#1BHINNEKA TUNGGAL IKA Republic of Indonesia "Navigating Global Economic Challenges: Strengthening Synergy to Maintain Stability and Revive Economic Growth" December 2023#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 arranges an investor conference call on a monthly basis, answers questions through email, telephone and may arrange direct visit of banks/financial institutions to Bank Indonesia and other relevant government offices. Published by Investor Relations Unit - Republic of Indonesia Website: http://www.bi.go.id/en/iru/default.aspx Contact: Rosita Dewi (International Department - Bank Indonesia, Ph.: +6221 2981 8232) Thasya Pauline (Deputy Ministry for Macroeconomic and Finance Coordinator - Coordinating Ministry for Economic Affairs, Ph. +6221 352 1843) Putri Rizki Yulianti (Fiscal Policy Office - Ministry of Finance, Ph.: +6221 345 0012) Subhan Noor (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Ph.: +6221 351 0714) E-mail: [email protected] This Presentation Book is also available for download at: https://www.bi.go.id/en/iru/presentation/default.aspx 1#3Highlight of the Month What's New National Economic Indicators ...page 5-10, 42 Fiscal & Financing Policy Update Preserved Economic Resilience Amidst Global Uncertainty Strong Synergy and Collaboration among Institutions Nationwide, including Sub-National Government Robust Economic Recovery by ... page 66-68, 71-77 External Sector, Monetary & Bank Indonesia Board of Meeting Decision ...page 46-50, 79-81 Banking & Non-Banking Performance ...page 82-88 Rating Agencies Fitch Ratings MOODY'S S&P Global R&I Rating and vesturest Information, Inc. Continued National economic recovery momentum, reflected 4.94% (yoy) economic growth in the third quarter of 2023, driven by strong domestic demand. Affirmation of Investment Grade Sovereign Credit Rating Rating (Outlook) BBB (Stable) Baa2 (Stable) BBB (Stable) BBB+ (Positive) Fitch Ratings (Fitch) has affirmed Indonesia's Sovereign Credit Rating at BBB (one level above the lowest investment grade) with a stable outlook on September 1, 2023. Key factors supporting the affirmation include a favorable medium-term growth outlook and a low government debt/GDP ratio, despite challenges coming from government revenue as well as lagging structural features, such as governance indicators, compared to those from 'BBB' category peers. While several external finance metrics, such as current account, are stronger than pre- pandemic levels, but they should normalise within the next few years, assuming further falls in commodity prices. 2#4Overview 1 Unwavering Improvement Amidst Global Economic Uncertainty 4 Accelerated Reforms Agenda: 2 Institutional Improvement, Progressive Infrastructure External Factor: Improved External Resilience Fiscal Performance and Flexibility: 5 Strong Commitment in Maintaining Fiscal Credibility Economic Factor: 3 Improved Growth Prospects Supported by Continued Economic Recovery Momentum 6 Monetary and Financial Factor: Credible Monetary Policy Track Record and Favorable Financial Sector 3#5Section 1 BHINNEKA TUNGGAL IKA Unwavering Improvement Amidst Global Economic Uncertainty#6Global Conditions still Facing a Number of Challenges Ahead THE WORLD ECONOMIC FACES UNCERTAINTY INDONESIA'S ECONOMIC GROWTH PROJECTIONS (GOVERNMENT PROJECTIONS) Policy for Supporting Growth (RKP 2024) 3.4 3.3 Growth Outlook (%) 3.1 APBN Outlook 3.0 2.9 2.9 2024 = 5.20 Reducing Poverty and 5.30 2.7 2.4 5.31 2.1 3.69 Outlook 2023 = 5.10 2022 2023p 2024p Eliminating Extreme 1 Poverty Improving the Quality of Revitalizing Industry and Strengthening Applied Research 2 Health and Education Services 3 -2.07 2020 2021 2022 2023f 2024f Accelerating Strengthening Business Competitiveness IMF (Oct'23) OECD (Nov'23) WB (Jun '23) Global Economic Risks ■ Real estate crisis in China has put the global economy at risk Commodity prices become more volatile under renewed geopolitical tensions and disruptions linked to climate change ■ Debt sustainability issues in developing countries ■ Global tightened financial conditions ■ Fiscal buffers have eroded in many countries INDONESIA'S ECONOMIC GROWTH PROJECTIONS (INSTITUTION PROJECTIONS) Low-Carbon Development and the Energy 5 Transition Accelerating Development of Basic Infrastructure and 5.3 5.3 5.3 4.9 5.0 4.9 5.2 5.0 4.9 Accelerating the Development of IKN 6 Connectivity 2022 2023f 2024f have ■OECD (Nov'23) IMF (Oct'23) World Bank (Dec'23) 8 Holding the 2024 General Election Note: RKP= government-wide work plans ம S#7Indonesia's Economic Growth Remains Solid GDP Growth (%YoY) S&P Global Indonesia 10 60 Manufacturing PMI Total Investment (DDI+FDI) IDR Trillion CCI & Retail Sales 150 20.0 4.94 55 Expansion >50 5 51.7 400 374.40 10.0 130 350 50 0.0 0 300 110 -10.0 45 250 -5 200 90 -20.0 40 150 -10 70 -30.0 100 35 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Contraction <50 50 2019 2020 2021 2022 2023 30 Total GDP 25 Household Consumption Q1Q3Q1Q3Q1 Q3Q1 Q3Q1 Q3 2019 2020 2021 2022 2023 Retail Sales-g (rhs) Consumer Confidence Index (CCI) GFCF Current Account Balance Trade Balance (USD Billion) The Indonesian Rupiah and JCI 80.00 10.00 (% of GDP) 60.00 12000 12500 8.00 13000 2.00 40.00 6.00 13500 1.00 14000 20.00 4.00 14500 0.00 0.00 2.00 15000 -1.00 -0.20 -20.00 0.00 15500 -2.00 16000 -3.00 -40.00 -60.00 -2.00 16500 -4.00 Q1Q3Q1Q3Q1 Q3Q1Q3Q1Q3Q1Q3 2018 2019 2020 2021 2022 2023 159 159 159 159 159 2019 2020 Sources: CEIC, BI, BPS, Bloomberg (as of 28 December 2023) 2021 2022 Balance (Billion USD) Export-g (% YoY)-rhs Import-g (% YoY)-rhs 2023 -4.00 17000 1/16/2020 5/16/2020 9/16/2020 1/16/2021 5/16/2021 9/16/2021 1/16/2022 ⚫IDR/USD 5/16/2022 9/16/2022 1/16/2023 5/16/2023 9/16/2023 JCI-rhs Net Capital flow (USD Million) 7500 10000 8000 7000 6000 6500 4000 2000 6000 0 -2000 5500 -4000 -6000 5000 -8000 -10000 4500 -12000 4000 1/1/2021 7/1/2021 1/1/2022 7/1/2022 1/1/2023 7/1/2023 Equity Flow (ytd) Bond Flow (ytd) Total CO 6#8Short Term Mitigation and Policy Response Amidst Weakening Global Economic Prospect Risk Mitigation and Policy Response Boosting Domestic Demand Maintaining Household Consumption Encouraging Investment Direct Cash Assistance to Mitigate the Adverse Impact of El Nino Stimulus to Boost Property Market • • • Maintaining the External Sector Resilience Issuing Keppres 24/2023 concerning the Task Force for Increasing National Exports Issuing PP 36/2023 concerning Foreign Exchange Proceeds from Natural Resource Exports Expanding LCT implementation 7#9Fiscal Incentives to Boost the Economy The government provides fiscal incentives to create a conducive investment climate, especially for industry players in order to boost investment and strengthen domestic industrial structure TAX HOLIDAY & MINI TAX HOLIDAY TAX ALLOWANCE INVESTMENT ALLOWANCE SUPER DEDUCTION TAX • The criteria are new investment, taxpayers including pioneer industries, and income received from the main business activities carried out. There are 18 eligible pioneer industries that consist of 169 KBLI. Pioneer industries defined as are industries new possessing broad linkages, giving added value and high externality, introducing technology, as well as possessing strategic value for the national economy. Income tax reduction are 100% & 50% (mini tax holiday) during the next 2 (two) years subsequent to the end of the CIT reduction periods above, the taxpayers are eligible for half of the CIT reduction percentages • • To increase direct investment activities for certain business fields and/or in certain areas. The facilities include a reduction in net income of 30% of the total investment for six years, accelerated depreciation and amortization, imposition of income tax on dividends paid to foreign tax subjects of 10% or lower and compensation for losses of up to 10 years. . The criteria are having a high investment value or for export, a large absorption of labor; or have a high local content. • To encourage investment in labor-intensive • industries, supporting programs for job creation and absorption Indonesian workers. of net ⚫ Deduction from income, of 60% of the amount invested in tangible fixed assets, including land, that are used for the taxpayer's main business activities. The deduction is spread over six years (10% annually), starting from the fiscal year the commercial production commences • There are 45 labor- intensive industrial sectors and employ an average of 300 workers in 1 tax year. Super Deduction Vocational • Engaging in industry 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 Source: Coordinating Ministry for Economic Affairs 8#10Improved Outlook and a Well-Maintained of Indonesia's Sovereign Credit Rating Amid Global Economy Uncertainties BBB+ BBB R&I JCRA S&P Fitch Ratings BBB / Stable September 2023, Rating Affirmed at BBB/Stable "Indonesia's rating balances a favourable medium-term growth outlook and low government debt/GDP ratio against weak government revenue and lagging structural features, such as governance indicators, compared with 'BBB' category peers. BBB- BB+ BB BB- B+ 2006 Investment Grade Fitch Moody's 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 S&P Global Ratings July 2023, Rating Affirmed at BBB/Stable BBB / Stable "The stable rating outlook reflects our expectation that Indonesia will achieve solid economic growth over the next two years. This will support prudent fiscal outcomes and stabilize debt". MOODY'S Baa2 / Stable March 2023, Rating Affirmed at Baa2/Stable ""Indonesia's credit profile is supported by its large economy, low fiscal deficits and modest debt burden., balanced against low revenue mobilization, reliance on external funding and some economic concentration that leaves the economy vulnerable to commodity cycles." R&I July 2023, Outlook Revised To Positive; BBB+ Ratings Affirmed BBB+ Positive JCR "In R&l view, Indonesia's economy has been showing strong performance even amid uncertainties of the global economic environment. With the inflation rate that has fallen within the target range in 2023, the price stability is being restored. The government has achieved its target level of fiscal deficit a year earlier than originally planned and the government debt ratio stays on a downward trajectory. The stability of financial system has been maintained and the economy has resilience to external shocks". July 2022, Rating Affirmed at BBB+/Stable BBB+ / Stable "The ratings mainly reflect the country's solid domestic demand-led economic growth potential, restrained public debt and resilience to external shocks supported by accumulation of foreign exchange reserves. JCR holds that the debt will gradually decrease as the fiscal balance improves mainly increased revenue from economic growth and higher commodity prices". 9#11Indonesia's Competitiveness Rank Improved in 2023 Based on the IMD (Institute for Management Development) World Competitiveness Yearbook 2023 report, Indonesia's competitiveness ranking in 2023 is in 34th position out of a total of 64 countries. This rank has increased from 2022 (No. 44). All factors have increased compared to 2022: Economic Performance (+13), Business Efficiency (+11), Government Efficiency (+4), and Infrastructure (+1) IMD World Competitiveness Index 2015-2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 42 42 48 48 42 43 32 34 37 40 40 44 #4 No. Country 2019 2020 2021 2022 2023 Factors 2019 2020 2021 2022 2023 1 South Korea 28 23 23 27 28 Economic 25 26 35 42 29 2 Indonesia 32 40 37 44 34 Performance 3 Japan 30 34 31 34 35 Government 25 31 26 35 31 Efficiency 4 India 43 43 43 37 40 Business 5 Philippines 46 45 52 48 52 20 31 25 31 20 Efficiency 6 Mexico 50 53 55 55 56 Infrastructure 53 55 55 57 52 51 5557 7 Brazil 59 59 56 40 57 59 59 60 60#12Section 2 BHINNEKA TUNGGAL IKA Accelerated Reforms: Institutional Improvement, and Progressive Infrastructure#13Indonesia Gold Vision 2045: Become a Sovereign, Advanced and Sustainable Country INDONESIA GOLD VISION 5 GOLD VISION 8 TARGETS OF INDONESIA DEVELOPMENT MISSIONS 17 DEVELOPMENT DIRECTIONS 2025-2045 1. Income per capita equivalents to developed countries 2. Poverty goes to 0% and inequality decreases 3. Leadership positions and international influence increase 4. HR competitiveness increases 5. GHG emission intensity towards NZE Development Phase 1. Social 2. Economy 3. Governance First Phase (2025-2029) Strengthening the foundation of transformation Second Phase (2030-2034) Third Phase (2035-2039) Fourth Phase (2040-2045) to With the establishment of a strong foundation, Indonesia is set accelerate its economy Indonesia starts steps to expand globally Indonesia succeeds in realizing Indonesia Gold 2045 vision TRANSFORMATION FOUNDATION OF TRANSFORMATION 4. Legal Supremacy, Stability, & Diplomatic Strength 5. Socio-Cultural and Ecological Resilience 45 MAIN INDICATORS OF DEVELOPMENT TRANSFORMATION IMPLEMENTATION FRAMEWORK 6. Equal and Quality Territorial Development 7. Quality and Environmentally Friendly Facilities and Infrastructure 8. Development Sustainability Source: Preliminary Draft RPJPN 2025-2045, November 10, 2023 12#14Targets of Economic Transformation for Achieving Indonesia Gold 2045 Projection GNI per Capita Indonesia (USD) Economic transformation aims to bring Indonesia out of the middle-income trap and into a high-income country. For this reason, the Indonesian economy must grow by an average of 6-7% in the next 20 years, high economic growth that is inclusive and sustainable 35.000 30.000 25.000 22 years Indonesia has been trapped in MIT for 30 years (1993-2022) Optimistic Scenario Transformative Scenario 20.000 Baseline 15.000 10.000 5.000 0 Upper-Middle Income Threshold 1969 1972 1975 1978 1984 1987 1990 1993 1996 1000 1999 2002 3000 2005 2008 Economic Transformation 1. Science and Technology, Innovation and Economic Productivity 7% 2. Green Economy Implementation 3. Digital Transformation 6% 4. 