April 2020
Republic of Indonesia
Maintaining Stability and Supporting Growth,
Mitigating Covid-19 Risk
1
About 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, Investment Coordinating Board, Ministry of Trade, Ministry of State Owned
Enterprises, Ministry of Energy and Mineral Resources and Financial Services Authority.
IRU also convenes an investor conference call on a quarterly basis, answers questions through email, telephone and may arrange direct visit of banks/financial
institutions to Bank Indonesia and other relevant government offices.
Published by Investor Relations Unit – Republic of Indonesia
Website: http://www.bi.go.id/en/iru/default.aspx
Contact: Wiwit Widyastuti (International Department - Bank Indonesia, Phone: +6221 2981 8279)
Putri Rizki Yulianti (Fiscal Policy Office - Ministry of Finance, Phone: +6221 345 0012)
Subhan Noor (Directorate General of Budget Financing and Risk Management - Ministry of Finance, Phone: +62213510714)
Phone: +62213510714)
E-mail: [email protected]
This Presentation Book also can be downloaded from: http://www.bi.go.id/en/iru/presentation/red/Default.aspx
2
What’s New in This Edition
S&P Affirm Sovereign Credit Rating Indonesia at BBB and Revise
Outlook to Negative
…page 7
Authorities’ Concerted Effortstoward Covid-19
…page 11-18
Bank Indonesia maintained BI 7-Day Reverse Repo Rate by 25 bps to
4.50% and lowered Reserve Requirement by 200 bps
…page 67-68
Outlook of Domestic Economy
…page 112
Fiscal Policy Updates
…page 46-56
3
Overview
1
2
3
4
5
6
Institutional and Governance Effectiveness:
Accelerated Reforms Agenda with
Institutional Improvement
Economic Factor:
Strong and Stable Growth Prospects Remain
Intact
External Factor:
Improved External Resilience
Fiscal Performance and Flexibility:
Prudent Fiscal Policy to Combat the COVID-19
Pandemic and Maintaining Economic
Sustainability
Monetary and Financial Factor:
Credible Monetary Policy Track Record
and Favourable Financial Sector
Progressive Infrastructure Development:
Strong Commitment on Acceleration
of Infrastructure Provision
Institutional and Government Effectiveness:Accelerated Reforms Agenda with Institutional Improvement
Section 1
5
Improving Global Perception…with recent improvements on corruption perception index and governance indicator
1. Source: World Economic Forum – The Global Competitiveness Report 2019;
2. Source: World Bank – Doing Business 2020 Report;
3. Source: World Bank – The Worldwide Governance Indicators 2019 Update;
4. Source: Transparency International – Corruption Perceptions Index 2019 Report
Worldwide Governance Indicators3
Ease of Doing Business2Global Competitiveness Index1
Corruption Perception Index4
Higher rank is better
Higher score is better
Higher rank is better (rankings at the time of annual report publication)
Higher rank is better41
36
4550
20
30
40
50
60
70
80
90
Rank
India Indonesia Philippines Bulgaria Colombia
91
72
73
73
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Indonesia India Philippines Bulgaria Colombia
*New Concepts by using the Global
Competitiveness index 4.0 which captures
the determinants of long-term growth.
52
28
59
51
4346
15
30
45
60
2010 2011 2012 2013 2014 2015 2016 2017 2018
Voice and Accountability Political Stability/Absence of Violence
Government Effectiveness Regulatory Quality
Rule of Law Control of Corruption
38
4041
41
36
34
42
43
36
37
30
32
34
36
38
40
42
44
2012 2013 2014 2015 2016 2017 2018 2019
Indonesia India Philippines Bulgaria Colombia
6
Continuous Improvement of Investment Climate …another leap on Indonesia’s Rank on Ease of Doing Business (EODB)*
EoDB 2020
Rank
EoDB 2019
Rank
Change in
Rank
EoDB 2020
Points
EoDB 2019
Points
Change in
Points
Overall 73 73 0 69.6 68.0 1.6
Starting a business 140 134 6 81.2 81.2 0.0
Dealing with Construction Permits 110 112 2 66.8 66.6 0.2
Getting Electricity 33 33 0 87.3 86.4 0.9
Registering Property 106 100 6 60.0 61.7 1.7
Getting Credit 48 44 4 70.0 70.0 0.0
Protecting Minority Investors 37 51 14 70.0 63.3 6.7
Paying Taxes 81 112 31 75.8 68.0 7.8
Trading Across Borders 116 116 0 67.5 67.3 0.2
Enforcing Contracts 139 146 7 49.1 47.2 1.9
Resolving Insolvency 38 36 2 68.1 67.9 0.2
- Government efforts to boost business growth through deregulations and de-bureaucratization have been recognized by the improvement of EODB
- Structural reforms will continue including in the budget and real sectors
Source: World Bank
* Higher rank is better, EoDB 2020 was published in October 2019
7
BBB / Stable
Baa2 / Stable
BBB / Negative
Feb 2020, Rating Affirmed at Baa2/Stable
“The affirmation of the ratings is underpinned by a number of credit
strengths – including Indonesia’s robust and stable growth rates and
a low government debt burden, preserved by consistent fiscal
discipline and emphasis on macroeconomic stability – as well as
persistent credit challenges.”
April 2020, Rating Affirmed at BBB, Outlook Revised from Stable to
Negative
“The affirmation reflects Indonesia’s stable institutional settings, strong
growth prospects, and historically prudent fiscal policy settings. The
negative outlook reflects S&P expectation that Indonesia faces additional
fiscal and external risks related to the COVID-19 pandemic in the next 24
months .”
January 2020, Rating Affirmed at BBB/Stable
Indonesia's rating balances a favourable medium-term growth outlook
and a small government debt burden compared with 'BBB’ category
peers against challenges that include a strong dependence on
external financing, low government revenue, and lagging structural
indicators such as governance indicators and GDP per capita.
BBB+ / StableJanuary 2020, Rating Upgraded at BBB+/Stable
“The ratings mainly reflect the country’s solid domestic consumption-led economic growth, restrained budget deficit
and public debt, and resilience to external shocks supported by flexible exchange rate and credible monetary
policies and accumulation of foreign exchange reserves. Since its previous rating review, JCR has been paying
particular attention to the continuing reform initiatives pushed by the administration of President Joko Widodo and
the content and progress of the economic policy taken by his second administration which took office in October
2019. Among the reform agenda, infrastructure development has continued to progress faster than JCR had
expected.”.
Indonesia Has Been Rated as Investment Grade Countrysince 2017
BBB+ / StableMarch 2020, Rating Upgraded at BBB+/Stable
“Indonesia's President Joko Widodo is firmly implementing policies to strengthen economic
growth potential, on the back of a political foundation solidified in his second term.
Supported by such policy efforts, the economy is expected to continue stable growth over the
medium term. Keeping fiscal deficits in check, the government maintains its debt ratio at a
low level. Foreign reserves are ample relative to short-term external debts. The country's
economic resilience to external shocks is retained under a policy stance that emphasizes
macroeconomic stability and fiscal discipline.”
8
Concerted Efforts to Mitigate Covid-19 RiskGeneral Measures
Establishment of a COVID-19 Task Force to Accelerate Coronavirus Disease 2019 (COVID-19) Handling
Extension of the emergency status for COVID-19 until 29th
May 2020
Permission for civil servants to work from home, while maintaining the continuity of public services
Closing and limiting the mobility of Indonesian citizens abroad and foreigners to enter Indonesian territory with strict immigration and health protocols..
5
3
2
1
Evacuation of Indonesian citizens from affected countries and strict quarantine processes with complete medical facilities.
6
Promoting massive prevention of the spread of Covid-19; application of health protocols in public areas, public transportation, and offices; calls for carrying out social distancing and the prohibition of carrying out activities that involve large crowds.
4
Conducting Rapid Test in 17 provinces with positive patients of Covid-19.
7
Decentralized tests by increasing the number of Covid-19 test laboratories throughout Indonesia.
Providing Designated Hospitals, including additional designated hospital in Galang Island.
Utilization of four (4) of ten (10) Wisma Atlet KemayoranTowers (former Athletes Hotel) as emergency hospital.
Establishment of Contingency Plans in the regions level.12
10
9
8
Preparation of drugs that have been used for Covid-19patients in China according to doctor's prescription. Thedrug has been distributed to designated facilities and itsstock is continuously being augmented with domesticpharmaceutical production..
13
Preparation of 606 health workers and 192 non-healthworkers in Wisma Atlet Kemayoran and recruitment of 328medical volunteers and 2590 non-medical personnel in thefield of logistics and operations.
11
Speed up the procurement and distribution of personalprotective equipment for designated hospitals and theprovision of incentives for medical personnel.
14
9
Government Measures to Mitigate Covid-19 RiskFiscal and Non Fiscal Stimuli
Brought forward the launch of the Pre-Employment Card in Bali, North Sulawesi and the Riau Islands
Increased disbursements of the Noncash Food Assistance Program (BPNT) from Rp150,000 to Rp200,000 for a six-month period commencing March 2020
Provided incentives for domestic and international travellers
Discounted the price of aviation fuel at airports located around nine travel destinations for March-May 2020
6
4
2
1
Reduced the air passenger service fee (PSF) by 20% for March-May 2020
5
Subsidised or provided grants totalling Rp3.3 trillion to local governments affected by lower tax revenues food service activities
7
Provided a stimulus package for housing in the form of an Rp800 billion subsidy as well as a subsidy on down payments totalling Rp700 billion
3
Non-Fiscal Stimuli
Relaxation of Income Tax (PPh Article 21)
Relaxation of Income Tax on Imports (PPh Article 22)
Relaxation of Value Added Tax (VAT) Restitution4
2
1
Relaxation of Income Tax (PPh Article 25)3
Reduce and simplify restrictions on export activities to maintain export performance and competitiveness
1
Reduce and simplify restrictions on import activities to ensure the availability of raw materials
2
Fiscal Stimuli Phase 2Fiscal Stimuli Phase 1
10
Bank Indonesia’s Measures to Mitigate Covid-19 RiskTo maintain Monetary and Financial Market Stability
Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms
Reducing the foreign currency reserve requirement ratio for conventional commercial banks from 8% to 4%, effective 16th March 2020.
Reducing the rupiah reserve requirement ratio by 50bps for banks engaged in export-import financing activity in coordination with the Government.
Expanding the types of underlying transactions available to foreign investors as hedging alternatives against rupiah holdings in Indonesia.
4
3
2
Measures Launched on March 2, 2020 Measures Launched on March 18-19, 2020
1
Source: Bank Indonesia
Global investors may utilise global and domestic custodian banks for investment activity in Indonesia.
5
Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and market mechanisms.
Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry.
Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate liquidity.
Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic NDF, thus increasing hedging alternatives against rupiah holdings.
5
3
2
1
Expanding the incentive of a 50bps looser daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing of MSMEs and other priority sectors.
6
Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market.
4
Strengthening payment system policy to support COVID-19 mitigation efforts .
7
11
Government Measures to Mitigate Covid-19 RiskUpdates on Stimuli 1 and 2
No StimuliPolicy Update
STIMULI 1
1 Front-loading of Government
Spending
Accelerating the process of disbursing Capital Expenditure, accelerating the
appointment of treasury officials, accelerating the implementation of tenders, etc.
Accelerating disbursement of social assistance spending.
Transfer to Regional and Village Funds.
2 Expansion of Staple Food Cards to
increase the benefits (IDR 150
thousand / month → IDR 200
thousand / month)
Has been carried out by the Ministry of Social Affairs as of March 2020.
3 Expansion of the target for housing interest
subsidies with an additional house volume
of around 175 thousand housing units
Currently in the process of drafting the implementing regulations The revision of DIPA is
still in the process based on the proposal of the Ministry of Public Works and Public
Works
The contract with the Implementing Bank is planned for April 2020
STIMULI 2
1 Relaxation of Income Tax Article 21 Income Tax Borne by the Government (DTP), exemption of Article 22 Income Tax
Import, Reduction of Income Tax Article 25, VAT refunds are accelerated
2 Simplification and Acceleration of the
Exim Process
Simplification and reduction of export and import restrictions (manufacturing, food
and medical support), acceleration of the export-import process for reputable traders,
and export-import services through the National Logistic Ecosystem.
Source: Coordinating Ministry for Economic Affairs
12
Economic Policies Taken in Response to Covid-19 Pandemic as of April 2020
Source: Coordinating Ministry for Economic Affairs
• Government’s policy related to COVID-19 pandemic comprises of four safety nets.
• Latest Update 22/4: Expansion of business classification coverage for Fiscal Incentives.
• The economic safety net and national economic recovery measures, along with other economic stimulus that focus on maintaining purchasing power and ensuring
business continuity (minimizing layoffs), will minimize the spill-over effect of the COVID-19 pandemic hence limiting the impact to the banking system.
Health Safety Net Social Safety Net Economic Safety NetNational Economic Recovery
Measures
Budget Support: Rp75 T Budget Support: Rp110 T Budget Support: Rp70,1 T Budget Support: Rp150 T
• BPJS contribution subsidies
• Medical Personnel Incentives
• Death Compensation for
Health Workers
• Purchase of Medical
Equipment (PPE, ventilators,
masks, etc.)
• Referral Hospitals
• Program Keluarga Harapan
• Staple Products
• Pre-employment Card
• Labor Intensive Program
• Electricity tariff discount for
450 VA and 900 VA
• Housing Incentives for MBR
• Religious Holiday Bonus
• Price Stabilization/Market
Operations
• Ministry/Agency Budget
Adjustment
• Government Regulation in Lieu of
Law No. 1 Tahun 2020
• Local Currency Settlement (LCS)
• Recovery Bond
• Fiscal Incentives (Elimination
of Income Taxes & Imported
Goods Taxes, Corporate Tax
Reduction and the
Acceleration of VAT Restitution
• Non-Fiscal Incentives
(Simplification and
Acceleration of the Exim
Process)
• Relaxation of Community
Credit (KUR)
• Bank Indonesia Policy
• OJK and Capital Market
Policies
Rp405,1 trillion
(USD24.6 billion)
Total Budget Allocation
13
Government Measures to Mitigate Covid-19 RiskProvision of Economic Stimulus for the Real Sector Safety Net
Source: Coordinating Ministry for Economic Affairs
Social Safety
Net
Real Sector Safety
Net
Financial Sector
Safety Net
IMPACTED GROUPS COVID-19 IMPACT POLICY MAIN POLICIES
* : Expansion of the Policy in the 2nd Stimulus
1
* : Expansion of Fiscal Incentives in PMK-23/2020
•Fatal threats, health problems
•Job Loss, Decreased Income
•Declining purchasing power, bad credit
INDIVIDUAL/ HOUSEHOLD
•Decreased activities, business difficulties
•Lack of sales, business closures
•Bad Credit, unable to pay obligations
MSMEs
•Declining Demand, Shrinking sales
•Reduced production, employee layoffs
•Loss / Bankruptcy / Closing, Bad Credit
CORPORATIONS
•Raw material supply disruption, production decline
•Declining demand, business closure, layoffs
•Cash-Flow Difficulties, Credit Restructuring
REAL SECTOR
•Liquidity issues, Decreasing solvency
•Pressure on the money market, capital markets, exchange rates
•Threats to financial sector stability
FINANCIAL SECTOR
Allowance / Postponement /
Withholding Tax (Article 21/22/25
Income Tax, VAT)
Loan Allowance / Delay Payment,
Credit Restructuring
Relaxation of Rules and Licensing,
Ease of Doing Business and
Investment
Process and Service Acceleration,
Administrative Reduction and Costs
Special Credit Facilitation for
Increasing Working Capital and
Maintaining Business
**
*
*
*
2
3
4
5
14
Economic Stimulus Programs for MSMEs and Cooperatives
Source: Coordinating Ministry for Economic Affairs
1. Interest subsidy and recap guarantee relief programs (KUR, PMN, Pegadaian)
Inclusive part of the Economic Safety Net (Rp. 70.1 T – Cluster III)
Interest subsidy and installment payment following the KUR scheme
Facilitating Fintech to become chanelling agent to access KUR and PIP
The fiscal impact for the Payment of Interest Subsidies and Principal Delays :
o KUR = Rp 6.1 T (19.5 million Customers);
o PNM = Rp 2.8 T (6.5 million Customers);
o Pegadaian = Rp 5.3 T (10 million Customers).
2. The Saving and Loan Cooperatives (KSP) is facilitated through LPDB, where the amount and total is taken from the budget reallocation and refocussing of the Ministry of Cooperatives and SMEs.
3. Financing for rural banks, PNM, Pegadaian (pawnshops) is accessed through the Financial Safety Net that is being prepared (draft of Cluster IV GR is under process)
4. Exemption of MSME income tax (to 0%) for a period of 6 months:
Tariff decrease in MSME's Final Income Tax from 0.5% 0% (fiscal impact: Rp. 2.4 T)
5. The use of Warung (stalls) for food distribution is coordinated by Ministry of Social Affairs and OJK through the Laku Pandai program.
15
Economic Stimuli for the Manufacturing Industry Sector (Stimuli 2)Tax Incentives: Article 21 Income Tax, Article 22 Import Income Tax, Article 25 Income Tax, VAT
Source: Coordinating Ministry for Economic Affairs
PMK-23Finance Ministerial Regulation 23/PMK.03/2020 on March 21, 2020 concerning
Tax Incentives for Taxpayers Affected by Corona Virus Outbreak, effective on April 1, 2020
Policy Related Sector Impact
1. Article 21 Income Tax will be Borne by
the Government for 6 months for
workers with a gross income of not
more than 200 million rupiah
• Specific manufacturing sectors (440 KLU)
• KITE Taxpayers
• KITE IKM Taxpayers
Provide additional income for workers in the
manufacturing sector to maintain
purchasing power.
2. Exemption from Income Tax Article 22
Import for 6 months
• Specific manufacturing sector (102 KLU)
• KITE Taxpayers
• KITE IKM Taxpayers
The stimulus for the industry is to maintain
the pace of imports.
3. Reduction of Income Tax Article 25 by
30% for 6 months
• Specific manufacturing sector (102 KLU)
• KITE Taxpayers
• KITE IKM Taxpayers
Domestic economic stability can be
maintained and exports are expected to
increase.
4. VAT refunds are accelerated for 6
months for:
- Exporters (without restrictions)
- Non-Exporters (maximum refund value of
5 billion)
• Specific manufacturing sector (102 KLU)
• KITE Taxpayers
• KITE IKM Taxpayers
Through the accelerated refunds, Taxpayers
can optimize cash management.
16
Proposed Expansion of Fiscal Incentives for the Real SectorExpansion of PMK-23: Addition of Sectors Other than Manufacturing Industries in PMK-23/2020
Source: Coordinating Ministry for Economic Affairs
No KBLI Category
Number of
proposed
KBLI
1 Agriculture, Forestry, and Fisheries 100
2 Mining and excavation 17
3 Processing Industry 127
4 Procurement of electricity, gas, steam / hot water, and cold air 3
5 Water Management, Waste Water Management, Waste Management and
Recycling, and Remediation Activities
1
6 Construction 60
7 Wholesale and retail trade; Car and Motorcycle Repair and Maintenance 193
8 Transportation and Warehousing 85
9 Provision of Accommodation and Provision of Food and Beverages 27
10 Information and communication 36
11 Financial and Insurance Activities 3
12 Real Estate 3
13 Professional, Scientific and Technical Activities 22
14 Rental and Leasing Activities without Option Rights, Employment, Travel
Agencies and Other Business Supports
19
15 Education 5
16 Health and Social Activities 5
17 Arts, Entertainment and Recreation 52
18 Other Services 3
Total 761
19 Companies at Bonded Zone V Addition of “Companies at Bonded Zone” in PMK-23.
NOTE:
Total number of KBLI in PMK-23: 440 KBLI
Number of additional proposal: 761 KBLI
(including proposed 118 KBLI for incentives
expansion
Total combined KBLI: 1.083 KBLI
17
Government Measures to Mitigate Covid-19 RiskGovernment Regulation In Lieu of Law No.1 2020
Source: Coordinating Ministry for Economic Affairs
Regulates two topics: (1) National Budget (APBN) and (2) Financial Sector Policy
National Budget (APBN)
1. Relaxation Deficit exceeds 3%, but starting in 2023 it returns
to the maximum level of 3%.
2. Relaxation is related to the allocation/reallocation of
expenditure between institutions, between functions, and
between programs and mandatory spending.
3. Relaxation of allocation / reallocation of Regional Government
Expenditures.
4. Lending to LPS.
5. Issuance of SUN and SBSN can be purchased by BI, BUMN,
corporate investors and / or retail investors.
6. Use of alternative budget sources for example SAL, education
endowment funds, and funds managed by the Public Service
Agency.
