ratio of 1.94 times in February 2022. Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Dec- Jan- -eb- Mar- Apr- May-21 Jun-21 9 60 YOY Growth (rhs) 10% 5 372 5% 4 0% 2.43% -5% 3 -10% 2 -15% 1 -20% 0 Source: Financial Service Authority (OJK) *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Feb-22 % IDR Trillion 250 200 1.94 150 100 50 0 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19. Sep-19 Oct-19_ Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 % NPF of multi-finance companies remained below the 5% threshold and was recorded at 3.25% as of February 2022. *) Jan-19 May-19 Sep-19 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Domestic Debt Multi-finance companies' exposure to foreign and domestic debt remained low despite an increase in domestic debt. *) Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21. Feb-21 Mar-21 Apr-21 May-21. Jun-21 Jul-21 Aug-21 Sep-21. Oct-21. Nov-21 Dec-21 Jan-22 Feb-22 103 Foreign Debt 3.25#105Jan-19 Feb-19 % Mar-19 Apr-19 May- Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-1 Dec- Jan- 10 0 NW 20 40 30 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Manageable Insurance and Pension Risks with Adequate Performance General insurance Life insurance Insurance and pension funds continue to improve, shown by the adequate performance and manageable risks. In line with recovering economy, insurance premium marked a total increase of IDR18 Tn (m-to-m) with General and Life insurance added premium at IDR6.1 Tn and IDR11.9 Tn respectively. In February 2022, both General Insurance and Life Insurance Investment Adequacy Ratios were steadily kept above the threshold. Nov-19 Jan-20 Mar-20 May-20 Sep-21 Nov-21 240 220 200 180 160 11.9 140 120 100 80 60 6.1 40 20 0 Jan-22 Life Insurance (Lhs) General Insurance (rhs) IDR Tn 900 400 1,500 800 323.11 350 700 300 1,200 600 250 900 500 535.72 200 400 300 200 threshold Insurance RBC (rhs)=120% 150 600 threshold Insurance RBC (Lhs)=120% 100 300 100 50 0 0 0 Life Insurance threshold Investment Adequacy Ratio= 100% General Insurance RBC of the insurance industry remained well above the minimum threshold (120%) with Life Insurance at 530.85% and General Insurance at 311.13% in January 2022. In January 2022, both insurance and pension fund investment values remained stable at Rp1,356.44 Tn and Rp314.82 Tn, respectively. Oct-2 Nov-20 Dec-2 Jan-2 Feb-2 May-2 Jun-21 Jul-21 Aug-21 Sep-2 Oct-21 Dec-19 Nov-19 Oct-1 Sep-19 Aug-19 Jul-19 Jun-19 May-19 Apr-19 Mar-19 Feb-19 Jan-19 Source: Financial Service Authority (OJK) *) provisional figures due to the relaxation on financial institutions' report to OJK because of Covid-19 Jan-19 Feb-19 Apr-19 Jul-19 Sep-19 Aug- Oct-19 Aug- Insurance -ΛΟΝ Dec- Pension Funds (rhs) IDR Tn 1373.40 400 350 318.68 300 104 200 250 Feb-2 189.19 113.6#10660 8 7 Domestic Capital Market Performance Amid Global Challenges Despite the Fed's hawkish stance, investors are still optimistic for a faster economic recovery, supported by progress of 3rd vaccination rates. 16900 Following The Fed's tightening stance and persistent conflict, the global stock market, particularly in Advanced Economies endured quite a fall to the negative zone. Stock Index Performance as of 7 April 2022 (compared to 31 Dec'21) TURK 360 25.81% BRAZ 12.79% 340 SIN INDO 9.24% 8.46% 320 MAL THAI 2.45% 1.23% 300 EU -1.57% 280 PHIL -2.76% US -4.83% 260 HKN -6.46% JPN -6.61% 240 WORLD -6.85% (% YTD) 220 S KOR -9.46% CHIN11.07% 200 -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Yield (%) 10 6 Government bond yields remained competitive with a slight increase, followed by stable rupiah as risk premium was maintained. 5 UT As of 6 April, 2022 Jan-19 Mar-19 5-yr Yield 20-yr Yield May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Source: Reuters and Ministry of Finance Composite Bond and Stock Index continued to move positively in April 2022, reflecting public confidence in the market. Comp Bond Index Comp Stock Index (rhs) 7210.83 7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 Jan-19 Apr-19Jul-190ct-19Jan-20Apr-20Jul-200ct-20Jan-21Apr-21Jul-21Oct-21Jan-22 Apr-22 Net asset value (NAV) of equity mutual funds was stable with low volatility, showing high optimism in the capital market. NAV Equity Mutual Funds 10-yr Yield IDR Tn USD/IDR IDR (rhs) 700 18,000 600 14,000 500 400 10,000 300 6,000 200 100 2,000 0 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 As of 8 April, 2022 Apr-20 May-20 Jun-20 Jul-20 02-1hr Aug-20 Aug-20 Sep-20 Oct-20 07-120 Nov-20 NOV-20 Sep-20 JCI (rhs) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 105#10780 Domestic Capital Market Performance (continued) Several capital market indicators still show a favorable performance and remain stable. 10900 Non-resident Investors booked a total of Net Buy IDR12.32 trillion and YTD Net Sell IDRO.34 trillion in the capital market as of 8 April 2022. Total of securities issuance reached IDR67.66Tn (YTD) as of 12 April 2022, indicating maintained trust to economic recovery. 60 40 20 0 -20 -40 -60 -80 -100 -120 -140 Jan-19 ■Gov't Debt Securities Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 ■Equity May-21 Jul-21 Sep-21 IDR Tn ΠΙΡΟ Rights Issue Corporate Bond & Sukuk 160 5.47 140 120 100 80 6.85 60 40 20 42.49 17.26 7.92 Nov-21 Jan-22 Mar-22 Apr-22 0 2016 2017 2018 2019 2020 2021 2022* Capital Market Investors continued to increase with a total of 8.39 million investors as of Mar-22 or growing 73% (y-on-y). 