5. Domestic and Global Economic Integration Cities as Centers of Economic Growth Proyeksi High Income 5% Threshold 2008 2011 2014 2014 2017 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044 Scenario Average Growth Years Escape from MIT Transformative 6% 2041 Optimistic 7% 2038 First Phase (2025-2029) Second Phase (2030-2034) Third Phase (2035- 2039) Fourth Phase (2040-2045) Down streaming natural resources and strengthening innovation research and labor productivity Massively increasing productivity and expanding sources of economic growth Economic power house that is integrated with global and domestic supply chains networks, as well as strong exports High income country Source: Preliminary Draft RPJPN 2025-2045, November 10, 2023 13#15Investment Policy Direction 2020-2024 : Improving Investment Quality To Promote Inclusive and Sustainable Economic Growth Encouraging downstream products and increased use of domestic products Optimizing the use of natural resources and domestic production Encouraging increased investment in business sectors categorized as green investment and having a large positive social impact Environmental and Social and equitable investment Equality (ESG) throughout Indonesia Encouraging investment in export-oriented industries and industries that substitute imports Job Creation/Encouraging investment in labor-intensive business fields and developing business fields that involve the community by utilizing existing human resources Labor intensive Direction of Investment Policy: Quality Investment 2020-2024 Export Oriented and Import Subtitution Sumber: Strategic Planning of Ministry of Investment/ BKPM (Renstra) 2020 - 2024 Increase Productivity Encouraging increased company efficiency (i.e. Industry 4.0) and improvements to the Incremental Capital Output Ratio (ICOR) Transfer of Knowledge and Technology Encouraging human resource development and increasing R&D in an effort to master technology Improve Competitivenes s and Market Access Encouraging increased perceptions and opening up a wider market for national companies and MSMEs through business partnerships 14#16The Government Focuses on Regulations and Procedures for Ease of Doing Business Improvement in regulations in the context of structural reforms to the Job Creation Law and its derivative regulations can provide legal certainty to business actors. Streamlining Administrative Procedures and a Positive Investment Climate Latest update FDI Realization (IDR Tn) Impact on ease of doing business 644.2 559.6 454.0 Law No. 11 of 2020 PERPPU 2 of 2022 423.1 concerning Job concerning Job Creation Creation has been issued Providing legal certainty to business actors 412.8 2019 2020 2021 2022 until Q3- 2023 Ease of Doing Business Policy Improving risk-based 4.94 5.45 Feb-22 5.32 Aug'22 Government Revision of the licensing procedures (NSPK) and Unemployment Rate (%) Regulation No 5 of 2021 Legal Draft and Appendix I/II harmonization with 7.07 other Government Regulations 6.49 6.26 5.83 5.86 Assistance in conformity Better and smoother Business Regulation and System Licensing Services OSS RBA System evaluation between Aug'20 Feb-20 Feb-21 Aug'21 Feb-23 Aug'23 Ch#17Risk-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 RISK-BASED TARGETING - Optimizing Effectiveness and Cost of Monitoring: Resource and time limitations The Government implemented OSS-RBA on August 9, 2021, based on Regulation 5 of 2021. • Low Risk Medium Risk High Risk • Focus on critical hazards that are more likely to arise NIB Issued = 7,058,517 • Period August 4, 2021 - December 29, 2023 Based on Business Based on Based on Business Actor: Investment Type: Scale: Business Entity • FDI = 24,341 = 786,847 DDI = Individual = 6,271,670 • Short Medium-term • . - 7,034,176 Micro = 6,800,186 = Medium = 23,310 Small 187,228 Large = 47,793 Action Plans Accelerate the reduction of Ex Ante licenses toward Ex Post compliance (Risk-Based Approach) • Towards technical regulations for risk management - Third Party System Establish OSS as a national portal for business licenses with legal security Long-term Consider random inspections because blanket inspections are not appropriate, resulting in excessively costly (for countries. and businesses) INSPECTION: . • Based on the risk Inspection is carried out to ensure the implementation of operational and commercial activities according to business standards Exception in the implementation of supervision for Micro and Small Enterprises Implementation of inspections can be carried out by certified professionals (third parties). The Progress of Development Monitoring/Inspection Subsystem Of the 44 modules in the monitoring (inspection) subsystem: • 36 modules have been completed/embedded in the OSS RBA (go-live) • Speed up better development approach (e.g., climate change, etc.) 8 modules are still in the process of User Acceptance Testing (UAT) 16#18Encouraging Investment: Indonesia Investment Authority (INA) to Accelerate FDI •PP Number 73 of 2020 concerning Initial Capital for the Cumulative total deployment Indonesia Investment Authority Legal PP Number 74 of 2020 concerning the Indonesia Investment Authority basis •PP Number 49 of 2021 concerning Tax Treatment of Transactions Involving the 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 (INA and partners) 2023 to -USD 2022 2021 -USD 800 mn -USD 1.7bn date 3 bn Update on Progress □ Fruitful partnerships with various institutional investors have resulted in >USD 25 billion in collective commitments. INA has deployed >USD 3 billion of capital to date together with investor partners and will potentially deploy close to USD 3.5 billion by the end of 2023 ☐ Investment opportunity that has been completed (closed): • • • Digital infrastructure: Mitratel's IPO for a total transaction size of USD 800 million together with ADIA, ADG, GIC Toll Road: Investment into SMR PPTR (Waskita Karya Toll Road) for an upfront transaction size of USD 400 million together with CDPQ, ADIA, APG Tourism/Digital: Investment into Traveloka for a total transaction size of USD 300 million with BlackRock, Allianz, and other leading institutions Healthcare: Investment into a significant minority stake in Kimia Farma Apotek and subscription into Kimia Farma (KAEF IJ)'s MCB for a total transaction size of USD 150 million with Silk Road Fund Infrastructure & Logistics: ESR and Mitsubishi Corp for a total transaction size of USD 100 million for three modern warehouse asses, Hutama Karya two-toll road assets in Trans Sumatera for a total transaction of USD 1 billion. DP World and Pelindo investment for the development of an international container terminal Green Energy: Anchor investor into the IPO of Pertamina Geothermal Energy (PGEO IJ) for a total transaction size of USD 490 million with Masdar □ Current cooperation agreements secured are: • Toll Road: Investment platform with ADIA, CDPQ, and APG for USD 3.75 billion. The Hutama Karya opportunity is expected to close in June 2023, while a Waskita Karya opportunity is envisioned to be completed in early 2023. Seaports: Alliance agreement with DP World for developing container ports and supporting maritime logistics infrastructure amounting to USD 7.5 billion throughout the concession period. Green Sector: USD 2 billion investment for Optimizing blended finance in ETM programs such as ADB, SMI, PLN, Global Energy Alliance with CATL Green EV Fund General: USD 10 billion investment framework agreement with ADG for various sectors in Indonesia General: USD 3 billion investment framework agreement with SRF for various sectors in Indonesia Source: INA, as of May 30, 2023 17#19Institutional Reforms to Establish a Conducive PPP Ecosystem... 1 Public Private Partnership (PPP) Institutional Reforms for PPP Implementation KPPIP: kpop Coordinating unit in IIGF decision-making processes and debottlenecking efforts for infrastructure acceleration Indonesia Infrastructure Guarantee Fund: Provides guarantee and supports project preparation ♥SMi KANTOR BERSAMA KPBU REPUBLIK INDONESIA PPP Joint Office: Information center for policy coordination and capacity building to encourage the use of PPP schemes Sarana Multi VSMI Infrastruktur: Facilitating infrastructure financing, preparing project, and serving advisory PPP Guarantee As a Single Window Institution to provide Government guarantee for PPP infrastructure projects. Presidential Regulation 78/2010; McF Regulation 8/2016 PPP Project Development Facility Provide project preparation and transaction advisory services for PPP projects assigned by the Minister of Finance (MoF). MoF Regulation 180/2020 National Strategic Project (PSN) Guarantee Project Guarantee against Political Risks that can result in delays in the implementation of PSN and unfavorable financial impact on Business Entities implementing PSN. MoF Regulation 30/2021 SOE Credit Guarantee Credit guarantee against of State Owned Enterprises /SOE default risk on loans and bond issuance to finance infrastructure project MoF Regulation 101/2018 National Economic Recovery Program Corporate Credit Guarantee Credit Guarantee for Corporate working capital as part of National Economic Recovery Program MoF Regulation 98/2021 Credit Guarantee for State- owned Enterprises/SOE involved in National Economic Recovery Program MoF Regulation 211/2021 Government Commitment through Fiscal Support oool Project Preparation Project Development Facility (PDF) Commitment Contracting Agency (CA) Commitment MoF assigns SOE to assist Through conversion CA in PPP project preparation and transaction from State Budget to PPP financing scheme Viability of Project Viability Gap Fund (VGF) Availability Payment (AP) MoF provides support resulting a more viable project to be offered to market MoF provides periodic payment scheme for non- commercial projects that greatly needed by public Bankability Sovereign Guarantee and Long-Term Financing MoF established SOE in order to provide sovereign guarantee and long-term financing support Land Support MoF established dedicated unit that settle land acquisition payment to be used for strategic infrastructure projects Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 18#20Indonesia's Special Economic Zone (SEZS) Encourage Economic Growth, Equitable Development, and Increase Competitiveness 1. KEK Arun Lhokseumawe Aceh Utara & Lhokseumawe, Aceh IPP No. 5/2017 Februari 2017) Beroperasi Desember 2018 Kegiatan Utama -Industri Energi Industri Petrokimia dan Kimia Lainnya Industri Pengolahan Kelapa Sawit -Industri Pengolahan Kayu -Logistik 2. KEK Sei Mangkel Kab. Simalungun, Sumatera Utara PP No. 29/2012- Februari 2012 Beroparasi Januari 2015 Kegiatan Utama: Industri Pengolahan Kelapa Sawit. Industri Pergolahan Karel Pariwisata -Logistik 3. KEK Batam Auro Technic Kota Batam, Kepulauan Riau PP No. 67/2021 Juni 20211 Kegiatan Utama: Industri MRO (Maintenance, Repair, Overhaul Pesawat 4. KEK Nongsa Kota Batam, Kepulauan Riau (PP No. 68/2021-Juni 2021) Kegialan Utama: IT-digital -Periwisata 18 SEZs and Main Activities 11. KEK Singhesari Kab. Malang, Jawa Timur (PP No 69/2019 September 2019 Kegatan Utama: -Pariwisata -Pengembangan Teknologi SLOC Malacca ALKI-I 12. KEK Mandalika 2 Kab. Lombok Tengah, NTB IPP No. 52/2014 Quni 2014 Beroperasi Oktober 2017 Kegiatan Utama: Parteiseta 13. KEK MBTK Kab. Kutai Timur, Kalimantan Timur IPP No. 85/2014 Oktober 2014: Beroperasi April 2019 Kegiatan Utama: -Industri Pergolahan Kelapa Sawit Industri Energi -Logistik ALKI-III 14. KEK Palu Kota Palu, Sulawesi Tengah. PP No. 31/2014-Me 2014) Beroperasi September 2017 Kegiatan Uteme Industri Logam Dasar Logistik ALKIN B ALXTIC SUMMARY OF THE 18 SPECIAL ECONOMIC ZONES PERFORMANCE 15. KEK Likupang Kab. Minahasa Utara, Sulawesi Utara (PP No. 84/2019-Desember 2019 Kegiatan Utama Pariwisata 16. KEK Bitung Kota Bitung, Sulawesi Utara (PP No. 32/2014 Nel 2014 Beroperasi April 2019 Kegiatan Utama Industri Fengolahan Kelapa industri Pengolahan Perikanan Logistik 17. KEK Morotai Kab. Pulau Morotai, Maluku Utara (PP No. 50/2014-Juni 2014) Beroperasi April 2019 Kegiatan Utama: -Industri Pengolahan Perikanan Pariwisals -Logistik 18. KEK Sorong Sorong, Papua Barat Beroperasi Oktober 2019 Kegiatan Utama: Cumulative Achievement SEZs until December 2023 Realization by Developer (Without APBN) 26.4 IDR Trillion $ 18% 167.2 IDR Trillion (PP No. 31/2016 Agustus 20161 Investment Realization by 82% tenant and developer (Accumulation until Sept 2023) Realization by tenant 140.8 IDR Trillion Industri Pengolahan Nikel -Industri Pengolahan Kelapa Sawit -Industri Hasil Hutan dan Perkebunan Sagul Logistik 5. KEK Galang Batang Kab. Bintan, Kepulauan Riau IPP No 42/2017 Oktober 2017 Beroperasi Desember 2018 Kegiatan Utama Industri Pengolahan Bauksit - Logistik 6. KEK Tanjung Kelayang Kab. Beitung, Bangka Belitung (PP No 6/2016-Maret 2016 Beroperasi Maret 2019 Kegiatan Utama. Pariwisata 7. KEK Tanjung Lesung Kab. Pandeglang, Banten PP No. 26/2012 Februari 2012 Beroperasi Februari 2015 Kegiatan Utarna: Pariwisata ALKI-II 8, KEK Lide Bogor, Jawa Barat IPP No. 69/2021 Juni 2021: Kegiatan Utama: Pariwisata -Industri Kreatif 9. KEK Kendal Kab. Kendal, Jawa Tengah PP No. 85/2019-Desember 2019) Beroperasi Mei 2021 Kegiatan Utama: Industr Tekatil dan Busana -Inousin Furnitur dan Alat Permainan -Industr Makanan dan minuman -Industri Otomotif -Industri Elektronik Logistik 10. KEK Gresik Kab. Grasik, Jawa Timur IPP No. 71/2021-Juni 20211 Kegiatan Utama: -ndusni Metal Industri Elektren Industri Kima Industi Energi -Logistik Import Substitution & Export Promotion industrialization MAIN TARGET OF SEZS Industry 4.0 Acceleration Regional Development Ratio of Foreign and Domestic Investment DDI; 29% Services Industry Development Improve Trade Balance FDI; 71% Number of Employment 113,038#21National Strategic Project (PSN): 214 Projects through Public Private Partnership (PPP) 1 PPP Projects under National Strategic Projects (PSN) – incl. PSN Programs (Updated on 2023) Public Private Partnership (PPP) 210 projects under 14 sectors PSN Program #10 Regional Development Program 31 Projects 62 Projects (USD 52,47 Bil) 6 Projects (USD 0,87 Bil) (USD 7,37 Bil) 49 Projects (USD 16,33 Bil) 220 PPP Projects 72 Projects PSN Projects Waste to Energy Programs Central Java Projects (USD 9,12 Bil) East Java Projects West Java Projects Total . 30% of the projects are small scale PPP projects initiated by the Regional Government, with investment value under USD 15 Million. Of these, 36 projects (53%) are Toll Road projects. Highlighted Projects Kediri Airport PPP Unsolicited - Initiated by Private Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Project Scope Investment Value USD 607 Million • Design-Build - Finance - Operate - Maintain - Transfer (DBFOMT) (incl. land acquisition) · 50 years concession · User Charge 20 20#22Limited Concession Scheme Stipulation as an Asset Recycling Scheme for Brownfield Infrastructure Asset 2 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. Limited Concession Scheme (LCS) LCS Concept 0A о 000 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 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) 21#23LVC Scheme Implementation to Ease the Government Burden on Infrastructure Development 3 "A policy approach that enables communities to recover and reinvest economic value increases and increases in economic productivity that result from public investment and other government actions. (Lincoln Institute of Land Policy) Land Value Capture (LVC) Open Housing & Settlement Keep Investing- network Grows 0000000 Human Settlement Improvement Tax based LVC Land and Property Tax Value Uplift Retain a Portion Betterment Levies and Special Assessment Tax Increment Financing (TIF) Development Based LVC Land Sale and Rent Air Right Sale Joint Development Land Readjustment I LVC Benefit 1. Local revenue from tax and levy Better city planning and development Regional growth I | . 