7. Taxation Policy: a) Decrease in Corporate Income Tax Rates
gradually to 20% starting in 2022; b) Taxation Incentives in the
Capital Market for public ownership <40%; c) Taxation of
Electronic Transactions; d) Extension of tax administration
time; e) Customs facilities in the context of COVID-19.
Financial Sector Policy
1. Improved Coordination among KSSK members
2. Provide the necessary authority to 4 institutions to prevent a
crisis (forward looking) in the KSSK forum for example to
issue instruments, BI buys SUN on the primary market,
lending to LPS and OJK may request a merger or
consolidation of Financial Services Institutions.
3. Foreign exchange management (LLD) management for
residents
4. Increase public confidence without causing moral hazard.
18
Government Measures to Mitigate Covid-19 RiskBudget Refocusing Policy
Source: Coordinating Ministry for Economic Affairs
I. Presidential Regulation (Perpres) No 7/2020 on Taskforce to Manage COVID-19 Outbreak → Renewed through Presidential Regulation
(Perpres) No 9/2020
1. Answer to the President → Director (Chair: Coordinating Minister for Economic Affairs) and Implementer (Chair: Head of Indonesian
National Board for Disaster Management), focusing on accelerating the mitigation of COVID-19 through synergy between ministries and
government
2. Funding comes from the state budget, regional budget, and other legal sources
II. Presidential Instruction (Inpres) No 4/2020 concerning Refocusing of Activities, Reallocation of Ministry/Agency Budget, and
Procurement of Goods and Services in the Framework of Mitigating COVID-19 Outbreak and Ministry of Finance Circular (SE) No
6/2020 on Refocusing Activity and Reallocation of Ministry/Agency Budget in the Framework of Mitigating COVID-19 Outbreak
1. Minister / Head of Institution prioritizes the use of budget allocations for the acceleration of mitigating COVID-19 outbreak in
accordance with COVID-19 Handling Protocol
2. Done through a budget revision mechanism (done quickly, simply and accountably)
III. Policy to support efforts to adjust regional allocations and relax transfers for handling Covid-19
1. Minister of Finance Regulation (PMK)19/2020 concerning Distribution and Use of DBH, DAU, and DID TA 2020 in the context of COVID-
19 Countermeasures;
2. Minister of Finance Decree (KMK) 6/2020 concerning Distribution of Physical DAK on Health and BOK in the framework of
Prevention and/or Handling of COVID-19
3. Permendagri 20/2020 on acceleration of COVID-19 Mitigation in the Scope of Regional Government
19
3.2
3.5
3.7
3.7
4.5
10.1
10.1
11.6
11.9
23.0
25.2
32.9
36.4
44.6
47.8
0.0 10.0 20.0 30.0 40.0 50.0 60.0
Australia
Germany
Singapore
Korea
Taiwan
Malaysia
Myanmar
Mexico
Philippines
US
Indonesia
Thailand
Vietnam
China
India
31
.31
34
.47
23
.61
26
.94
24
.99
26
.57
31
.27
34
.52
22
.48
27
.21
24
.95
26
.34
31
.78
34
.55
23
.14
29
.56
25
.31
26
.26
0
5
10
15
20
25
30
35
40
India Indonesia Malaysia Philippines Thailand Vietnam
2018 2019e 2020e
0
50
100
150
200
250
300
Billio
n U
SD
2018 2017
22.5
25.2
26.3
31.9
32.1
34.2
36.4
36.4
38.5
39.2
39.8
48.1
48.7
58.3
0 10 20 30 40 50 60 70
Myanmar
Taiwan
South Korea
Philippines
Hong Kong
Malaysia
Australia
Japan
Thailand
Singapore
Vietnam
Indonesia
India
China
Indonesia Remains the Investment Destination of Choice
1. Source: The Economist – Asia Business Outlook Survey 2019
2. Source: IMF World Economic Outlook, Database October 2019
3. Source: United Nations Conference on Trade and Development (UNCTAD) – World Investment Report 2019
4. Source: JBIC – Outlook for Japanese Foreign Direct Investment (30th Annual Survey)
To
tal I
nve
stm
en
t / G
DP
(%
)
Indonesia Enjoys Large Investments Relative to Peers within the Region2
JBIC: Among ASEAN countries, Indonesia is one of the most preferred place for business
investment (December 2019)4
The Economist: Indonesia rounds out the top five of Asian economies that can look
forward to increased investment spending. (January 2019)1
% of surveyed who consider each country has promising prospects
UNCTAD: Indonesia is listed in the top 20 host economies based on FDI inflows, 2017
and 2018 (June 2019)3
(x) = 2017 ranking
20
Medium-Term National Development Plan (RPJMN) 2020-2024President’s Vision: "The Establishment of an Advanced Sovereign, Independent and Personality Based on Mutual Cooperation".
Source: Coordinating Ministry for Economic Affairs
1Improving the Quality of the Indonesian Labour
Force
2 Achieving Productive, Independent and
Competitive Economic Structure
3 Attaining Equitable and Prosperous National
Development
4Achieving Sustainable Environmental
Climate
5 Developing Cultural Progress
Reflecting the Nation's Personality
6 Developing a Dignified and Trustworthy Legal
System Free from Corruption
7Protection of All Nations and
Provision of Security to All Citizens
8 Attaining Good, Effective, and
Reliable Governance
9Achieving Synergy of Governmental
Framework with the Regional Government
Strengthening Economic Resilience to
Achieve Superior Economic Growth
Developing More Remote Regions to Reduce
Economic Gaps and Improve Equality
Improvement of Quality and
Competitiveness of the Labour Force
Engaging in Mental Revolution
and Culture Development
Strengthening Infrastructure to
Support Economic Development
and Improve Basic Services
Conservation of Environment,
Supporting Climate Change, and
Enhancing Disaster Resilience
Enhancing Political, Legal, Defense and
Stability and Transforming Public Services
1 HR
Development
2 Infrastructure
Development
3Regulation
Simplification
5 Economic
Transformation
4 Simplification of
Bureaucracy
President‘s Missions Top 5 Presidential Priorities 7 RPJMN Development Agenda
21
Simplifying Regulations through Omnibus LawsOmnibus Laws Group a Diverse Range of Issues into Legislation, Aimed at Creating Jobs and Empowering SMEs.
1Under discussion
Source: Coordinating Ministry for Economic Affairs
Financial
Sector1Taxes
Investment
Labour
Omnibus Law Priority Sectors
1) Simplification of Licensing
2) Investment Requirements
3) Employment
4) Ease, Empowerment and Protection of MSMEs
5) Ease of Doing Business
6) Research and Innovation Support
7) Government Administration
8) Imposition of Sanctions
9) Land Acquisition
10) Government Investment and
Projects
11) Economic Zone
11 Clusters of Omnibus Law Cipta Lapangan Kerja (Job Creation)
6 Pillars of Omnibus Law Perpajakan (Taxation)
1) Investment Funding2) Territorial System
3) Personal Taxpayer
4) Taxpayer Compliance
5) Equity of Business
6) Taxation Facility
Following the inauguration of his second presidential term in October 2019, President Joko Widodo announced his administration’s plans to continue regulatory reform by focusing on
initiatives such as developing a dynamic and qualified workforce, promoting industry cooperation through technology, further enhancing infrastructure development and economic
reform as well as simplifying regulations and bureaucracy.
To achieve such ends, President Widodo’s Government subsequently prepared three bills of omnibus laws, namely an omnibus bill on job creation, an omnibus bill on development
and strengthening the financial sector and an omnibus bill on tax provision.
Omnibus laws refer to laws that group diverse and unrelated issues which are drawn into a bill which is accepted in a single vote by a legislature.
22
The Economic Policy Packages
“To improve national industry competitiveness, export and investment to generate significant economic growth”
Phase III (7 Oct ’15)Financial services facilitation, export financing and elimination of business unnecessary burden
Phase IV (15 Oct ’15)Social safety net and betterment of people welfare
Phase V (22 Oct ’15)Improving industry and investment climate through tax incentives and deregulation on sharia banking
Harmonizing Regulations Simplifying Bureaucratic Process Ensuring Law Enforceability
Phase VI (5 Nov ’15)Stimulating economic activities in border areas and facilitating strategic commodities availability
Phase I (9 Sept ’15)Improving national industry competitiveness
Phase II (29 Sept ’15)Easing permit requirement and simplifying export proceeds requirement
Phase VII (7 Dec ’15)Stimulating business activities in labor-intensive industries nation-wide through incentives in the form of accelerating land certification process for individuals
Phase VIII (21 Dec ’15)Resolving land acquisition disputes, intensifying domestic oil production, stimulating domestic parts and aviation industries
Phase IX (27 Jan ’16)Accelerating electricity generation, stabilizing meat prices and
improving rural–urban logistics sector
Phase X (11 Feb ’16)Revising the Negative investment List and improving protection
for SMEs
Phase XI (29 Mar ’16)Stimulating national economy through facilitation to SMEs and
industries
Phase XII (28 Apr’16)Improving Indonesia’s rank on Ease of Doing Business (EODB)
Phase XIII (24 Aug ’16)Low Cost Housing for Low-Income Communities
Phase XIV (10 Nov ’16)Roadmap for E-commerce
Source: Coordinating Ministry for Economic Affairs
Phase XV (15 Jun ’17)Improving logistics
In addition to the 16 Policy Packages, on August 31, 2017 the Government has issued a Presidential Regulation No.91/2017 for enhancing business license service standard
Phase XVI (16 Nov ’18)Improving the competitiveness and domestic economy
23
Improving the Competitiveness and Domestic EconomyThe 16th Economic Policy Package has been launched
Source: Coordinating Ministry for Economic Affairs
TAX HOLIDAY EXPANSION
Background
In order to further increase investment value in Indonesia,
there is a need for expansion of sector and standard
classification of Indonesian Business Fields (KBLI) that are
given tax holiday, complemented with a process simplification
to receive the tax holiday according to the Online Single
Submission (OSS).
Objectives and benefits
1) Increasing investment and strengthening the industrial
sectors from the downstream to the upstream through the
expansion of the business sector, KBLI’s pioneer industries,
and Special Economic Zones (SEZ) that can receive tax
holiday facilities
2) Increasing the process of convenience of filing process and
tax holiday facilities provision
EXPORT PROCEEDS (DHE) SCHEME
Tax Rates on Deposit
Interest IncomeTax Rates on Deposit Interest Income
24
Other Progress on Economic Policy Packages
29 Provinces have set 2016 Minimum Wage
System in accordance to the Government
Regulation (GR) No. 78/2015
Fair, Simplified &
Projectable Wage System
• The Provinces of Central Java proposed 3
IZ’s: Kendal, Demak, and Ungaran
• Pharmaceutical IZ in Bitung (North Sulawesi)
in 2017
Industrial Zone
Development of
Spesial Economic Zone (SEZ)
Investment commitments in SEZ up to 2017
reach 41 T, with 3 hour licenses already
applied in 4 SEZ’s Administrators in 2017
52 Bonded Logistic Center has been
launched to support various industries
Deregulation on
Logistics Sector
25
Investment Incentives to Boost Industry Sector
BUSINESS EXPANSION
• Tax allowance
• Exemption or relief of import duty on capital goods, machinery or equipment
for production purposes that can not be produced domestically;
• Exemption or relief of import duty on raw materials or auxiliary material for
production purposes for a certain period of time and certain conditions;
• Exemption or suspension of VAT on the import of capital goods or
machinery or equipment for production purposes that have not been
produced domestically for a certain period of time;
• Accelerate depreciation or amortization (part of tax allowance); and
• Property tax relief, especially for certain business sectors in certain regions;
• Combine with Online Single Submission (OSS)
Tax holiday of corporate income tax in a certain amount and time
PIONEER INDUSTRIES
SPECIAL ECONOMIC ZONE
• No collection of VAT and Luxury Goods Sales Tax (PPnBM),
• Customs tax exemption,
• Tax Allowance and Tax Holiday,
• Suspension of Import Duty,
• 0% Import Duty for goods produced using local components of a certain
level
INDUSTRIAL ZONE
FREE TRADE ZONES AND PORTS
MICRO, SMALL, MEDIUM ENTERPRISES (MSMES)
E-COMMERCE
• VAT exemption on import or delivery of capital goods,
• Import Duty exemption on machineries/goods/materials,
• Tax Allowance and Tax Holiday
Exemption of:
• Import Duty
• VAT
• Luxury Goods Sales Tax (PPnBM)
• Customs duty
Decreasing MSMEs Tax from 1% to 0.5% of gross revenue
• Sales from customs areas for non-small entrepreneurs through the
market place will be subject to 0.5% income tax and 1% VAT
• Sales from customs areas for small entrepreneurs through the market
place will be subject to 0.5% income tax
Source: Coordinating Ministry for Economic Affairs
26
New Tax Holiday Policy*to boost industry sector
Taxpayer
Pioneer Industry with minimum investment value of 1 trillion
Rupiah (minimum investment value of 500bn Rupiah for
telecommunication sector)
Corporate Income Tax (CIT)
reduction rate
Concession period
Transition
After Tax Holiday
Not available
100% (single rate)
• 5 – 15 years; or
• Can be extended to 20 years; subject to MoF
discretion
1. 500Bn – 1Tn : 5 years
2. 1Tn – 5Tn : 7 years
3. 5Tn – 15Tn : 10 years
Pioneer Industry with minimum investment value of 500bn Rupiah
Applied to 8 industry groups:
(i) upstream basic metal industry; (ii) oil and gas refinery
industry; (iii) organic basic chemicals industry; (iv) machinery
industry; (v) plantation, forest, and fishery products
processing industry; (vi) telecommunication, information and
communication industry; (vii) marine transportation; and (viii)
economic infrastructure
Applied to 17 industry groups:
(i) upstream base metal; (ii) oil and gas refinery; (iii) petrochemical (oil, gas,
or coal based); (iv) non-organic base chemical; (v) organic base chemical;
(vi) pharmaceutical materials; (vii) semiconductor and other components;
(viii) communication devices components; (ix) medical devices
components; (x) machine manufacturing for industry; (xi) machine main
components manufacturing; (xii) robotic components manufacturing; (xiii)
ship components manufacturing; (xiv) airplane components manufacturing;
(xv) train components manufacturing; (xvi) power plants; and (xvii)
economic infrastructure
PROVISION BEFORE AFTER
5 – 20 years depends on the investment value (in IDR):
4. 15Tn – 30Tn : 15 years
5. ≥ 5Tn : 20 years
50% CIT reduction for the next 2 years
10 – 100%
Tax allowance not providedTax allowance for business expansion can be provided
with terms and conditions applied
Source: Coordinating Ministry for Economic Affairs *) MoF has issued a new Tax Holiday policy through Regulation No. 35/PMK.010/2018 (PMK-35) dated 4 April 2018.
27
Enhancing Business License Service StandardPresidential Regulation to Accelerate Ease of Doing Business has been launched
Source: Coordinating Ministry for Economic Affairs
Po
licy
Go
als
12
34
56
Improve efficient, streamlined, &
integrated business license service
standards
Accelerate the business
licensing process
Provide business licensing
process assurance in terms of
the costs and lead times
Increase coordination & synergy
between central & regional
government
Overcome the barriers to
doing business in
Indonesia
Implement integrated
licensing process (single
submission)
Ma
in P
olicy
Forming a Task Force to identify &
overcome the end-to-end licensing
barriers
Implementing a licensing checklist for
Special Economic Zones (KEK), Free
Trade Zones (FTZ), Industrial Zones &
Tourist Zones
Utilizing data sharing
Business license
regulatory reforms
Implementation of the
Single Submission
system
1st Phase 2nd Phase
Note: 1st and 2nd Phase are implemented in parallel
28
Improving Investment ClimateOnline Single Submission (OSS) Has Been Launched...
Source: Coordinating Ministry for Economic Affairs
OSS is a web-based business licensing system intended to cut the red tape involved in obtaining business
permits and integrated between the central government and regional administrations
Lorem Ipsum
Suitable for all
category,
Environment &
Forestry SectorElectricity
Sector
Public Works &
Housing SectorHealth Sector Industry Sector
Marine & Fishery
Sector
Medicine &
Food Sector
Transportation
SectorTrade Sector
Information &
Communication
Sector
Other Sector
Sectors
The Advantage of Using OSS
Business licenses can
be secured in under an
hour
Standardized
business licenses
are available
Ellectronically
integrated
The whole licensing
process is monitored by
the Task Force
More practicalAccessible at
anytime and
anywhere
29
(Pusat Logistik Berikat/PLB) is a
facility provided by Ministry of
Finance as part of the
implementation of the 1st Economic
Policy Package.
PLB facility aims to improve
efficiency and reduce the cost of
transportation and logistics in
Indonesia; support the growth of the
domestic industry, including small
and medium industries; increase
investment; and to make Indonesia
to become a logistics hub in Asia
Pacific.
To date, 52 Bonded Logistic Center has been launched to
support various industries.
Improving Investment Climate…Bonded Logistic Center to Improve Indonesia’s Competitiveness
Oil and
gas, and
mining
industry
Food &
beverages
industry
Auto-
motive
industry
Personal
care/
home care
industry
Textile
(cotton)
industry
Small and
medium
industry
Synthetic
textile
(chemical
substances)
industry.
Bonded Logistic Center
Heavy
Equipment
industry
Defence
industry
Aircraft
MRO
industry
30
Improving Investment Climate …revising the Negative Investment List
1 For total project value of IDR10bn and above
Before
Cold storage Restaurants, Bars Pharmaceutical Raw Materials
Manufacturing
Sports Center,
Film Processing Lab, Crumb Rubber
Revision of "Partnership" category to refer to partnership with Micro, Small and
Medium Enterprises (MSMEs)
Grandfather Law: If a particular sector is tightened in future, existing foreign
investor does not need to comply with tighter stake
Key Reforms in Negative Foreign
Investment List
Strengthen implementation of negative investment law through active roles from
ministries, agencies and regional governments
100%49%
100%51%
100% 85% 100%
95%100%
33%67%
51%67%
67%55%
67%65%
67%
Distribution, Warehousing Private Museum, Catering, apparel
Manufacturing, Exhibitions &
Conventions
Toll Road Operator,
Telecommunication Testing Company
Consultancy for Construction1
Telecommunication Provider
with Integrated Services
Professional Training, Golf Course Management, Air
Transport Support Services, Travel Bureau
After Before After Before After Before After
Before After Before After Before After
Before After Before After Before After
33%
49%
Introduction of New Foreign Ownership Regulation for Strategic Sectors
Source: Investment Coordinating Board (BKPM)
31
Investment Realization (Q1-2020)
IDR tn
2013 2014 2015
Direct Investments
2016 Mining
Housing, Industrial Estate,
and Office Building
Food Industry
Electricity, Gas, and
Water Supply
US$602.9 mn
US$1,523.8 mn
US$298.4 mn US$482.7 mn
US$868.6 mn
US$806.9 mn
Transportation, Warehouse,
and Telecommunication
50.9%
US$569.4 mn
81.3%
43.1%
21.5%22.1%
36.5%
149.1%
Investment
Realization
Top 8 FDI Realization by Sectors (Q1-2020 vs Q1-2019)
Source: Investment Coordinating Board (BKPM), compared to Q1-2019 period
2017
Rp145.4 T
Rp159.4 T
IDR98tn
434,463
9.6% 15.6%
9.2% 29.3%
Q1-2016 Q1-2017
Q1-2019 Q1-2020
Q1-2016 Q1-2017
Q1-2019 Q1-2020
*
* person
375,982
IDR210.7tn
8.0%
Q1-2019 Q1-2020
IDR195.1tn
IDR87.2tnIDR107.9tn IDR112.7tn
Chemical and
Pharmaceutical Industry
Metal, Except Machinery,
and Equipment Industry
2018 2019
Food Crops,
Plantations, and
Livestock
US$478.8 mn
120.5%98.0
112.7
210.7
0
20
4060
80
100120
140
160180
200220
240
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
FDI DDI TOTAL
2020
decreasing
Economic Factor:Strong and Stable Growth Prospects Remain Intact
Section 2
33
Conducive Environment Underpinning Strong Growth Fundamentals
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
Fuel subsidies
significantly reduced
and spending
redirected to more
productive allocation
Prudent debt
management
Reform-Oriented
Administration
Three main sources of financing for investment
needs: State and regional budget, State Owned
Enterprises and PPP
Continuing from 2015 policy, infrastructure will
be higher than fuel subsidy
Fiscal and non-fiscal incentives to attract
infrastructure investment and promote PPP
Infrastructure spending focused on basic
infrastructure projects
Large and Stable
EconomyConsistent
Budget Reform
New Economic
Structure
High
Infrastructure
Investments
34
Indonesia’s Strong GDP
Growth Prospect
Strong GDP Growth1
%
Institutions2020 GDP growth
(%YoY)
2020 Budget 5.3
Bank Indonesia around 2,3
IMF (WEO April 2020) 0.5
World Bank (GEP April 2020) 2.1
ADB (ADO April 2020) 2.5
Consensus Forecast (April 2020) 2.1
Favourable GDP Growth Compared to Peers2
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
2. Source: World Economic Outlook Database – October 2019; * indicates estimated figure
%
• Despite global economic moderation, resilient national economic growth has been
maintained in Indonesia. For the year 2019, solid economic growth was recorded at 5.02%
in 2019, albeit down slightly from 5.17% in 2018. The main driver of economic growth in
2019 was domestic demand, as export performance declined. In the fourth quarter of
2019, economic growth stood at 4.97% (yoy), down slightly from 5.02% (yoy) in the
previous period.