3.88 2.48 1.62 1.12 2017 2018 2019 Source: Source: Financial Service Authority, KSEI 7.86 8.1 8.39 7.49 7.15 6.76 6.43 6.1 2020 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 106#108IDR tn 40 1253125050 Jan-19 Feb-19 Mar-19 Apr-19. May- Number of Investors Jun-19 Jul-19 Aug-19. Sep-19 Oct-19 Nov-19 Dec-19 -eb-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Number of Issuers Jan-2 Feb-21 Mar-2 Apr-21 May-21 Jun-21 Outstanding Loan Manageable NPL within Fintech Intermediation Peer to Peer Lending (P2PL) Fintech intermediation grows with manageable NPL and Securities Crowdfunding fundraising continues to increase. LOAN Outstanding loan of P2PL Fintech continued to increase, which was recorded at IDR34.6 Trillion or growing by 104% (y-on-y) as of Feb'22. In February 2022, P2PL Non-Performing Ratio decreased to 2.35% from 2.52% in Jan'22. YOY Growth г 200% 34.6 10% - 150% 9% 104% 8% 100% 7% 6% - 50% 5% 4% -0% 3% -50% 2% 1% -100% 0% Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Total number of investors and issuers in Securities Crowdfunding continued to increase and stood at 107,118 and 224 as of 12 April 2022, respectively. Continuing the positive trend, in April 2022, the total value of SCF fundraising grew by IDR76.96 billion. Feb-20 600 120,000 490.15 413.19 500 100,000 80,000 107,118 400 60,000 300 184.90 93,777 40,000 200 1,380 5,063 51,414 64.15 20,000 100 14 49 6.47 127 195 224 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 107 Source: Financial Service Authority (OJK) Mar-20 Apr-20 Apr-20 May-20 May-20 Jun-20 Jun-20 Jul-20 התנכלת Aug-20 oz-8px Sep-20 ■Total Fundraising Sep-20 Oct-20 הכנ-לה Nov-20 Nov-20 Dec-20 Jan-21 Mar-21 Apr-21 - May-21 Jun-21 IZ-unc Jul-21 המולד Aug-21 TZ-8 Sep-21 Oct-21 IZ-120 Nov-21 Dec-21 Jan-22 Feb-22 Peer to Peer NPL Ratio 2.35%#109Five OJK Priority Policies in 2022 Enhancing The Role of the Financial Services Sector in the Context of National Economic Recovery Increasing Preparedness of the Financial Services Sector for Policy Normalization in Advanced Economies and the Domestic Level OJK'S Policy Priorities 2022 Developing a Sustainable Financing Scheme in the Financial Services Industry to Boost the Development of A New Economy, prioritizing Green Economy Strengthening Digital Transformation Policy in The Financial Services Sector Enhancing Financial Access of All Segments of Society, particularly MSMEs and Improving Financial Literacy as Part of Strengthening Consumer Protection 108#110The 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 Sharia 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) 109#111Indonesian 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 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 2024 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 110#112Loan 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 POJK 48/2020 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) 111#113Digital 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 Outsourcing Platform Sharing Finance & Investment 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 112#114Bank Indonesia's Comprehensive Financial Deepening Program Acceleration of Money Market Deepening in 2022.. 3 Key Initiatives Blueprint for Money Market Development 2025 ETP Matching Implementation of ETP Matching for Spot Market Instrument expansions: Repo and DNDF Repo Expansion of Repo transaction participant Expansion of underlying Repo • Development of efficient pricing Repo rate " Strengthening treasury certification and market conduct • Utilization of Mini GMRA Syariah * Development of Securities Lending and Borrowing (SLB) Promote FMI Digialization & Strengthening FMI Trading Venue/BI-ETP Central Counterparty BI-5555 BI-RTGS Trade Repository Improving the Effectiveness of Monetary Policy Transmission Repo IndONIA and JIBOR Overnight Index Swap DNDF LCS Develop Economic Financing Sources and Risk Management Long-Term Hedging Instrument Sustainability dan Green Financing Retail Investor Asset Securitization Focus 2021-2022 DNDF Expansion of DNDF transaction participant • Efforts to balance supply-demand • Development of currency and DNDF tenors variations Strengthening JISDOR as a credible DNDF fixing rate Other Instrument Overnight Index Swap and IRS Long Term Hedging Instrument + Local Currency Settlement Source: Bank Indonesia 113#115Bank Indonesia's Continue to Expand Payment System Digitalization in 2022 ..to accelerate integration of the digital economic and financial ecosystem, including financial and economic inclusion DIGITALIZATION TREND 1 FASTER DIGITAL BANKING TRANSFORMATION 2 GREATER COMPETITION AND COLLABORATION [BANK-FINTECH) 3 RAPID E-COMMERCE INNOVATION 2021 & 2022 : RECOVERY AND REFORM PAYMENT SYSTEM AND RUPIAH CURRENCY MANAGEMENT (SPPUR) POLICY IN 2021 SUPPORTING NATIONAL ECONOMIC RECOVERY THROUGH A NON-CASH PAYMENT SYSTEM POLICY SPPUR POLICY DIRECTIONS FOR 2022 PAYMENT SYSTEM POLICY FOR A HEALTHY, COMPETITIVE AND INNOVATIVE PAYMENT SYSTEM INDUSTRY REGULATORY REFORM LICENSING AND APPROVAL SLA PAYMENT SYSTEM SURVEILLANCE ELECTRONIFICATION: • TP200 • GAP 4.0 MUFF • MULTIMODE INTEGRATION 1 ELECTRONIFICATION SOCIAL ASSISTANCE (BANSOS) ELECTRONIFICATION IMPROVEMENT WITH G2P 4.0 2 STRENGTHENING ETP WITH TP2DD ENCOURAGING THE INCLUSIVE AND EFFICIENT DIGITAL ECONOMY AND FINANCE 3 EXPANDING ELECTRONIFICATION IN THE TRANSPORTATION SECTOR PUR 1 RUPIAH CURRENCY MANAGEMENT DIGITALIZATION IN BANKING INDUSTRY Source: Bank Indonesia ENSURING THE AVAILIBILTY OF CASH-IN-CIRCULATION FOR ECONOMIC REACTIVATION 3 RUPIAH DIGITAL DEVELOPMENT 5 RUPIAH CURRENCY AVAILIBILITY SAFE, EFFICIENT AND REASONABLE MARKET PRACTICES IN PAYMENT SYSTEM IMPLEMENTATION PAYMENT SYSTEM PRICE SCHEME POLYCY CYBER SECURITY AND RESILIENCE AML CTF COMPLIANCE THE GI INTEGRATED, INTERCONNECTED, INTEROPERABLEL SAFE, AND RELIABLE INFRASTRUCTURE THROUGH: QRIS DATA. OPTIMIZATION BI-PAST THE AVAILIBILITY & RELIABILITY SNAP OF BANK INDONESIA PAYMENT SYSTEM COORDINATION AND SYNERGY 114#116Section 7 Commitment to Sustainability and Preserving the Environment BHINNEKA TUNGGAL IKA#117Climate Change Risk on Indonesia Indonesia is classified as a country that is vulnerable to the impact of climate change Very Wulnerable Vulnerable Intermediate Less Vulnerable Least Vulnerable Unrated Sovereigns Source Standard and Poor's 2014 RISKS OF CLIMATE CHANGE 0 ન Indonesia is a country that is very vulnerable to climate change Indonesia is an archipelagic country WITH >17,000 islands and is vulnerable to climate change risks such as the rise of sea level From 2010-2018, national GHG emissions experienced an increasing trend of around 4.3% per year. From 1981-2018, Indonesia experienced increasing temperature of 0.03 °C per year Sumber Data: KLHK (2020), data diolah Indonesia experiences a sea level rise of 0.8-1.2 cm/year, while around 65% of the population lives in coastal areas Source: BMKG (2020) Source: Bappenas (2021) 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. HEALTH QUALITY DECREASE Floods can cause the spread of vector-borne diseases and death from drowning. An increase in temperature can cause death from heat stroke. FOOD SCARCITY Changes in the production of biomes and ecosystems can lead to food scarcity for all living things. 