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 22 22#24Other Financing Scheme and Modality - Indonesia Investment Authority (INA) as an Alternative Source of Economic Development Financing 4 Legal basis Other Creative ' Financing for Infrastructure Development ⚫PP Number 73 of 2020 concerning Initial Capital for indonesia Investment Authority ⚫PP Number 74 of 2020 concerning Indonesia Investment Authority •PP Number 49 of 2021 concerning Tax Treatment of Transactions Involving Indonesia Investment Authority and/or Entities Owned ⚫PP Numbers 110 and 111 of 2021 concerning the Addition of PMN to the Capital of Investment Management Institutions ⚫The Supervisory Board has been formed based on Presidential Decree No. 6/P of 2021 •The Board of Directors has been formed based on the Decree of the INA Council Number 1 of 2021 ⚫An initial capital of IDR 15 T has been allocated in 2020, and an additional capital of IDR 15 T from PMN and from the transfer of shares amounting to IDR 45 T ⚫There have been discussions with more than 50 companies to become strategic partners, and several countries have expressed a desire to partner with INA Main Sectors of Investment Health Services Seaports Toll Airport Road Industrial Area Digital Infrastructure Renewable Energy Traditional Energy Plantation Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) Development of INA's Progress The total investment opportunity commitment received up to June 2022 reached >USD 20 billion. At least two investment opportunities are expected to be closed in 2022-2023: Toll Road and Seaport. Current cooperation agreements secured are: • Toll Road: Investment platform with ADIA, CDPQ, and APG for USD 3,75 billion. Hutama Karya's opportunity is expected to close in December 2022, while ADIA is reevaluating the Waskita Karya opportunity. • Seaports: Alliance agreement with DP World to develop ports and support infrastructure amounting to USD 7.5 billion throughout the concession period. • General: USD 10 billion investment framework agreement with ADG for various sectors in Indonesia Investment opportunity that has been completed: Digital infrastructure: Mitratel's IPO with ADIA, ADG, and GIC for a total of USD 770 million 23 23#25Promoting the Development Of Nickel-based Industries to Become a Global Battery and EV Supplier Government Issues Presidential Decree No. 55 of 2019 to Accelerate the Use of Battery Electric Vehicles (BEV) on the Road & Government Regulation No. 74/2021. In order to strengthen the ecosystem of Battery-Based Electric Motorized Vehicles, the Government provides Incentive Support in the form of Government-borne VAT Potential: Indonesia's Nickel Reserves Are Abundant Global Nickel Reserve INDONESIA Australia 21,0 M 20,0 M Brazil Other 16,0 M 14,0 M Russia 6,9 M Cuba 5,5 M Philippines 4,8 M Also rich in other battery materials reserve South Africa 3,7 M China 2,8 M Canada 2,8 M Guatemala 1,8 M Madagascar 1,6 M 1.2 billion ton Aluminium 51 million ton Copper 43 million ton Manganese Colombia 0,4 M US 0,1 M Cobalt Lithium Graphite Benefits and Added Value of Nickel Downstream Value added process Input Output Value-added 90 to 150 Nickel Ore Battery times Amount of Incentive for Battery-Based Electric Motorized Vehicles - TKDN > 40% - VAT incentive of 10%, so that the VAT that must be paid remains 1% - TKDN > 20% - 40% - VAT incentive of 5%, so that the VAT that must be paid remains 6% In Indonesia, the deepening of the electric vehicle industry structure is carried out through the obligation to gradually increase the domestic content level (TKDN) until 2030. Supporting Regulation Regulation Of The Minister Of Finance Of The Republic Of Indonesia 38/2023 24 24#26Investment Realization Quarter III 2023 (Upstream Oil and Gas, Financial Services Sector are exlcluded) 26.7% Investment Realization July-Sep 2023 Rp374.4 T Realization: 34.0% of target from Strategic Plan Document: Rp 1,099.8T Realization: 26.7% of the President's target: Rp1,400T FDI Rp196.2 T (52.4%) Outside Java Rp190.9 T (51.0%) DDI Rp178.2 T (47.6%) Java Rp183.5 T (49.0%) Absorbed Domestic Labor within Quarter III 2023: 516,467#27Investment Realization Trend in Java and Outside Java 2019 Total: Rp809,6 T Labor: 1.033.835 Secondary Sector: Rp216 T PMDN: Rp386,5 T (47,74%) 2020 Total: Rp826,3 T Labor: 1.156.361 Secondary Sector : Rp272,9 T PMDN: Rp413,5 T (50,04%) 2021 Total: Rp901 T Labor: 1.207.893 Secondary Sector: Rp 325.4 T PMDN: Rp447 T (49,62%) 2022 Total: Rp1.207,2T Labor: 1.305.0001 Secondary Sector: Rp497,7 T PMDN: Rp552,8 T (45,79%) Outside Java Outside Java Outside Java Rp375,0 T (46,3%) Rp417,5 T (50,5%) Rp468,2 T (52,0%) Outside Java Rp 636,3 T (52,7%) Java Rp434,6 T (53,7 %) Java Rp408,8 T (49,5 %) Java Rp432.8 T (48,0%) Java Rp570,9 T (47,3%) Since the 3rd quarter of 2020, investment realization in Outer Java has always been greater than investment. realization in Java. This is the result of massive infrastructure development outside Java during the 1st period of President Joko Widodo's administration. Source: Ministry of Investment (BKPM) 26#28Investment Realization Based on Countries Quarter III 2023 US$ 4.4 B Noted: Singapore B: Billion Source: Ministry of Investment (BKPM) US$ 1.8 B US$ 1.7 B US$ 13 B O US$ 0.9 B China Hong kong, PRC Japan Malaysia 27 27#29Investment Realization Trend Based on Sectors 2019 2020 9. No Sector Rp (T) % No Sector Rp (T) % No Transportation, Transportation, 1. Warehouse, and 139,0 17,2% 1. Warehouse, and 144,8 17,5% Telecommunication Electricity, Telecommunication Electricity, 2021 Sector Metal, Metal Goods, Except Machinery, and Rp (T) % No 2022 Sector Metal, Metal Goods, Except Rp (T) % 117,5 13,0% 1. 171,2 14,2% Machinery, and Equipment Industry Equipment Industry 2. Gas and 126,0 15,6% 2. Gas and 102,0 12,3% Housing, Water Supply Water Supply Industrial Estate, 2. 117,4 13,0% 2. Mining 136,4 11,3% Housing, Industrial Metal, Metal and Office 3. Estate, and Office Goods, Except Building 71,1 8,8% 3. 94,8 11,5% Machinery, and Transportation, 3. Building Transportation, Warehouse, and 134,3 11,1% Equipment Industry 3. Warehouse, and 107,4 11,9% Telecommunication Metal, Metal Telecommunication Housing, Industrial Housing, Industrial Goods, Except 4. 61,6 7,6% 4. Estate, and Office Electricity, 4. Estate, and Office 109,4 9,1% 76,4 9,2% Machinery, and 4. Building Equipment Industry Gas and Water Supply 81,6 9,1% Building Chemical and 5. Pharmaceutic 93,6 7,8% 5. Mining 59,5 7,4% 5. Construction 71,0 8,6% 5. Mining 81,2 9,0% al Industry Metal Industry Investment Realization Growth (2019-2022) +177,9% In line with the policy of the President of the Republic of Indonesia on economic transformation from primary sector industry to value-added based (downstream) industry, investment in the Basic Metal, Metal Goods, Non-Machinery and Equipment Industry sector increased 177.9% from IDR 61.6 T to IDR 171.2 T (year 2019-2022). Source: Ministry of Investment (BKPM) 28#30Development Stages of the National Capital City 2020-2024 Initial transfer to IKN 2025-2035 Building IKN as a Resilient Area 2035-2045 Building the entire infrastructure and ecosystem of 3 cities to accelerate the development of East Kalimantan 2045-onwards Strengthening reputation asa "World City for All" Critical basic infrastructure is completed and • operational (eg water, energy, rail) for residents in the initial stages Build central infrastructure (e.g. Presidential Palace, MPR/DPR Building) and housing in the Main IKN area Transfer of early-stage ASN (eg TNI, Polri, K/L ASN) Initiation of priority economic sectors Source: Coordinating Ministry for Economic Affairs Developing the next phase of the city (e.g., innovation and economic centre) • Completed the transfer of • the IKN government centre Develop priority economic sectors Implement an incentive system for priority economic sectors Achieving the goals of the Sustainable Development Goals (SDGs) Expand urban development and complete connectivity between and within cities FDI Destination No. 1 for priority economic sectors in Indonesia Top 5 top destinations in Southeast Asia for global talent Encouraging sustainable utility networks by implementing circular economy enablers Developing a center for innovation and talent development To be the leading city in the world in terms of competitiveness Top 10 livable cities in the world Achieving net zero- carbon emissions and 100% renewable energy at installed cap a city - the first city in the world with >1 million inhabitants to reach this target 29#31Visioning Nusantara - New Capital City of Indonesia Vision The National Capital City (IKN) is a milestone in a new era of regional development and new economic centers in the Regions, as well as a symbol of a big push strategy to accelerate growth and equal distribution of the national economy. Recent Progress 1. The financing for land acquisition proposed by the Minister of PUPR is IDR9.09 T until 2023, where in 2022, it was allocated through DIPA PUPR of IDR 500 M. 2. 3. 4. The Minister of Finance requested that the 2023 land procurement proposed by PUPR of IDR8.45 T be accommodated through LMAN. The DJA has approved the construction budget from PUPR for 2022 of Rp. 5 trillion. The need for the 2023 Construction budget is IDR23.6 T, including proposals from 5 Ministries / Agencies. New Capital City Planning Scheme K-IKN Kawasah KN Area 56181 ha KIPP Kawasan Inti Pusat Pemerintahan Area: 6,856 ha KP-IKN Kawasan PerluasanikN Area 256.14272 ha Zona Area H K-IPP 6.856 K-KN 56.181 KP-IKN 256.142 Target Populasi 2045 jwa) 280.000-300,000 1.700.000-1.900.000 The IKN proposal as National Strategic Project (NSP) is approved and included in the Regional Development Program as a Subprogram. The inclusion of IKN as NSP will refer to the Presidential Decree No.63/2022 and the draft One Map - One Planning - One 30#32Government Effort in Accelerating Energy Transition "Reducing Fossil Energy and Increasing Renewable Power Plant" PRESIDENT INSTRUCTION 1 UNFCCC - COP21, DEC 2015 upd SEP 2022 | Decreasing greenhouse gases emission up to 31,89% (with our own ability) or 43,2% (with International Assistance) in 2030 according to NDC COP 28, DECEMBER 2nd, 2023 To achieve the net carbon sink target or net carbon absorption in the forestry and land sector by 2030, Indonesia has made systematic and innovative steps, one of which was by implementing a permanent moratorium on clearing forests covering around 66 million hectares of primary forest and peatland since 2019. G20 SUMMIT GOAL "Recover Together, Recover Stronger" 1. Inclusive Global Health; COP28: Indonesia's Efforts To Achieve The Net Carbon Sink Target In The Forestry And Land Sector By 2030 MAIN STRATEGY 1. 2. Rehabilitated 3 million hectares of degraded land and 3 million hectares of peatland Invites all parties to strengthen South-South cooperation. This is because solidarity, equality, and collaboration are crucial in addressing global climate change. 13. Carbon Trading through the Carbon Exchange stated that the carbon exchange is a system that regulates the trading of carbon and/or ownership records of carbon units. Industri Komersial Transportasi Sektor Lainnya Rumah Tangga Pembangkit 1.680 <-BAU 1.466 1.412 1.927 1.340 1.136 1.009 821 706 2. Digital Economic Transformation; and 623 69542 662 705 617 621 510 530 439 401 3. Sustainability Energy Transition. Source: Ministry of Energy and Mineral Resource 2021 2023 2025 2027 2029 2031 2033 2035 2037 2030 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 31#33Strategies for Increasing Human Resources Productivity REVITALIZATION OF THE INDONESIAN TVET SYSTEM (Vocational Education and Training) (Presidential Decree No. 68 of 2022) VOCATION Long Term Improved TVET Governance TVET Implementation Reform Increasing the role of the business world and industry in TVET Pre-Emplyoment Card Program "The Pre-Employment Card Program is a vocational training aid aimed at job seekers, workers / active laborers and / or workers/laborers affected by termination of employment that require increased competence Pendaftaran www.prokerja.go.id Verifikasi & Soloksi Penetapan Penerima Pembukaan Virtual Account Penerima I "The G2P (Government to Face Recognition votivasi Dmal KTE KK HpTKD don kartu prokerja End to End Digital Transfer Dana ke Virtual Account ! Person) program is the most I massive in Indonesia" Penerima Dapat Insentif mela Ring Bank Penerima Menyelesaikan Pelatihan Mendopation Te dan memberi usan dan roting Peserta Membeli Pelatihan di Platform EDUCATION AND TRAINING PROGRAMS a. Pre-Employment Card Program; b. Digital Talent Scholarship; c. Training at Job Training Centers; Short Term d. Development of human resource quality through LPDP scholarships; e. Other programs Penerima Mengisi 3 Survei Evaluasi dan Menerima Insentif Survei Innovation and GERAKAN NASIONAL 1000 STARTUP DIGITAL M UMKM Digitalization of MSMEs Financing and Marketing 88 ASEAN digiKU ONLINE SALE DAY Digital Kredit UMKM Acceleration and ((8) Palapa Ring BTS Equalization of Digital Infrastructure ICT Digital Ecosystem Satelite Interne t Access WLKPP ecatalogue PaDi UMK Protege HR Literacy and Development kartu SIBER prakerja KREASI PahlawanDigital PLUT-KUMKM E-LEARNING KUMKM Legality and Licensing OSS 1 Online Single Submission Pelayanan Perizinan Berusaha Terintegrasi Secara Elektronik Standardization and Certification BADAN POM HALAL Pasar Digital UMKM Indonesia Online processing of BPOM permits via: e-reg.pom.go.id Manage Halal Certification online via: https://ptsp.halal.go.id SNI Register SNI online via: SIMPKTN 32#34Pre-Employment Card Program for Human Resources Development > 53 Million Total Registered and Recipient 18,356,621 17,568,343 Registrants on the Pre-Employment Card site (verified Email, NIK, KK, & Phone Number) Total Recipients of Pre-Employment Cards (Batch 1-58) Total Effective Recipients of Pre-Employment Cards (Batch 1-58) 38 Provinces 514 Reg/City Normal Scheme Implemented in 2023 RECIPIENT Effective recipient of the Normal 1,142,924 Scheme Pre-Employment Card (Batch 48-60)* 244 851,009 Recipient Completed Training Training Progress 15.1 hours Rp 1,464,960 Training Institute 1,216 Active Training 834,899 Rp544 Bio Recipients get incentives Incentives have been disbursed 14% Training Method N=168 Average training duration The average price of the training purchased by Participants 86% N=1048 * The number of effective beneficiaries, namely defined beneficiaries (1.272.177 people) minus beneficiaries whose membership has been revoked is 129.253 people) Offline Online Source: Pre Employment Card Management, 3 November 2023#35Tax Incentives and Reform Lower Tax Rate for the Corporate Income Tax Law No. 2/2020, PERPPU 1/2020, PP 30/2020 25% <2020 RP 22% 2020-2021 Other improvements: 1. E-filing for CIT, VAT, worker income tax (payroll) 2. Faster VAT Restitution 20% 2022 dst Investment Facilities through OSS System Tax Holiday and Mini Tax Holiday Corporate income tax exemption of 50-100% for 5-20 years for investments in pioneer industries. Tax Allowance Income deduction before corporate income tax of 30%- TA (or 60%-IA for labor-intensive industries) of the investment value for 6 years for investments in certain business fields and/or areas. Import Duty Facility Import duty exemption incentives for imports of machinery as well as goods and materials for industry and service industries. Investment Facility in SEZ Tax Holiday for Main Activities, Tax Allowance for Other Activities, for investors investing in Special Economic Zones. * Import Duty, Excise and Tax facilities related to Import do not go through OSS. Source: Ministry of Investment (BKPM) 34#36APBN Deficit Keeps Below 3% of GDP, Fiscal Sustainability Maintained Since the COVID-19 pandemic which occurred in 2020 and 2021, fiscal policy has been pushed to be expansionary with a budget deficit of above 3% of GDP, but in 2022 the deficit was only 2.35% even though it was initially projected to be 4.5%. 