• Solid domestic demand was a key contributor to economic growth momentum in 2019 as
exports languished on dwindling global demand and sliding international commodity prices.
Domestic demand was influenced by stable household consumption, which grew 5.04% in
2019, relatively unchanged from the 5.05% posted in 2018. Household consumption was
maintained in line with controlled inflation and upbeat consumer confidence.
• Furthermore, the general election held in 2019 edged up consumption by non-profit
institutions serving households (NPISH) to 10.62% from 9.10% in 2018. Domestic demand
was also buoyed by strong investment performance, building investment in particular which
grew 5.37% in the reporting period, similar to the 5.41% recorded in 2018. Services in the
tertiary sector were the main locomotive of economic growth in 2019, led by
communications and information, financial services and insurance as well as other
services.
0.04
3.83 3.27
(2.07)
(0.16)
3.74 3.31
(1.73)
(0.36)
4.01
3.14
(1.81)
(0.30)
4.01
3.19
(1.70)
(0.41)
4.21
3.09
(1.69)
(0.52)
4.20
3.06
(1.74)
5.12 4.94 4.93
5.05 4.82 4.74 4.77 5.17
4.92 5.18
5.01 4.94 5.01 5.01 5.06 5.19 5.065.275.17 5.185.075.055.024.97
-3.0
-1.0
1.0
3.0
5.0
7.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2014 2015 2016 2017 2018 2019
QoQ YoY
3.7
3.23.4
3.6
6.17.0
5.05.1
5.7
6.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2012 2013 2014 2015 2016 2017 2018 2019* 2020*
Bulgaria Colombia India Indonesia Philippines
35
GDP Growth Breakdown
GDP Growth by Sector (%, YoY)
By sectors2015 2016 2017 2018 2019
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
Agriculture, forestry, and
fishery3.7 6.5 2.9 1.6 3.8 1.5 3.5 3.2 5.5 3.4 7.1 3.3 2.8 2.4 3.9 3.4 4.7 3.6 3.8 3.9 1.8 5.3 3.1 4.3 3.6
Mining and Quarrying 0.6 (3.6) (4.4) (6.0) (3.4) 1.2 1.0 0.2 1.4 0.9 (1.3) 2.1 1.8 0.0 0.7 1.1 2.6 2.7 2.2 2.2 2.3 (0.7) 2.3 0.9 1.2
Manufacturing 4.1 4.2 4.6 4.4 4.3 4.7 4.6 4.5 3.3 4.3 4.3 3.5 4.9 4.5 4.3 4.6 3.9 4.4 4.2 4.3 3.9 3.5 4.1 3.7 3.8
Construction 6.0 5.4 6.8 7.1 6.4 6.8 5.1 5.0 4.2 5.2 6.0 7.0 7.0 7.2 6.8 7.4 5.7 5.8 5.6 6.1 5.9 5.7 5.6 5.8 5.8
Wholesale and Retail Trade,
Repair of Car and Motorcycle3.8 1.6 1.4 3.5 2.5 4.3 4.3 3.7 3.9 4.0 4.6 3.5 5.2 4.5 4.5 5.0 5.2 5.3 4.4 5.0 5.2 4.6 4.4 4.2 4.6
Transportation and Storage 6.3 6.0 7.0 7.5 6.7 7.4 6.5 8.2 7.6 7.4 8.1 8.8 8.9 8.2 8.5 8.5 8.7 5.7 5.5 7.1 5.5 5.9 6.7 7.6 6.4
Information and
communication9.7 9.3 10.6 9.2 9.7 7.6 9.3 8.9 9.6 8.9 10.5 11.1 8.8 8.3 9.6 7.8 5.1 8.1 7.1 7.0 9.1 9.6 9.2 9.7 9.4
Financial service 8.6 2.6 10.3 12.8 8.6 9.3 13.6 9.0 4.2 8.9 6.0 5.9 6.1 3.8 5.5 4.3 3.1 3.1 6.2 4.2 7.2 4.5 6.1 8.5 6.6
Other Services* 5.1 6.5 4.8 5.5 5.4 6.0 5.6 4.5 3.8 4.9 4.2 3.5 4.8 6.0 4,6 5.4 6.2 6.7 6.4 6.2 6.8 7.3 6.4 6.2 6.7
GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0
Source: Central Bureau of Statistics of Indonesia (BPS)
*Other services consist of 10 sectors (according to Standard National 2008)
GDP Growth Based on Expenditures (%, YoY)1
By expenditure2015 2016 2017 2018 2019
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
HH. Consumption 5.0 5.0 5.0 4.9 5.0 5.0 5.1 5.0 5.0 5.0 4.9 5.0 4.9 5.0 4.9 5.0 5.2 5.0 5.1 5.1 5.0 5.2 5.0 5.0 5.0
Non profit HH.
consumption(8.1) (8.0) 6.6 8.3 (0.6) 6.4 6.7 6.7 6.7 6.6 8.1 8.5 6.0 5.3 6.9 8.1 8.8 8.6 10.8 9.1 17.0 15.3 7.4 3.5 10.6
Government
consumption2.9 2.6 7.1 7.1 5.3 3.4 6.2 (3.0) (4.0) (0.1) 2.7 (1.9) 3.5 3.8 2.1 2.7 5.2 6.3 4.6 4.8 5.2 8.2 1.0 0.5 3.2
Gross Fixed Cap.
Formation4.6 4.0 4.9 6.4 5.0 4.7 4.2 4.2 4.8 4.5 4.8 5.3 7.1 7.3 6.2 7.9 5.8 6.9 6.0 6.6 5.0 4.6 4.2 4.1 4.4
Exports (0.6) (0.3) (1.0) (6.4) (2.1) (3.1) (1.5) (5.9) 3.9 (1.7) 8.4 2.7 16.5 8.4 8.9 5.8 7.5 8.3 4.6 6.5 (1.6) (1.7) 0.1 (0.4) (0.9)
Imports (2.6) (7.1) (6.5) (8.6) (6.2) (5.0) (3.4) (4.1) 2.7 (2.4) 4.8 0.2 15.4 11.9 8.1 12.5 14.9 13.8 7.1 11.9 (7.5) (6.8) (8.3) (8.0) (7.7)
GDP 4.8 4.7 4.8 5.2 4.9 4.9 5.2 5.0 4.9 5.0 5.0 5.0 5.1 5.2 5.1 5.1 5.3 5.2 5.2 5.2 5.1 5.1 5.0 5.0 5.0
1. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption
36
Regional Economic Growth
Source: Central Bureau of Statistics of Indonesia (BPS)
Solid domestic demand is supported by increasing income from inter-regional trade, such as in Sumatra. Meanwhile, economic growth
in Kalimantan and Bali-Nusa Tenggara has been maintained as exports of primary commodities improved.
External Factor:Improved External Resilience
Section 3
38
1.97
(8.35)
(2.06)
0.31
-2.84
-4.5
-4.0
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
-12
-10
-8
-6
-4
-2
0
2
4
6
8
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**
Goods Services Primary Income Secondary Income Current Account (%GDP) (rhs)
US$bn
External Balance under Control Supported by Adequate Reserves
Current Account Deficit within Safe ThresholdBalance of Payments Portrait
Substantial FX Reserves to Mitigate External ChallengesTrade Balance Portrait
Source: Bank IndonesiaSource: Bank Indonesia
Source: BPS
* Preliminary Figure ** Very Preliminary Figure
2015:
Surplus
US$7.59bn
2013:
Deficit
(US$4.10bn)
2014:
Deficit
(US$2.37bn)
2016:
Surplus
US$8.83bn
2017:
Surplus
US$11.83bn
Source: Bank Indonesia
FX Reserves as of March 2020: US$121.0 bn
(Equiv. to 7.0 months of imports + servicing of government debt)US$bn
2015:CA Deficit
(US$17.5bn)
2013:CA Deficit
(US$29.1bn)
2014:CA Deficit
(US$27.5bn)
2016:CA Deficit
(US$17.0bn)
2017:CA Deficit
(US$16.2bn)
2018:
Deficit
(US$8.7bn)
2018:CA Deficit
(US$30.6bn)
2019:
Deficit
(US$3.2bn)
(8.12)
12.38
4.28
129.18
0
40
80
120
160
-15
-10
-5
0
5
10
15
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1*Q2*Q3*Q4**
2013 2014 2015 2016 2017 2018 2019**
Indonesia's Balance of Payments
Current Account Capital and Financial Account Overall Balance Reserve Asset (rhs)
US$bn US$bn2019:
CA Deficit(US$30.4bn)
-1.13
-0.50-1.63
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
1 3 5 7 9
11 1 3 5 7 9
11 1 3 5 7 9
11 1 3 5 7 9
11 1 3 5 7 9
11 1 3 5 7 9
11 1 3 5 7 9
11 1 3
2013 2014 2015 2016 2017 2018 2019 2020
OG Non-OG Total
-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
50
60
70
80
90
100
110
120
130
1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1
2013 2014 2015 2016 2017 2018 2019 2020
FX Reserves (LHS) Month of Import & Debt Service (RHS)
MonthUS$bn
39
Exchange Rate In Line with Fundamentals
Movement of Rupiah
Rupiah Exchange Rate Fared Relatively Well Compared to Peers
IDR/US$ The rupiah regained some of its lost value in the second week of April 2020 as global
financial market panic began to subside. On 13th April 2020, the rupiah appreciated
4.35% (ptp) on the level recorded at the end of March 2020. Notwithstanding, the
rupiah has still depreciated by around 11.18% on the level recorded at the end of
2019. The rupiah appreciated in April 2020 in response to an influx of foreign capital
flows to domestic financial markets after various policies were implemented around
the world to mitigate the economic impact of COVID-19, including in Indonesia. The
stronger rupiah was also supported by the maintained supply of foreign exchange from
domestic players, which underpinned rupiah exchange rate stability. Bank Indonesia is
confident that the current value of the rupiah is adequate to support economic
rebalancing, as the currency is fundamentally undervalued. Furthermore, rupiah
stability is expected as the currency strengthens towards Rp15,000 per US dollar at
the end of 2020. Bank Indonesia will continue to bolster rupiah stabilization policy in
line with the currency's fundamental value and market mechanisms. To that end, Bank
Indonesia will increase the intensity of triple intervention policy through the spot and
Domestic Non-Deliverable Forward (DNDF) markets, as well as purchasing SBN in the
secondary market. To boost the effectiveness of exchange-rate policy, therefore, Bank
Indonesia will continue to optimize monetary operations in order to ensure sound
market mechanisms and adequate liquidity in the money and foreign exchange
markets.
Source: Bank Indonesia
Rupiah Exchange Rate Volatilty
15630
14601
14798
14134
1425414120
14064 14219
16195
14,141
14,381 14,220
14,031
14,232
14,113
14,006
13,714
15,179
16,195
13,000
13,500
14,000
14,500
15,000
15,500
16,000
16,500
17,000
12
-Ma
y
12
-Ju
n
12
-Ju
l
12
-Au
g
12
-Se
p
12
-Oct
12
-No
v
12
-De
c
12
-Ja
n
12
-Fe
b
12
-Ma
r
12
-Ap
r
12
-Ma
y
12
-Ju
n
12
-Ju
l
12
-Au
g
12
-Se
p
12
-Oct
12
-No
v
12
-De
c
12
-Ja
n
12
-Fe
b
12
-Ma
r
12
-Ap
r
IDR/USD
Quarterly Average
Monthly Average
data as of April 13th, 2020
0.25
-0.41
-0.71
-0.78
-0.84
-1.23
-1.76
-2.26
-2.37
-5.71
-6.27
-6.57-9.30
0.16
0.07
0.50
-0.38
0.42
-0.01
-0.81
-1.07
0.17
-2.27
4.35
1.91
-1.23
-10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0
PHP
KRW
CNY
JPY
SGD
MYR
EUR
INR
THB
TRY
IDR
BRL
ZAR
point-to-point
average
*data as of April 13th, 2020
YTD 2020 vs 2019
%
18.1%17.0%
16.0%
7.0%5.4%
6.4% 6.2%4.7%
28.7% 28.5%
18.0%
23.7%
3.7%
5.9%
14.4%
5.1%
15.99%
ZAR BRL TRY IDR THB PHP INR MYR
2019
YTD 2020
Average YTD 2020
*data as of April 13th, 2020
40
Ample Lines of Defense Against External Shocks
Ample level of FX reserves to buffer against external shock
FX Reserves as of March 2020: US$121.0 billion
South Korea Renewed a 3 year KRW / IDR swap arrangement with the size of up to KRW 10.7 trillion / IDR 115 trillion in March 2020
Australia Renewed a 3 year A$/IDR swap arrangement of up to A$10 billion or IDR 100 trillion in August 2018
Chiang Mai Initiative
Multilateralization
(CMIM) Agreement
Entitled to a maximum swap amount of US$ 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
Japan Renewed a 3 year USD22.76 billion swap line with Japan on October 14th, 2018
The facility is available in USD and JPY
IMF Global Financial
Safety Net - GSFN
Indonesia is entitled to access IMF facilities for crisis prevention to address potential (actual) BOP problem
Such facilities include Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL)
Bila
tera
lR
egio
na
lG
lob
al
FX Reserve
Ample Reserves
Swap Arrangement
Source: Bank Indonesia
ASEAN Swap
Arrangement (ASA)
Entitled to a maximum swap amount of USD600 million under ASA
The first MoU on the ASA was signed in 1977 among 5 ASEAN Central Banks with total facility USD100 million
Doubled to USD2 billion in 2005
Singapore Renewed a one year SGD/IDR swap arrangement with a size up to USD10 billion (equivalent) in November 2019
China Renewed a 3 year swap arrangement and increased the size of swap line up to CNY 200 bn / USD 30 billion in
November 2018
Malaysia Established a 3 year RM/IDR swap arrangement with a size up to USD2 billion (equivalent) in September 2019
41
Solid Policy Coordination In Managing Financial Markets Volatility
Source: Ministry of Finance
First Line of Defense
State’s Budget
Buyback fund at DG of Budget Financing and
Risk Management
Investment fund at Public Service Agency
(BLU) (min. level Aware)
State Owned Enterprises
(BUMN)’s Budget Related SOEs (min. level Aware)
Social Security Organizing
Agency (BPJS)’s BudgetBPJS (min. level Aware)
Second Line of Defense
State’s Budget
State General Treasury Account (Rekening KUN)
(min. level Alert)
Accumulated cash surplus (SAL) (min. Level Crisis)
Gov’t Securities Crisis Management Protocol (CMP)
Indicators:
- Yield of benchmark series;
- Exchange rate;
- Jakarta Composite Index;
- Foreign ownership in government securities
Policies to address the crisis at every level :
- Repurchase the government securities at secondary market
- Postpone or stop the issuance
Bond Stabilization Framework
The enactment of Law No. 9/2016 regarding Prevention and
Mitigation of Financial System Crises as a legal foundation
for the government to serves at the time of financial crisis in
the form of Financial System Stability Committee (KSSK)
KSSK members: the Ministry of Finance, Bank Indonesia, the
Financial Services Authority, and the Deposit Insurance
Corporation
Swap facility arrangements based on international
cooperation
Enhancing coordination between government institutions
and continuous dialogue with market participants
Implementing Crisis Management Protocol (CMP)CMP
Implementing Bond Stabilization Framework (BSF)BSF
42
Strengthened Private External Debt Risk Management
Regulation Key Points
Phase 1
Jan 1,2015 –
Dec 31,2015
Phase 2
Jan 1,2016 –
Dec 31,2016
Phase 3
Jan 1, 2017 &
beyond
Object of Regulation Governs all Foreign Currency Debt
Hedging Ratio
< 3 months 20%* 25%**
> 3 – 6 months 20%* 25%**
Liquidity Ratio (< 3 months) 50% 70%
Credit Rating Not applicable Minimum rating of BB-
Hedging transaction to meet
hedge ratio
not necessarily be done with a bank in
Indonesia
Must be done
with a bank in
Indonesia
Sanction As of Q IV-2015 Applied
External Debt/GDP (%)
Debt Burden Indicator (External Debt/GDP) Remains Comparable to Peers Rating Encouraging Corporates Compliance on Hedging Ratio & Liquidity Ratio
Source: Bank Indonesia
Liquidity Ratio*
Hedging Ratio*
*Data as of Q3 2019, with total population 2.602 corporates
Regulation on Prudential Principle in Managing External Debt
Source: Bank Indonesia
Source: Moody’s Statistical Handbook, November 2019
23.9
36.2
20.0
39.9
57.3
23.0
36.7
20.9
42.9
56.5
21.9
37.0
21.4
42.3
54.3
0 10 20 30 40 50 60 70
Philippines
Indonesia
India
Colombia
Bulgaria
2020F
2019F
2018
2,341 ,
90%
261 ,
10%
≤ 3 months
2,443 , 94%
159 , 6%
> 3 - 6 months
2,294 , 88%
308 , 12%
Comply Not Comply
43
Healthy External Debt Composition
External Debt Structure
Source: Bank Indonesia, External Debt Statistics of Indonesia, April 2020*Provisional Figures
The Structure of External Debt is Dominated by Long-Term Debt
External Debt Remains Manageable External Debt to GDP Ratio & Debt to Export Ratio
%% %
121.8 114.9
101.0
113.8
123.1
139.5
168.4
176.1
168.0
160.8
168.7 172.4
177.4 183.7
31.8
26.5 25.0
27.4 29.1
32.9
36.1 34.3 34.7
36.0 36.8 36.6 36.2 36.1
0
5
10
15
20
25
30
35
40
80
100
120
140
160
180
200
External Debt / Export Ratio External Debt / GDP Ratio (rhs)
42.6 41.447.4 50.0 53.6 55.8 54.1 50.5 48.8 50.4 50.8 49.8 50.0 49.8 49.5 50.1
57.4 58.652.6 50.0 46.4 44.2 45.9 49.5 51.2 49.6 49.2 50.2 50.0 50.2 50.5 49.9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Private External Debt Public External Debt
18.3 21.2 20.7 21.7 21.2 20.2 17.9 17.1 15.6 16.0 16.2 15.8 14.1 15.7 14.6 14.6
81.7 78.8 79.3 78.3 78.8 79.8 82.1 82.9 84.4 84.0 83.8 84.2 85.9 84.3 85.4 85.4
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Short Term External Debt Long Term External Debt
Million USD
11.5
17.1
11.312.0
5.4
10.2
5.9
3.0
10.1
6.5
8.3
10.1 10.5
7.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000 External Debt External Debt Growth (rhs)
44
Manageable External Debt ProfileShort term non-bank corporate debt (non affiliation) represents only 8.6% of total private external debt
Private
Short-Term1
Private
Non-Bank
External Debt
Position
Affiliation
Non Affiliation
US$155.2bn
or
76%
of Private Ext.
Debt
US$19.5bn
or
9.6%
of Private
Ext. Debt
US$11.8bn
or
5.8%
of Private
Ext. Debt
US$17.7bn
or
8.7%
of Private
Ext. Debt
Public Long Term1 Private Bank
US$29.5bn
or
14.4%
of Private
Ext. Debt
US$204.2bn
or
50.1%
of total
Ext. Debt
US$49bn
or
24%
of Private
Ext. Debt
External Debt Position as of February 20201 Based on remaining maturity
Source: External Debt Statistics of Indonesia, April 2020
US$407.5bn
US$203.3bn
or
49.9%
of Total Ext.