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 MARINE ECOSYSTEM DAMAGE Rising sea surface temperatures cause the extinction of coral reefs, seaweed, mangroves, some biodiversity and marine ecosystems. Source: Ministry of Finance 116#118Global 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- 72 02 Adapt to protect communities century and keep 1.5 degrees within reach and natural habitats protect and restore ecosystems coal ⚫ accelerate the phase-out of ⚫ curtail deforestation speed up the switch build defences, 03 Mobilise finance ⚫developed countries mobilise at least $100bn in climate finance per year by 2020. •International 04 Work together to deliver ⚫ finalise the Paris Rulebook 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 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 117#119GHG emissions Net Zero Emission (NZE) BUSINESS AS USUAL NET-ZERO 2010 2020 2030 2040 2050 2060 2000 2000 2090 2100 Source: World Resource Institute لبليليلا NET ZERO EMISSIONS Net Zero Emission is a more ambitious Long Term Strategy to keep the global temperature rate below 1.5 degrees. 1. 10 Key Solutions to Achieve NZE 2050 PHASE OUT coal plants 6. INCREASE public transport Emissions Reduction 2. Gross Emissions Net Emissions Carbon Removal 3. 4. DECARBONIZE Cement, stel & plastics INVEST in clean energy & efficiency RETROFIT buildings 7. * 8. 000 9. 101 DECARBONIZE aviation and shipping HALT deforestation & RESTORE degraded lands REDUCE food loss and waste 5. SHIFT to electric vehicles 10. EAT more plants & less meat 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 LMNL COP21-CMP11 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 118#120Indonesia'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. 33,3% of global emissions Source: Ministry of Finance 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. 119#121The 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 * Long-Term Strategy for Low Carbon and Climate Resilience 2060 Mandate from: Paris Agreement Article. 4.19 • Dec. 1/CP.21 Para 35 Policy Strengthening and Implementation Capacity Climate Technology Finance Development and Building Transfer LCCP Scenario: Peak emission 5 sector in 2030 = 540 Mton CO2e • Net-Sink FOLU in 2030 • Net Zero Emission in 2060 or sooner Carbon Trade Stated in: Carbon • First NDC (2016) Carbon Tax Pricing . • Updated NDC (2021) (initial rate: Rp30/Kg CO2e) Climate Resilience Social Economic Resilience 2 Resilience and 3 Ecosystem and Livelihood Landscape Resilience ADAPTATION Toward Net Zero Emission 2060 12 110#122Commitment 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 13 14 PAAT JUDGE PERTATION 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 Development Plan into the National 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 121#123Climate 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) •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 Technical Line Ministries & Agencies " Implementing role in climate programs and climate budget Implementing role in climate policy and targets 122#124Commitment 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 에 CLIMATE CHANGE AGENDA NATIONAL AND GLOBAL 13 PENANGANGAN PERUBAHAN IKLIM Preparation of fiscal instruments related to Carbon Tax and Carbon Trading Nationally Determined Contribution (NDC) SDGs 13: Climate Action updating Mitigation Fiscal Framework 300-04 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 123#125National Climate Financing GEI SONUSE 9065-0704 13 PENANGANGAN PERUBAHAN IKLIM NET ZERO CO, EMISSIONS 2050 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 • 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. 124#126The 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. 125#127State Expenditure for Climate Change the average climate change budget allocation in the 2018-2020 State Budget is IDR102.65 trillion per year the average mitigation and co-benefit budget reached the average adaptation budget reaches IDR 40.4 trillion IDR 62.7 trillion per year per year IDR trillion 140.00 6.0% 6.5% 4.0% 120.00 2.8% 5.5% 48.64 100.00 4.5% 80.00 3.5% 39.20 60.00 2.5% 33.30 40.00 20.00 83.83 1.5% 58.46 44.51 0.5% -0.5% 2018 2019 2020 • Around 88% is used to finance green infrastructure. • Approximately 12% is used to finance supporting activities such as regulations and policies, R&D, capacity building, and community empowerment. • The share of the climate change budget in the APBN has a downward trend. It is necessary to strengthen climate change commitments in the work plans of the Ministries/Agencies in the future. Waste, 4.94% IPPU, 0.02% Composition of the Climate Change Mitigation Budget by sector Energy and Transportati on, 83.93% Source: Ministry of Finance, calculated Alokasi Anggaran Alokasi Anggaran Adaptasi (LHS) Alokasi Anggaran Alokasi Anggaran Mitigasi & Co-Benefit (LHS) Porsi dalam APBN (RHS) Agriculture, 6.97% Forestry and Non- Infrastructure LULUCF, 11.9% 4.14% Composition of Climate Change Budget by Type of Output Infrastructure 88.1% 126 (%)#128Role of The Ministry of Finance in Mobilizing Funds From Non-State Budget GREEN CLIMATE FUND SDG Indonesia One bpdlh Ingungen • 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 127#129GCF Approved Indonesian Projects/Programs GCF Readiness 1 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 VSMi Result-based Payment UN 3 (RBP) REDD+ Indonesia DP (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 5 THE WORLD BANK ■ GCF - Loan ■GCF Reimbursable Grant ■GCF - Grant 310 Climate Investor One (CIO) Funding Scheme (in million USD) 100 26.5 FMO Entrepreneurial Development Bank Global Subnational Climate Finance (SnCF) Funding Scheme (in million USD) - GCF - Reimbursable Grant ■ Co-Financing - Development Fund (Grant) ■ Co-Financing - 18.5 150 9.5 IUCN PEGASUS 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 128#130Achievements of SDG Indonesia One Achievement of SDG Indonesia One Quarter 1 2021 Blended Finance Project (Indicative) 19 Projects consists of 4 financing projects and 15 project development activities Ecosystem Enabler 9 Activities Consists of capacity building activities and sharing sessions Funds Mobilization USD791 m Support for grants, de- risking and loans as stated in the agreement with the donor Drinking. Water, 5% Sectors Supports Renewable Energy,... Indonesian SDG Performance One had been supporting the following SDGs Target On-Going Programs Solar Rooftop Program Urban Infrastructure Program 6 DAN SANITASI Disaster Area Rehabilitation Program 9 Sustainability Promotor # Technical Assistance on Green Finance PLN Facility PERTAMINA Technical Assistance on Global Green Bond Issuance Clean Water Program Renewable Energy Program Source: Ministry of Finance Financing, 21% Grants for TA, 79% ENERGI BERSIH DAN TERJANGKAU 13 PENANGANGAN PERUBAHAN IKLIM 17 KEMITRAAN UNTUK MENCAPAI TUJUAN 129#131Indonesia 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 na 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) H 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 130#132Funding 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. 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 CCFF bpdlh insungentido GREEN CLIMATE FUND SDG Indonesia One PISP 131#133Recent 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 Non-ministries Map current spending on climate activities from Financing Needs Financing Gaps Climate Fiscal Strategy Map next- decade need for climate finance. Identify total finance gap for all (public 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 b. Carbon Pricing private sector. 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 132#134Green 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. • Corporate that still use non-renewable energy • Fossil fuel share will be decrese, but the magnitude not recessarily reduced Renewable energy share will increase and dominate the energy mix. a) Upgrading technology to clean technology b) Use of CCS (Carbon Capture Storage); 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 1 Policy - Compensation & Incentives Clean Energy Acquisition Incentives to companies that will conduct R&D and invest in clean/renewable energy (hydrogen, hydro, PLTS, etc.) 2 Energy Transition Mechanism (Coal-fired PP Early Retirement) Compensation for early retirement of dirty/non- renewable energy plants (PLTU) 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 tilization of 5 ean/renewable energy 133#135Phasing Out Coal Scenario 120 100 80 Skenario Zero Carbon 2060 (%) 1 7 9 8 29 45 50 53 8 60 40 。。 20 68 62 59 24 11 0 2020 2045 2050 PLTU 2025 2030 2040 PLTGU Nuklir ■ PLTA PLTP EBT Lain PLTS + PLTB Skenario Zero Carbon 2060 (TWh) 1800 1600 1400 1200 1000 800 600 400 200 0 2020 2025 2030 PLTU PLTGU Nuklir ■ PLTA 2040 2045 2050 2060 2060 PLTP EBT Lain PLTS + PLTB 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 134#136Roadmap Moving Towards Decarbonization and Coal Phase Out REPLACEMENT OF COAL & GAS PLANT PLTU BY PLT EBT BASELOAD 1,1 GW ↑ RETIREMENT SUBCRITICAL STAGE II (9 GW) RETIREMENT ULTRA SUPERCRITICAL STAGE I (24 GW) RETIREMENT ULTRA SUPERCRITICAL FINAL (5 GW) 2021 2025 2030 2035 2040 2045 2050 2055 2060 RETIREMENT SUBCRITICAL STAGE I (1 GW) RETIREMENT PLTU SUPERCRITICAL (10 GW) RETIREMENT ULTRA SUPERCRITICAL PROGRESSIVELY STARTING 2045 - 2056 1. Initial phase out until 2025 by replacing diesel plants and PLTGU with RNE Plants. 2. 2nd phase out in 2030 by retiring PLTU operations outside Java. 3. 3rd phase out in 2035 by retiring FTP-1 Power Plants. 4. 4th phase out in 2040 to 2056 by retiring all supercritical and ultra supercritical IPP. Source: Ministry of Finance Source: PT PLN (2021) 135#137Carbon Pricing or Carbon Economic Value (NEK) is a part of a comprehensive policy package for climate change mitigation Emission Trading System First Period End of Period Gra DY anak and Entity B have the same Emission Allocation allocation Certificate A 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 Entity A at the beginning of the period Emission Offset 02. Non-trading instruments, consists of 2 types: 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 B C Emission Reduction Certificate Initial Emission Final Emission Emission Obtained Carbon Tax Result-Based Payment A has an allocation surplus that can be sold to B B Euals E-lal B is a business entity that is subject to a cap C is a business entity that is not subject to a cap Carbon Content GRK Emitting Activities Non-Trading No carbon rights transfer 13 16#138Carbon tax is one of the instruments of Carbon Economic Value (NEK) OBJECTIVES 1 CHANGE BEHAVIOR Aims to change the behavior of economic actors to sw tcn to cw-carbor green economic activities. 2 SUPPORTS EMISSION REDUCTION Support GHG emission reduction targets in the med um and org term. 3 ENCOURAGE INNOVATION AND INVESTMENT Encouraging carbon markets develoomert, technologica innovators, and investments that are more efficent, low-carbon, and environmentaly frendy. PRINCIPLES 1 JUST Based on the polluters-pay-principle. 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. 