2020 Extraordinary Policy ■ Perppu 1/2020 → Law 2/2020 ■ Law 2/2020 Handling Covid-19 and Stimulus Program PEN ■ Widening APBN deficit by 6.34% of GDP 2020 APBN deficit to GDP (%) Perp res 54/2020 Perp res (Apr) 72/2020 Realization (Jun) 2021 COVID-19 Handling & Economic Recovery ■ Focus on handling the pandemic (vaccination and health protocols) ■ Economic recovery, and flexible accountable PEN ■ Reform momentum (UU HPP, UU HKPD) 2021 APBN deficit to GDP (%) APBN 2021 Realization 2021 יד וווי -1.76 2022 National Economic Recovery & Structural Reform ■ Strengthening pandemic management (accelerating vaccination for communal immunity) ■ Strengthening pandemic management (accelerating vaccination for communal immunity) ■ Effectiveness of reforms 2023 Increased Productivity & Fiscal Consolidation Strengthening the role of the APBN to increase productivity ■Consolidation of a quality fiscal (deficit returns to a maximum of 3% of GDP) Structural reform 2022 APBN deficit to GDP (%) 2023 APBN deficit to GDP (%) APBN 2022 Perpres 98/2022 Realization (Jun) APBN 2023 Realization 12 Dec 2023 2022 -5.07 -6.34 -6.14 -5.7 -4.57 || -4.85 -4.5 -2.35 -2.27 -0.17 2024 Accelerating Economic Transformation ■ Maintained Sustainability ■ Short inflation, ☐ poverty, Fiscal term focus: extreme stunting, investment Long term focus: HR, Infrastructure, bureaucracy 2024 APBN deficit to GDP (%) APBN 2024 -2.29 Source: MOF#37Section 3 Economic Factor: Improved Growth Prospects Supported by Continued Economic Recovery Momentum BHINNEKA TUNGGAL IKA#38Conducive Environment Underpinning Improved Growth Fundamentals Amid Heightened Global Uncertainty Largest Economy in South East Asia 4th Most Populous country in the World; 64% in productive age Manageable Inflation Rate 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 Budget reform as a part of larger economic reform initiative Tax base to be broadened from one reduce dependency on commodities Large and Stable Economy Consistent Budget Reform Reform- Oriented Administration New Economic Structure High Infrastructure Investments 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 37#39Indonesia's Economic Growth Projected to Remains Solid and Resilient Supported by Domestic Demand Strong GDP Growth¹ 8.0 IQoQ -YoY 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 2016 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2015 2017 2018 4.94 1.60 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2019 2020 2021 2022 2023 Favourable GDP Growth Compared to Peers² 10,00 Amidst increasing global uncertainty, Indonesia's economic performance remains solid and resilient to global spillover. Entering the second half of 2023, Indonesia's economy grew by 4.94 % (yoy) in the third quarter of 2023, after recorded a 5.17% (yoy) growth in the second quarter of 2023. The economic performance was supported by solid domestic demand. Household consumption growth recorded 5.06% (yoy) in line with increasing mobility, stable purchasing power, and a well maintained of consumer confidence. Meanwhile government consumption contracted by 3.76% (yoy) due to shifting personnel expenditures in Q2-2023. Overall investment recorded a higher growth at 5.77% (yoy), supported by improved construction investment in line with the continued infrastructure development in various regions, including the infrastructure development of Ibu Kota Nusantara (IKN). Nevertheless, exports contracted by 4.26% (yoy), given weaker global economy. Economic growth also supported by sound performance across all economic sectors, particularly the manufacturing industry, wholesale and retail trade as well as construction. Spatially, the highest economic growth was recorded in the regions of Sulawesi-Maluku-Papua (Sulampua), Java, Kalimantan, Sumatera, and Bali-Nusa Tenggara (Balinusra). Robust economic growth is expected to persist in the fourth quarter of 2023, as reflected in a number of early indicators, such as consumer confidence, income expectations and the Manufacturing Purchasing Managers Index (PMI). Overall, economic growth in 2023 is projected in the 4.5-5.3% range before accelerating in 2024 as a corollary of solid consumer confidence, the upcoming general election and ongoing development of national strategic projects (PSN). Bank Indonesia will continue strengthening fiscal- monetary stimulus synergy with macroprudential stimuli to drive economic growth, particularly from the demand side. 2023-2024 Growth Projection *) 6,29 5,88 4,95 5,00 3,25 1,51 0,00 0,66 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Institutions GDP growth 2023 GDP growth 2024 -5,00 2023 Budget 5.3 5.2 Bank Indonesia 4.5-5.3 4.7-5.5 -10,00 Consensus Forecast (December 2023) 5.0 4.9 -15,00 India Indonesia -Italy Philippines Portugal Uruguay World Bank (IEP, December 2023) 5.0 4.9 IMF (WEO, October 2023) 5.0 5.0 ADB (Asian Development Outlook, September 2023) 5.0 5.0 2. 1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption Source: World Economic Outlook Database - October 2023; * indicates estimated figure *) Consensus Forecast number will be given later 38#40GDP Growth Breakdown GDP Growth Based on Expenditures (%, YoY)¹ 2018 2019 2020 2021* 2022** 2023*** By expenditure HH. Consumption Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot Q1 Q2 Q3 5,0 5,2 5,0 5,1 5,1 5,0 5,2 5,0 5,0 5,0 2,8 -5,5 -4,0 -3,6 -2,6 -2,2 6,0 1,0 3,6 2,0 4,3 5,5 5,4 4,5 4,9 4,5 5,2 5,1 Non profit HH. consumption Government consumption Gross Fixed Cap. Formation 8,1 8,8 8,7 10,9 9,1 17,0 15,3 7,4 3,5 10,6 -5,0 -7,8 -1,9 -1,9 -4,2 -3,6 4,1 2,9 3,2 1,6 5,9 5,0 6,0 5,7 5,6 6,2 8,6 6,2 2,7 5,2 6,3 4,6 4,8 5,3 8,2 1,0 0,5 3,3 3,9 -6,5 9,8 1,9 2,1 2,6 8,2 0,6 5,3 4,2 -6,6 -4,6 -2,6 -4,8 -4,5 3,3 10,6 -3,8 7,9 5,8 6,9 6,1 6,7 5,0 4,6 4,2 4,1 4,5 1,7 -8,6 -6,5 -6,2 -5,0 -0,2 7,5 Exports 5,8 7,4 8,3 4,6 6,5 -1,1 -1,2 0,9 -0,6 -0,5 0,4 -13,6 -12,7 -7,4 -8,4 2,2 Imports GDP 12,5 15,2 14,2 7,4 12,1 -5,8 5,1 5,3 5,2 5,2 5,2 5,1 -5,9 -8,5 -8,1 -7,1 -6,0 5,1 5,0 5,0 5,0 3,0 -21,3 -25,0 -17,6 -17,6 5,2 -5,3 -3,5 -2,2 -2,1 -0,7 7,1 3,8 4,5 3,8 28,4 20,7 22,2 18,0 33,2 31,1 32,6 24,9 3,5 5,0 3,7 4,1 3,1 5,0 3,3 3,9 2,1 4,6 5,8 14,2 16,4 19,4 14,9 16,3 11,9 -3,0 -4,3 16,0 12,7 25,4 6,3 14,7 3,7 -3,1 -6,2 5,0 5,5 5,7 5,0 5,3 5,0 5,2 4,9 GDP Growth by Sector (%, YoY) 2018 2019 2020 2021 2022** 2023*** By sectors Q1 Q2 Q3 Q4 Tot Q1 Agriculture, forestry, and fishery Mining and Quarrying Manufacturing Construction 3,3 4,7 3,6 3,8 3,9 1,1 2,6 2,7 2,2 2,2 1,8 2,3 5,3 3,1 4,2 Q2 Q3 Q4 Tot 3,6 Q1 Q2 Q3 Q4 0,0 2,2 2,2 2,6 Tot | Q1 1,8 3,5 -0,7 2,3 0,9 1,2 0,4 -2,7 -4,3 -1,2 -2,0 -2,0 5,2 1,4 7,8 Q2 Q3 Q4 Tot Q1 Q2 Q3 Q4 Tot 0,6 2,3 4,6 3,9 4,4 4,2 4,3 3,9 3,5 4,1 3,7 3,8 2,1 6,2 -4,3 -3,1 -2,9 -1,4 6,6 3,7 7,4 5,7 5,8 5,6 6,1 5,9 5,7 5,6 5,8 5,8 2,9 -5,4 -4,5 -5,7 -3,3 -0,8 4,4 3,8 4,9 3,4 5,1 3,9 STW 4440 Q1 Q2 Q3 1,9 1,2 1,7 2,0 4,5 2,3 0,4 2,0 1,5 5,2 4,0 3,8 4,0 3,2 6,5 4,4 4,9 5,0 7,0 4,0 4,8 5,6 4,9 4,4 2,8 4,8 1,0 0,6 1,6 2,0 0,3 5,2 SAUN 4,9 5,2 6,4 Wholesale and Retail Trade, Repair of Car and Motorcycle Transportation and Storage Information and communication 5,0 5,2 5,3 4,4 5 5,2 4,6 4,4 4,2 4,6 1,5 7,7 -5,1 -3,7 -3,8 -1,3 9,5 5,1 5,5 4,6 8,5 8,7 5,7 5,5 7 5,4 5,8 6,7 7,6 6,4 1,3 7,8 5,1 8,1 7,1 7 9,1 9,6 9,2 9,8 9,4 Financial service 4,3 3,1 3,1 6,2 4,2 7,2 4,5 6,2 8,5 6,6 10,6 1,1 -0,9 2,4 3,2 -3,0 8,3 -30,8 16,7 -13,4 -15,1 -13,1 25,1 -0,7 7,9 9,8 10,8 10,7 11,0 10,6 8,7 6,9 5,5 6,2 4,3 -2,6 Other Services 5,4 6,2 6,7 6,4 6,2 6,8 7,3 6,4 6,2 6,7 4,6 -6,3 -1,4 -1,7 -1,2 -2,5 9,8 -0,8 3,4 3,2 6,8 1,6 2,3 5,7 4,4 5,4 6,6 5,5 4,9 5,3 5,1 15,8 21,3 25,8 17,0 19,9 15,9 15,3 14,7 7,2 8,1 7,0 8,7 7,7 7,1 8,0 8,5 1,6 1,5 0,9 3,8 1,9 4,4 2,9 5,2 3,3 4,0 7,9 4,9 5,0 4,5 7,1 3,3 GDP 5,1 5,3 5,2 5,2 5,2 5,1 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 5,0 5,5 5,7 5,0 5,3 5,0 5,2 4,9 Source: Central Bureau of Statistics of Indonesia (BPS) *Other services consist of 10 sectors (according to Standard National 2008) 39#41Economic Performance in All Regions Remains Solid In the third quarter of 2023, the economy grew 4.94% (yoy), down from 5.17% (yoy) in the previous period Realization of PDRB Quarter III 2023 (%, yoy; compared to Quarter II 2023) ACEH 3,76 North Sumatra 4,94 North Kalimantan 4,79 GORONTALO RIAU 4,62 North 4,02 West Sumatra Riau Islands 4,88 West Kalimantan East Kalimantan 5,29 Sulawesi North 5,40 Maluku 4,27 West 4,30 JAMB Babel 4,90 Islands Central Kalimantan 3,74 25,13 West Sulawes Central Sulawesi 13,06 Papua 3,73 South 4,01 South 7,50 Kalimantan Sumatra BENGKULU 5,08 4,57 Southeast Sulawesi 3,96 LAMPUNG DKI 3,93 South Sulawesi 4,05 4,92 MALUKU 5,69 4,93 West Central Java West Nusa BANTEN Java East BALI 4,57 4,97 4,92 Java Tenggara 5,35 1,58 4,86 DIY 4,96 East Nusa Tenggara 2,08 Q3'23-Q2'23 Q3'23<Q2"23 Q3'23>Q2'23 Source: BPS, calculated Source: Central Bureau of Statistics of Indonesia (BPS), calculated PAPUA 8,28 40 40#42Economic Performance in Most Sectors Continue to Improve In terms of production, Indonesia's economy is mainly supported by services sector, manufacturing, and primary sector. Services sector (wholesale and retail trade, transportation and warehousing, information and communication,) has expanded the last five years, while primary sector (mining and quarrying) has benefited from higher commodity prices in 2022. % Indonesia's GDP Share (%) 80.0 70.0 60.0 50.0 9.13 9.09 9.35 9.49 9.86 13.30 13.19 13.02 13.02 13.01 13.19 12.81 12.80 40.0 30.0 22.04 21.76 21.45 21.03 21.08 20.0 10.0 2010 2011 2012 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 2013 2014 2015 2016 2017 2018 100.0 90.0 2.63 1.99 2.16 2.49 2.49 3.15 3.57 3.85 4.06 4.11 3.27 3.53 3.51 4.29 3.65 3.51 3.56 3.99 5.05 4.05 3.91 4.68 4.47 4.42 4.38 4.61 4.32 4.23 17.5 17.6 17.8 18.0 18.2 18.6 18.6 18.4 18.3 18.6 19.1 18.8 19.10 19.8 19.2 18.5 18.5 17.0 18.1 18.0 17.0 16.6 16.1 17.00 16.7 16.3 17.1 16.15 3.49 3.46 3.72 3.88 3.86 4.03 4.19 4.20 4.15 4.24 4.70 4.44 4.32 3.73 3.60 3.61 3.57 3.50 3.52 3.62 3.78 3.77 3.96 4.25 4.66 4.56 3.57 3.53 3.63 3.93 4.42 5.02 5.20 5.41 5.38 5.57 5.17 3.57 4.39 13.46 13.61 13.21 21 13.21 13.43 4.34 4.34 4.16 4.00 4.05 4.13 4.30 4.10 4.06 4.41 4.35 4.12 4.02 4.13 4.15 4.19 4.21 4.22 4.62 4.82 5.03 5.56 5.02 5.56 5.87 5.98 4.24 4.51 4.58 4.41 4.56 4.51 4.58 4.43 4.57 4.47 4.27 4.21 4.67 4.26 4.37 3.90 4.12 4.28 4.56 12.84 12.91 13.07 13.07 13.00 10.21 10.38 10.38 10.53 10.75 10.70 10.55 10.59 10.95 10.70 10.79 10.11 10.38 20.99 20.52 20.16 19.86 19.70 19.97 19.85 19.84 19.80 19.87 19.82 19.28 19.14 18.79 19.24 19.21 6.27 6.15 6.48 2019 Q1-2020 Q2-2020 10.46 11.81 11.61 11.01 9.83 7.65 7.18 7.58 8.08 7.26 6.82 13.93 13.51 13.37 13.36 13.34 13.49 13.48 13.16 12.81 12.71 12.84 15.44 14.67 11.97 13.70 13.23 14.29 14.32 11.39 13.28 12.57 13.08 13.00 11.00 12.40 11.78 13.35 13.57 6.43 7.64 8.09 9.55 10.43 8.97 10.37 Q3-2020 Q4-2020 2020 Q1-2021 Q2-2021 Construction Financial and Insurance Services Q3-2021 Q4-2021 2021 Q1-2022 Q2-2022 Q3-2022 Q4-2022 Information and Communication Manufacturing 2022 Q1-2023 Q2-2023 Q3-2023 12.71 12.96 13.10 12.76 12.79 12.77 12.85 12.95 12.85 12.96 10.48 10.44 10.43 9.18 9.49 10.01 9.77 9.88 9.43 9.86 17.92 17.97 18.32 18.34 18.56 18.25 18.74 12.64 13.03 12.65 12.22 11.85 10.48 10.18 41#43Solid Fundamentals Facing the Headwinds Inflation Rate (%) Inflation remain under control within the target range 1998 2008 12.1 Nov 2023 2.86 (yoy) IDR Movement (%) IDR movement year-to-date exceeding Other developing economies currency performance Foreign Reserves (USD bn) Significantly higher than 1998 & 2008, ample to cover 6.1 months of import and external debt repayment 1998 -197 82.4 2008 -35 20 Dec 23 0.37 (ytd) -300 -200 -100 0 1998 Non-Performing Loan/NPL (%) NPL level (gross) is below the maximum threshold of 5% 30 2008 3.8 Oct 2023 2.42 05 10 15 20 25 30 35 40 External Debt (Public & Private) to FX Reserve Ratio Significantly lower than 1998 crisis 1998 17.4 2008 50.2 Nov 2023 138.1 More Liquid Market (%) In the markets, the IndONIA rate is in line with the higher BI7DRR and strengthening the monetary operations strategy of Bl Government Debt*/GDP Consistently well-maintained 62 10.5 5,59 1998 2008 23 August 2023 External Debt/GDP Significantly lower than 1998 crisis 8.6x 3.1x 2.9x 100.0% 27.4% 38.11% 116.8% 33.2% 28,9% 2008 Oct 2023 2008 Nov 2023 2008 Q3-2023 1998 1998 1998 *) Domestic & Forex 42 12#44Outlook of Domestic Economy Remains Solid ...strong economic growth projected to continue in 2023, and further accelerate in 2024 amid global uncertainty 2023 2024 Economic Outlook - Bank Indonesia projects economic growth in 2023 continue to accelerate to the range of 4.5-5.3% in 2023, before accelerating to the range 4.7-5.5% in 2024 Bank Indonesia is confident that inflation will remain under control in the 3.0%±1% target this year, and 2.5%±1% in 2024. Bank Indonesia projects Balance of Payment (BOP) to remain sound, supported by a manageable current account maintained in the range of a 0.4% surplus to a 0.4% deficit of GDP in 2023, and in the range of a 0.1 deficit to 0.9% deficit of GDP in 2024. Bank Indonesia projects credit growth in 2023 will grow by 9%-11% and accelerating to 10%-12% in 2024 LOAN 元 Rp Economic Growth Inflation CAD (% of GDP) Credit Growth 2019 Realization 5.02% 2.72% 2.71% 6.08% 2020 Realization -2.07% 1.68% 0.4% -2.4% 2021 Realization 3.69% 1.87% surplus 0.3% 5.24% 2022 Realization 5.31% 5.51% surplus 1.0% 11.35% surplus 0.4% - 2023 4.5-5.3% 3.0±1% 9-11% deficit 0.4% Deficit 0.1% - 2024 4.7-5.5% 2.5±1% 10-12% Deficit 0.9% Source Bank Indonesia 43 13#45The General Election Period Will Boost Economic Activity Political Stability is one of the keys to the success of ! economic achievement. Indonesia is the third-largest democracy in the world. Since 2004, the people can directly elect the president and members of parliament. NPSHIs consumption and M2 (money supply) increased during the election period (including the campaign period) in 2014 and 2019 2004 2009 2014 2019 Number of parties 24 38 12 16 Presidential candidate's 60,6% 60,8% 53,2% 55,5% vote 30 25 20 15 10 5 0 -5 -10 -15 GE Period |2013-2014 NPSHIS Consumption -Growth M2(RHS) GE Period 2018-2019 18.00 1. I 16.00 GE: Juli 2014 MA GE: April 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Elections will drive the national and regional economy through: Increasing MSME economic activity until the campaign period through e- mail, printing, and various merchandise; Election logistics costs; Improvement of facilities and infrastructure (including infrastructure) to build public image; Regional Original Revenue (PAD) through advertisement tax for the installation of billboards, banners, video trans, etc.; 14.00 2. 12.00 3. 10.00 8.00 4. 