Debt
Fiscal Performance and Flexibility:Prudent Fiscal Policy to Combat the COVID-19 Pandemic and Maintaining Economic Sustainability
Section 4
46
Optimizing the Policy Mix to Combat the COVID-19 Pandemic and Maintaining Economic Sustainability
Source: Ministry of Finance
2
Budget Refocusing & Reallocation
STIMULUS I
Rp8,5 TSTIMULUS II
Rp22,5 TSTIMULUS III
Rp405,1
Line ministries and regional govt: budget priorities to
tackle COVID-19
Strengthening the domestic economy through:• Accelerating spending &
encouraging labor-intensive policies
• Spending stimulus
Maintaining people's purchasing power and ease of export and import:• Fiscal stimulus• Non-Fiscal Stimulus• Policy in the Financial Sector
Rescueing national health and economy, as well as maintaining the stability of the financial
sector (through Perppu No.1 Tahun 2020)• State Financial Policy (health, social safety
net, business support & economic recovery financing support)
• Policy in the Financial Sector
FISCAL POLICY
MONETARY*
• Reducing BI 7DRR• Increasing triple intervention intensity• Lowering Currency Statutory Reserves
(GWM) in Rupiah & foreign currency• Extend SBN tenure
BANKING
• Relaxation of credit/financing/fund provision requirements for MSMEs
• MSMEs credit/financing restructuring
MONETARY AND FINANCIAL POLICY
Rp190 T Spending cut/saving
Rp55 T Spending Reallocation
*For more detail please see section 5
47
Extraordinary Handling of The COVID-19 PandemicGovernment Regulation in lieu of law (Perppu) No. 1/2020 stipulates that everything spent by the government on Covid-19 economic recovery programs will be regarded as a measure to save the economy from crisis and not a state loss
Source: Ministry of Finance
48
Extraordinary Handling of The COVID-19 PandemicGovernment Regulation in lieu of law (Perppu) No. 1/2020 stipulates that everything spent by the government on Covid-19 economic recovery programs will be regarded as a measure to save the economy from crisis and not a state loss
Source: Ministry of Finance
49
Source: Ministry of Finance
Background:
• Adjustment of state budget deficit
threshold
• Utilization of budget funding alternative
sources
• Adjusment of mandatory spending,
shifting and refocusing central and
regional budgets
• SBN issuance and loan program to
finance the additional deficit
• Incentives and tax facilities
• Implementation of the National
Economic Recovery Program for the
sustainability of the real sector and
financial sector.
MAIN PRINCIPLE/SETTINGS IN PERPPU
State Financial Policy Financial Sector Policy• Expanding the authority of KSSK and
the scope of the KKSK meeting
• Strengthening the authority of the BI,
including in buying long-term SBN in the
primary market to support the handling of
Covid-19 pandemic
• Strengthening the authority of Financial
Service Authority (OJK) and Deposit
Insurance Corporation (LPS) to prevent
risks that endanger financial system
stability and protect bank customers.
• Strengthening the authority of the
government in handling banking
problems and financial system stability
due to COVID-19 pandemic
PERPPU No. 1 of 2020Quick and Extraordinary Steps in Handling COVID-19
and the ImpactCOVID-19 PANDEMIC:
• Escalation of confirmed case and fatalities
• Great economic impact• Potential disruption to the stability of
financial system
Need quickand
anticipatory
step
Forceful
urgency1 2
PERPPU No. 1 of 2020as a legal basis for taking rapid and
extraordinary and coordinated steps to counter the COVID-19 pandemic.
- carried out while maintaining good governance -
Extraordinary Handling of The COVID-19 PandemicGovernment Regulation in lieu of law (Perppu) No. 1/2020 stipulates that everything spent by the government on Covid-19 economic recovery programs will be regarded as a measure to save the economy from crisis and not a state loss
50
COVID-19 Impacts and CountermeasuresPerpu No. 1/2020 provides a legal basis to take extraordinary steps in tackling COVID-19 humanitarian crisis and saving the economy
Source: Ministry of Finance
Health and Mental
Threats
Disruption of Social
& Economic Activity
Disruption in Real Sector and Increased Risk in
the Financial Sector
Losing source of income
Declining purchasing power and
consumption ability
Disruption in business activity
(production, investment, and
trade)
Business is facing potential
bankruptcy
Increase in financing and
banking nonperforming loan
Liquidity and solvency issues
in the financial sector (bank and
nonbank)
Health Measures:
Appoint dedicated hospital,
emergency hospital, equipment
support, and medical personnel
support
Testing and tracing
physical distancing, work and
study from home, etc.
Large-scale Social Restriction
(PSBB)
Business Support:
Reducing of import restriction (lartas) including manufacturing
support, food and health/medical goods, acceleration of the export-import process, and improvement of services through
the National Logistics Ecosystem
Incentives and tax facility
The National Economic Recovery Program through PMN,
placement of Government investment, and/or guarantee activities
Various policies and relaxation in the financial sector: BI, OJK,
LPS, and the Government
Social Safety Net:
PKH improvement and expansion
Basic food cards improvement and
expansion
Pre-Work Card expansion and flexibility
Exemption from electricity bills
Additional interest rate subsidy
assistance
Infected
Starving
Death
Triggering mental health issues
(anxiety, fear, sadness)
51
The objectives of Government Stimulus
Source: Ministry of Finance
1. Helping economic player to survive the impact of COVID-19
2. Minimizing the number of work terminations (PHK)
3. Supporting banks in providing relaxation and liquidity
Trade sector could be one of the hardest-hit business sector, particularly because most of them are classified as MSMEs (with big concerns whether they have sufficient financial capacity to survive until the outbreak ends)
MSMEs absorp around 97% of total workforce and 99% of total job field, thus it is very crucial for the Government to maintain the sustainability of those MSMEs, minimize the number of layoffs, and maintain the level of unemployment in a tolerable level.
In order to break the vicious cycle in conducting credit in this time of crisis, liquidity injection becomes important. It needs to be done to channel liquidity to the real sector that needs cashflow to undergo a crisis due to COVID-19.
Global economy as well as Indonesia economy face extraordinary challenges because of the impact of COVID-19. To overcome these, liquidity channeling policies need to be prepared in order to achieve the following objectives:
52
Flexibility In 2020 Budget To Respond Emergency ConditionWidening the deficit above 3 percent of GDP is to accelerate the mitigation of COVID-19, salvage the economy from threatening crisis, and maintain the stable financial system
Source: Ministry of Finance
Slow economic activity, plummeting of oil and commodities price
Tax incentive for businesses
Focusing for health, social safety net, and businesses support, including the small and medium one;
Reducing the non-priority spending, refocusing, and reallocating to bolster the management of COVID-19;
Enhancing the spending for COVID-19 treatment
Widening (Rp545.8T)
The increasing of accumulated cash surplus utilization (Rp45 trillion)
Financing to promote the national economy recovery (Rp150 trillion)
Adding the securities issuance to cover financing gap
Revenue Spending
Deficit
Budget(Rp307.2T) = 1.76% GDP
Outlook(Rp853.0T) = 5.07% GDP
BudgetRp2,233.2T
BudgetRp2,540.4TOutlook
Rp1,760.9T
OutlookRp2,613.8T
53
Outlook of 2020 Budget Revenue in COVID-19 Emergency
Source: Ministry of Finance
DOMESTIC
REVENUE
TAX REVENUE FROM D.G.TAX
TAX REVENUE
CUSTOMS & EXCISES
REVENUE
Growth: -5.4% | Tax Ratio 9.4%
• Slowdown of economic growth and oil price war
• Tax incentive facilities stage II (PMK 23/2020)
• Additional tax relaxation Stimulus widening
• Reducing of Corporate Income Tax into 22%
• Possibility of Dividend Income Tax suspend due to
Omnibus Law
Growth: -5.9%, by calculating the impact of:Growth: -2.2%,
considering the stimulus
effect of import duty
exemption for 19 industries
Growth: -26.5%
Reckoning the influence of:
• The drop of oil and gas
prices due to the lower ICP’s
assumption
• It is similar to non-oil and gas
commodities since the coal’s
price has plunged
GROWTH
-10% FROM 2019’s REALIZATION
OR
78.9% 2020 BUDGET TARGET
54
State Expenditure & Transfer to Regions Outlook in The APBN 2020 Amid Emergency Situation due to COVID-19
Source: Ministry of Finance
//////////////////////// ////////////////////////
BUDGET
REFOCUSING &
REALLOCATION TO
FIGHT COVID-19
Rp190 TExpenditure Savings:
(Line Ministries: Rp95,7 T and Transfer to Region Rp94,2 T)
Rp54,6 TExpenditure Reallocation
Rp255,1 TAdditional spending to mitigate
COVID-19 (PERPPU)
////////////////////////
• Rp75 T Additional health spending
• Rp110 T Increasing Social Safety Net
• Rp70,1 T Support for business
sector/industry
OUTLOOKDBH(Revenue sharing) in line with state revenue change
DAU(general allocation fund) Cut by 10%
DAK Fisik(Physical Specific Allocation Fund) cut by 25% except for education and health programs
DAK Non Fisik(Non Physical Specific Allocation Fund) has been taking into account additional incentive for healthcare workers of Rp3,7 T
DID & Dana Desa(Incentive Fund & Village Fund) taking into account disbursement capacity.
Dana Desa(Village fund) can be used for cash transfer social assistance in village level
55
State Financing Outlook in The APBN 2020 Amid Emergency Situation due to COVID-19
Source: Ministry of Finance
DEFICIT
OUTLOOK
INCREASE TO BE
5,07%OF GDP
FROM
1,76% OF GDPIN APBN 2020
FINANCING
Additional financing will use accumulated cash surplus
(Saldo Anggaran Lebih /SAL), endowment fund, and
fund from BLU.
NON DEBT FINANCING Rp108,9 T
Debt financing will come from:
• Government bonds issuance (SBN), in global and
domestic market,
• Loan withdrawal from multilateral and bilateral
sources.
• Government bonds issuance including bonds that will be
purchased by Bank Indonesia in the primary market.
Rp545,7 TRILLION
DEBT FINANCING Rp654,5 T
Government will utilize debt financing sources with
relatively low cost and manageable risk.
Adittional education
financing Rp18,6 T to
fulfill mandatory education
spending of 20% of total
budget
Non debt financing include:
Financing t support National
Economic Recovery
Program of Rp150 T
56
The Realization of The State Budget up to March 2020 Controlled State budget Amid the Pandemic Pressure
Source: Ministry of Finance
Budget (IDRtn)
2019 2020
Budget
Realization
as of 31
March
% to Budget Growth (%) Budget
Realization
as of 31
March
% to Budget Growth
A Revenue and Grant 2,165.1 349.0 16.1 4.6 2,233.2 375.9 16.8 7.7
I. Domestic Revenue 2,164.7 348.9 16.1 4.6 2,232.7 375.9 16.8 7.7
1. Taxation Revenue 1,786.4 278.7 15.6 6.2 1,865.7 279.9 15.0 0.4
a. Tax Revenue 1,577.6 247.7 15.7 1.3 1,642.6 241.6 14.7 (2.5)
b. Custom and Excise 208.8 31.0 14.8 73.1 223.1 38.3 17.2 23.6
2. Non Taxation Revenue 378.3 70.2 31.0 (1.2) 367.0 96.0 26.2 36.8
II. Grants 0.4 0.1 33.7 (43.7) 0.5 0.1 15.5 (47.4)
B Expenditure 2,461.1 452.1 18.4 7.7 2,540.4 452.4 17.8 0.1
I. Central Government Expenditure 1,634.3 260.7 16.0 11.4 1,683.5 277.9 16.5 6.6
1. Line Ministries Expenditure 855.4 128.8 15.1 24.8 909.6 143.0 15.7 11.0
2. Non Line Ministries
Expenditure778.9 132.0 16.9 0.9 773.9 134.9 17.4 2.2
III. Transfer to Region and Village Fund 826.8 191,3 23.1 3.1 856.9 174.5 20.4 (8.8)
1. Transfer to Region 756.8 181.2 23.9 3.4 784.9 167.3 21.3 (7.7)
2. Village Fund 70.0 10.1 14.4 (1.9) 72.0 7.2 10.0 (28.6)
C Primary Balance (20.1) (32.5) 161.5 87.1 (12) (2.6) 21.6 (92.0)
D Surplus/(Deficit) (296.0) (103.1) 34.8 20.1 (307.2) (76.4) 24.9 (25.8)
% of GDP (1.8) (0.65) (1.76) (0.45)
E Financing 296.0 177.9 60.1 16.9 307.2 74.2 24.2 (58.3)
57
Government SecuritiesIndicative Financing Plan for 2020
Source: Ministry of Finance
Government Securities
(GS)
Issuance
Composition
GS Rupiah
Domestic
[82% - 86%]
Auction
[76% – 80%]
Non-auction
[6% - 8%]
Foreign
Denominated GS
International
[14% - 18%]
• Auction:
• Conventional Securities – 24x
• Islamic Securities – 24x
• Non-auction:
• Retail GDS (tradable/ORI & non-tradable), Retail
Sovereign Sukuk (tradable/Sukri & non-tradable);
• Private Placement – based on request.
• Foreign denominated GS as complementary
Avoid crowding out in domestic market.
• The target amount can be adjusted to the potential
of other financing sources and financing needs.
*in IDR Trillion
58
Government Securities Financing Realization(as of March 31, 2020)
Source: Ministry of Finance
*Dual-currency bonds issuance using SEC format amounted USD2 bn and EUR1 bn, settlement on January 14, 2020
(BI mid day exchange rate; 1 USD = 13,654 IDR & 1 EUR = 15,207.83 IDR)
- Including SBR009 issued February 17, 2020
59
GS Primary Market Performance 2019-2020Through Auction
Source: Ministry of Finance
2.11
3.11 2.80
2.12 2.15
3.17
2.59
1.97 2.34
2.97
2.44
5.14
6.50
3.01
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
-
50
100
150
200
250
300
350
400Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)
Incoming bid 2020 = Rp65.49T , while awarded bid 2020 = Rp13.91T
60
Republic of Indonesia – USD4.3bn GLOBAL BONDS ISSUANCE
Source: Ministry of Finance
On April 7, 2020, the Republic of Indonesia priced a transaction comprising USD4.3bn in senior unsecured notes
Issuer Republic of Indonesia
Issuer Rating Baa2 Moody’s (Stable)
BBB S&P (Stable)
BBB Fitch (Stable)
Exp. Issue Rating Baa2 Moody’s / BBB S&P / BBB Fitch
Format U.S. SEC registered
Issue Senior unsecured fixed rate notes
Pricing Date April 6, 2020
Settlement Date April 15, 2020
Aggregate Size USD4,300 mm
Long 10.5-year Long 30.5-year Long 50-year
Maturity Oct 15, 2030 Oct 15, 2050 Apr 15, 2070
Tranche Size USD1,650 mm USD1,650 mm USD1,000 mm
Coupon (p.a.) 3.850% 4.200% 4.450%
Reoffer Price 99.573 99.150 99.009
Reoffer Yield (p.a.) 3.900% 4.250% 4.500%
Listing Singapore, Frankfurt Open Market
Law New York
Use of Proceeds For general purposes of the Republic of Indonesia, including
financing COVID-19 relief and recovery
Transaction Highlights
Net proceeds will be used for general purposes of the Republic, including financing COVID-19 relief and recovery efforts for the Republic to contain the virus and mitigate its
impact on Indonesia.
The Republic's fiscal policy amidst volatile market conditions includes support for healthcare, the social safety net, and small and medium enterprises.
The debut 50-year offering on strong demand in the long end of the curve.
The transaction is the largest global offering by the Republic and demonstrates the Republic’s ability to respond swiftly to markets and capture favorable issuance windows.
Investor Breakdown
by Investor TypeInvestor Breakdown by Region
RI1030
RI0470
RI1050
45%
25%
21%
9%
52%
20%
26%
2%
44%
38%
18%
45%
25%
21%
9%
US Europe Asia ex-Indonesia Indonesia
RI1030
RI0470
RI1050
64%
20%
1%
4%
1%
10%
Asset Managers
Insurance/Pension Fund
Central Bank/Sovereign Wealth Fund
Banks
Private Banks
Others
64%20%
1%4%
1%10%
71%
22%
1%1% 2% 3%
85%
11%
1%1% 1% 1%
61
Disciplined and Sophisticated Debt Portfolio Management
Weighted Average Debt Maturity of ~8.5 Years
Prudent Fiscal Deficit
Source: Ministry of Finance
Well Diversified Across Different Currencies
% of Yearly Issuance
Source: Ministry of Finance
Source: Ministry of Finance
Source: Ministry of Finance
Stable Debt to GDP Ratio Over the Years
IDR Tn Government Debt / GDP (%)
Note: *as of endo of December by using GDP assumption (interpolation)
265
362 407
442
358
(9)
19
(4) (20)
14
(7)
(58) (69) (56) (66)
(227)
(298) (308) (341) (269)
-2.2%
-2.6% -2.5% -2.5%
-1.8%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
(400)
(300)
(200)
(100)
-
100
200
300
400
500
2014 2015 2016 2017 2018
SBN (neto) Pinjaman DN & LN (neto)
Non Utang (neto) Surplus (Defisit) APBN
Rasio Defisit APBN thd. PDB (RHS)
Non Debt (Net)
Bonds (Net) Loans (Net)
Budget Surplus/Deficit
Fiscal Deficit (%GDP, RHS)
1,931.2 2,410.0
2,780.6 3,248.6
3,612.7 4,014.8 4,292.73 714.4
677.6
755.1
734.8 746.2
810.7 764.5
24.7%
27.4% 28.3%29.4% 29.8% 30.2%
32.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
-
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
2014 2015 2016 2017 2018 2019*) Mar-20
Bond Loan Debt/GDP Ratio [RHS]
9.8
9.4
9.1
8.7
8.4
8.5 8.6
2014 2015 2016 2017 2018 2019 Mar-20
ATM (in years)
57% 59% 58% 62% 59%
31% 30% 30% 27% 29%
4% 4% 4% 4% 5%7% 6% 6% 5% 6%
1% 1% 1% 1% 1%
0%
20%
40%
60%
80%
100%
2016 2017 2018 2019 Mar-20
IDR USD EUR JPY OTHER
62
Well Balanced Maturity Profile With Strong Resilience Against External Shocks
Declining Interest Rate Risks
Debt Maturity Profile
Declining Exchange Rate Risks
Upcoming Maturities (Next 5 Years)
IDR tn
Note: using GDP assumption
Source: Ministry of Finance
14.813.7
12.1
10.6 10.69.8 10.2
21.0 20.7
17.5
19.2 19.7
16.114.9
2014 2015 2016 2017 2018 2019 Mar-20
Variable rate ratio [%] Refixing [%]
176
273
215 225
283
129 139 141 134
208
128 143 96 94
150
46 99
28
89 62
29 23 20 33 28 - - 20 35
-
110
177
195 190
183
177 139 140 142
96
58 51
31 27
19
39
9
31
37
4
3 3 39 27 35
35 22
42 30 55.7
-
50
100
150
200
250
300
350
400
450
500
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
20
36
20
37
20
38
20
39
20
40
20
41
20
42
20
43
20
44
20
45
20
46
20
47
20
48
20
49
-20
58
IDR Denominated (Triliun Rp)Other Currencies (Triliun Rp)
10.712.2 12.1 12.1 12.3 11.3
13.3
43.4 44.542.6
41.3 41.037.9
41.3
2014 2015 2016 2017 2018 2019 Mar-20
FX Debt to GDP ratio (%) FX Debt to total debt ratio (%)
7.7 8.46.5
9.9 10.68.1 6.7
20.121.4 22.7
25.0 25.5 24.3 23.5
33.9 34.7 36.039.3 40.4 41.0 40.1
2014 2015 2016 2017 2018 2019 Mar-20
in 1 year (%) in 3 year (%) in 5 year (%)
63
Holders of Tradable Central Government SecuritiesMore Balance Ownership In Terms of Holders and Tenors
Foreign Ownership of Gov’t Domestic Debt Securities by TenorHolders of Tradable Gov’t Domestic Debt Securities
Source: Ministry of Finance
23.9% 22.5% 23.4%20.3% 21.1%
26.9%
37.8% 39.9% 36.8% 42.0% 40.3%
40.3%
38.2% 37.5% 39.8% 37.7% 38.6%
32.7%
0%
20%
40%
60%
80%
100%
Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar-19
Foreign Holders Domestic Non -Banks Domestic Banks
3.2% 3.5% 5.0% 4.3% 2.4% 2.4%1.3%
5.3%5.1%
1.9% 6.7% 7.9%
11.8%
17.8% 17.3%
18.4%
22.0%23.1%
39.0% 37.4% 35.6% 36.8%34.1%
31.6%
44.7%
36.0% 37.0% 38.6%34.8% 35.0%
38.2% 37.5%39.8%
37.7% 38.6%
32.7%
0%
20%
40%
60%
80%
100%
Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar-20
0-1 >1-2 >2-5 >5-10 >10 % Foreign Ownership of Total
64
Ownership of IDR Tradable Central Government Securities(as of March 31, 2020)
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.