13 7 ✓#139The legal basis for the carbon tax has been established, while derivative regulations are being drafted Law no. 7/2021 on the Harmonization of Tax Regulations - Article 13 Key Provisions: • • • • Imposition: imposed on carbon emissions that harm the environment. Directions for carbon tax imposition: pay attention to the carbon market roadmap and/or the carbon tax roadmap that includes a carbon emission reduction strategy, priority sector targets, alignment with new and renewable energy development and alignment between various other policies. The principle of carbon tax: the principle of just and affordability by considering 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). The utilization of state revenues from the Carbon Tax is carried out through the State Budget mechanism. It can be used, among others, to control climate change, provide social assistance to poor households affected by carbon taxes, subsidize renewable energy, and others. Taxpayers participating in carbon emission trading can be granted a carbon tax deduction. Enforcement of the carbon tax: effective on April 1, 2022, which was first imposed on an agency operating in the coal-fired power plant sector with a cap and tax scheme in line with the implementation of the carbon market, which has already been implemented starting in the coal- fired power plant sector. Presidential Regulation no. 98/2021 concerning the NEK Implementation - Article 58 Key Provisions: • • Carbon levies are defined as state levies both at the central and local levels, based on carbon content and/or potential carbon emissions and/or total carbon emissions and/or performance of Mitigation Actions. Furthermore, the arrangement for its implementation is carried out in accordance with the provisions of the laws. Thus, carbon levies can be in the form of existing state levies (e.g. Motor Vehicle Tax, Fuel Tax, PPnBM) and other levies that will be applied (e.g. the imposition of a Carbon Tax). Implementing Regulations being Developed: 1. MoF Reg of Carbon Tax Tariff and imposition basis 2. MoF Reg of Carbon Tax Imposition Procedures and Mechanisms 3. GR of Carbon Tax Roadmap 138#140The carbon tax roadmap is designed for a just and affordable principle 2021: • • Enactment of the Presidential Regulation on Carbon Economic Value Enactment of the HPP Law, with one of its clauses being a carbon tax • Development of a technical mechanism for Carbon Tax and Carbon Exchange • Piloting of carbon trading in the power sector by the Ministry of Energy and Mineral Resources with an average price of IDR • 30,000/tCO2e Evaluation of the implementation of carbon trading piloting in the power sector by the Ministry of Energy and Mineral Resources 2 2022 . • Synchronization of Cap & Trade and Cap & Tax of the Electricity Sub Sector Determination of the cap for the coal power generation sector by the Ministry of Energy and Mineral Resources Limited application of carbon tax (cap & tax) to coal-fired power plants at a rate of IDR30,000/tCO2e Setting up a carbon trading support MRV System (SRN). Preparation of carbon trading technical regulations (KLHK) 2025: 3 Full implementation of carbon trading via carbon exchange Expansion of the Cap & Trade and Cap & Tax sectors gradually, in accordance with the readiness of the sectors. The carbon tax rate will be evaluated periodically and set higher or equal to the carbon price in the carbon market 139#141Indonesia's Green Project Priority Sector Indonesia realizes that investment in green and sustainable infrastructure infrastructure is becoming increasingly important in post-pandemic. ☐ 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: • . Urban Transport, and Waste Management 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.. ☐ Additionally, GOI also initiate the development of ESG framework to be implemented to projects which involve private financing and at the same time obtain government supports. Source: Ministry of Finance PPP Focused Sectors 2020-2024 ZHAN Water and Sanitation Housing * Urban Transport Gas Distribution M Health Facility Waste Management Ongoing Initiative on Sustainable Infrastructure: ESG Implementation ■ ESG aspects will be applied on the Government Support (GS) Product for Infrastructure Projects ■ The scope of Implementation are: 1. Initial stage: Govt. Support for infrastructure projects through the Public Private Partnership (PPP) scheme; 2. Further staging: Govt. Support for infrastructure projects for non-PPP projects which will be determined later; and ■ The development of ESG Framework 140#142The 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. 141#143Fiscal Incentives Rp TAX: Tax Holiday Income Tax Facility VAT Facility Import Tax Facility Property Tax Several tax incentives to promote green private investment. Instruments 100% tax discount for Up to 20 years depends on the amount of investment for 17 pioneer industries. Tax Allowance for geothermal businesses, renewable energy generators, and bioenergy industries. The exemption of article 22 income tax on imported goods for geothermal business activities. VAT exemption on imported goods for geothermal activities. Import tax exemption on geothermal activities. Fiscal Transfer Strengthening the capacity of sub-national governments in tackling climate change. Profit Sharing Fund on Natural Resources (DBH SDA) DBH SDA Forestry DBH SDA Geothermal Special Allocation Fund for Physical Development (DAK Fisik): • DAK Fisik Agriculture & Irrigation Development • DAK Fisik Environment Development DAK Fisik Forestry Development • DAK Fisik Marine & Fisheries Development Non Physical Special Allocation Fund (DAK Non Fisik) DAK Non Fisik for Waste Management (for tipping fee support) Incentive Fund (DID) • Property tax deduction exploration stage. up to 100% for DID on Waste Management Source: Ministry of Finance 142#144Fiscal, 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) QJ 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 143#145Sustainable Finance Initiatives Ex Br A www.Y OK B 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) OFPRICAN RITA (3551-257951 MATHE 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 Market Infrastructure Development of Sustainable Finance Information Hub SUSTAINABLE FINANCE INDONESIA Human Resources Non- Government Support Coordination among related Ministries/ Institutions • • • 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 144#146OJK'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. 