6.00 4.00 44#46Section 4 External Factor: Improved External Resilience BHINNEKA TUNGGAL IRA#47External Sector Remains Resilient Supported by Adequate Reserves and Sound Balance of Payments Balance Of Payment Remains Solid Current Account Recorded Low Deficit 2016: 2017: 2018: CA Deficit CA Deficit CA Deficit (US$17.5bn) (US$16.9bn) (US$16.2bn) (US$30.6bn) 2019: CA Deficit (US$30.3bn) US$bn 20 15 10 2015: CA Deficit Indonesia's Balance of Payments US$bn 160 140 134.86 120 US$bn 23 100 5 -0.28 80 283 18 13 0 60 8 -5 40 3 -10 -1.46 20 (2) -15 (7) Q1 Q3 Q1 Q3 Q1 Q3 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1* (12) Q3** Q1 2015 2016 2017 2018 2019* 2020* Capital and Financial Account 2021 2022** Current Account 2023** Overall Balance Source: Bank Indonesia Trade Balance Surplus Continues 2018: US$bn Deficit 12 10 8 6 4 2 02 -2 -4 (US$8.65bn) Reserve Asset (rhs) 2019: Deficit (US$3.24bn) 2020: 2021: 2022: Surplus Surplus Surplus (US$21.81bn) (US$33.8bn) (US$54.52bn) Q3 2023 Surplus (US$2.4bn) OG Non-OG Total 2017 Source: BPS 2018 2019 2020 2021 2022 2023 *Preliminary Figure ** Very Preliminary Figure 2020: CA Deficit (US$4.4bn) 2021: CA Surplus US$3.5bn 2022: 2023: CA Surplus CA Deficit US$12.8bn (US$0.1bn) Current Account Deficit ---སུ------ Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q3 Q4 Q1 zŏ Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q4 Q2 - εδ 200 -0.25 100 10.27 (1.00) 1.46 (2.00) -8.49 (3.00) -4.11 (4.00) Q4 Q1* Q2* Q3** 2015 2016 2017 2018 2019* 2020* 2021 2022** 2023** 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 Nov 2023: US$138.1bn (Equiv. to 6.1 months of imports + servicing of government debt) Month of Import & Debt Service (RHS) FX Reserves (LHS) US$bn 150 140 130 120 110 100 90 4.62 80 70 -2.21 60 5 50 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 35 79 1 3 5 7 9 11 11 11 11 11 = 2018 2019 2020 2021 2022 Source: Bank Indonesia Month 138.1 14 15 1 3 5 7 9 11 2023 6.1 11 10 9 LULUS87654321 46#48Movement of Rupiah Exchange Rate Movement In Line With BI Stabilization Measures Data.d. 20-Dec-23 Quarterly Average IDR/USD 14893 14669 14219 14064 14935 14566 14373 14157 14339 14399 26-Jul-2 14259 28-Nov-21 -Dec-21 14344 11-Feb-2 8-Mar- Rupiah Exchange Rate Volatilty Rupiah 2023 vs 2022 point-to-point TRY -35,76 -29,92 JPY ZAR MYR CNY KRW THB INR PHP IDR SGD EUR BRL 15568 15223 15510 15215 14860 16-Jun-2 11-Jul-2 5-Aug- 30-Aug: 24-Sep-2 19-Oct-22 3-Nov-22 8-Dec-22 2-Jan-23 27-Jan-23 21-Feb-23 18-Mar-23 12-Apr-23 7-May-23 1-Jun-23 26-Jun-23 21-Jul-23 15-Aug-23 9-Sep-23 4-Oct-23 29-Oct-23 3-Nov-23 average 17,000 16,500 16,000 15639 15,500 18-Dec-23 15,000 14,500 14,000 13,500 13,000 15,0 As of 20th December 2023, the rupiah gained 0.44% in value against the level recorded at the end of November 2023. Consequently, the rupiah has appreciated 0.37% on the level recorded at the end of December 2022, thereby outperforming the Philippine peso, Indian rupee and Thai baht, which depreciated 0.05%, 0.53% and 0.85% respectively. In addition to BI stabilisation policy, rupiah appreciation continues as a corollary of foreign capital inflows, attractive yields on domestic financial assets for investment as well as the positive economic outlook. Moving forward, Bank Indonesia will remain vigilant of several emerging risks and strive to maintain rupiah stability. In addition, Bank Indonesia will optimise the pro-market MO strategy through the SRBI, SVBI and SUVBI instruments to enhance liquidity management at domestic financial institutions and attract portfolio inflows from abroad. Meanwhile, Bank Indonesia continues strengthening coordination with the Government, banking industry and business community to support the effective implementation of instruments that retain the proceeds of natural resources exports in accordance with Government Regulation Number 36 of 2023 (PP DHE SDA) concerning the Foreign Exchange Proceeds of Exports and the Exploitation, Management and/or Processing of Natural Resources. 47 -8,59 -6,35 6,88 -11,05 -5,44 -3,49 -3,33 -4,85 -2,54 -0.91 -0,85 0,84 -0,53 -4,67 -0,05 1.85 0,37 -2.43 0.75 2,63 2,30 2,58 8,51 3,53 -10,0 -5,0 0,0 5,0 10,0 %, ytd -35,0 -30,0 -25,0 -40,0 -20,0 -15,0 Source: Reuters and Bloomberg. Data as of 20 December 2023#49Global Regional Bilateral Ample Lines of Defense Against External Shocks Ample Reserves FX Reserve Swap Arrangement Japan Singapore China Malaysia Ample level of FX reserves to buffer against external shock FX Reserves as of of November 2023: US$138.1 bn Renewed a 3 year USD22.8 billion swap line with Japan in October 2021 The facility is available in USD and JPY Renewed a 1 year SGD/IDR swap arrangement with the size up to SGD 9.5 bn / IDR 100 tn (equivalent) in November 2023 • Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 250 bn / IDR 550 tn (equiv.) in January 2022 Renewed a 3 year RM/IDR swap arrangement with a size up to RM 8 billion / IDR 28 trillion (equiv.) in September 2022 Chiang Mai Initiative Multilateralization (CMIM) Agreement Entitled to a maximum swap amount of US$ 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 IMF Global Financial Safety Net GSFN Source: Bank Indonesia 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) 48#50100% 90% 80% 70% 60% 50% 40% 30% 20% 10% %0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-20 20 External Debt Structure External Debt Remains Manageable Million USD 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1-2019 Source: Bank Indonesia, External Debt Statistics of Indonesia 02-20 20 Q3-20 20 Q4-20 20 Jan-21 Feb-21 Mar-21 Apr-21 May-21* TZ-unc 12-0 Healthy External Debt Profile Aug-21 Sep-21 Oct-21 Private External Debt Public External Debt Nov-21 Dec-21 an-22* Feb-22* Mar-22* Apr-22* May-22* Jun-22* Jul-22* Aug-22* Se p-22* Oct-22* Nov-22* Dec-2022 * Jan-23* Feb-23* Mar-23* Apr-23* May-23* Jun-23* Jul-23* External Debt External Debt Growth (yoy) - rhs Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022* Q2-2022* Q3-2022* Q4-2022* Q1-2023* Q2-2023* . Aug-23* Sep-2 023* Oct-20 23** % % 20.0 240 394,448 220 15.0 200 10.0 180 160 5.0 140 0.0 120 -0.5 100 -5.0 80 Q3-2023** 2009 2010 *Provisional Figures 2011 2012 2013 2014 2015 2016 2017 50.2 100% 90% - 80%- 49.8 70% 60% 50% - 40% 30% 20%- 10% 0% The Structure of External Debt is Dominated by Long-Term Debt Short Term External Debt ■Long Term External Debt 2009 2010 2011 2012 2013 2015] 2016 2017 2018 2019 Q2-2019 Q3-2019 24-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Jan-21 Feb-21 Mar-21 Apr-21 May-21* External Debt to GDP Ratio & Debt to Export Ratio 2018 Q1-2019 Q2-2019 03-2019 04-2019 Q1-2020 02-2020 03-2020 **Very Provisional Figures External Debt/ Export Ratio (rhs) External Debt/ GDP Ratio 04-2020 01-2021 02-2021 03-2021 04-2021 Q1-2022* Q2-2022* QB-2022* 04-2022* Q1-2023* 02-2023* 03-2023 ** 49 Jun-21 12-pr Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22* Feb-22* Mar-22* Apr-22* May-22* Jun-22* Ju-22* Aug-22* Sep-22 Oct-22* Nov-22* Dec-2022* Jan-23* Feb-23* Mar-23* Apr-23* May-23* Jun-23* Ju-23* Aug-23* Sep-2023* Oct-2023** 40 20 21225 35 30 28.9 124.0 10 ܘ܂ 0 17.4 82.6#51Strengthened Private External Debt Risk Management Lower Debt Burden Indicator (External Debt/GDP) Compared to Peers Rating Encouraging Corporates Compliance on Hedging Ratio & Liquidity Ratio External Debt/GDP (%) Hungary Uruguay Kazakhstan Croatia Colombia Panama Mexico Hedging Ratio* 80.5 81.1 89.5 74.3 78 7979.4 282 corporates (11,3%) 172 corporates (6,9%) 60.4 71.8 83.3 55.5 52.1 53.6 53.8 46.8 48.2 48.7 I Indonesia Philippines 38.5 40.2 45.9 29.1 30.1 34.9 26.1 27.5 75.1 77.5 2023 2022 ■2021 ≤ 3 months 2211 corporates (88,7%) Liquidity Ratio* > 3-6 months 2321 corporates (93,1%) Source: Moody's Credit View Fundamental Data, September 2023 Regulation on Prudential Principle in Managing External Debt Regulation Key Points 1 Jan 17 & beyond Object of Regulation Hedging Ratio ≤ 3 months > 3-6 months Liquidity Ratio (≤ 3 months) Credit Rating Hedging transaction to meet hedge ratio Sanction Governs all foreign currency Debt 25% 25% 70% Minimum rating of BB- (State-owned Enterprises) Must be done with a bank in Indonesia Applied Source: Bank Indonesia 332 corporates (13.3%) 2161 corporates (86.7%) ■Comply ■ Not Comply *Data as of Q2-2023, with total population 2,493 corporates Source: Bank Indonesia 50#52BHINNEKA TUNGGAL IRA Section 5 Fiscal Performance and Flexibility: Strong Commitment in Maintaining Fiscal Credibility#532023 Fiscal Policy Focus 63 Human Resources Infrastructure Bureaucratic Reform Industrial Revitalization The 2023 State Budget supports consolidation to maintain fiscal sustainability 2019 2020 2021 (73.1) 2022 2023 (156.8) (348.7) (328.4) (431.6) (486.4)* (633.6) (732.2) (775.1) (2.20) (2.28)* (947.7) (3.92) (4.57) (6.14) Deficit (trillion rupiah) Primary Balance (trillion rupiah) Deficit of GDP (%) 1st Semester Report Outlook I Green Economy Strengthening the Role of the APBN and Continuing Quality Fiscal Consolidation Revenue Mobilization Quality Expenditure Innovative Financing 52 52#54Strategic Focus for 2023: Prioritizing Health, Food Security, Human Capital, and Infrastructure Development Health IDR Trillion Food Security IDR Trillion 50.8 73.1 -4.5 5.5 43.2 -39.4 -4.6 -10.4 -18.8 7.0 Realization 159.3 42.6 -Growth (%) 92.0 61.0 37.0 33.2 34.6 96.6 101.9 29.7 Education IDR Trillion 2019 2020 2021 2022 2023 Realization -Growth (%) 2019 2020 2021 2022 2023 Infrastructure IDR Trillion 7.9 1.9 1.2 5.5 7.1 0.6 29.9 -25.6 -15.3 8.3 326.7 305.2 280.4 285.7 289.3 Realization 195.9 189.4 173.7 160.4 145.8 ⚫% Growth Realization % Growth 2019 2020 2021 2022 2023 Source: Ministry of Finance, YTD 31 Aug 2023 2019 2020 2021 2022 2023 53#55Solid Budget Performance Continues The budget deficit returned to below 3% GDP one year earlier than the initial target 2022 2023 Account (IDR Tn) Growth1 Budget Audite d (%) Budget Growth² Gov't (%) Reg 75/2023 Real. 30th Nov % to Budget³ (%) Growth Real. 12th Dec % to Growth Budget³ (%) Revenue 2,635,8 30.6 2,463.6 (6.2) 2,637.2 Tax Revenue 2,034.6 31.4 2,021.2 (0.7) 2,462. 4 2,118.3 1,916.3 90.5 93.4 3.6 2,553.2 96.8 4.1 3.6 1,996.4 94.2 4.4 Government Revenue State Revenue grew well amidst moderation in commodity prices, this growth was driven by economic improvement. In fact, the development of state revenues exceeded the initial budget which was prepared conservatively. Non Tax Revenue 595.6 28.3 441.4 (25.0) 515.8 544.2 105.5 3.2 554.5 107.5 3.1 Expenditure 3,096.3 10.9 3,061.2 (1.0) 3,117.2 2,510.5 80.5 (4.0) 2,588.2 83.0 Central Government 2,280.0 13.7 2,246.5 (1.2) Expenditure 2,302.5 1,774.4 71.1 (5.7) 1,840.4 79.9 Transfer to 816.2 3.9 814.7 (0.2) 814.7 736.1 90.4 0.6 747.8 91.8 Region Primary (74.1) (81.9) (156.8) (101.0) (38.5) 361.1 (937.2) 185.7 378.6 (982.8) 215.2 Government Expenditure The government's spending priorities are geared towards enhancing productivity and safeguarding the public, with adequate budget support provided to preserve citizens' purchasing power through energy subsidies and compensation programs. (4.1) (5.9) 0.6 Balance Surplus (Deficit) (460.4) (40.1) (598.2) (28.8) (479.9) (48.2) 10.0 (79.6) (35.0) 7.3 (85.8) % to GDP (2.35) (2.84) (2.27) (0.23) (0.17) Financing 591.0 (33.1) 598.2 2.5 479.9 282.3 58.8 (36.2) 289.6 60.3 (38.9) Government Financing Addressing the challenges posed by global financial market volatility and the possibility of increased debt costs. Source: Ministry of Finance. Note: 1. % Growth of 2021 Budget Realization, 2. % Growth of 2022 Budget Realization, 3. % Growth of 2023 Budget Under Presidential Regulation No.75/2023 54 54#56Solid Budget Performance Supported by Sustained Revenue Collection Remained robust economic activities and gained from the tax reforms have sustained revenue collection amid moderating commodity prices Positive Growth in Main Sector Tax Revenue (12th Dec 2023 YTD) Jan-Dec12 '23 Jan-Dec 12 '22 Positive Growth in Main Sector Tax Revenue (12th Dec 2023 YTD) Jan-Dec12 '23 Jan-Dec12 '22 3.1% Manufacturing (27,1%) Domestic VAT (23,8%) 36.4% 7.5% Trade (24,3%) 50.3% Corporate Income Tax (22,3%) Financial Service & Insurance (11,9%) 22.2% 15.3% 18.0% 24.9% 16.6% 92.0% -5.1% Import VAT (13,8%) 43.7% 23.8% Mining (9,6%) Income Tax art. 21 (11,3%) 139.2% Transportation & Warehouse (4,5%) Construction & Real Estate (4,3%) Source: Ministry of Finance, YTD 12th December 2023 30.1% 27.0% 17.2% 20.0% -25.6% Final Income Tax (6,9%) 54.9% 17.1% Income Tax art. 26 (4,6%) -4.3% 16.4% 11.3% 55#57Customs and Excise Revenue Contraction Impact of Global Commodity Price Decline and Tax Control Policies Amid Sustained Domestic Economic Activity IMPORT DUTY IDR 47.6T 100.1% of Budget 89.6% Gov't Reg 75/2023 IDR Trillion EXPORT DUTY IDR 12.3T 120.5% of Budget 62.2% Gov't Reg 75/2023 IDR Trillion 86.6% EXCISE IDR 196.7T 80.1% of Budget Gov't Reg 75/2023 IDR Trillion Tobacco Product Excise (CHT) IDR188.9T (81.2% of Budget/86.4% of Revised Budget) 5.0 22.6 15.6 8.8 0.0 -0.7 3.3 7.9 4.6 3.8 3.0 1.7 1.8 0.1 -0.1 -68.1-69.0-71.7-71.7-67.5 -77.0 -81.3-80.3-78.1-74.4 -69.8-68.5 -5.2 -5.8 -5.4 -4.3 -4.5 -3.7 -8.9 -12.4-12.7 0.5 0.2 23.9 17.6 4.4 4.5 4.4 4.1 3.8 3.5 4.6 3.8 4.2 4.5 4.0 17.1 18.4 18.0 18.4 16.7 1.2 1.0 1.1 8.3 13.0 12.3 15.6 7.3 1.0 0.9 4.5 3.3 3.5 4.0 3.6 4.2 4.2 4.6 4.3 4.4 5.1 1.7 1.8 1.3 24.7 26.4 8.7 3.6 4.1 3.8 1.0 2.0 20.7 2.9 3.2 1.6 17.5 8.9 18.4 17.5 17.9 2.4 13.4 14.4 12.5 1.3 0.8 0.9 88 7.8 5.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 12th Dec 2022 2023 Accumulated Growth (%) 2022 12023 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 12th Dec Accumulated Growth (%) Jan Feb Mar Apr May Jun 2022 2023 Jul Aug Sep Oct Nov 12th Dec Accumulated Growth (%) Customs revenue until December 12 decreased by 0.1% (YoY) due to a decline in import values (-7.8% until October 2023), offset by a rise in Free Trade Agreement (FTA) utilization (34% compared to the previous year's 33.6%). The Directorate General of Customs and Excise (DJBC) improved import services, including postal items, e-cd, Rush Handling, and services for Indonesian Migrant Workers. Enhanced supervision was also implemented on the East Coast and main ports. Source: Ministry of Finance Export tax revenue until December 12, 2023, dropped by -68.5% (YoY) due to declining palm oil (-81.3% YoY), copper (-0.3% YoY), and bauxite (-89.0% YoY) export taxes. Mineral export policy relaxation added IDR 3.26 trillion in exit duties, aligning with downstreaming policies. Export services improved via clinics, sampling standardization, and reduced logistics costs through multimodal NLE. CHT revenue until December 12 fell by -3.7% (YoY) due to policies balancing consumption control, sustaining employment, and monitoring illegal cigarettes. Production declined by -1.8%, aligning with consumption control targets (-1.3% effective rates). Estimated employment absorption increased by 15,683 people (DJBC 2022 survey). Confiscated tobacco-related products saw a 26% (YoY) rise. 56#58Non-Tax Revenue Realization has Reached The Budget Target Amidst Commodity Price Fluctuations This achievement is primarily the result of increased Non-Oil and Gas Natural Resources Revenue, Separated State Wealth Revenue, and Other Non-Tax State Revenue. 595.6 IDR Trillion 441.4 554.5 515.8 2022 2023 Revised Budget Budget Real. 12th Dec Source: Ministry of Finance Oil & Gas IDR 109.0T 83.1% Budget 105.2% Revised Budget 148.7 131.2 103.6 109.0 2022 2023 Budget Revised Budget 12th Dec Real. Lower Indonesian Crude Price (ICP) from economic slowdown in Europe and oil lifting issues Coal tariff adjustments, enhanced non Tax Revenue with the Automatic Blocking System, utilization of a analytical data, and taxpayer profiling in supervision 120.1 64.8 131.0 119.7 2022 2023 Revised Budget Budget 12th Dec Real. Non Oil & Gas 109.4% IDR 131.0T 202.1% Budget Revised Budget Separated 100.0% Other Non 166.1% State Assets IDR81.5T Revised Tax Revenues Budget 134.4% Budget Budget IDR152.3T 196.3 115.8% Revised Budget Public Service Agencies IDR 80.8T 97.3% Budget 101.6% Revised Budget 81.5 81.5 89.9 83.0 152.3 79.5 80.8 131.5 113.3 49.1 40.6 2022 2023 Revised Real. Budget Budget 12th Dec The increase is contributed by the dividend payments from state-owned enterprises in both banking and non- banking sectors. 