(IDR tn)
Source: Ministry of Finance
Description Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Mar -2020
Banks* 350.07 23.95% 399.46 22.53% 491.61 23.41% 481.33 20.32% 581.37 21.12% 763.39 26.94%
Govt Institutions (Bank
Indonesia**)148.91 10.19% 134.25 7.57% 141.83 6.75% 253.47 10.70% 262.49 9.54% 255.10 9.00%
Bank Indonesia (gross) 157.88 8.90% 179.84 8.56% 217.36 9.18% 273.21 9.93% 426.08 15.04%
GS used for Monetary
Operation 23.63 1.33% 38.01 1.81% (36.15) (1.52%) 10.72 0.39% 170.98 6.03%
Non-Banks 962.86 65.87% 1,239.57 69.90% 1,466.33 69.83% 1,633.65 68.98% 1,908.88 69.34% 1,814.88 64.05%
Mutual Funds 61.60 4.21% 85.66 4.83% 104.00 4.95% 118.63 5.01% 130.86 4.75% 129.44 4.57%
Insurance Company and
Pension Fund221.45 15.15% 325.52 18.36% 348.86 16.61% 414.47 17.50% 471.67 17.13% 498.08 17.58%
Foreign Holders 558.52 38.21% 665.81 37.55% 836.15 39.82% 893.25 37.71% 1,061.86 38.57% 926.91 32.71%
Foreign Govt's & Central
Banks110.32 7.55% 120.84 6.81% 146.88 6.99% 163.76 6.91% 194.45 7.06% 183.58 6.48%
Individual 42.53 2.91% 57.75 3.26% 59.84 2.85% 73.07 3.09% 81.17 2.95% 86.97 3.07%
Others 78.50 5.37% 104.84 5.91% 117.48 5.60% 134.22 5.67% 163.32 5.93% 173.48 6.12%
Total 1,461.85 100% 1,773.28 100% 2,099.77 100.00% 2,368.45 100.00% 2,752.74 100.00% 2,833.36 100.00%
Monetary and Financial Factor:Credible Monetary Policy Track Record and Favourable Financial Sector
Section 5
66
Bank Indonesia’s Policy MixTo Maintain Macroeconomic and Financial System Stability
Source: Bank Indonesia
Implementing Macro prudential
Intermediation Ratio (RIM)
Implementing Macro prudential Liquidity
Buffer (MLB)
Electronification: Social program, e-
payment for Government
Financial technology
National Payment Gateway (NPG)
QRIS (QR Indonesia Standard)
Expanding National Clearing System
(SKNBI) services
Developing market instruments for financing
infrastructure
Developing financial market infrastructures
Rupiah Interest Rate Swaps (IRS) and Overnight Index
Swap (OIS)
Domestic non-Deliverable Forward (DNDF)
Developing the Commercial Papers (Surat Berharga
Komersial)
Controlling inflation: TPIP, TPID
Structural reforms: Government
Financial deepening & stability: KSSK
(Financial System Stability
Committee), OJK (Financial Services
Authority)
Coordinating efforts in reducing
Current Account Deficit
Accommodative monetary policy
consistent with controlled inflation
in the target corridor, while serving
as a pre-emptive measure to
maintain domestic economic growth
momentum
Stabilize exchange rate consistent
with fundamentals
Optimize monetary operations in
order to ensure market
mechanisms and adequate liquidity
in the money and foreign exchange
markets
Monetary
Policy
Coordination
with other
Authorities
Financial Market
Deepening
Macro-
prudential
Policy
Payment
System
Policy
1 2
3
45
67
Bank Indonesia Policy Mix: April 2020
The BI Board of Governors agreed on 13th and 14th April 2020 to hold the BI 7-Day Reverse Repo Rate at
4.50%, while also maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 3.75% and 5.25%.
Rupiah Reserve Requirement Lowered by 200 bps
Continue to
optimize monetary
operations in order
to ensure market
mechanisms and
adequate liquidity
in the money and
foreign exchange
markets
Holds the BI
7-Day
Reverse Repo
Rate at
4.50%
Continue to strengthen
coordination with
financial authorities and
relevant government
ministries/agencies will
constantly be improved in
terms of formulating an
optimal policy mix and to
mitigate escalating risk in
the financial system.
Source: Bank Indonesia
Focus on
macroprudential
policy measures on
efforts to maintain
financial system
stability and
anticipate potentially
higher risks in the
financial sector due
to COVID-19.
Reinforced its policy
mix towards mitigating
the risk of COVID-19
transmission, perceives
adequate space to
lower the policy rate
due to mild inflationary
pressures and the
urgent need to
stimulate economic
growth
Monetary policy
considers the need
to maintain external
stability amidst
heightened global
financial market
uncertainty
68
Bank Indonesia Policy Mix: April 2020
1) To stabilize and strengthen rupiah exchange rates, Bank Indonesia has strengthened the intensity of triple intervention policy through the spot and
Domestic Non-Deliverable Forward (DNDF) markets, as well as purchasing SBN in the secondary market.
2) To support national economic recovery efforts from the deleterious COVID-19 impact, Bank Indonesia will increase monetary easing through
quantitative easing as follows:
a. Expand monetary operations by providing banks and the corporates a term-repo mechanism with SUN/SBSN underlying transactions of tenors up to
one year.
b. Lower the rupiah reserve requirement ratios by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units,
effective from 1st May 2020.
c. Relax the additional demand deposit obligations to meet the Macroprudential Intermediation Ratio (MIR) for conventional commercial banks as well
as Islamic banks/Islamic business units for a period of one year, effective from 1st May 2020.
3) To strengthen liquidity management in the banking industry and in relation to the lower rupiah requirements, Bank Indonesia has raised the
Macroprudential Liquidity Buffer (MLB) by 200bps for conventional commercial banks and by 50bps for Islamic banks/Islamic business units, effective
from 1st May 2020. The banking industry is required to meet the additional MLB through purchases of government issued SUN/SBSN in the primary
market.
4) To increase the uptake of non-cash payment instruments in order to mitigate the COVID-19 impact, Bank Indonesia is increasing various payment
system policy instruments as follows:
a. Supporting government programs to accelerate non-cash social aid program (bansos) disbursements to members of the public in conjunction with
payment system service providers by expediting the electronification of relevant social programs, including the Family Hope Program (PKH), Noncash
Food Assistance Program (BPNT), Pre-Employment Card and Smart Indonesian Card (KIP).
b. Increasing public socialization activities in collaboration with payment system service providers to increase the uptake of non-cash payment
instruments through digital banking, electronic money and broader QRIS acceptance.
c. Relaxing credit card policy by lowering the upper limit for credit card interest, minimum payment requirements and the penalties for late payments,
while supporting credit card issuer policy to extend the due date for customers.
The BI Board of Governors agreed on 13th and 14th April 2020 to hold the BI 7-Day Reverse Repo Rate at 4.50%,
while also maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 3.75% and 5.25%.
Rupiah Reserve Requirement Lowered by 200 bps
69
Bank Indonesia Policy Mix: March 2020Mitigating the risk of COVID-19 transmission
To strengthen coordination and the various policy measures already taken, Bank Indonesia on March
2nd 2020 introduced a variety of five follow-up policy measures to maintain monetary and financial
market stability as well as mitigate the COVID-19 risks
1) Intensify triple intervention policy to ensure rupiah exchange rates move in line with the currency's fundamental
value and market mechanisms. To that end, Bank Indonesia will optimize its intervention strategy in the DNDF
market, spot market and SBN market in order to minimize the risk of increasing rupiah exchange rate volatility.
2) Lower the FX reserve requirements for commercial banks from 8% to 4%, effective 16th March 2020, which will
increase FX liquidity in the banking industry by around USD3.2 billion and simultaneously alleviate foreign exchange
market pressures.
3) Lower the rupiah reserve requirements by 50bps for banks financing export-import activity in coordination with the
Government. Effective from 1st April 2020 for a period of nine months before a further review, this policy is
expected to facilitate export-import activity through lower costs/fees.
4) Expand the range of underlying transactions available to foreign investors in order to provide alternative hedging
instruments against rupiah holdings.
5) Reaffirm that global investors can utilize global and domestic custodian banks to conduct investment activity in
Indonesia.
70
Bank Indonesia Policy Mix: March 2020Mitigating the risk of COVID-19 transmission
Bank Indonesia on the Board of Governors Meeting 18th and 19th March 2020 has reinforced its policy mix towards mitigating
the risk of COVID-19 transmission, while maintaining money market and financial system stability and catalyzing economic growth
momentum through the following policy measures:
1) Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and
market mechanisms, including the spot and DNDF markets as well as purchasing SBN in the secondary market.
2) Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry, effective from 20th March
2020.
3) Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate
liquidity, effective from 19th March 2020.
4) Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market, while
encouraging the banks to utilize the foreign currency reserve requirements lowered by Bank Indonesia for domestic purposes.
5) Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic Non-Deliverable Forwards
(DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia, which has been brought forward from 1st April 2020 to no later than
23rd March 2020.
6) Expanding the incentive of a 50bps daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing
of MSMEs and other priority sectors, effective from 1st April 2020.
7) Strengthening payment system policy to support COVID-19 mitigation efforts by:
• providing hygienic currency fit for circulation, alternative cash and backup services, and urging the public to prioritize non-cash payment transactions;
• encouraging the use of non-cash payment channels by reducing the cost of the National Clearing System (SKNBI) from the banking industry to Bank
Indonesia from Rp600 to Rp1 and from customers to the banking industry from a maximum of Rp3,500 to Rp2,900, effective from 1st April 2020
until 31st December 2020; and
• supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program
(BPNT), Pre-Employment Card and College Smart Indonesia Card.
71
Bank Indonesia Policy Mix: March 2020Mitigating the risk of COVID-19 transmission
Bank Indonesia on the Board of Governors Meeting 18th and 19th March 2020 has reinforced its policy mix towards mitigating
the risk of COVID-19 transmission, while maintaining money market and financial system stability and catalyzing economic growth
momentum through the following policy measures:
1) Strengthening the intensity of triple intervention policy to maintain rupiah exchange rate stability in line with the currency's fundamental value and
market mechanisms, including the spot and DNDF markets as well as purchasing SBN in the secondary market.
2) Extending the SBN repo tenor to 12 months and providing daily auctions to loosen rupiah liquidity in the banking industry, effective from 20th March
2020.
3) Increasing the frequency of FX swap auctions for 1, 3, 6 and 12-month tenors from three times per week to daily auctions in order to ensure adequate
liquidity, effective from 19th March 2020.
4) Strengthening foreign currency term deposit instruments in order to enhance foreign currency liquidity management in the domestic market, while
encouraging the banks to utilize the foreign currency reserve requirements lowered by Bank Indonesia for domestic purposes.
5) Expediting the enforcement of domestic vostro rupiah accounts for foreign investors as underlying transactions for Domestic Non-Deliverable Forwards
(DNDF), thus increasing hedging alternatives against rupiah holdings in Indonesia, which has been brought forward from 1st April 2020 to no later than
23rd March 2020.
6) Expanding the incentive of a 50bps daily rupiah reserve requirement beyond banks that are engaged in export-import financing to include the financing
of MSMEs and other priority sectors, effective from 1st April 2020.
7) Strengthening payment system policy to support COVID-19 mitigation efforts by:
• providing hygienic currency fit for circulation, alternative cash and backup services, and urging the public to prioritize non-cash payment transactions;
• encouraging the use of non-cash payment channels by reducing the cost of the National Clearing System (SKNBI) from the banking industry to Bank
Indonesia from Rp600 to Rp1 and from customers to the banking industry from a maximum of Rp3,500 to Rp2,900, effective from 1st April 2020
until 31st December 2020; and
• supporting non-cash disbursements for government programs, such as the Family Hope Program (PKH) and Noncash Food Assistance Program
(BPNT), Pre-Employment Card and College Smart Indonesia Card.
72
Bank Indonesia Policy Mix: April 2020Mitigating the risk of COVID-19 transmission
As a follow-up measure to strengthen monetary and financial market stability in conjunction with the Coordinating Ministry of
Economic Affairs, Ministry of Finance, Indonesian Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS), the
Governor of Bank Indonesia, Perry Warjiyo, on April 1st 2020 delivered The policy mix implemented by Bank Indonesia to mitigate
the COVID-19 impact is as follows:
1) Lower the BI 7-Day (Reverse) Repo Rate in February and March by 25bps respectively;
2) Intensify triple intervention policy in the spot and DNDF markets and purchasing SBN in the secondary market;
3) Reduce the foreign currency reserve requirements for conventional commercial banks from 8% to 4%;
4) Extend the SBN repo tenor and provide daily auctions to loosen rupiah liquidity as well as increase the frequency of FX Swap auctions to
daily in order to ensure adequate liquidity;
5) Expand the types of underlying transactions for Domestic Non-Deliverable Forwards (DNDF), thus increasing hedging alternatives against
rupiah holdings in Indonesia;
6) Lower the rupiah reserve requirements by 50bps for banks that are engaged in export-import financing, as well as the financing of MSMEs
and other priority sectors;
7) Loosen the Macroprudential Intermediation Ratio (MIR);
8) Provide hygienic currency fit for circulation, reduce the costs of the National Clearing System (SKNBI), maintain a QRIS Merchant Deposit
Rate (MDR) of 0% for micro-merchants, and support non-cash disbursements of various government programs, including the Family Hope
Program (PKH) and Noncash Food Assistance Program (BPNT), as well as the Pre-Employment Card and College Smart Indonesia Card.
Bank Indonesia reiterated that rupiah exchange rates are currently adequate and the outlook scenario formulated for the main macroeconomic
indicators is a form of forward-looking anticipatory measure towards prevention through joint efforts, while Bank Indonesia continues to
maintain rupiah stability.
73
Bank Indonesia Policy Mix: April 2020Mitigating the risk of COVID-19 transmission
As a follow-up measure to strengthen monetary and financial market stability in conjunction with the Coordinating Ministry of
Economic Affairs, Ministry of Finance, Indonesian Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS), the
Governor of Bank Indonesia, Perry Warjiyo, on April 1st 2020 delivered The policy mix implemented by Bank Indonesia to mitigate
the COVID-19 impact is as follows:
• Bank Indonesia also backs promulgation of the Government Regulation in Lieu of Law in order to relax prevailing laws to mitigate the COVID-19
impact as an anticipatory measure in conjunction with the Government, OJK and LPS. COVID-19 handling requires extraordinary measures,
unconventional policies and policies that exceed previous jurisdiction.
• To that end, Bank Indonesia has reiterated its authority in accordance with Government Regulation in Lieu of Law (Perpu) No. 1 of 2020 as
follows:
1) Expansion of BI authority to purchase long-term government securities (SBN) and government Islamic securities (SBSN) in the primary market in
order to assist the Government finance the handling of the COVID-19 impact on financial system stability.
2) SBN will be purchased in the primary market by Bank Indonesia as a last resort if the market is unable to fully absorb the SBN issued by the
Government. Further provisions will be regulated in conjunction with the Minister of Finance and the Governor of Bank Indonesia based on the
following considerations: financial market conditions and the impact on inflation.
3) As an anticipatory measure, Bank Indonesia will purchase repo securities held by the Deposit Insurance Corporation (LPS) in order to finance the
handling of solvency issues at systemic and non-systemic banks;
4) Provision of short-term liquidity loan or short-term liquidity financing facilities in compliance with sharia principles to systemic and non-systemic
banks;
5) Foreign exchange flow management for residents. The use of foreign exchange by residents, including provisions for the surrender, repatriation
and conversion of foreign exchange to maintain macroeconomic and financial system stability as follows:
6) Bank Indonesia would like to stress that this measure is not a form of foreign exchange control but policy to manage foreign exchange applicable
only to residents (excluding non-residents/foreign investors). Foreign portfolio investment and foreign direct investment (FDI) are still required for
the Indonesian economy, thus existing policy permitting the free flow of foreign exchange by foreign investors remains effective.
7) Regulating foreign exchange amongst residents is consistent with international prudential principles for macroeconomic management, particularly
under economic distress, such as the current COVID-19 pandemic.
74
Bank Indonesia Policy Mix: April 2020Mitigating the risk of COVID-19 transmission
Bank Indonesia has agreed a repurchase agreement line (repo line) with the US Federal reserve worth USD60 billion
• The agreement may be used by Bank Indonesia to fulfil US dollar liquidity if required. The repo line facility for Foreign and International
Monetary Authorities (FIMA) has only been extended to a few central banks, thus indicating confidence in Indonesia's economic outlook and
the macroeconomic policies implemented. In addition, Bank Indonesia has also established repo line facilities with several other institutions,
namely the Bank for International Settlements (BIS), worth USD2.5 billion, the Monetary Authority of Singapore (MAS), USD3 billion, as well
as other central banks in the region valued at USD500 million-USD1 billion.
• The agreements will strengthen Bank Indonesia’s second line of defence, encompassing Bilateral Currency Swap Arrangements (BCSA) with
several other central banks, namely the People’s Bank of China (PBoC), worth CNY200 billion (equivalent to USD30 billion), the Bank of
Japan (BOJ), USD22.76 billion, Bank of Korea, KRW10.7 trillion (equivalent to Rp115 trillion), and the Monetary Authority of Singapore
(MAS), USD10 billion.
75
Bank Indonesia Policy Mix: April 2020Mitigating the risk of COVID-19 transmission
Bank Indonesia Issued Implementing Provisions for Auction of Government Debt Securities (SUN) and/or
Government Islamic Securities (SBSN) in the Primary Market
• Bank Indonesia issued Board Member of Governors Regulation No. 22/5/PADG/2020 on Auction of Government Debt Securities and/or
Government Islamic Securities in the Primary Market to Maintain State Financial Management Sustainability as Implementation of
Government Regulation in Lieu of Law Number 1 of 2020 on State Financial Policy and Stability of Financial Systems for the Management
of Corona Virus Disease 2019 (Covid-19) and/or Encounter the Threat to National Economy and/or Stability of Financial Systems. The
regulation starts to take effect on 20 April 2020.
• The regulation serves as a follow-up to Government Regulation in Lieu of Law Number 1 of 2020, granting authority to Bank Indonesia
among others to purchase Government Debt Securities (SUN) and/or Government Islamic Securities (SBSN) in the primary market . It is
necessary as a funding source for the government to recover the national economy including maintaining state financial management
sustainability including SUN and/or SBSN issued in response to COVID-19 pandemic. Purchase of SUN and/or SBSN in the primary market
is based on principle that Bank Indonesia is a last resort if the market capacity is unable to purchase them and/or result in high yield
increase. Further, this regulation specifies the following:
1) Bank Indonesia holds auction of SUN and/or SBSN and auction of additional SUN and/or SBSN for long-term SUN and/or SBSN in the
primary market as a follow-up to the implementation of Government Regulation in Lieu of Law Number 1 of 2020.
2) Provisions for offer quote and participants of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the
applicable Finance Minister Regulation on auction of SUN and/or SBSN in the domestic primary market.
3) Bank Indonesia may quote an offer to purchase long-term SUN and/or SBSN in auction of SUN and/or SBSN and auction of additional
SUN and/or SBSN in the following manners: a. directly without using the main dealer and/or SBSN main dealer; b. non-competitive bid.
4) Implementation of auction of SUN and/or SBSN and auction of additional SUN and/or SBSN refer to the applicable Bank Indonesia
provisions for auction of Government securities in the primary market provided that they are not in contravention of this regulation.
76
Principles of Average Reserve Requirement Ratios Improvement
Substance Old NewEffective
Date
a. Additional rupiah
average reserve
requirement for
conventional
commercial banks
Fixed RR: 5%
Average RR: 1.5%
RR: 6.5%
Fixed RR: 4.5%
Average RR: 2%
RR: 6.5%
16th July
2018
b. Annulment of
demand deposit
renumeration
2.5% (from 1.5% RR) 0%
16th July
2018
c. Implementation of
foreign exchange
average reserve
requirement for
conventional
commercial banks
Fixed RR: 8%
Average RR: 0%
RR: 8%
Fixed RR: 6%
Average RR: 2%
RR: 8%*
1st October
2018
d. Implementation of
average reserve
requirement for
Islamic banks
Fixed RR: 5%
Average RR: 0%
RR: 5%
Fixed RR: 3%
Average RR: 2%
RR: 5%*
1st October
2018
* Complemented by harmonisation feature to align with the average reserve requirement in rupiah
feature for conventional commercial banks (e.g. Calculation period, lag period, and Maintenance
period of 2 weeks)
• Improvement in average reserve requirement is a follow up
to the monetary policy operational framework reform
implemented by Bank Indonesia since 2016.