145#147Urgency 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) 146#148Green 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) 147#149Innovative Financing: Sovereign Green Sukuk and SDGs Bond Sovereign Green Sukuk and SDG Bond No Issuance Value Green Sukuk Financed Sector Allocation (2018-2020) (Domestic and Global) 81% 62% 49% 1 Global Green Sukuk (Mar 2018) USD 1,25 billion 2 Global Green Sukuk (Feb 2019) USD 750 million 8% 27% 17% 11% 6% 9% 11% 7% 7% 5% 3 Green Sukuk Retail (Nov 2019) IDR 1,46 trillion 4 Global Green Sukuk (Jun 2020) USD 750 million Renewable Energy 5 Green Sukuk Retail (Nov 2020) IDR 5,42 trillion Energy efficiency Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction Sustainable Transport 2018 2019 2020 Waste and Waste to Energy Management 6 Global Green Sukuk (Jun 2021) USD 750 million 7 SDG Bond (Sep 2021) EUR 500 million SDGs Financing Needs in Indonesia In USD Billion, 2020-2030 8 Green Sukuk Retail (Nov 2021) IDR 5,00 trillion • Sovereign green sukuk is Indonesia's main financing instrument for climate actions. . • Total global green sukuk financing: USD 3.5 billion • • Rol issued its debut SDG Bond in September 2021, which was also the first issuance of sovereign conventional SDG bond in Asia. Source: Ministry of Finance 759 668 588 517 • Total green sukuk retail financing: IDR 11.88 trillion 453 396 400 Green sukuk has financed various projects in 5 sectors and mostly for transportation projects. 147 302 3:00 261 404 39% 227 372 192 347 316 200 247 267 291 100 17 168 226 206 8:00 Est. SDGs Financing Distribution In USD Billion, 2020-2030 Non-Government Government 4,710 700 1:00 44% 3,030 500 56% B1% BALL High 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 BAU High 148 Sour: APPEALS, SOR, 2008#150Republic of Indonesia Sustainable Development Goals (SDG BOND) EUR500 Million Issuer Republic of Indonesia Issuer Rating Format Moody's: Baa2 (Stable) / S&P: BBB (Negative) / Fitch: BBB (Stable) SEC-Registered September 23, 2021 Settlement Date 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 $600 million Maturity July 28, 2031 September 23, 2061 Coupon (p.a.) 2.150% 3.200% March 23, 2034 1.300% Reoffer Yield Reoffer Price Use of Proceeds Listing 2.180% 99.734% 3.280% 98.225% Repurchase certain of its outstanding global bonds pursuant to its tender offer announced on September 13, 2021 1.351% 99.419% Invest in projects that may qualify as Eligible SDGs Expenditures SGX-ST and Frankfurt Stock Exchange Transaction Highlights ■ Debut Sustainable Development Goals (SDG) EUR issuance by an Asian Sovereign ■ Debut Liability Management transaction and Debut US$ 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 149 149#151Indonesia'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 150#152Indonesia'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- Large Scale Based Power Source: Green Sukuk Allocation and Impact Report - May 2021 Electric Light Green Green Building Hydropower Plants > 30 MW Nuclear Assets 151#153Indonesia 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* GOOD HEALTH CLEAN WATER AFFORDABLE AND DECENT WORK AND INDUSTRY, INNOVATION 11 SUSTAINABLECITIES AND WELL-BEING AND SANITATION CLEAN ENERGY ECONOMIC GROWTH AND INFRASTRUCTURE AND COMMUNITIES 12 RESPONSIBLE CONSUMPTION Source: Indonesia SDG Government Securities Framework AND PRODUCTION QO 13 CLIMATE ACTION 14 LIFE BELOW WATER 15 LIFE DN LAND 152#154Indonesia 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 Socioeconomic Advancement and Empowerment Access to Essential Services Food Security and Sustainable Food Systems Affordable Basic Infrastructure Alignment with the Rol's 2030 SDGs Target NO 1 POVERTY GURLION 2 FLIEL 4 5 舞團 EDUCAT GENDER EQUALITY CLEAN WATER AND SANITATION 8 DECENT WORK AND 9 ECONOMIC GROWTH 555 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 INDUSTRY, INNOVATION AND INFRASTRUCTURE 10 REDUCED INEQUALITIES 11 SUSTAINABLE CITIES AND COMMUNITIES ID Nuclear Assets 153 153#155Overview 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 154#156External 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 Second Opinion கர் 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". ban dann von ka man ald J..... LA PAZ Awwww 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 IISD 155#157Indonesia'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 four sovereign global green sukuk, consecutively in March 2018, February 2019 and June 2020 & 2021, with the total amount of USD 3.5 Billion Global Green Sukuk Proceeds Allocation by Sector (in percentage) 83% 2021 Issuance USD 750 million USD 750 million 2020 Issuance 2019 Issuance USD 750 million 2018 Issuance USD 1.25 billion 2018 2019 2020 In 2019-2020, the Government of Indonesia issued two retail green sukuk in November 2019 and November 2020, with the total amount of USD 490.1 million (IDR 6.86 trillion) Use of Proceeds 2020 Global Green Sukuk Issuance The 2020 Global Green Sukuk Issuance comprised of 0.08% and 49% financing new projects 51% refinancing existing projects 7.21% 10.77% 49.51% 33.02% Sustainable Transport Waste and Waste to Energy Management Resilience to Climate Change for Highly Vulnerable Areas and Sectors/ Disaster Risk Reduction Project Owner Financing of 2020 new projects 2 Refinancing of Ministry of Public 2018 projects Works and Housing Ministry of Transportation Ministry of Agriculture Note: 55% 48% 9% 11% 7% 7% 27% 22% 8% 8% 11% 5% Renewable Energy Energy efficiency Resilience to Climate Change for Highly Vulnerable Areas and Sustainable Transport Sectors/Disaster Risk Reduction Waste and Waste to Energy Management Cumulative 2018, 2019, and 2020 Global Green Sukuk Issuance Allocation by Sector 11% 5% Renewable Energy Energy efficiency 41%: Sustainable Transport Allocation by Activity 43% Adaptation 0 36% Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction 6% Waste and Waste to Energy Management 57% Mitigation Information extracted from Green Sukuk Issuance Allocation and Impact Report (May 2021), 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 2020 budget year of IDR 14,400 per USD. Source: Ministry of Finance 156#158Indonesia's Green Initiatives: Projected Environmental and Social Impacts Environmental Benefits Arising from 2020 Global Green Sukuk Projected Environmental and Social Impacts For 2020 Global Green Sukuk Sustainable Transport • • Expected to: Reduce 1,415,718 