2022 2023 Revised Real. Budget Budget 12th Dec Contraction in mining revenue and DMO revenue is caused by lower Indonesian Crude Price (ICP), oil lifting, and a decrease in the Indonesian Coal Reference Price (HBA) 2022 2023 Revised Real. Budget Budget 12th Dec Revenue declined in managing the National Education Development Fund, Hospital Services, and Education Services. Decreased demand and falling CPO prices led to reduced revenue in managing the Palm Oil Plantation Development Fund. 57#59Central Government Expenditure Perfomance Central Government Expenditure as of 12th December 2023 IDR Trillion 20.4 16.9 5.3 2.1 -5.9 1012.4 894.3 670.1 719.0 582.0 1001.9 919.2 942.7 946.1 778.2 2019 2020 2021 2022 2023 Non-Line Ministries Growth (%) I Line Ministries Central government spending until October 2023 has been realized at IDR 1,840.4 trillion (81.9% of the allocation), comprising: 1 Line Ministries Spending IDR946.1 T* (94.5% of Budget) • Support for the preparation of election implementation, the development of the New Capital City (IKN) program, acceleration of priority infrastructure completion, and the distribution of various social assistance. *) Realization of personnel expenses, goods expenses, capital expenses, and social assistance expenses. 2. Non-Line Ministries Spending IDR894.3 T (71.8% of Budget) the realization of fertilizer subsidies, pre-employment cards, as well as the payment of fuel and electricity subsidies and compensation. The realization of Non-Line Ministries will increase along with the payment process for various programs, including subsidies and compensation in December Source: Ministry of Finance 58#60Increased Transfer to Regions with Improved Governance (January-November) 2023 2022 Revenue Sharing (DBH) ■General Allocation (DAU) Physical Special Allocation (DAK Fisik) I Non- Phyisical Special Allocation (DAK Non Fisik) Grant ■Special Autonomy & Privilege Allocation for Yogyakarta Village Fund Incentive Fiscal Special Fund The performance of the realization of the Regional Budget (APBD) expenditure in 2023 grew by 4.9% (year-on-year) due to improvements in the absorption of all types of expenditures, with the highest growth observed in capital expenditures, which increased by 13.0%. IDR 747.8T Transfer to Region Fund (91.8% from budget) • IDR 743.2T (92.3% from budget) • • • • The DAU is higher due to the distribution of Phase III of the DAU in the Education sector, Health sector, Public Works sector, including DAU for the payment of PPPK salaries. Non-Physical DAK is higher due to an increase in compliance with the requirements for disbursement. Special Fund is slightly higher due to an increase in the allocation ceiling for the year 2023 compared to 2022 by Rp100 million. DBH is lower, mainly because on October 31, 2022, there was a disbursement of DBH Family Planning amounting to Rp22.9 trillion Special Autonomy funds have been fully disbursed at 100%. This is lower than the previous fiscal year due to a reduction in the allocation of Aceh's Special Autonomy from 2% to 1% of the National DAU. In nominal terms, Physical DAK is lower because the ceiling is lower than the previous year. However, in terms of percentage, the disbursement has increased. At the end of December, the disbursement of Family Planning DBH and Additional Regular DBH for 2023 is planned. Local Government Performance IDR Trillion IDR Trillion 195.30 209.14 9.68 9.38 110.75 125.15 155.86 151.86 247.94 258.24 330.88 Jan Nov 2022 - 335.92 131.18 Jan Nov 2023 Jan-Nov 2022 Personnel Spending Capital Spending Material Spending Other Spendings 141.88 Jan-Nov 2023 Social Assistance Spending Health Spending Economy Spending Source: Ministry of Finance#61Stronger Budget Performance has Eased Fiscal Pressures Fiscal position has continued to improve Tax ratio increases in line with stronger recovery (% GDP) 10.8 10.4 10.2 10.4 9.9 9.8 10.0 10.1 9.1 8.3 2015 2016 2017 2018 2019 2020 2021 2022 Outlook Primary Balance is trending up (% GDP) 2023 2024* 2015 Overall budget position improved significantly (% GDP) 2016 2017 -2.6 -2.5 -2.5 2018 2019 -2.2 2020 2021 2022 ? 2023 Outlook -4.6 2024* -2.3-2.3 2015 2016 2017 2018 2019 -0.5 -0.1 -1.2 -1.0 -0.9 2020 2021 Source: Ministry of Finance Note: *2024 Proposed Budget 2022 2023 Outlook 2024* -6.1 Fiscal pressures has eased (% of GDP) 40.7 39.4 39.6 37.8 29.4 30.1 30.2 -0.40.2 -0.1 -2.5 2017 2018 2019 2020 2021 2022 2023 Outlook -4.1 60 60#62Fiscal Policy Directed to Support Acceleration of Economic Transformation Fiscal Policy Theme 2024: Accelerating Inclusive and Sustainable Economic Transformation K (1) Vision Advancing Indonesia 2045 Short-term Policy Focus Inflation control (price stability) Medium - Long Policy Focus Human Capital Gap Transformasi Ekonomi Eradication of extreme poverty Reduction of stunting prevalence Increased investment The role of the budget policy: Stabilization and addressing urgent issues (Stunting, extreme poverty) Infrastructure Gap Institutional Gap The role of the budget policy: Accelerating Structural Reforms Productivity Low > High Value Added Low > High Environmental Brown clean & green Economic Base Narrow Broad-based & inklusif Source: Ministry of Finance 61#632024 Budget Postures Focused on expediting inclusive and sustainable economic transformation 2023 Account (IDR Tn) outlook 2024 % Growth MACROECONOMIC ASSUMPTIONS FOR THE 2024 BUDGET Economic Revenue 2,637.2 2,802.3 6.26 Growth 5.2% (yoy) Tax Revenue 2,118.3 2,309.9 9.04 2.8% Inflation (yoy) Non-Tax Revenue 515.8 492.0 -4.61 Exchange rate IDR15.000/US$ Expenditure 3,123.7 3,325.1 6.45 Central Gov't 2,298.2 2,467.5 7.37 Rp Oil Price/ USD82/barrel Expenditure ICP Transfer to 825.4 857.6 3.90 Region % 10Y T-Bonds 6.7% Rate Deficit 486.4 522.8 7.48 Oil Lifting 635 Thousand bpd % of GDP (2.30) (2.29) Financing 486.4 522.8 7.48 Gas Lifting 1,033 Thousand bsmpd Source: Ministry of Finance 62 62#64Budget Supports for Structural Reform Agenda well Maintained Budget allocation for prioritized sectors on the upward trend (in IDR Trillion) 700 600 500 400 300 200 100 2013 2014 2015 2016 Education Source: Ministry of Finance Budget Development on Priority Program Covid-19 Pandemic % to total budget (avg 2013-2024) 661 2017 2018 2019 2020 2021 2022 Outlook 2023 Social Protection -Infrastructure 2024* Education 20% fostering a competitive human capital 494 423 186 14% 14% 5% -Health Social Protection promoting more effective and efficient social protection and subsidy distribution Infrastructure accelerating the implementation of basic infrastructure projects Health supporting health system reforms 63 33#65Budget Priorities 2024 to Support Economic Transformation 8 4 Ð 100000 Education (IDR660.8 T) Improve access and quality of education in Indonesia & educational infrastructure, especially in the 3T (frontier, outermost, and underdeveloped) regions Health (IDR186.4 T) Social Protection (IDR493.5 T) Accelerate stunting reduction, strengthen technology and pharmaceutical self-reliance, enhance National Health Insurance, and improve healthcare system reliability. Provide financial assistance and basic necessities to the extremely poor, Strengthen Lifelong Social Welfare, Graduation from Poverty, Adaptive Social Protection Infrastructure (IDR422.7 T) Develop infrastructure in ICT, energy, food, and connectivity sectors, accelerate completion of National Strategic Projects (IKN), particularly in connectivity infrastructure. Food Security (IDR108.8 T) Boosting domestic food production, improving agricultural storage and processing facilities, enhancing logistics and connectivity, and strengthening the national food reserve. 64#662023 Budget Financing Increasing productivity for an inclusive and sustainable economic transformation Macroeconomic Assumption for 2023 Budget 2023 Development Target Description (IDR Trillion) Budget 2023 A. State Revenue 1. Tax Revenue 2,463.0 2,021.2 Economic Growth 5.3% ICP US$90/barrel Unemployment rate Human Development Index 5.3-6.0 73.31-73.49 2. Non-tax Revenue 441.4 3. Grants 0.4 B. State Expenditure 3,061.2 Inflation 3.6% Oil Lifting 660 thousand barrel/day 1. Central Government Expenditure 2,246.5 Gini Ratio 0.375-0.378 Poverty Level 7.5-8.5 2. Regional Transfer & Village Fund 814.7 C. Primary Balance (156.7) Exchange Rate IDR14,800/USD 51 D. Surplus (Deficit) (598.2) 105-107 % of GDP (2.84) Gas Lifting 1,100 thousand barrel of oil equivalent/day Peasant Exchnage Rate Fisherman Exchnage Rate 107-108 10Y T-Bonds Rate E. Financing 598.2 7.90% Source: Ministry of Finance 65#67Budget Financing Controlled Amid Global Market Volatility & Government Liquidity Financing Realization as 12th December 2023 Domestic Loan (Net) IDR 8.36 T 544.4 345.0 9.5 534.8 298.6 46.4 Domestic Loan Withdrawal (Gross) IDR 11.17T Domestic loan principal installment financing IDR (2.81T) • 2022 12th Dec 2023 Loan (nett) Foreign Loan (Net) IDR 31.50 T Foreign Loan Withdrawal (Gross) IDR 105.43T Foreign loan principal installment financing IDR (73.93T) FLPP Securities (nett) Accelerate Investment in Priority Sectors for The Welfare of The Society Housing Financing Liquidity Facility IDR 108.5T (Total Fund from 2010 to December 2023) As of 12th December, 2023, a total of 299,000 FLPP (Housing Financing Liquidity Facility) homes have been disbursed to low-income communities, meeting the 2023 target for homes financed valued at IDR 26.3 trillion. Lembaga Manajemen Aset Negara State Asset Management Agency Total Fund Allocation: 159.89 trillion (from 2016 to December 2023) • The total fund allocation for LMAN in 2023 is 25.4 trillion IDR. As of December 2023, 116 National Strategic Projects with a total value of 122.19 trillion IDR have been funded. Education Fund Management Agency (LPDP) IDR 8T (2023 Funding Target) Total Endowment Fund as of Dec 2023 IDR 139.11T LDKPI International Development Cooperation Fund (LDKPI) Grant disbursement as of 12th December 2023 amounting IDR 265.67B to many countries in Latin America and Caribbean, Africa, Asia, and Pacific. Source: Ministry of Finance#68Debt Financing as of November 30, 2023 Budget Financing continues to well risk-controlled, among others through optimal composition, good related to currency, interest rates, and maturity Government Securities Rp292.5 Debt (Net) Financing Realization Loan (Net) Rp39.9 Rp 332.39 (47.7%) Disbursed Foreign Loan Rp105.4 Note: 1. all numbers in trilliun Rupiah 2. The percentage is the percentage of budget ceiling from National Budget year 2023 67 Source: Ministry of Finance#69GS Financing Realization 2023 Government Securities Government Debt Securities (SUN) IDR Denominated - Auction - Private Placement - Retail FX Denominated Sovereign Sharia Securities (SBSN) IDR Denominated - Auction - Private Placement - Retail FX Denominated Source: Ministry of Finance Realization ao Nov 30, 2023 (Trillion IDR) 787.22 506.05 447.08 369.92 11.57 65.59 58.97 281.17 249.77 181.00 6.83 61.94 31.40 68#70Republic of Indonesia USD3 bn Global Bonds Issuance Issuer Issuer Rating Format Pricing Date Settlement Date Republic of Indonesia Baa2 Moody's (Stable) BBB S&P (Negative) BBB Fitch (Stable) SEC-Registered Notes Offering January 5, 2023 March 11, 2023 Issue Size USD3 bn Tenor 5year 10year 30year Maturity January 11, 2028 January 11, 2033 January 11, 2053 Tranche Size USD1,0 bn USD1,25 bn USD750 milion Coupon 4.550% 5.650% (p.a.) Price 98.678% 5.750% Yield (p.a.) JLM Listing Use of Proceeds Sously VI ImunLL 98.900% 4.800% 4.850% 98.061% 5.100% BofA Securities, DBS Bank Ltd., HSBC, Mandiri Securities and Standard Chartered Bank Singapore, Frankfurt Stock Exchange Net proceeds from the sale of the Bonds will be used for the general purposes of the Republic Transaction Highlight The first Emerging Asian sovereign issuer in 2023 and marks the Republic's thirteenth successful SEC-registered US$ transaction since 2018. A low new issuance concession for the transaction, which was also one of the lowest amongst the transactions launched on the same day Investor Breakdown by Region 30% 5-year 3:3% % 37% Asia 44% 30-year 28% 41% 10-year 31% 30% 26% EMEA US Investor Breakdown by Investor Type <1% 10% 1% 8% 45-year 68% 6% 10-year 67% 1% 17% 19% ၁၁ 17% 11% 30-year Asset Managers / Fund Managers Central Banks / SWFS Private Bank 69% Banks Insurance / Pension Fund 69#71Republic of Indonesia JPY104,8 bn Samurai Bonds Issuance Series RIJPY0526B RIJPY0528B RIJPY0530 (Blue SB) RIJPY0533 (Blue SB) Investor breakdown by Investor Type Tenor 3 Years 5 Years 7 Years 10 Years Maturity Date May 26, 2026 May 26, 2028 May 24, 2030 May 26, 2033 Central Cooperatives; Public Fund; 4,80% 5,90% Regional Cooperatives; 1,00% Regional Banks; 0,50% Pricing Date 19 Mei 2023 Settlement Date 26 Mei 2023 Asset Managers; 9,40% Offshore Investors; 27,90% Size JPY46.9 Bio JPY37.2 Bio JPY14.7 Bio JPY6 Bio Yield/ Coupon City Banks; 9,50% 0,74% 0,98% 1,20% 1,43% Transaction Highlight . • The Republic becomes the first Sovereign Blue Bonds issuer that publicly offered in accordance with ICMA principles. This issuance demonstrates the government's commitment to sustainable financing, particularly for the achievement of the Sustainable Development Goals (SDGs), and represents a major milestone for blue financing. The Republic successfully achieved its objective of marking lower yield levels across tranches despite a significant rise in underlying interest rates compared to the previous year's transaction. Source: Ministry of Finance Lifers; 25,30% Others; 15,70% 70 70#72Republic of Indoneia USD 2 BN Global Sukuk Issuance The Republic of Indonesia (the "Republic") made its annual return to the global Sukuk market and successfully priced a US$ 2.0 billion Sukuk offering comprising of US$ 1.0 billion 5-year and a US$ 1.0 billion 10-year (Green) tranche. ◆ The transaction received positive response from investors since the start of bookbuilding, generating a combined final order book of US$ 5.6 billion reflecting an oversubscription of 2.8x. This enabled the Republic to compress guidance by 25 bps on both the 5-year and 10-year tranches, and priced at 5.40% for 5-year tranche and 5.60% for 10-year green tranche. ✰ Several notable achievements of this transaction include: the tightest 5-year and 10-year spreads at issuance achieved by an ASEAN sovereign in the last 2 years the tightest Sukuk vs. conventional differential achieved by the Rol in recent years ■ the lowest new issue premium achieved by the Rol in the USD markets in the last 2 years ■ the largest USD Sukuk issuance by an Asian sovereign year-to-date The 10-year Green Sukuk tranche is the sixth global Green Sukuk issued by the Republic and the second since the Republic published its SDGs Government Securities Framework in August 2021. Issuer Issue Format Country of Transaction Issuer Ratings (M/S/F) Issue Ratings (M/S/F) Pricing Date Issue Date Tenor Maturity Date Tranche Size Profit Rate Re-Offer Price Reoffer Spread 144A ISIN Reg S ISIN Use of Proceeds Other Details Listing Joint Bookrunners Co-Managers Perusahaan Penerbit SBSN Indonesia III 144A/Reg S, Senior, Unsecured, Wakala US$ Trust Certificate ("Sukuk") issued under a USD$35 billion Trust Certificate Issuance Programme Indonesia Baa2 Stb (Moody's) / BBB Stb (S&P) / BBB Stb (Fitch) Baa2 (Moody's) / BBB (S&P) / BBB (Fitch) 7 November 2023 15 November 2023 (T+5) 5Y Sukuk 15-Nov-28 USD1 billion 5.40% Fixed, Semiannual, 30/360 100.00% UST + 86.7bps US71567PAX87 US71567RAX44 The Obligor intends to use the net proceeds it receives from the issue