• Monetary policy operational framework reform started in
August 2016 as BI7DRR replaced BI Rate as policy rate. This
was then strengthened in 1st July 2017, by the
implementation of the average reserve requirement in
rupiah for conventional commercial banks at 1.5% out of the
total 6.5% of GDP reserve requirement in Rupiah. The
reformulation is also backed by various efforts in financial
market deepening.
• The current improvement aims to elevate flexibility in
banking liquidity management, enhance banking
intermediation function, and support efforts in financial
market deepening. This multiple targets will in turn improve
the effectiveness of monetary policy transmission in
maintaining economic stability.
Considerations for the Average Reserve Requirement Ratios
Improvement
Source: Bank Indonesia
77
Relaxing Reserve Requirement Ratios
Regulation
1 200bps for conventional commercial banks INELIGIBLE for looser daily reserve requirements as per macroprudential policy to support
export-import and MSME financing, effective from 1st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3%
2 50bps for Islamic banks and Islamic business units INELIGIBLE for looser daily reserve requirements as per macroprudential policy to
support export-import and MSME financing, effective from 1st April 2020, to 3.5%, with a daily ratio of 0.5% and average ratio of 3%
3 200bps for conventional commercial banks eligible for looser daily reserve requirements as per macroprudential policy to support export-
import and MSME financing, effective from 1st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3%
4 50bps for Islamic banks and Islamic business units eligible for looser daily reserve requirements as per macroprudential policy to support
export-import and MSME financing, effective from 1st April 2020, to 3.0%, with a daily ratio of 0% and average ratio of 3%
Source: Bank Indonesia
Lower reserve requirements, effective 1st May 2020
78
Principles of Macroprudential Intermediation Ratio (MIR) and Macroprudential Liquidity Buffer (MLB)
Striving to stimulate the bank
intermediation function and liquidity
management, Bank Indonesia
issued Bank Indonesia Regulation
(PBI) No. 20/4/PBI/2018 and Board
of Governors Regulation (PADG) No.
20/11/PADG/2018 concerning the
Macroprudential Intermediation
Ratio (MIR) and Macroprudential
Liquidity Buffer (MLB) for
Conventional Commercial Banks,
Sharia Banks and Sharia Business
Units.
The policy is expected to
stimulate the bank
intermediation function to the
real sector congruent with
sectoral capacity and the
economic growth target in
compliance with prudential
principles, while also overcoming
the issue of liquidity
procyclicality.
The regulation is effective
for conventional
commercial banks from
16th July 2018 and for
sharia banks from 1st
October 2018.
Considerations for Macroprudential Instruments
Macroprudential Intermediation Ratio (MIR) and
Macroprudential Liquidity Buffer (MLB)
1 2 3 4
This
macroprudential
policy instrument is
countercyclical and
can be adjusted in
line with prevailing
economic and
financial dynamics.
Source: Bank Indonesia
79
Principles of Macroprudential Intermediation Ratio (MIR)*
Regulation MIR (Conventional Commercial Bank)MIR Sharia (Sharia Banks and Sharia Business
Units)
1 MIR Accounting Formula Credit + Owned Bond
Deposit + Issued Bond
Financing + Owned Sharia Bond
Deposit + Issued Sharia Bond
2 Rate and Parameters Ceiling 94%
Floor 84%
Minimum Capital Adequacy Requirement 14%
Upper disincentive parameter 0.2
Lower disincentive parameter 0.1
Ceiling 94%
Floor 84%
Minimum Capital Adequacy Requirement 14%
For Sharia business units, the Minimum Capital
Adequacy Requirement is the same as that of the parent
conventional commercial bank
Upper disincentive parameter 0.2
Lower disincentive parameter 0.1
3 Scope of credit/financing and
deposits to calculate MIR / MIR
Sharia
Credit: rupiah and foreign currency
Deposits in rupiah and a foreign currency: (i)
demand deposits, (ii) savings deposits; and (iii)
term deposits, excluding interbank funds
Financing: rupiah and foreign currency
Deposits in rupiah and a foreign currency: (i) wadiah
savings; and (ii) unrestricted investment funds, excluding
interbank funds
4 Source of Data Monthly Commercial Bank Reports Monthly Sharia Bank Reports
5 Criteria for securities held Corporate bonds and/or corporate sukuk Corporate bonds and/or corporate sukuk
Issued by a nonbank corporation and by a resident
Offered to the public through a public offering
Equivalent to investment grade rating affirmed by a rating agency
Administrated by an authorised securities institution
*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019
80
Principles of Macroprudential Intermediation Ratio (MIR)*
Regulation MIR (Conventional Commercial Bank) MIR Sharia (Sharia Banks and Sharia Business
Units)
6 Percentage of the securities
held100%
7 Criteria for securities issued medium-term notes (MTN), floating rate notes (FRN)
and/or bonds other than subordinated bonds
sharia-compliant medium-term notes (MTN) and/or
sukuk other than subordinated sukuk
Issued by a nonbank corporation and by a resident
Offered to the public through a public offering
Equivalent to investment grade rating affirmed by a rating agency
Administrated by an authorised securities institution
8 Securities Reporting Offline delivery mechanism (email)
9 Scope of deposits to meet
DD MIR /DD MIR Sharia
Average daily total deposits in rupiah at all branch
offices in Indonesia
Including rupiah liabilities to a resident and non-
resident third-party nonbank, consisting of: (i)
demand deposits, (ii) savings deposits; (iii) term
deposits, and (iv) other liabilities
Average daily total deposits in rupiah at all branch
offices and sharia business units in Indonesia
Including rupiah liabilities to a resident and non-
resident third-party nonbank, consisting of: (i) wadiah
savings; (ii) unrestricted investment funds, and (iii)
other liabilities
10 Relaxation of DD
MIR/Sharia DD MIR
Bank Indonesia may relax the provisions of the DD MIR/Sharia DD MIR based on credit/financing disbursement
and fund accumulation
The provisions may be relaxed based on a request from a conventional commercial bank, Sharia bank or Sharia
business unit or a recommendation from the Financial Services Authority (OJK)
Conventional commercial banks, Sharia banks or Sharia business units that receive the relaxed policy are exempt
from sanctions
*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019
81
Adjustment of Macroprudential Intermediation Ratio (MIR)/Sharia Macroprudential Intermediation Ratio (Sharia MIR)*
• In response to global and domestic economic
developments, BI is maintaining an
accommodative policy mix to maintain the
economic growth while also maintaining
macroeconomic and financial system stability.
• BI relaxed MIR/sharia MIR policy in March
2019, which stimulated bank lending.
Nevertheless, the macroprudential
intermediation ratio (MIR) is again
approaching the upper bound, thus
necessitating efforts to increase bank lending
capacity.
• Considering the potential of bank funding
sources that are not included in the MIR ratio,
for example the expanding share of
loans/financing received by banks, BI decides
to adjust MIR/sharia MIR policy in order to
optimize loans/financing received for bank
lending.
• This policy to stimulate credit growth will
comply with prudential principles. Therefore,
BI is only encouraging banks with low non-
performing loans and adequate capital
resilience to expand credit/financing.
Policy Backgrounds
Source: Bank Indonesia
Bank Indonesia strengthens accommodative macroprudential policy through an adjustment to the Macroprudential Intermediation Ratio by
including the loan/financing received by banks as a component of funding in MIR/sharia MIR.
• Including loan received by conventional commercial banks and financing received by Islamic banks and Islamic
business units as a source of bank funding in the calculation of MIR/sharia MIR.
• The criteria for loans/financing received by banks that are eligible to be included in MIR/sharia MIR calculation
are as follows:
a. Loans/financing received in Rupiah and foreign currency;
b. Loans/financing received in the form of bilateral loans and/or syndicated loans for conventional commercial
banks, Islamic banks and Islamic business units;
c. Loans/financing excludes interbank loans/financing.
d. Loans/financing received with a maturity of no less than 1 year; and
e. Loans/financing received based on a loan agreement.
• Based on points a and b, the adjusted MIR/sharia MIR formula is as follows:
• The reference rate used to calculate penalties for banks that do not meet MIR/sharia MIR policy will be adjusted
from the Jakarta Interbank Offered Rate (JIBOR) to the Indonesia Overnight Index Average (IndONIA).
Main Regulatory Points
Credit + Owned Bond
Deposit + Issued Bond + Loan/Financing Received
Lower disincentive parameter
MIR/sharia MIR RR=
Lower Disincentives Parameter x (Lower Bound of MIR/Sharia MIR
Target – Bank’s MIR/Sharia MIR) x Deposit
Upper disincentive parameter
MIR/sharia MIR RR=
0.2 x (Bank’s MIR/sharia MIR - Upper Bound of
MIR/Sharia MIR Target – ) x Deposit
*This disincentive applies for banks with CAR below 14%.
*This adjustment will be effective from December 2nd, 2019
82
Principles of Macroprudential Liquidity Buffer (MLB)
Regulation MLB (Conventional Commercial Bank) MLB Sharia (Sharia Banks)
1 Rate 4% of rupiah deposits (including Sharia Business Units
deposits)
4% of rupiah deposits
2 Components Securities denominated in rupiah held by a conventional
commercial bank that may be used for monetary
operations (including SBI/SDBI/SBN); and
Sharia-complaint securities denominated in rupiah held by
an Sharia business unit that may be used for sharia-
compliant monetary operations (including SBIS/SBSN)
Sharia-complaint securities denominated in rupiah
held by an Sharia bank that may be used for sharia-
compliant monetary operations (including SBIS/SBSN)
3 Calculation Formula Percentage of rupiah securities held by a conventional
commercial bank to rupiah deposits
Percentage of sharia-compliant rupiah securities held by
an Sharia bank to rupiah deposits
4 Flexibility Under certain conditions, the securities used to meet the MLB
may be used for repo transactions to Bank Indonesia for open
market operations, totalling no more than 2% of rupiah
deposits
Under certain conditions, the securities used to meet the
sharia MLB may be used for repo transactions to Bank
Indonesia for open market operations, totalling no more
than 2% of rupiah deposits
5 Sources of Data on
Deposits
Monthly Commercial Bank Reports
Rupiah deposits to calculate MLB are the average daily
total deposits at all branches in Indonesia
Rupiah deposits include: (i) demand deposits, (ii) savings
deposits; (iii) term deposits, and (iv) other liabilities
Monthly Sharia Bank Reports
Rupiah deposits to calculate sharia MLB are the
average daily total deposits at all branches in
Indonesia
Rupiah deposits include: (i) wadiah savings; (ii)
unrestricted investment funds, and (iii) other liabilities
83
Macroprudential Liquidity Buffer (MLB) Policy and Credit card policy
Regulation Before After
1 Increase in the Macroprudential Liquidity Buffer (MLB)
for conventional commercial banks
4% of rupiah deposits 6% of rupiah deposits
2 Increase in the Macroprudential Liquidity Buffer (MLB)
for Islamic banks and Islamic business units
4% of rupiah deposits 4.5% of rupiah deposits
Policy to increase the Macroprudential Liquidity Buffer (MPLB), effective 1st May 2020.
Regulation Before After Effective Period
1 Lower upper limit on credit card interest 2.25% per month 2% per month 1st May 2020
2 Temporary reduction of minimum payment
requirements
10% 5% 1st May 2020 – 31st
December 2020
3 Temporary reduction of late payment
penalties
3% or maximum of Rp150,000 1% or maximum of Rp100,000 1st May 2020 – 31st
December 2020
4 Supporting credit card issuer policy to extend
the due date for customers
Issuer discretion 1st May 2020 – 31st
December 2020
Credit card policy, effective 1st May 2020.
84
Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios*
The LTV/FTV relaxation is conducted while taking into account aspects of prudential and consumer protection*
1. Increasing opportunities of first time buyers to fulfill their housing needs
through housing loan, specifically by adjusting the LTV ratio for property
loan and the FTV ratio for property financing for the 1st facility, 2nd
facility, etc., making the largest LTV ratio for property credit and FTV
ratio for property financing as shown in the table below.
“-“= The LTV rate depends on each bank’s risk management
2. Relaxing the amount of loan/financing facility through indent
mechanism to a maximum of 5 facilities without taking account of
the orders
3. Adjusting the arrangement of stages and amount of property
loan/financing disbursement of indent property:
Source: Bank Indonesia
*As part of further relaxation on macroprudential policy, an adjustment will be applied starting from December 2nd, 2019
85
Prudential aspects of Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios
1. The requirements of the LTV ratio for property credit and FTV ratio for property financing are as follows:
i. The net ratio of NPL to total credit or NPF to total financing must not exceed 5%; and
ii. The gross ratio of property NPL to total property credit or property NPF to total financing must not exceed 5%.
2. Banks must make sure that there is no loan transfer to another borrower at the same bank or different bank for tenors of less
than 1 year. The requirements are valid for banks that will disburse pre-order property loan/financing.
3. Banks are required to comply with prudential principles when disbursing loans.
4. Gradual loan liquidation is only allowed for developers that comply with bank’s risk management policy (e.g.the business
feasibility of the developer).
5. Banks are required to ensure that transactions to disburse loans (including down payment) and gradual liquidation must be
processed through the debitor and developer/seller’s bank account.
LTV / FTV Exemptions
Central government or local government loan / financing programs are exempt from this regulation.
Relaxing the Loan-to-Value (LTV) and Financing-to-Value (FTV) Ratios*
Source: Bank Indonesia
86
Adjustment of LTV Ratio for Property Loans, FTV Ratio for Property Financing, and Down Payments on Automotive Loans/Financing*
1. Adjustment of LTV Ratio for Property Loans and FTV Ratio for Property Financing.
a. BI decides to relax the LTV ratio for property loans and FTV ratio for property
financing by 5% from current ratio as follows:
Source: Bank Indonesia
Bank Indonesia adjusts macroprudential policy in the property and automotive sectors by: (i) relaxing the LTV ratio for property loans and the FTV
ratio for property financing; (ii) providing additional incentive on LTV ratio for green property loans and FTV ratio for green property financing; (iii)
relaxing down payments on automotive loans/financing; (iv) providing additional incentive on down payments on green automotive loans.
Policy Backgrounds Main Regulatory Points
*This adjustment will be effective from December 2nd, 2019
• In response to global and domestic economic
developments, BI is maintaining an accommodative policy
mix to maintain the economic growth while also
maintaining macroeconomic and financial system stability.
This effort will be targeted to several potential sectors.
• Considering the ongoing needs to stimulate the property
and automotive sectors which have a huge backward and
forward linkages to other sectors in the economy, BI
decides to relax LTV/FTV policy for property
loans/financing and down payments on automotive loans
in compliance with prudential principles.
• Additional incentives are also given to support sustainable
development through green financing in order to reduce
potential disruptions to financial system stability stemming
from environmental degradation.
• As a prudential mitigation, those relaxations will be given to
borrower with strong repayment capacity and low
credit/financing risk.
• BI will regularly evaluate this policy at least once a year.
87
2. Additional incentive on the LTV ratio for green property loans and
FTV ratio for green property financing.
a. The Green Property criteria refers to the standards/certificates
issued by a nationally or internationally recognized
environmental institution.
b. Green property that is granted for the incentive has to meet the
following standards:
i. For residential areas/buildings in certified green belt
areas, each unit in the residential area/building is
considered to meet the criteria.
ii. In case that the residential area/building is not a certified
green belt area, an evaluation will be conducted on each
unit as follows:
For buildings < 2500m2, the bank may conduct a self-
assessment using the tools/applications provided by a
recognized institution.
For buildings > 2500m2, the assessment must be
conducted by a recognized institution;
For new buildings constructed in an area by one
developer or group of developers, the assessment must
be conducted by a recognized institution and the
certificate must be submitted by the developer
i. Additional incentive for green property on LTV ratio for
property loans and FTV ratio for property financing is 5%
from the LTV/FTV ratio presented in Table 2 as follows:
Adjustment of LTV Ratio for Property Loans, FTV Ratio for Property Financing, and Down Payments on Automotive Loans/Financing*
Source: Bank Indonesia
Main Regulatory Points
3. Adjustment of Down Payments on Automotive Loans/Financing
a. Down Payments on Automotive Loans/Financing is adjusted as
follows:
i. Relaxation on the down payments of automotive loans or
automotive financing 5%-10% from current regulations;
ii. The relaxation should consider the gross NPL/NPF ratios
and gross NPL/NPF ratios on automotive loans/financing;
iii. The adjustment of down payments of automotive
loans/financing in points a and b is as follows:
*This adjustment will be effective from December 2nd, 2019
88
4. Adjustment of Down Payments on Green Automotive Loans/Financing
a. The green vehicles criteria refers to the Presidential Regulation No. 55 of 2019 concerning Battery Electric Vehicles.
b. The down payments on green automotive loans or green automotive financing is adjusted as follows:
i. Additional incentive of 5% on green vehicles from the down payment presented in Table 5;
ii. The down payment incentives considers the gross NPL/NPF ratios and gross NPL/NPF ratios on automotive loans/financing;
iii. The down payment regulation for green automotive loans or green automotive financing in points a and b is as follows:
Adjustment of LTV Ratio for Property Loans, FTV Ratio for Property Financing, and Down Payments on Automotive Loans/Financing*
Source: Bank Indonesia
Main Regulatory Points
Note: Adjustments of the LTV ratio for property loans, FTV ratio for property financing and down payments on automotive loans or financing will be effective from
December 2nd, 2019
*This adjustment will be effective from December 2nd, 2019
89
Principles of Domestic Non Deliverable Forward (DNDF) Transaction
Purposes
1. To support the effort of stabilizing
the Rupiah exchange rate through
the additional of alternative
hedging instruments
2. To support the development and
deepening of the domestic
financial market
3. To increase the confidence of
exporters, importers, and investors
in conducting economic and
investment activities through the
flexibility of hedging transactions
against Rupiah currency risk
General Provisions
Domestic Non-Deliverable Forward Transaction (DNDF Transaction)
Plain vanilla derivatif transaction of foreign exchange against rupiah in the form of
forward transaction with fixing mechanism in the domestic market
Forward Transactions
Forward Transactions are sell/purchase foreign currencies againts rupiah whereas the
delivery of funds shall be performed in more than 2 days after the transaction date
Fixing Mechanism
Transaction settlement mechanism without full movement of funds by calculating the
difference between rate on the transaction date and reference rate in JISDOR on a
specified future time agreed in the contract (fixing date)
Other Definitions
The definition of derivative transaction of foreign exchange againts rupiah, Forward
Transaction, Spot Transaction, Customers, Foreign Party is referring to Bank Indonesia
regulations regarding foreign exchange transaction againts rupiah
Source: Bank Indonesia
90
Principles of Domestic Non Deliverable Forward (DNDF) Transaction
Bank can perform DNDF Transactions as follows:
Bank – Customer
Bank – Foreign Party
Bank – Bank
Transaction between:
Can only be
performed to
hedge rupiah
exchange rate
risk.
1. Must have Underlying Transactions:
Including all following activities :
a. Trade of goods and services
b. Investments, loans, capital, and other investements.
c. Banks credit or financing in foreign currencies
(specifically for transactions between bank and
customers)
Excluding following activities:
a. Bank Indonesia certificates;
b. Placement of funds with bank;
c. Unwithdrawn credit facilities;
d. Documents of foreign currencies sales againts rupiah;
e. Money transfer by fund transfer companies
f. Intercompany loan
g. Money changer activities.
2. Nominal of DNDF Transactions ≤ Nominal of Underlying
Transactions
3. Tenor of DNDF Transactions ≤ Tenor of Underlying
Transactions
Source: Bank Indonesia
91
Principles of Domestic Non Deliverable Forward (DNDF) Transaction
Transaction Settlement• Use Fixing mechanism
• Reference rate: JISDOR for USD/IDR and BI FX Transaction MidRate for non-USD/IDR
• Settlement currency : IDR
• Roll over and early termination are not allowed
Roll over and early termination for DNDF is prohibited
However, unwind can be done by opening the reverse DNDF transactions
Cover HedgingBank may conduct DNDF Transactions with Bank Overseas for cover hedging purpose.
• Underlying Transactions: DNDF Transaction between Bank and Customer/Foreign
• Purpose: Hedging
Customer /
Foreign PartyBank
Overseas
BankHedging
Notes:
Customer A conduct DNDF transactions with Bank B, and so Bank B can conduct DNDF
transactions with overseas Bank for the purpose of cover hedge.