tCO2e of GHG emission Reduce travel time by 30 minutes on average Increase passengers-km by 1.3 times (over 2.5 billion passengers are expected to shift from private mode of transportation) Resilience to Climate Change for Highly Vulnerable Areas and Sectors/Disaster Risk Reduction • Expected to: Fulfill raw water supply needs for drinking water of 275.5 m³ Protect 1,920.4 Ha of areas from flooding Rehabilitate 134,700 Ha of tertiary irrigation network Develop 1,071 units of other water source Benefit 1,236,000 people Create and revitalize 12,000 Ha of rice field Waste to Energy and Waste Management Expected to 2,059,094 households benefit due to the improved waste management SUSTAINABLE DEVELOPMENT GOALS AFFORDABLE AND CLEAN ENERGY 8 DECENT WORK AND 9 INDUSTRY, INNOVATION 11 SUSTAINABLE CITIES AND COMMUNITIES 13 CLIMATE ACTION ECONOMIC GROWTH 157#159Tangible Results from Indonesia's Green Sukuk Initiatives Green Projects Refinanced and Financed with Proceeds from Indonesia's Green Sukuk Issuance in 2020 Proceeds from Indonesia's Green Sukuk Initiative has been successfully deployed to a range of eligible Green projects Locations Amount Committed to Finance 2020 New Projects Amount Committed to Refinance 2020 Projects Impacts Social / SDGs Project Examples Financed/Refinanced Note: Resilience to Climate Change Across the country Sustainable Transport Jakarta, Java, Banten Waste and Waste to Energy Management All provinces except Banten USD 371.3 million USD 247.7 million 10 Management of Dam, Lake and Other Water Retention Facilities (Financing) Development of water retention units, i.e. water retention basins (embung), dams, and lakes in 22 provinces across Indonesia. These projects provided solutions for the local community to access the groundwater. Locations: 22 provinces across Indonesia Preservation Expansion and of Agricultural Lands (Refinancing) Implementation of rice-field opening and revitalization project in areas highly vulnerable to climate change impacts which may threaten food security. Locations: Potangoan Village of Buol Regency in Central Sulawesi *Micro-hydro is of <100 kW and mini-hydro is of 100 kW-10 MW USD 0.6 million USD 54.1 million 13 CA of Railway Development and Management Transport and Supporting Facilities (Refinancing) Upgrade of South Line Java Railways Network from single to double track connecting Cirebon City in West Java Province to Jombang Regency in East Java Province. The upgrade of double-track lines becomes a significant part in the effort to improve the role and efficiency of the railroad mode in Java, minimizing the transport burden of road networks. Furthermore, the goal is to improve interregional connectivity to reduce the regional disparity. USD 80.8 million AB Supervision and Development of Settlement Sanitation (Refinancing) • While municipal solid waste management focuses to reduce number of waste disposed to landfill by applying 3R principles, the Ministry of Public Works and Housing priorities to develop regional landfill for 3-4 ciities, and improve the carrying capacity and management from open dumping to sanitary landfills Locations: All provinces except Banten Note: Information extracted from Green Sukuk Issuance Allocation and Impact Report (May 2021), 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 2020 budget year of IDR 14,400 per USD. Source: Ministry of Finance 158#160Government 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 (credit guarantee and business viability guarantee) and Geothermal Fund Facility (PISP Fund). Several guarantees has been provided to renewable energy power plant construction and Power Purchase Agreement (PPA). PISP funds (and its co-finance), can be used for geothermal development in the exploration, exploitation, and development stages, and are eligible for Government Drilling, SOE Drilling/Public Window, and Private Drilling/Private Window. PISP Fund Exploration Financing Facilities PISP Co-financing (MOF Regulation 62/2017) Goal Fund Manager Total Funds Fund Distribution Main feature Financing exploration, exploitation and PLTP PT Sarana Multi Infrastruktur (SMI) IDR 3,1 Trillion (revolving fund) Loans, capital injections, and data provisions ■ De-risking facility for exploration stage ■ Minister of Finance's Assignment Letter (SK) to PT SMI to finance exploration project. Governance ■ Monitoring and supervision by The Joint Committee between MoF and MEMR. Engage academic experts to receive technical knowledge. (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. Source: Ministry of Finance 159#161wonderful indonesia La) C indonesia.travel @indtravel indonesiatravel @indtravel www.indonesia travel The Ancient Village of Ke'te Kesu' in the Heart of the Toraja, Sulawesi#16251 Regulations for Job Creation Law (Substance Grouping) Spatial 1. Government Regulation No. 21 of 2021 concerning the Implementation of Spatial Planning 2. Government Regulation No. 43 of 2021 concerning Settlement of Inconsistencies in Spatial Planning, Forest Areas, Permits, and / or Land Rights 3. Government Regulation No. 45 of 2021 concerning the Implementation of Geospatial Information 4. Presidential Regulation No. 11 of 2021 concerning Cooperation between the Central Government and State-Owned Enterprises in Providing Basic Geospatial Information Land and Land Rights 1. Government Regulation No. 18 of 2021 concerning Management Rights, Land Rights, Apartment Units and Land Registration 2. Government Regulation No. 19 of 2021 concerning Implementation of Land Acquisition for Development for Public Interest 3. Government Regulation No. 20 of 2021 concerning Control of Neglected Areas and Lands 4. Government Regulation No. 23 of 2021 concerning Forestry Implementation 5. Government Regulation No. 24 of 2021 concerning Procedures for Imposing Administrative Sanctions and Procedures for Non-Tax State Revenues Derived from Administrative Fines in the Forestry Sector Environment 1. Government Regulation No. 22 Year 2021 concerning Implementation of Environmental Protection and Management Construction and Housing to 1. Government Regulation No. 12 of 2021 