of Sukuk to meet part of its general financing requirements. USD 10Y Sukuk (Green) 15-Nov-33 ----- USD1 billion 5.60% Fixed, Semi-annual, 30/360 100.00% UST+103.6bps US71567PAY60 US71567RAY27 The Obligor intends to invest an amount equal to the net proceeds from the issue of the trust certificates exclusively to finance or re- finance expenditure directly related to "Eligible SDGs Expenditures with Green and Blue focus" as defined in the Obligor's SDGs Government Securities Framework. USD200k/1k denoms., English / Indonesian Law SGX-ST and Nasdaq Dubai CIMB, Citigroup, Dubai Islamic Bank, Mandiri Securities and Standard Chartered Bank (B&D) PT BRI Danareksa Sekuritas and PT Trimegah Sekuritas Indonesia Tbk ORDERBOOK DISTRIBUTION 5-Year USD US$ 2.75bn+ From 95 accounts INVESTORS BY GEOGRAPHY (ALLOCATION) 18% 18% 5-Year USD.0% 25% 29% 10-Year USD US$ 2.85bn+ From 127 accounts 15% 22% 9% 10-Year USD 27% 27% ■ Asia (ex-ID, Msia) ■ Indonesia =ME/Malaysia ■ Europe ■ US INVESTORS BY GEOGRAPHY (ALLOCATION) 1% 1% 21% 36% 5-Year USD 51% 5% 10-Year USP 55% 5% 7% 18% ■Fund Managers ■ CBS/SWFs ■Ins/Pension ■Banks ■ PB & Others 71#73400 Primary Market Performance 2022 - 2023 Government Securities (GS) Incoming Bids 500 Awarded Bids 6.00 450 ---2022 Avr Incoming Bids Bid to Cover Ratio [RHS] --2022 Avr Awarded Bids 5.01 4.77 5.00 350 3.56 300 3.11 250 2.73 2.6 2.60 2.45 200 2.2 2.2" 2.14 IDR32.25 tn 150 per auction 1.96 1.81 1.78 IDR12.46 tn per auction 100 50 50 Jan-22 Feb-22 Mar-22 Source: Ministry of Finance Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 3.61 2.87 2.78 2.40 2.2, 2.02 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 3.00 2.35 2.33 2.06 1.00 2.00 4.00 In 2023: average incoming bid IDR35.02 tn/auction average awarded bid = IDR12.24 tn/auction 72#74Ownership Of Tradable Domestic Government Securities Description Banks* Dec-19 581.37 21.12% Dec-20 1,375.57 35.54% Govt Institutions (Bank Indonesia**) 262.49 9.54% 454.36 11.74% Bank Indonesia (gross) 273.21 9.93% GSused for Monetary Operation 10.72 0.39% Non-Banks 1,908.88 69.34% 874.88 420.51 2,040.83 22.60% Mutual Funds 130.86 4.75% 10.86% 52.72% 161.32 4.17% Insurance Company and Pension Fund Foreign Holders 471.67 17.13% 542.82 14.02% Dec-21 1,591.12 34.01% 801.46 17.13% 1,220.73 26.09% 419.27 8.96% 2,286.40 48.87% 157.93 3.38% 655.24 14.00% Dec-22 1,697.43 31.97% 1,020.02 19.21% 1,453.58 27.38% 433.57 8.17% 2,591.98 48.82% 145.82 2.75% 873.03 16.44% Nov-23 1,549.86 27.67% 1,027.79 18.35% 1,362.42 24.33% 334.63 5.97% 3,023.23 53.98% 1,061.86 38.57% 973.91 25.16% 891.34 19.05% 762.19 14.36% Foreign Govt's & Central Banks 194.45 7.06% 178.31 4.61% 233.45 4.99% 203.11 3.83% Individual 81.17 2.95% Others Total 163.32 5.93% 2,752.74 100% 3,870.76 100% 4,678.98 100% 131.21 231.57 5.98% 3.39% 221.41 4.73% 344.30 6.48% 360.47 7.70% 466.65 8.79% 176.59 3.15% 1,035.09 18.48% 833.88 14.89% 226.24 4.04% 430.67 7.69% 547.01 9.77% DR 68.13% Portion of foreign ownership in the mid & long term sector (≥5 years) on January 24, 2020, foreign holders 1,092.02T reach a record high in nominal terms 5,309.43 100% 5,425.54 100% 1) Non Resident consists of Private Bank, Fund/Asset Manager, Securities Company, Insurance Company, and Pension Fund. 2) Others such as Securities Company, Corporation, and Foundation. *) Including the Government Securities used in monetary operation with Bank Indonesia. **) net, excluding Government Securities used in monetary operation with Banks. Source: Ministry of Finance Non-Banks, 53.98% Govt Institutions, 18.35% Banks, 27.67% Foreign Holders, Others, 14.89% 9.77% Insurance and Pension Fund, 18.48% Individual, 7.69% Mutual Funds, 3.15% 73#75Holders of Tradable Central Government Securities Balanced Ownership In Terms of Holders and Tenors Holders of Tradable Gov't Domestic Debt Securities Foreign Ownership of Gov't Domestic Debt Securities by Tenor 23.9% 22.5% 23.4% 20.3% 21.1% 27.7% 35.5% 34.0% 32.0% 29.6% 29.8% 30.09 27.89% 28.4% 26.9% 27.1% 24.2% 24.27 24.19 24.80 25.60 23.96% 37.8% 39.9% 36.8% 42.0% 40.3% 38.49 37.89 36.7! 38.52 39.3% 46.9% 54.0% 53.7% 34.8% 36.2% 36.9% 39.5 39.55 40.08 39.83 39.15 44.17% TII 21.8% 22.1% 22.39 22.8! 22.33 22.17 21.39 20.93% 23.8% 23.19 18.7 19.87% 22.00% 18.97 18.82 17.57 17.03 16.56 16.09 15.65 15.24 14.31 13.90 14.27 14.36 14.89% 38.2% 37.5% 39.8% 37.7% 38.6% 25.2% 19.0% 14.4% 14.9% 5.3% 5.1% 10.3 10.14 10.2% 9.9% 8.7% 8.6% 9.29% 9.15% 9.04% 8.76% 5.64% 2.9% 4.1% 4.3% 3.59% 4.8% 4.9% 5.0% 5.0% 4.57% 4.41% 4.95% 5.56% 4.23% Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Nov-23 Foreign Holders Source: Ministry of Finance Domestic Non Banks Domestic Banks Jan-22 Feb-22 Mar-22 10-1 >2-5 >10 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 >1-2 >5-10 % Foreign Ownership of Total Oct-22 Nov-22 Dec-22 Nov-23 74#76Triliun Rp Disciplined and Advanced Debt Portfolio Management Stable Debt to GDP Ratio Over the Years Prudent Fiscal Deficit 9,000.00 40.73% 39.36% 45% 39.48% 38.11% 8,000.00 40% 1,177 878 659 916.03 442 446 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 755.12 27.46% 28.34% 29.40% 29.81% 30.18% 887.04 35% 358 819.86 30% 53 14 1 852.91 30 25% 764.48 810.74 734.85 746.32 2,000.00 1,000.00 2,410.01 2,780.86 3,248.93 3,612.69 4,014.80 5,221.65 6,091.85 6,846.89 7,124.98 (20)(56) 20% (341) (57) (269) (9)(35) (349) (36) (7) (105) 15% -1.80% (464) -2.50% -2.20% -2.38% 10% (775) -6.14% (948) -4.57% 5% 2017 2018 2019 2020 2021 2022 0% 2015 2016 2017 2018 2019 2020 2021 2022 Nov-23 Government Securities (net) Non-debt (net) Loan Bond Weighted Average Debt Maturity Debt to GDP Deficit/GDP (RHS) Domestic & Offshore Loan (Net) Surplus (Deficit) Well Diversified Across Different Currencies 9.6 9.39 9.13 9.2 1% 1% 1% 1% 0% 0% 100% 6% 4% 5% 5% 5% 5% 5% 2% 4% 5% 4% 20% 80% 30% 27% 23% 20% 20% 20% 8.8 8.68 8.6 60% 8.52 8.5 8.37 8.4 8.27 40% 8.06 58% 62% 66% 70% 71% 72% 8 20% 7.6 0% 2018 2019 2020 2021 Dec-22 Nov-23 7.2 2015 2016 2017 2018 2019 2020 2021 2022 Nov-23 Source: Ministry of Finance ■ATM IDR USD EUR JPY OTHER 75#77100 900 800 700 600 500 400 28.0 20.7 23.0 19.2 19.7 17.5 16.1 Well Balanced Maturity Profile with Strong Resilience Against External Shocks Interest Rate Risks (%) Declining Exchange Rate Risks (%) (2.0) 2015 2016 2017 2018 2019 2020 VR Prop Non SKB VR Prop SKB 2021 Refixing Proportion 2022 Nov-23 Debt Maturity Profile 25.5 50.0 44.6 42.6 22.0 26.5 41.3 41.0 21.0 37.9 40.0 33.5 30.0 29.2 28.1 18.0 30.0 10.2 10.6 13.0 8.9 20.0 6.6 12.2 12.1 12.1 12.2 13.2 11.4 12.2 11.5 10.7 8.0 13.7 10.0 12.1 10.6 10.6 9.8 7.6 7.4 8.2 9.0 3.0 0.0 2015 2016 2022 Nov-23 300 486551577525483 200 391 2023 2024 2025 2026 2027 2028 Source: Ministry of Finance 2029 278347278275280 183 152 80 143 2030 2031 2032 2033 2034 21 130 2039 2040 2041 2042 2043 2044 00 2017 2018 2019 2020 2021 ■FX to GDP Ratio ■FX Proportion Upcoming Maturities (Next 5 Years) (%) 50.0 43.9 42.5 ■IDR Denominated (Triliun Rp) 40.4 41.0 39.3 39.6 40.1 40.0 36.0 Other Currencies (Triliun Rp) 34.7 30.0 25.0 25.5 26.4 24.3 24.6 22.7 22.8 22.8 21.4 20.0 2045- 2046 2047 2048 2049-2071 9.9 10.6 8.4 8.1 7.8 10.0 6.5 6.4 7.5 8.3 0.0 2015 2016 2017 2018 2019 2020 2021 2022 Nov-23 ■1 Year 3 Year 5 Year 76#78Government Guarantee for Basic Infrastructure Development Reflects strong commitment to national development planning Government Guarantee Program Power (Electricity) Full credit guarantee for PT PLN's debt payment obligations under FTP 1 10.000MW and 35GW programs* Contingent Liabilities from Government Guarantee as of Q3 2023** Central Government Guarantee for Infrastructure Programs Exposure/ Outstanding (USD bn) Credit Guarantee • Clean water - Guarantee for 70% of PDAM's debt principal payment obligations 1 - Toll road - Full credit guarantee for PT Hutama Karya's debt payment obligations for the development of Sumatra Toll Roads Infrastructure Full credit guarantee on SOE'S borrowing from international financial institution & guarantee for PT SMI's local infrastructure financing 2 Coal Power Plant 10,000MW Fast Track Program (FTP 1) Clean Water Supply Program 0.18 0.00 3 Direct Lending from International Financial Institution to SOEs 2.77 4 Sumatra Toll Road. 1.76 5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) 4.00 Public Transportation (Light Rail Transit) - Full 6 Public-Private Partnerships (PPP) 6.52 credit guarantee for PT Kereta Api Indonesia's debt payment obligations for the development of LRT Jabodebek 7 Regional infrastructure financing 0.12 8 Public Transportation (Light Rail Transit) 1.08 9 Electricity Infrastructure Fast Track Program (35 GW) 5.51 - Total 21.93 Business Viability Guarantee (BVG) 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* PPP Guarantee Infrastructure - Guarantee for Government-related entities obligations (line ministries, local governments, SOES, local SOEs) under PPP contracts/agreements • • Maximum new guarantee issuance for the period 2023-2026 is set at 1.5% of GDP per year. Starting from 2008 the Government has allocated a contingent budget with respect to these guarantees. The allocated fund is then transferred to a guarantee reserve fund. This reserve fund can be used to serve any claims that may arises from the guarantees. Political Risk Guarantee Infrastructure - Guarantee against infrastructure risk 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 **) Currency conversion at IDR15,526/USD1 and IDR16,404/EUR1 (September 2023) 77#79Section 6 Monetary and Financial Factor: Credible Monetary Policy Track Record and Favourable Financial Sector BHINNEKA TUNGGAL IRA#80Bank Indonesia's Policy Mix Direction in 2024 Maintaining Stability, Reviving Sustainable Growth Inclusion & Pro-Stability Pro-Growth Green B Stability • BI7DRR Growth BI Rate Focused on achieving the inflation target and maintaining Rupiah stability to ensure that global shocks cannot disrupt national economic stability or growth. • Policy coordination between Bank Indonesia and the Government will be increased to strengthen external resilience to global shocks, control inflation and foster sustainable economic growth. 1. Forward-looking and pre-emptive interest rate policy to achieve the inflation target set by the Government at 2.5%±1% in 2024 and 2025 2. Rupiah stabilization policy to mitigate the impact of global shocks on achieving the inflation target as well as maintaining macroeconomic and financial system stability to support the national economic recovery. 3. A pro-market monetary operations strategy to strengthen the effectiveness of Bank Indonesia policy transmission to the financial markets and economy, which includes attracting foreign portfolio inflows. 4. Managing capital flows in accordance with international principles to support external economic stability in Indonesia and maintain adequate reserve assets. • • • . Monetary Macro prudential Payment System Money Market Development Green Financial Economy Enhancing the effectiveness of KLM and loosening all other macroprudential policy instruments to revive bank lending/financing to priority sectors in the economy. Maintaining loose liquidity conditions by reducing the MPLB to revive lending/financing and maintain financial system stability against the impact of global spillovers Strengthening the systemic surveillance of loan/financing disbursements and banking industry resilience to maintain financial system stability in close coordination with the KSSK Strengthening the coordination of BI macroprudential supervision with OJK microprudential supervision to maintain financial sector resilience, including risk mitigation of the global spillovers. • Payment system policy in 2024 will remain oriented towards strengthening payment system stability and accelerating the national digital economy and finance further to support sustainable economic growth The direction of payment system policy remains in accordance with implementation of the Indonesia Payment System Blueprint (BSPI) 2025, which is currently being refined and extended to 2025-2030. • Pro-growth money market deepening policy will be maintained in 2024 by creating and maintaining a modern money market based on international standards, strengthening the transmission effectiveness of the Bank Indonesia policy mix, as well as reviving financing for sustainable economic growth Bank Indonesia will continue expanding and strengthening programs to develop a green and inclusive economy and finance to support sustainable economic growth. • Bank Indonesia will also continue strengthening its role as a pioneer and driver of the sharia economy and finance as a new source of economic growth and to become a major world player Source: Bank Indonesia 79#81Bank Indonesia Policy Mix: December 2023 Maintaining Stability and Reviving Growth B BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA The BI Board of Governors Meeting agreed on 20th-21st th December 2023 to hold the BI-Rate at 6.00%, while also maintaining the Deposit Facility (DF) rate and Lending Facility (LF) rate at 5.25% and 6.75% respectively. Starting from December 21st 2023, Bank Indonesia will refer its policy rate using the term "BI-Rate", replacing the BI 7-Day (Reverse) Repo Rate, to enhance its monetary policy communication. % Rp Hold the Bl Rate at 6.00% Rupiah stabilisation through foreign exchange market intervention with a focus on spot and Domestic Non- Deliverable Forward (DNDF) transactions, as well as government securities (SBN) in the secondary market Strengthening the pro-market monetary operations (MO) strategy for effective monetary policy, which includes optimising Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Forex Securities (SVBI) and Bank Indonesia Forex Sukuk (SUVBI) Deepening prime lending rate (PLR) transparency policy with a focus on interest rates by economic sector Accelerating payment system digitalisation towards greater transaction efficiency and expanding the digital economy and finance (EKD) ecosystem as follows: 1. (Expanding QRIS implementation by: (i) setting a target of 55 million QRIS users in 2024, (ii) setting a target of 2.5 billion QRIS transactions in 2024, and (iii) strengthening the cross-border QRIS implementation strategy to accelerate uptake, 2. Strengthening Indonesia Credit Card (KKI) implementation for the government segment by developing online payment features, while expanding more intensive socialisation, coordination and monitoring activities. Expanding international cooperation with other central banks and authorities in partner countries, particularly through cross-border QRIS linkages and local currency transactions (LCT), as well as facilitating investment, trade and tourism promotion in priority sectors in conjunction with relevant institutions Source: Bank Indonesia 80#8218 14 10 6 2 (2) 2013 Manageable Monetary Environment Amid Heightened Global Uncertainty Well Maintained Inflation Ensured Price Stability Strengthened Monetary Policy Framework (%) CPI (%, yoy) RHS Volatile Food (%, yoy) - LHS Rupiah Exchange Rate Volatilty 2014 2015 2016 2017 2018 2019 2020 2021 Dec-22 Jan-23 Mar-23 Feb-23 Apr-23 00 8.00 LF Rate: 7.00 The New Monetary Operation Framework 7.00 BI Rate: 6.50 I 6.00 7.59 I 2.86 3 5.00 2.07 I 4.00 1.87 May-23 Administered (%, yoy) - LHS Core (%, yoy) - RHS Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Oct-23 Nov-23 Dec-23 3.00 2.00 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Credit Growth Profile % yoy 20.0 12.12 19.53 18.27 17.64 16.81 16.15 13.... 