Cover
Hedging
Source: Bank Indonesia
92
Amendment on DNDF Regulation*to provide more flexibility in DNDF transaction*to increase liquidity and efficiency in domestic foreign exchange market
BI Regulation No. 20/10/PBI/2018
Source: Bank Indonesia
BI Regulation No. 21/7/PBI/2019AMENDMENT
Article 3
1. DNDF transactions must have Underlying
Article 3
1. Sell FX/IDR through DNDF up to $ 5 mio can be done without
underlying documents
Article 6
2. Not Regulated;
Article 6
2. DNDF can be terminated (unwind);
Article 11
3. Underlying documents must be final (firm) with additional
supporting documents
Article 11
3. Underlying documents for buy FX/IDR for DNDF is :
• Final (firm commitment) + Supporting documents
4. Underlying documents for sell FX/IDR for DNDF above
threshold $ 5 mio can be:
• Final (firm commitment) + Supporting documents
• Projection (anticipatory basis) + Supporting documents
Article 11
4. Not Regulated;
Article 11
5. In using estimate underlying transaction documents in the
form of cash flow projection, Bank must evaluate the
appropriateness through:
a. Supplementary documents;
b. Historical data within at least 1 year before; and
c. Track record of the Customer or Foreign Party.
*Effective on May 17th, 2019; English version of the regulation is available in BI website.
93
Overnight Index Swaps (OIS) & Interest Rate Swaps (IRS)
Source: Bank Indonesia
As hedging instruments against Rupiah interest rate changes IRS is a contract between two parties to
periodically exchange rupiah interest rate flows
during the contract period or at the completion
of the contract based on certain notional
amount. IRS pricing is based on JIBOR.
OIS is an interest rate swap agreement based on
a daily overnight reference rate (IndoNIA)
Encourage price transparency in the rupiah
money market
Strengthen monetary policy transmission
Provide alternative hedging instruments
against rupiah interest rate changes
Support securities market deepening in
Indonesia
1
2
3
4
IndoNIA & JIBOR
OIS transaction with IndoNIA as benchmark rate
Alignment between JIBOR and OIS interest rate
Improvement of IRS transaction liquidity
Strengthening reference rate based on realtransactions
94
OIS and IRS Transactions: General Provisions
Source: Bank Indonesia
Market Players. Banks, bank clients, both individual
and non-bank institutions, and also foreign parties.
Transaction Needs Analysis. A bank performing an IRS
or OIS transaction with a customer and/or foreign party
on behalf of the customer and/or foreign party is
required to have an analysis on the need of rupiah
interest rate derivative transactions.
Market Conventions. When performing IRS and OIS
transactions, the respective bank is bound by market
conventions agreed upon by market players through
industry association including the Indonesian Foreign
Exchange Market Committee.
Settlement. Settlement can be performed as a netting
payment and every transaction has to be settled in
Rupiah. Close-out netting can be applied under
predetermined conditions.
Market Conventions
Calculation
Base ACT/360
IndONIA Index
with 5
decimals
Compound
Floating Rates
(CFR) based
on 5 decimals
Interest Payment
based on Netting
Notional of Net
interest payment in
IDR with 0 decimals
Settlement Date = 1
business days after
Maturity Date (MD)
OIS Quotation rates
based on 2 decimals
Quotation : 1W, 2W,
1M, 2M, 3M, 4M,
5M, 6M
At the 1st phase, OIS
settlement will only
be done at the end
of the OIS tenor
(MD+1bd).
95
3.00
4.00
5.00
6.00
7.00
8.00
LF Rate BI Rate BI-7Day RR Rate DF Rate LF Rate (Dummy)Rupiah Exchange Rate Remains Comparable to Peers
Well Maintained Inflation Ensured Price Stability Strengthened Monetary Policy Framework
Credit Growth Profile
BI 7Day RR Rate: 4.50
(%)
LF Rate: 7.00
LF Rate: 5.25
BI Rate: 6.50
DF Rate: 3.75
19 August 2016The New
Monetary
Operation
Framework
8.38 8.36
3.353.02
3.613.13
2.72 2.96
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
-2
0
2
4
6
8
10
12
14
16
18
20
2013 2014 2015 2016 2017 2018 2019 Mar-2020
(%)
CPI (%, yoy) rhs
Core (%, yoy) - lhs
Volatile Food (%, yoy) - lhs2
Administered (%, yoy) - lhs
Source: Bank Indonesia
0.25
-0.41
-0.71
-0.78
-0.84
-1.23
-1.76
-2.26
-2.37
-5.71
-6.27
-6.57-9.30
0.16
0.07
0.50
-0.38
0.42
-0.01
-0.81
-1.07
0.17
-2.27
4.35
1.91
-1.23
-10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0
PHP
KRW
CNY
JPY
SGD
MYR
EUR
INR
THB
TRY
IDR
BRL
ZAR
point-to-point
average
*data as of April 13th, 2020
YTD 2020 vs 2019
%
5.9
3.4
10.3
6.1
0
2
4
6
8
10
12
14
16
18
20
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
2015 2016 2017 2018 2019 2020
%,yoy
Total Growth
Working Capital Loans
Investment Loans
Consumption Loans
Stable Monetary Environment Despite Challenges
96
Regional Inflation Remains under Control
Source: Central Bureau of Statistics of Indonesia (BPS), calculated
Inflation in most regions remained within the 2020 national inflation target range of 3.0% ± 1%. Inflation in West Java (3,9%) and Aceh (3.9%) remained high,
driven by rising commodity prices of various fish and gold jewelery
REGIONAL INFLATION, MARCH 2020 (%, YOY)
97
4 Strategies to Achieve the Inflation Target
Achieving inflation at 3,5%±1%
• Maintaining core inflation
• Maintaining volatile food stability at 4-5%
• Controlling administered price inflation
2018-2019 Target
Stabilizing the
price
1. Price Affordability
Achieving inflation at 3,0%±1%
• Maintaining core inflation
• Maintaining volatile food inflation less than 4%
• Controlling administered price inflation
2020-2021 Target
Managing
demand side
Strengthening
production,
Government
food reserves
and food export-
import
management
2. Supply Availability
Strengthening
institution
Encouraging
trade
cooperation
between regions
3. Well Managed Distribution
Improving trade
infrastructure
Improving data
quality
4. Effective Communication
Strengthening
central-regional
coordination
Source: Bank Indonesia
4 Strategies
98
Improving the Effectiveness of Monetary Policy Transmission
Bank Indonesia has instituted a Reformulation of Monetary Policy Operations Framework which consists of 3 pillars;
(1) implementation of BI 7day Reverse Repo Rate;
(2) implementation of reserve requirement averaging; and
(3) continue to implement money market deepening program.
Enhancement of monetary policy
signal
Enhancement of banking liquidity
management
Implementation of BI 7 Day
Reverse Repo Rate
Implementation of Reserve
Requirement (RR) Averaging
Reformulation of
Monetary Policy Operational Framework
Enhancement of instruments
and transactions
Implementation of Money
Market Deepening Program
Source: Bank Indonesia
99
Enhancement of Monetary Operations Framework
• Can be traded among contributor banks for 10
minutes.
• Up to the amount of Rp10 billion.
• Up to 1-month tenor.
• Can be traded among contributor banks for 20
minutes.
• Up to a total of Rp20 billion.
• Up to 3-month tenor.
CURRENT JIBOR (as per June 1st, 2016)
PREVIOUS JIBOR
Source: Bank Indonesia
100
Financial Intermediation Managed to Maintain Its Stable Growth
Financial industry's intermediation still experiences positive and moderate growth in Feb-20 despite external pressure.
Source: Financial Service Authority (OJK)
As of Mar-20, the total of capital raising on 2020 reaches IDR 23.43 Tn.
Banking intermediation can still maintain its moderate growth at 5.93% in Feb-20
5,538
5.93%
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
1,000
2,000
3,000
4,000
5,000
6,000
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
IDR Tn yoyBank Loans Growth (rhs)
12.07 9.6 16.43 14.7 0.09
67.12
88.19
35.4529.17
116.18
156.71
114.18122.98
5.46
0
20
40
60
80
100
120
140
160
180
2016 2017 2018 2019 Jan-20 Feb-20 Mar-20
IDR Tn IPO Rights Issue Corporate Bond & Sukuk
Growth of financing distributed by multi-finance also grows moderately at 2.82%
yoy in Feb-20
Growth of insurance gross premium of insurances remains stable as of Feb-20
-3.75
20.94
-30
-20
-10
0
10
20
30
40
50
60
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Life Insurance Premium Growth
General & Reinsurance Premium Growth
452
2.82%
0%
2%
4%
6%
8%
10%
0
100
200
300
400
500
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
yoyIDR tnFinancing Growth (rhs)
101
Stable Financial Institutions
Domestic financial institutions exhibit a relatively stable condition. The capital is consistently well above the minimum requirements, while profitability
and leverage remain to be at a sufficient level.
Source: Financial Service Authority (OJK)
CAR of the banking sector remains high and stable at 22.42% with Tier-1 capital at
20.68% as of Feb-20
Profitability of the banking sector has maintained relatively stable
RBC of the insurance industry remains high and well above the minimum
threshold (120%)
Gearing ratio of multi-finance companies is steadily maintained at a level of below
three times in Feb-20
22,42
20,68
10
12
14
16
18
20
22
24
26
Jan
-18
Feb
-18
Ma
r-1
8
Apr-
18
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-1
8
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Apr-
19
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Sep
-19
Oct-1
9
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
CAR Tier 1
670
312
0
50
100
150
200
250
300
350
400
0
100
200
300
400
500
600
700
800
900
Jan
-18
Fe
b-1
8
Mar-
18
Ap
r-1
8
Ma
y-1
8
Jun-1
8
Jul-1
8
Aug-1
8
Sep
-18
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Feb
-19
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-1
9
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Life Insurance (Lhs) General Insurance (rhs)
4,81
2,49
0
1
2
3
4
5
6
Jan
-18
Feb
-18
Mar-
18
Apr-
18
Ma
y-1
8
Jun
-18
Jul-1
8
Aug-1
8
Sep
-18
Oct-1
8
Nov-1
8
De
c-1
8
Jan
-19
Feb
-19
Mar-
19
Apr-
19
Ma
y-1
9
Jun
-19
Jul-1
9
Aug-1
9
Sep
-19
Oct-1
9
Nov-1
9
De
c-1
9
Jan
-20
Feb
-20
Net Interest Margin Return on Assets
2,52
0
1
2
3
4
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Feb
-19
Mar-
19
Apr-
19
Ma
y-1
9
Jun
-19
Jul-1
9
Aug-1
9
Sep
-19
Oct-1
9
Nov-
19
De
c-1
9
Jan
-20
Fe
b-2
0
102
Manageable Credit Risks with Adequate Liquidity
Financial Institutions are equipped with sufficient liquid assets. Credit risks are also managed at a low level and remains below the threshold.
The ratio of liquid assets to deposit and non-core deposits in the banking sector is
maintained well above the threshold.
As of Feb 20, the gross & net NPL ratios of the banking sector are 2.79% and 1%
accordingly, well maintained below the threshold. NPF ratio of the multi-finance industry constantly maintained low at 2.7% as of Feb-20
Investment adequacy ratio in the insurance industry is maintained above 100%
Source: Financial Service Authority (OJK)
108,12
22.81
0
5
10
15
20
25
30
40
50
60
70
80
90
100
110
120
130
140
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Apr-
19
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Sep
-19
Oct-
19
Nov-
19
De
c-1
9
Jan
-20
Feb
-20
%%Liquid Assets to Non-Core Deposits Liquid Assets to Deposits
threshold LA to Deposit (rhs) = 10%
threshold LA/ NCD= 50%
114,83
183,49
0
50
100
150
200
250
Jan
-18
Fe
b-1
8
Mar-
18
Ap
r-1
8
Ma
y-1
8
Jun-1
8
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Feb
-19
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-1
9
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Life Insurance General Insurance
1,00
2,79
0
1
2
3
4
5
Jan
-18
Fe
b-1
8
Mar-
18
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Sep
-18
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Mar-
19
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Sep
-19
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
%
NPL Net NPL Gross
%
%
2,7
0
1
2
3
4
5
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oc
t-1
9
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
103
Manageable Market Risks
Amidst the increasing market volatility, the risk profile of financial institutions remains manageable
Net open position in the banking sector is maintained significantly below the
maximum limit (20%)
Insurance & pension fund investment value is growing steadily.
The exposures of multi-finance companies to foreign debt have largely been
mitigated by company hedging measures
Mutual funds’ net asset value (NAV) is restrained after following a considerable
decline in JCI during March’20
Source: Financial Service Authority (OJK)
2,35
0
1
2
3
Jan
-18
Fe
b-1
8
Mar-
18
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Aug-1
8
Sep
-18
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Mar-
19
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Sep
-19
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
%
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
260
310
360
410
460
510
560
610
Jan
-19
Fe
b-1
9
Ma
r-1
9
Apr-
19
Ma
y-1
9
Jun
-19
Jul-1
9
Aug-1
9
Sep
-19
Oc
t-1
9
Nov-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Ma
r-2
0
IDR Tn NAV Mutual Funds JCI (rhs)
As of 1 April, 2020
1146.8
280
200
250
300
350
400
0
300
600
900
1.200
1.500
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
May-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oc
t-1
8
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-
19
Nov-1
9
De
c-1
9
Jan
-20
Fe
b-2
0IDR TnIDR Tn Insurance Pension Funds (rhs)
174,05
102,17
0
25
50
75
100
125
150
175
200
225
250
Jan
-18
Fe
b-1
8
Mar-
18
Apr-
18
Ma
y-1
8
Jun
-18
Jul-1
8
Aug-1
8
Sep
-18
Oc
t-1
8
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Mar-
19
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Aug-1
9
Sep
-19
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Domestic Debt Foreign Debt
IDR Tn
104
Domestic Capital Market Performance Amid Global Challenges
Source: Bloomberg and Ministry of Finance
Domestic bond and stock index begin to recover after a sharp fell at the
end of March
Government bonds record capital inflow in Apr-20 after previously experiencing
significant net sell due to global pressure
The COVID-19 pandemic continues to weigh on JCI's performance alongside with the
plunging global stock market
The government bond yields on the benchmark of 10-yr and 20-yr rise to above
8 percent following rupiah depreciation.
-18.0-35.9
-20.5-18.2
-19.9-13.8
-7.5-27.7
-20.2-14.0
-24.1-17.0
-23.1-20.6
-40 -35 -30 -25 -20 -15 -10 -5 0
TURK
BRAZ
US
EU
JPN
MAL
CHIN
PHIL
SIN
HKN
INDO
S KOREA
THAI
WORLD
Stock Index Performance as of 7 Apr ’20 (compared to 31 Dec’19)
0.9
-1.5
-140
-120
-100
-80
-60
-40
-20
0
20
40
60
80
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-1
8
Au
g-1
8
Se
p-1
8
Oct-
18
No
v-1
8
De
c-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-1
9
Ma
y-1
9
Jun
-19
Jul-1
9
Au
g-1
9
Se
p-1
9
Oct-
19
No
v-1
9
De
c-1
9
Jan
-20
Fe
b-2
0
Ma
r-2
0
7 A
pr-
20
Gov't Debt Securities Equity
266
4,779
3000
3500
4000
4500
5000
5500
6000
6500
7000
200
210
220
230
240
250
260
270
280
290
300
Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20
Comp Bond Index Comp Stock Index (rhs)
As of 7 April, 2020
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
5
6
7
8
9
10
Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20
Yield (%)5-yr Yield 10-yr Yield 20-yr Yield IDR (rhs)
105
Strategic Policies in Financial Sector
Source: Financial Service Authority (OJK)
Providing financing alternatives
for Goverment Priority Sectors
Supporting acceleration of
national economic growth
Providing financial access to
MSMEs especially in remote
areas
Preparing financial services
industry to cope with
Industrial Revolution 4.0
Improvement of business
process in the industry
106
Continuous Program on Capital Market Deepening…continuously strengthened, including through capital market deepening initiatives
Strengthening market infrastructure
Development of Integrated Licensing (SPRINT).
Enhancement of electronic reporting system.
Development of electronic public offering.
Integrated data warehouse and supervisory system.
Enhancing the supply-side
Product: QIB offering and private placements, private
fund, asset-backed securities, REITs, infrastructure fund,
IGBF (Indonesia Government Bonds Future) & equity
crowdfunding.
Issuer: Financial conglomerates, big bank debtors, local
government, IDX incubators, SMEs, SOEs & big tax payers.
Enhancing the demand-sideStrengthening governance & customer
protection
Development of market players’ capacity
Enhancement of GCG for publicly-listed companies
Establishment of disgorgement fund
Source: Financial Service Authority (OJK)
Enhancing the role of the domestic institutional investors
(insurers & pension funds) in capital markets .
Development of the domestic investor base (conducting
investor education programs).
Simplification in opening securities account.
Development of regional securities companies.
Development of e-bookbuilding.
Online marketing initiative
107
Enhancing Financial Literacy & Inclusion
Source: Financial Service Authority (OJK)
OJK strives to build a strong foundation for financial inclusion programs, to ensure access to financial products &
services by Indonesians of all social classes. Such initiatives also include the enhancement of financial literacy and
financial consumer protection.
Developing
financial education
models utilizing
various delivery
channels
Enhancing the
role of the
“Investment
Alert Taskforce”
The result of OJK’s 2019 national survey demonstrated an improvement in financial literacy & inclusion among
Indonesians compared to that of 2016.
Financial
Literacy
Financial
Inclusion
21.8%
2013
Developing
micro-credit
products with
additional business
support (“KUR
Klaster”)
Promoting the
establishment
of Islamic
microfinance
institutions (“Bank
Wakaf Mikro”)
Strengthening
the role of
Financial Access
Acceleration
Taskforce (TPAKD) in
local areas
29.7%
2016
38.03%
20192019 Target: 35%
59.7%
2013
67.8%
2016
76.19%
20192019 Target: 75%
108
A Comprehensive Financial Deepening Program…strategy to tackle challenges in deepening Indonesia’s financial markets
Source: Bank Indonesia
In Apr-2016, the Minister of Finance, the Governor of Bank Indonesia, and the Chairman of the Board of Commissioners of the Financial Services Authority
launched a Coordination Forum for Development Financing through Financial Market (FK-PPPK). The three authorities have agreed to formulate “The National
Strategy of Financial Market Development”
Vision:
To Establish Deep, Liquid, Efficient,
Inclusive, and Safe Financial Market
ECONOMIC FUNDING & RISK
MANAGEMENT
MARKET INFRASTRUCTURE
DEVELOPMENT
POLICY COORDINATION,
HARMONIZATION &
EDUCATION
Benchmark Rate &
Standardization
Instrument
Fund Regulatory
FrameworkMarket Infrastructure
Intermediaries
Coordination &
Education
Mission: Financial Market as Sources of National Development Financing
1 2 3
Money
MarketFX Market
Bond
Market
Stock
Market
Syariah
Market
Structure Product
Market
3 Pilars
6 Markets
7 Elements
of Financial
Market
Ecosystem
TARGET KEY PERFORMANCE INDICATOR STRATEGIC ACTION PLAN
109
BI’s Roles in Supporting Distribution of Non-Cash Social Assistance (NCSA)
BI supports government’s program of shifting social assistance to targeted non cash social assistance disbursement
through the electronic payment system. In the future, electronic mechanism disbursement will be also applied to LPG
subsidy.
NCSA Programs
Family Hope Program
(Program Keluarga
Harapan -PKH)
Smart Indonesia
Program (Program
Indonesia Pintar-PIP)
Non Cash
Food Assistance
(Bantuan Pangan
Non Tunai – BPNT)
20
16
-20
20
Pilot Project
Gradual
Implementation
Interconnected &
interoperable
payment system
LPG
Subsidy
Full
Implementation
XXYYZZ12345678
9876543210
Source: Bank Indonesia
110
Progress of NCSA Programs
Family Hope Program
(Program Keluarga Harapan - PKH)Non Cash Food Assistance
(Bantuan Pangan Non Tunai -
BPNT)
• The Family Hope Program (PKH) is a program that
provides cash to very poor households.
Rp 1,89 million /year will be granted for each
household. PKH will be granted every February,
May, August, and November.
• As of December 2017, PKH has been distributed
to 6,0 million households on non-cash basis.
• In 2018, PKH has been distributed to 10 million
households on non-cash basis.
• BPNT is a poverty alleviation and social protection
program that is managed by the central
government. It provides subsidized rice and eggs
to low-income households. Rp 110
thousand/month will be granted for each
household as BPNT that can be used in certain
stores which called e-warong.
• As of December 2017, BPNT was distributed to
1,2 million households in 44 cities.
• In 2018, BPNT has been distributed to 10.1 million
households (65.1% of the target of 15.5 million
households target).
Source: Bank Indonesia
• As of Sept-2019, PKH has been distributed to 9.8
million households on non-cash basis with
realization of 82.52% of the 2019 budget.
• As of Sept-2019, BPNT has been
distributed to 13.0 million households
with realization of 68.04% of the 2019
budget.