concerning Amendments No. Government Regulation 14 of 2016 concerning Implementation of Housing and Settlement Areas 2. Government Regulation No. 13 of 2021 concerning the Implementation of Flats to 3. Government Regulation No. 14 of 2021 concerning Amendments Government Regulation No. 22 of 2020 concerning Implementation Regulations of Law No. 2 of 2017 concerning Construction Services concerning 4. Government Regulation No. 15 of 2021 Implementation Regulations of Law No. 6 of 2017 concerning Architects 5. Government Regulation No. 16 of 2021 concerning Implementation Regulations of Law No. 28 of 2002 concerning Buildings 6. Presidential Regulation No. 9 of 2021 concerning the Agency for the Acceleration of Housing Management Cooperatives and SMEs 1. Government Regulation No. 34 of 2021 concerning the Use of Foreign Workers 2. Government Regulation No. 35 of 2021 concerning Specific Time Work Agreements, Transfer, Working Hours and Breaks, and Termination of Employment 3. Government Regulation No. 36 of 2021 concerning Wages 4. Government Regulation No. 37 of 2021 concerning the Implementation of the Job Loss Guarantee Program Source: Coordinating Ministry for Economic Affairs 161#16351 Regulations for Job Creation Law (Substance Grouping) Investment 1. Government Regulation No. 42 of 2021 concerning the Ease of National Strategic Projects 2. Government Regulation No. 44 of 2021 concerning Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition 3. Government Regulation No. 48 of 2021 concerning Third Amendment to Government Regulation No. 31 of 2013 concerning Implementation Regulations of Law No. 6 of 2011 concerning Immigration 4. Presidential Regulation No. 10 of 2021 concerning the Investment Business Field 5. Government Regulation No. 73 of 2020 concerning Investment Management Institutions2. 6. Government Regulation No. 74 of 2020 concerning Authorized Capital for Management Institutions Investation Fiscal 1. Government Regulation No. 9 of 2021 concerning Tax Treatment to Support Ease of Doing Business 2. Government Regulation No. 10 of 2021 concerning Regional Taxes and Regional Levies in the Framework of Supporting Ease of Doing Business and Regional Services 3. Government Regulation No. 49 of 2021 concerning Taxation Treatment of Transactions Involving Investment Management Institutions and / or Entities They Own Employment 1. Government Regulation No. 34 of 2021 concerning the Use of Foreign Workers 2. Government Regulation No. 35 of 2021 concerning Specific Time Work Agreements, Transfer, Working Hours and Breaks, and Termination of Employment 3. Government Regulation No. 36 of 2021 concerning Wages 4. Government Regulation No. 37 of 2021 concerning the Implementation of the Job Loss Guarantee Program Economic Zone 1. Government Regulation No. 40 of 2021 concerning the Implementation of Special Economic Zones 2. Government Regulation No. 41 of 2021 concerning the Implementation of Free Trade Zones and Free Ports Government Goods / Services 1. Presidential Regulation No. 12 of 2021 concerning Amendments to Presidential Regulation No. 16 of 2018 concerning Government Procurement of Goods / Services Source: Coordinating Ministry for Economic Affairs 162#16451 Regulations for Job Creation Law (Substance Grouping) Licensing and Sector Business Activities 1. Government Regulation No. 5 of 2021 concerning Implementation of Risk-Based Business Licensing 2. Government Regulation No. 6 of 2021 concerning the Implementation of Business Licensing in Regions 3. Government Regulation No. 25 of 2021 concerning the Implementation of the Sector of Energy and Mineral Resources 4. Government Regulation No. 26 of 2021 concerning the Implementation of the Agricultural Sector 5. Government Regulation No. 27 of 2021 concerning the Implementation of the Marine and Fisheries Sector 6. Government Regulation No. 28 of 2021 concerning the Implementation of the Industrial Sector 7. Government Regulation No. 29 of 2021 concerning the Implementation of the Trade Sector 8. Government Regulation No. 30 of 2021 concerning Implementation of the Road Traffic and Transportation Sector 9. Government Regulation No. 31 of 2021 concerning the Implementation of the Shipping Sector 10. Government Regulation No. 32 of 2021 concerning the Implementation of the Aviation Sector 11. Government Regulation No. 33 of 2021 concerning the Implementation of the Railway Sector 12. Government Regulation No. 38 of 2021 concerning Accompanying Accounts for Umrah Travel Expenses 13. Government Regulation No. 39 Year 2021 concerning Implementation of the Halal Product Guarantee Sector 14. Government Regulation No. 46 of 2021 concerning Post, Telecommunication and Broadcasting 15. Government Regulation No. 47 of 2021 concerning the Implementation of Hospitalization Source: Coordinating Ministry for Economic Affairs 163#165Improving the Effectiveness of Monetary Policy Transmission Bank Indonesia has instituted a Reformulation of Monetary Policy Operations Framework which consists of 3 pillars B Reformulation of Monetary Policy Operational Framework Implementation of BI 7 Day Reverse Repo Rate Enhancement of monetary policy signal Implementation of Money Market Deepening Program Enhancement of instruments and transactions Implementation of Reserve Requirement (RR) Averaging Enhancement of banking liquidity management Blueprint for Money Market Development (BPPU) 2025 launched on Dec 14th, 2020 to build a reliable and efficient ecosystem for money market development in Indonesia Initiative I Promoting Digitalization and Strengthen Financial Market Infrastructures (Trading venue, central counterparty, BI-SSSS, BI-RTGS, trade repository) Initiative II Strengthening Effectiveness of Monetary Policy Transmission (Repo, IndONIA and JIBOR, Overnight Index Swap, DNDF, LCS) Initiative III Developing Economic Financing Sources and Risk Management (long-term hedging, sustainability and green financing, investor retail, asset securitization) Blueprint is accessible here: https://www.bi.go.id/en/publikasi/kajian/Pages/Blueprint-Pengembangan-Pasar-Uang-2025.aspx Source: Bank Indonesia 164