13.81 12.... 12.57 20 20 15.0 10.0 15 5.0 10.66 9.64 9.28 7.77 8.02 .17 8.40 10 10 0.0 6.54 7.74 6.20 5.57 .84 5.06 -5.0 .26 3.45 5 3.61 0.91 1.44 2.05 -10.0 0.89 BRL ZAR TRY IDR Sumber: Reuters. Bloomberg diolah Source: Reuters, Bloomberg (calculated) KRW THB MYR INR SGD PHP Dec-2023 LF Rate: 6.75 BI 7Day RR Rate: 6.00 DF Rate: 5.25 Apr-22 May-22 Jun-22 Ju-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May 23 Jun-23 Ju-23 Aug-23 Sep-23 Oct-23 Nov-23 Total Growth -Working Capital Loans -Investment Loans Oct-15 Oct-16 Oct-17 Oct-18 Jan-20 Oct-20 Ja n-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 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Óct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 July-23 Aug-23 Sep-23 Oct-23 Nov-23 81 10.14 9.57 9.26 9.74#8315% 10% 5% 0% -5% -10% Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 20% Source: OJK Source: Financial Services Authority (UJK) Apr-20 Jul-20 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% Jan-19 Jul-19 Apr-19 Oct-19 Jan-20 Apr-20 Jul-20 LOAN In October 2023, bank loans and third-party funds (total deposits) grew by 8.99% (yoy) and 3.43% (yoy), respectively. Loan Third-Party Fund (Deposits) Banking Intermediation Despite the challenging global economic environment, Bank loans and Third-Party Funds grew modestly, driven by investment and consumption loans. Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Loan growth by segmentation continued to improve in October 2023, with major contribution from Consumption Loans, which recorded 9.28% (yoy) growth. MSMEs Consumption Oct-20 Jan-21 Apr-21 Corporation - Total 30% 9.28% 8.99% 20% 8.61% 8.36% 10% Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 -10% 0% Jan-19 Apr-19 LOAN 20% 15% 8.99% 10% 5% 3.43% 0% de à de 5% -10% Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Working Capital Consumption All types of loans maintained their positive trend in October 2023, with Investment Loans, in particular, grew by 10.22% (yoy). Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Investment Total Loan 10.22% 9.28% 8.99% Third-Party Funds (Total Deposits) grew at a slower rate in October 2023, driven by increased household consumption particularly in Term Deposits, which increased by 5.66% (yoy). Term Deposits Demand Deposits ми Savings Third-Party Fund (Deposits) 5.66% 3-43% 2.62% Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 82 88 1.64% Apr-23 Jul-23 Oct-23 8.10%#84Source: OJK 170 160 150 140 130 120 110 100 Jan-19 1 2 The banking NPL ratios were manageable in October 2023, recorded at 2.42% gross and 0.77% net, significantly below the threshold. % NPL Net NPL Gross 4 3 Banking Risk Profile and Profitability The banking industry has ample liquidity, robust capitalization, and manageable credit risk. Profitability is maintained at a steady level. Liquid Assets to Non-Core Deposits Liquid Assets to Non-Core Deposits and Liquid Assets to Third-Party Funds (Total Deposits) remained well above the thresholds. threshold LA/ NCD= 50% Jan-19 Apr19 Jul-19- Oct-19- Jan-20 Apr-201 Jul-20 Oct-201 5432-0 Feb-20 May-20 Jan-21- % Apr-21 Jul-21- Liquid Assets to Deposits (rhs) % °/ 26,36 30 4 20 117,29 2 threshold LA to Deposit (rhs) = 10% 10 Oct-21- Jan-22 Apr-22 Jul-22- 0 2,42 20 15 0,77 Net Open Position was maintained well below the maximum limit of 20% and stood at 1.92% in October 2023. Aug-22 Nov-22 Feb-23 May-23 Aug-23 1,92 10 % 25 CAR The banking sector's Capital Adequacy Ratio (CAR) was steady with a value of 27.48% and Tier-1 capital stood at 25.77% as of October 2023. Tier 1 The banking industry's profitability remained steady with NIM at 4.85% and ROA at 2.73%, as of October 2023. I Net Interest Margin Retum on Assets Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 83 33 2,73 Oct-22 Jan-23 4,85 Apr-23 Jul-23 Oct-23 25,77 27,48#85Jan-19 Apr-19 1 2 Source: Financial Services Authority (OJK) 3 Jul-19 Oct-19 Jan-20 Apr-20 4 Jul-20 Oct-20 Jan-21 Apr-21 0 100 Jan-19 200 Apr-19 Jul-19 IDR tn Net Financing 500 400 300 Multi-finance Companies The performance of multi-finance companies continues to improve, as shown by growing financing, a manageable Non-Performing Financing (NPF) ratio, and a stable gearing ratio. In October 2023, net financing continued its increasing trend and stood at IDR463.12 Tn or growing by 15.02% yoy. The Non-Performing Financing ratio of multi-finance companies improved as shown by a decrease from 2.59% to 2.57% in October 2023, well below the 5% threshold. Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Growth (rhs) 15,02% ΟΥ 463,12 15% 10% 6 5 5% 41 %0 3 -5% 2 -10% 1 -15% The gearing ratio of multi-finance companies stood at 2.25 times or well below the threshold in October 2023. Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 0 Jan-19 200 2,25 150 50 T 100 Apr-19 Jul-19 Oct-19 Jan-20 Jan-23 Apr-23 Jul-23 Oct-23 250 -20% 0 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 % Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Multi-finance companies' exposure to domestic debt and foreign debt experienced a slight increase in October 2023. IDR Trillion Domestic Debt ■Foreign Debt Apr-20 Jul-20 Oct-20 Jan-21 Apr-211 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 1 55,89 84 232,24 Jul-22 Oct-22 Jan-231 Apr-23 Jul-231 Oct-23 2,57#86Source: OJK 900 800 700 600 500 400 300 200 100 о Jan-19 Apr-19 ୦୧ IDR Tn 45 Jan-19 Apr-19 Jul-19 20 40 ON W WA 30 35 Oct-19 Jan-20 Apr-20 Life Insurance (Lhs) threshold Insurance RBC (Lhs)=120% Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 In October 2023, insurance premiums marked a total increase of IDR32.22 Tn (mtm) with General and Life insurance added premiums at IDR17.74 Tn and IDR14.48 Tn, respectively. General insurance Life insurance Insurance and Pension Funds Insurance and pension funds continue to improve, shown by adequate performance and manageable risks. Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 240 220 200 180 160 140 14,48 120 100 80 60 17,74 40 20 0 In October 2023, the Investment Adequacy Ratio of both Life Insurance and General Insurance stayed well above the threshold at 129.08% and 193.44%, respectively. Risk-Based Capital (RBC) of the insurance industry remained well above the minimum threshold with Life Insurance at 435.98% and General Insurance at 340.54% in October 2023. In October 2023, pension fund and insurance investment values experienced a slight decrease and stood at IDR346.52 Tn and IDR1,520.16 Tn, respectively. General Insurance (rhs) % IDR Tn 400 340,54 350 1.500 300 1.200 435,98 250 200 900 threshold Insurance RBC (rhs)=120% 150 600 100 50 300 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-221 Oct-22 Jan-23 Apr-23 £z-\n( Oct-23 0 Jan-19 Apr-19] 61-15 Oct-19 oz-uer Apr-20 Jul-20 Life Insurance General Insurance 193,44 threshold Investment Adequacy Ratio=100% Jan-19 Apr-19 Jul-19- Oct-19- Jan-20 Apr-20 Jul-20- Oct-20- Jan-21- Apr-21- Jul-21 Oct-21- Jan-22 Apr-22- Jul-22- Oct-22 Jan-23- Insurance Pension Funds (rhs) IDR Tn 1520,16 400 346,52 350 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23] Jul-23 Oct-23 200 250 85 85 300 Apr-23- Jul-23 Oct-23 129,08#875 6 7 Oct-19 Dec-19 Feb-20 8 9 Yield (%) 10 Apr-20 Jun-20 Aug-20 Oct-20 Source: Reuters, OJK Dec-20 Feb-21 Domestic Capital Market Performance Indonesia's capital market proved to be resilient, supported by positive external performance and growing domestic demand. 0900 The major stock market marked an upward trend, while few emerging markets dipped into the negative zone due to increased global uncertainties and current geopolitical tensions Following the dynamic shifts in global capital markets, the domestic capital market started to adjust gradually indicated by slowdown in the composite bond index in the last month. - Comp Stock Index (rhs) Stock Index Performance as of 8 December 2023 (compared to 30 Dec'22) 8000 TURK 44,25% JPN 7500 23,81% GER 19,82% 7000 FRAN 15,67% BRAZ 6500 14,83% S KOR 12,58% 6000 US 8,96% 5500 INDO 4,51% UK 1,28% 5000 MAL -3,58% 4500 CHIN -3,87% SIN 4000 -4,32% PHIL -5,05% (% YTD) 3500 THAI -17,34% 3000 HKN -17,43% -30% -20% -10% 0% 10% 20% 30% 40% 50% Government bond yields remained competitive, followed by a stable rupiah as the risk premium was maintained. Apr-21 Jun-21- Aug-21- 5-yr Yield 20-yr Yield 10-yr Yield USD/IDR ......IDR (rhs) 700 18.000 600 500 14.000 400- 10.000 300- 6.000 200 As of 8 December, 2023 100 Oct-21- Dec-21 Dec-21- Feb-22- Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23- 2.000 0 Sep-19 Nov-19- Jan-20 Mar-20 May-20 Jul-20- Sep-19 Comp Bond Index 380 360 340 320 300 280 260 240 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20- Mar-21- Jun-21- Sep-21- Dec-21- Mar-22 - Jun-22- Sep-22 Dec-22- Mar-23- Jun-23 Sep-23- Dec-23 As of 8 December, 2023 IDR Tn The Net Asset Value (NAV) of equity mutual funds remained stable, reflecting a steady movement in the capital market. NAV Equity Mutual Funds Sep-20 Nov-20- Jan-21 Mar-21- May-21- Jul-21- Sep-21- Nov-21- Jan-22 ZZ-UP JCI (rhs) 8.000 7.000 6.000 5.000 4.000 3.000 2.000 As of 30 November, 2023 1.000 0 Mar-22 May-22 Jul-22- Sep-22 Nov-22 Jan-23 Mar-23 May-23- Jul-23- Sep-23- Nov-23 86 220 200#88Domestic Capital Market Performance Several capital market indicators recorded positive performance and remained stable. IDR Tn 100 50 0 Non-resident portfolios of government bonds and equity market recorded a YTD net buy of IDR59.66 Tn as of 6th December 2023. Gov't Debt Securities -50 As of 6 December, 2023 -100 -150 -200 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Equity Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 14 IDR Tn Total securities issuance reached IDR230.59 Tn (YTD) as of 30th November 2023. IPO Rights Issue Corporate Bond & Sukuk 220 200 As of 30 November, 2023 180 160 140 126,61 120 100 80 60 40 20 ° T 52,99 50,99 2016 2017 2018 2019 2020 2021 2022 2023* Capital Market Investors continued to grow to 12.03 million by the end of November 2023, representing a 18.52% (yoy) increase. Total Investor 12 (million) 10 8 64 2 12,03 0 Source: OJK, KSEI 2017 2020 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 87#89° 10 20 LOAN The outstanding loan of P2PL Fintech stood at IDR58.05 Tn or grew by 17.66% (yoy) as of October 2023. Fintech (Peer to Peer Lending and Securities Crowdfunding) Peer to Peer Lending (P2PL) Fintech intermediation grows with an improving NPL ratio and Securities Crowdfunding fundraising continues to rise. IDR Tn 70 60 50 40 30 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Outstanding Loan YOY Growth 10% 200% 58,05 8% 150% 100% 6% 50% 17,66% 4% 0% 2% -50% 0% -100% Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 The total number of investors and issuers in Securities Crowdfunding increased to 166,452 and 484, respectively, as of 30 November 2023. Number of Investors Number of Issuers Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 IDR Bn The Non-Performing Loan ratio of P2PL Fintech remained manageable at 2.89% in October 2023. Peer to Peer NPL Ratio Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 90 Oct-22 Continuing the positive trend, the total value of SCF fundraising stood at IDR1.03 trillion as of 30 November 2023. Jan-23 Apr-23 Jul-23 Oct-23 1 180.000 *As of 30 Nov 2023 Total Fundraising *As of 30 Nov 2023 1.200 160.000 140.000 1.000 166.452 120.000 800 100.000 127.810 600 413,19 80.000 93.777 60.000 51.414 400 184,90 40.000 1.380 5.063 340 484 64,15 200 20.000 127 195 6,47 14 49 735,76 1.030,00 il 0 0 2018 Source: OJK 2018 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 88 2,89%#90Act No. 4/2023 - Financial Sector Reform • FUNDAMENTAL ISSUES Short-term financing is still dominated by Banks Small non-bank asset portion should be enlarged to finance development - • Limited financial instruments – huge potential for market deepening . Digital assets: high risk and complex financial instruments Weak governance and law enforcement in the financial sector EXTERNAL CHALLENGES Technology Disruptions New financial risks from climate change and current geopolitical situation OBJECTIVE: Optimizing financial intermediation and financing portfolio for productive sectors; improving financial access, inclusion and literacy, and consumer protection; expanding long-term financing resources; enhancing competitiveness and efficiency of the financial sector; and strengthening the authorities and responsibilities of financial regulators. OTORITAS JASA KEUANGAN Indonesia Financial Services Authority Strengthening OJK's role in some areas, including integrated supervision, financial conglomerate supervision, market conduct supervision, consumer protection, etc. Giving new mandates among others: cooperative in the financial sector, digital assets, carbon exchange, bullion activities. BANK INDONESIA The Central Bank of The Republic of Indonesia Strengthening BI's role in some areas, such as maintaining financial system stability to support sustainable economic growth, maintaining the smooth running of the payment system, implementing macroprudential policies. LEMBAGA PENJAMIN SIMPANAN Indonesia Deposit Insurance Corporation Strengthening the role of IDIC in deposit guarantee and bank resolution. Giving a new mandate: IDIC establishes policies and implement the insurance policy guarantee program. KEMENTERIAN KEUANGAN The Ministry of Finance Strengthening the role of the Ministry of Finance as a coordinator for Financial System Stability Committee and Sustainable Finance committee. The MoF coordinates with OJK, BI, and IDIC in some areas, including financial literacy and inclusion, financial sector development, etc. Source: Financial Services Authority (OJK) 89 99#91Act No. 4/2023 - Substances Act No. 4/2023 modifies, removes, and/or establishes new provisions for 17 existing laws in the financial sector and repeals one law. The Act also introduces new provisions regarding a) Financing Service Business, b) Consumer Protection in the Financial Sector, c) Technological Innovation in the Financial Sector, d) Human Resources, e) Financial Reporting, and f) Mutual Insurance. CHAPTER I General Provisions CHAPTER II. Principles, Purposes, Objectives and Scope CHAPTER III Institutional Aspect CHAPTER IV Bank CHAPTER V Capital Market, Money Market and Foreign Exchange Market CHAPTER VI Insurance CHAPTER VII Mutual Insurance CHAPTER VIII Policy Guarantee Program CHAPTER IX Guarantee Agencies CHAPTER X Financing Service Business CHAPTER XI Bullion Business Activity CHAPTER XII Pension Fund, Old Age Protection Program, and Pension Program CHAPTER XIII Cooperative in the Financial Services Sector CHAPTER XIV Microfinance Institution CHAPTER XV Financial Conglomerate CHAPTER XVI Financial Sector Technology Innovation CHAPTER XVII Sustainable Finance Implementation CHAPTER XVIII Financial Literacy, Financial Inclusion and Consumer Protection CHAPTER XIX Access to Micro, Small, and Medium Financing CHAPTER XX Human Resources CHAPTER XXI Financial System Stability CHAPTER XXII Indonesia's Export Financing Institutions CHAPTER XXIII Administrative Sanction CHAPTER XXIV Criminal Provisions CHAPTER XXV Other Provisions CHAPTER XXVI Transition Provisions CHAPTER XXVII Closing Provisions Source: Financial Services Authority (OJK) 90 90#92indonesia) C indonesia.travel @indtravel indonesiatravel @indiavel www.indonesia.travel