111
Stronger Fundamentals Facing the Headwinds
82.4
12.1
6.8
1998
2008
Sep-15
30
3.8
2,79
1998
2008
Aug-15
17.4
50.2
1998
2008
Sep-15
Inflation Rate (%) IDR Movement (%)
Non-Performing Loan/NPL (%)
Government Debt/GDP
Foreign Reserves (USD bn)
100.0%
1998
27.4%
200829.8%
Q4 - 2019
8.6x
1998
3.1x
2008 3.1x
Q4 - 2019
116.8%
199833.2%
200836.1%
Q4 - 2019
More Liquid Market (%)
External Debt (Public & Private) to
FX Reserve RatioExternal Debt/GDP
Inflation controlled within the target range IDR appreciated year-to-date in April 2020
NPL level (gross) is below the maximum threshold of 5%
Consistently well-maintained
Significantly higher than 1998 & 2008, ample to cover 7.0
months of import and external debt repayment
Significantly lower than 1998 crisis
Slightly higher than 2008, but significantly
lower than 1998
Mar ’20 121Mar ’20 2.96 (yoy)
Feb ‘20
62
10.55.7
1998 2008 Jul-15
Overnight interbank money market rate is
relatively lower
Tw IV ‘19
4.8
4.35
-35
-197
-250 -200 -150 -100 -50 0 50
13-Apr-20
2008
1998
(ytd)
112
Outlook of Domestic Economy Remains Robust...domestic economic growth is predicted to be moderated in 2019 and rebound in 2020
2019 and 2020 Economic Outlook
Bank Indonesia projects economic growth in 2020 at around 2.3%, revised down from 4.2-4.6%.
Bank Indonesia projects inflation in 2020 within the target range, namely 3.0%±1%.
Bank Indonesia projects growth of outstanding loans disbursed by the banking industry in 2020 in the 6-8% range, revised down from
9-11% previously, in line with the revised economic growth projection in 2020.
Economic Growth Inflation CAD (% of GDP) Credit Growth
Source : Bank Indonesia
2018
Realization5.17% 3.13% 2.98% 11.75%
2019
Realization5.02% 2.72% 2.72% 6.08%
2020 around 2.3 % 3.0±1% 2.5 - 3 % 6.0-8.0%
Progressive Infrastructure Development:Strong Commitment on Acceleration of Infrastructure Provision
Section 6
114
IIGF has the potential to provide project guarantee
for non-PPP projects
The Government has Enacted Various Reforms to Accelerate Infrastructure Provision
Fiscal Reforms Institutional Reforms Regulatory Reforms
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Viability Gap Funding (VGF) KPPIP Direct Lending
Increase project financial feasibility by
contributing up to 49% of the construction cost
(MoF Reg. No. 223/2012)
Availability Payment
Land Revolving Fund
Issuance of regulatory framework to allow annuity
payment by the Government during concession
period to concessionaire since project operation
based on infrastructure service availability (MoF
Reg. No. 190/2015 for Central Gov’r and MoHA
Reg. No. 96/2016 for Regional Gov’t.)
A revolving-fund sourced from State Budget, to
accelerate land acquisition (MoF Reg. No.
220/2010)
KPPIP is actively involved in accelerating delivery
of priority infrastructure projects
PT. Sarana Multi Infrastruktur
Merging between PT. SMI and Gov’t Investment
Center (PIP) to become an infrastructure funding
company
Indonesia Infras. Guarantee Fund (IIGF)
PPP Unit
Provide facilities to help GCA on preparing PPP
project (PDF/TA)
BLU LMAN
The State Asset Management Agency (BLU LMAN)
is mandated to provide land fund for National
Strategic Projects to ensure timely land acquisition
process
Allow guarantee for direct lending to SOE to
accelerate financial close process for
infrastructure projects (Presidential Reg. No.
82/2015)
Land Acquisition
Stipulate land acquisition acceleration based on
Law No. 2/2012 (Presidential Reg. No.
148/2015) and land acquisition fee payment for
impacted community (Presidential Reg.
No.56/2017)
Economy Packages
Conduct deregulation for issues hindering
infrastructure delivery and develop a task force
under CMEA to ensure the effectiveness of
economic packages implementation
Risk-sharing Guidelines
IIGF has issued risk allocation and mitigation
guidelines for PPP project
Tax Incentives (Tax Holiday)
MoF Reg. No.35/2018 allowed 100% Tax Holiday
for 17 Pioneering Industries for 5 – 20 years
depending on the investment value
Indonesia Infrastructure Guarantee Fund (IIGF)
IIGF has the potential to provide project guarantee
for non-PPP projects
115
Some of Most Recent ReformsPolicy reforms are aiming to create a more conducive investment climate for infrastructure delivery
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Presidential Reg. No. 20/2018 on Use of Foreign Labor – released on March 2018
This regulation aims at simplifying the permit application process for foreign workers, hence making the process more efficient and faster, in order to
rise foreign direct investment in Indonesia
Presidential Reg. No. 56/2017 on Social Impact Handling in Land Acquisition Process for PSN – released on June 2017
This Presidential Reg. allows the Executing Agency to pay land acquisition compensation to the impacted community who does not have official rights
over the land required for PSN. This regulation helps to solve the land acquisition problem due to community objection over the land use.
MoF No. 60/2017 on Procedures for the Provision of Central Government Guarantee for the Acceleration of the National Strategic
Projects Implementation – released on May 2017
The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic Projects Implementation. This regulation
regulates the scope and general requirements and procedures to propose and grant guarantees, as well as allocate state budget obligation on
government guarantees to all PSN. The guarantee provision is expected to increase the feasibility and trust of investors to participate in the
implementation of PSN.
Government Reg. No. 13/2017 on National Spatial Plan (RTRWN) – released on April 2017
The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure projects listed in the annex of Government Reg.
No. 13/2017. A number of breakthroughs were developed, and one of them is that the Minister of Agrarian and Spatial can issue a recommendation of
spatial utilization; so that the process of obtaining project permission can be done.
MoF No. 21/2017 on Procedures for Land Acquisition for National Strategic Projects and Asset Management of Land Acquisition by
State Asset Management Agency – released on February 2017
The implementing regulation of Presidential Reg. No. 102/2016 on Financing of Land Acquisition for the Development of Public Interest in the
Framework of the National Strategic Implementation. This regulation becomes the legal basis for the financing of the procurement of National Strategic
and Priority Projects by BLU LMAN.
116
Reforms Along the Project’s Life Cycle...to encourage and accelerate infrastructure project using PPP scheme
Government of Indonesia
Project
Development
Facility (PDF)
Viability
Funding
Gap (VGF)
Guarantee
FundTax Facilities
Availability
PaymentLand Acquisition
Preparation Bidding Process Construction
Project development
facility contributing
to assist GCA on PPP
project preparation
(PDF&TA)
Managing entity:
KPPIP, PT SMI PT IIF,
and Ministry of
Finance
A facility with
contribution to
construction cost
to increase
project financial
viability
Managing Entitiy:
Ministry of
Finance based
on GCA proposal
Gov’t.
commitment:
49% max. Per
project cost
Guaranteeing
Govt. contractual
obligations under
infrastructure
concession
agreements and
Mof Regulation No
130/PMK.
08/2016 re: Govt
guarantee for
electricity project
acceleration
Managing entity:
IIGF and MoF
Govt’s comitment:
US$ 450 mn
MoF Reg. No.
159/PMK. 010/2015
re: tax holiday for
pioneer sector, such
as base metal, oil
refinery, basic
petrochemical,
machinery, renewable
energy, & telco
equipment industries.
Sector will be further
expanded
Managing entitiy:
Ministry of Finance
A scheme in which
concessionaires
receive sum of
money periodically
from central or
regional government
after the completion
of an asset.
MoF Regulation, and
MoHA Regulation on
Availability Payment
has been ratified.
Managing entity:
Ministry of Finance &
Ministry of Home
Affairs
A facility to support
land acquisition for
infrastructure projects
particularly projects
that involve private
sector
Managing enitiy:
Ministry of Finance,
Ministry of Agrarian
and Land Spatial/BPN
and BLU-LMAN
Gov’t. commitment:
US$ 12 mn (2016)
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
117
Efforts to Accelerate Infrastructure Provision
Regulation improvement to accelerate land procurement process
The Government of Indonesia issued Law No. 2 of 2012 on Land Acquisition for Public Interest, with a purpose to provide certainty about the land
acquisition duration for the Government Contracting Agencies and the Investors. The Law sets an estimated 583 days maximum time to complete the
land acquisition process.
For its implementation, the Law No. 2 of 2012 was supported by the Presidential Regulation
No. 71 of 2012 on Land Acquisition Implementation for Developing Public Facilities, which
has been revised into the Presidential Regulation No. 30 of 2015. The Amendment to the
Regulation allows a Business Entity to allocate funding for a land acquisition which can be
reimbursed by the Government following the completion of land acquisition process. With this
Regulation, the land acquisition process is expected not to be delayed by the unallocated
budget or the delay on the budget disbursement.
Land Procurement Process as Stipulated in Law No. 2 of 2012
Law No. 2/2012 was successfully applied in:
1. Palembang – Indralaya section of the Trans
Sumatera Toll Road Project
2. Java North Line Double Track Rail Project
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
118
Efforts to Accelerate Infrastructure Provision…the establishment of Indonesia Asset Management Agency (LMAN)
Source: Ministry of Finance
Government has established State Asset Management Unit (LMAN) as a solution to
accelerate the land acquisition through the provision of land acquisition fund
1. Unutilized fund can be allocated for the
following year
2. Non-project-specific land acquisition
fund allocation. Unused allocated fund
can flexibly be made available for the
other project
3. Land acquisition fund for PSN projects is
managed under one agency
1. LMAN was established in December 2015
through the issuance of MoF Reg. 219/2015
concerning State Assets Management
2. In 2016, BLU LMAN was mandated to provide
land acquisition fund as a support to Ministry
of Public Works due to US$ 1,081 Mio
shortage of fund to acquire land for priority
toll roads
3. The scope of support is broaden for all
National Strategic Projects through the
issuance of MoF Reg. 21/2017 concerning
land acquisition financing guideline for PSN
4. In January 2018, LMAN has disbursed up to
US$ 881.48 Million (IDR 11.9 Trillion) through
bridging finance scheme for 27 toll road
projects, and planned to start the
implementation of direct payment scheme
Land Acquisition Budgeting SchemeLMAN at a Glance
This LMAN initiative provides better
flexibility, coordination and
management of land acquisition fund
provision for National Strategic
Projects (PSN)
119
New Fundamental Regulations Have Been Initiated in 2017to accelerate infrastructure projects delivery
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
1Government Reg. No. 13/2017 on National Spatial Plan (RTRWN)
The issuance of RTRWN can resolve spatial planning mismatch in the implementation of infrastructure projects listed
in the annex of Government Reg. No. 13/2017. A number of breakthroughs were developed, and one of them is that
the Minister of Agrarian and Spatial can issue a recommendation of spatial utilization; so that the process of
obtaining project
permission can be done.
2
MoF No. 60/2017 on Procedures for the Provision of Central Government Guarantee for the
Acceleration of the National Strategic Projects Implementation
The supporting regulation for Presidential Reg. No. 3/2016 on the Acceleration of the National Strategic Projects
Implementation. This regulation regulates the scope and general requirements and procedures to propose and
grant guarantees, as well as allocate state budget obligation on government guarantees to all PSN. The guarantee
provision is expected to increase the feasibility and trust of investors to participate in the implementation of PSN.
3Presidential Reg. No. 56/2017 on Social Impact Handling in Land Acquisition Process for PSN
This Presidential Reg. allows the Executing Agency to pay land acquisition compensation to the impacted
community who does not have official rights over the land required for PSN. This regulation helps to solve the
land acquisition problem due to community objection over the land use.
4MoF No. 21/2017 on Procedures for Land Acquisition for National Strategic Projects and Asset
Management of Land Acquisition by State Asset Management Agency
The implementing regulation of Presidential Reg. No.102/2016 on Financing of Land Acquisition for the
Development of Public Interest in the Framework of the National Strategic Implementation. This regulation
becomes the legal basis for the financing of the procurement of National Strategic and Priority Projects by BLU
LMAN
120
Under Presidential Reg. No.56/2018, PSN list has been revised into 223 Projects and 3 Programs
projects
27Projects
53Projects
17Projects
12Projects
Sulawesi
US$23.4 BKalimantan
US$35.7 B
Sumatra
US$43.6 BMaluku & Papua
US$34.5 B
893 ProgramsProjects
National Projects
1 2 Projects
Java
US$72.7 BUS$100.7 B
13
Bali &
Nusa Tenggara
US$0.7 B Exchange rate: US$ 1 = IDR 13,500
Road
69 Projects
Dams
51 Projects
SEZs & IEs
29 ProjectsRailway
16 ProjectsEnergy
11 Projects
Ports
10 Projects
Clean Water &
Sanitation
8 Projects
Airports
7 Projects
Irigation
6 ProjectsSmelter
6 Projects
Electricity
1 Program
Technology
4 Projects
Housing
3 Projects
Fisheries/Farming
1 Projects
Sea Dike
1 ProjectsEducation
1 Projects
Economic Equality
1 Program
Aeroplane Industry
1 Program
Project Program
PSN includes 15 sectors at project level and 3 sectors at program level
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Projects
121
PSN may receive privileges as stipulated in the Presidential Reg. No. 3/2016 j.o. the Presidential Reg. No. 58/2017
01
02
03
Determination of National Strategic Projects
04
05
0607
08
09
10
11
12Permit & Non-permit
Completion
Spatial Planning
Land clearing acceleration
Local Content Utilization
Government Guarantee Provision
Projects Monitoring via KPPIP IT System
SOE’s Assignment
Problems and Hindrance Completion
Accelerate Goods and Service Procurement
Settlement of Legal Issues
Acceleration of Non-State Budget Projects
Additional Facilities
Existing Facilities
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
122
Progress on 223 Projects and 3 Programs PSN
The Estimated Investment Value for
223 Projects + 3 Programs PSN1
1Exclude 7 projects which investment value are still unknown
Exchange rate : US$ 1 = IDR 13,500
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
State Budget
10%
SOEs/ RSOEs31%
Private59%
Total Investment
Value2
US$ 307.4
Billion
State Budget
US$ 31.6 Bn
SOEs/RSOEs
US$ 96.6 Bn
Private
US$ 179.2 Bn
5 Sectors with Highest Investment
Value
Energy
11 Projects
US$ 89.8 Bn
Electricity
1 Program
US$ 76.7 Bn
Roads
69 Projects
US$ 49.7 Bn
Railways
16 Projects
US$ 29.2 Bn
SEZs and IEs
31 Projects
US$ 31 Bn
123
Progress on 223 Projects and 3 Programs PSN
Progress of National Strategic Projects
(as of December 2018)
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
32 projects already completed
32 projects, 1 electricity program, and 1 economic equality program
in construction and partial-operation phase
48 projects in construction and will start operating in 2019
52 projects in construction and will start operating after 2019
14%
15%
21%23%
3%
24%
6 projects in transaction
53 projects and 1 Aircraft Industry Program in preparation phase
Progress of National Strategic Projects
(as of September 2019)
51 projects already completed
27 projects, 1 electricity program, and 1 economic equality program
in construction and partial-operation phase
22 projects in construction and will start operating in 2019
80 projects in construction and will start operating after 2019
4 projects in transaction
39 projects and 1 Aircraft Industry Program in preparation phase
22%
13%
12%33%
3%
18%
124
In 2016 - 2018, 62 PSNs have been Completed with Total Estimated Investment Value of USD23.7 Billion
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
125
Progress on 37 Priority Projects
From the revised National Strategic Projects, the Government has selected a list of 37 Priority Projects to be the focus of
infrastructure provision.
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
1. Balikpapan-Samarinda Toll Road
2. Manado-Bitung Toll Road
3. Panimbang-Serang Toll Road
4. 15 Segments of Trans – Sumatera Toll Road
5. Probolinggo – Banyuwangi Toll Road
6. Yogyakarta – Bawean Toll Road
7. SHIA Express Railway
8. MRT Jakarta South-North Line
9. Makassar-Parepare Railway
10. Light Rail Transit (LRT) of Jakarta-Depok-
Bogor-Bekasi
11. LRT of South Sumatera
12. East Kalimantan Railway
13. LRT of DKI Jakarta
14. Kuala Tanjung International Hub Seaport
15. Bitung International Hub Seaport
16. Patimban Port
17. Inland Waterways Cikarang-Bekasi-Laut (CBL)
18. Palapa Ring Broadband
19. Batang, Central Java Power Plant (CJPP)
20. Central – West Java Transmission Line 500 kV
21. Indramayu Coal-fired Power Plant
22. Sumatera 500 kV Transmission (4 Provinces)
23. Mulut Tambang Coal-fired Power Plant (6 Provinces)
24. PLTGU (16 Provinces)
25. Bontang Oil Refinery
26. Tuban Oil Refinery
27. RDMP/Revitalization of the Existing Refineries
(Balikpapan, Cilacap, Balongan, Dumai, Plaju)
28. Abadi WK Masela Field
29. Unilization Field Has Jambaran-Tiung Biru
30. Indonesian Deepwater Development (IDD)
31. Tangguh LNG Train 3 Development
32. West Semarang Drinking Water Supply System
33. Jakarta Sewerage System
34. National Capital Integrated Coastal Development
(NCICD) Phase A
35. Jatiluhur Drinking Water Supply
36. Lampung Drinking Water Supply
37. Waste to Energy Program in 8 cities
126
Progress on 37 Priority Projects
Recent MilestonesProgress of 37 Priority Projects (as of September, 2019)
Funding Scheme of 37 Priority Projects
Loan Agreement has been signed on 15 November
2017.
On March 2018, pre-qualification stage has resulted 4 shortlisted bidders
Allocation of repayment liability on additional-loan for Phase I and Phase II
has been decided in the KPPIP Ministerial meeting – 49% will be borne by
Central Government and 51% will be borne Provincial Government of DKI
Jakarta.
Patimban Port
West Semarang Water Supply System:
Mass Rapid Transit (MRT) Jakarta South-North
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
66%
26%
8%
US$120.7 billion from Private/
PPP
US$47.7 billion from SOE/
Regional SOE
US$15.5 billion State/
Regional Budget
(including G-to-G loan)
Exchange rate : US$ 1 = IDR 13,500
Total Investment Value
US$ 183.9 Billion
West package has been fully operasional since April 2018.
Palapa Ring
Note: This data is still going to be verified by The Executive Office of President (KSP)
and Indonesia’s National Government Internal Auditor (BPKP)
Outline Business Case has been done on December 2017.
Yogyakarta-Bawen Toll Road
6%
16%
30%24%
8%
16%
3 projects in transaction
6 projects in preparation
6 projects in construction and
partial operation phase
2 project is completed
11 projects in construction and will
start operating in 2019
9 projects in construction and will
start operating after 2019
127
Energy Sector: the Progress of 35.000 MW Program
No Phase MW %
1 Operating 3,792 11
2 Construction 22,739 62
3 Signed Power-purchase Agreement 6,923 21
4 Procurement 1,279 4
5 Planning 734 2
17 Dec ‘14
Cabinet Meeting
“There’s electricity crisis in Indonesia,
requires construction of large capacity
plant "
Jan ‘15
Average economic growth of 6.7%
requires 7,000 MW / year or 35,000
MW / 5 years
(Kepmen ESDM No. 0074/2015 on
RUPTL 2015-2024)
Jan ‘15
Debottlenecking through regulation:
1. Regulation No.1/2015 concerning electricity
supply cooperation & joint utilization of the
electrical network among license holders.
2. Regulation No.3/2015, concerning Procedures of
Purchasing Electrical Power and benchmark prices
for Electrical Power through the Direct Selection &
Appointment.
16 Mar ‘15 4 May ‘15
June‘17
Cabinet Meeting
Progress of
35,000 MW
Launching 35.000 MW
by the President in
Goa Beach Sanden DIY
The progress so far:
Sulawesi
PLN: 2,000 MW
Private: 1,470 MW
Transmission: 5,275 ckt.km
Substation: 4,390 MVA
Maluku
PLN: 260 MW
Private: 12 MW
Transmission: 653 ckt.km
Substation: 620 MVA
Papua
PLN : 220 MW
Private: 0 MW
Transmission: 364 ckt.km
Substation: 460 MVA
Kalimantan
PLN: 900 MW
Private: 1,735 MW
Transmission: 5,604 ckt.km
Substation: 3,500 MVA
Nusa Tenggara
PLN: 670 MW
Private: 0 MW
Transmission: 2,347 ckt.km
Substation: 1,410 MVA
Sumatera
PLN: 1,100 MW
Private: 8,990 MW
Transmission: 18,729 ckt.km
Substation: 35,521 MVA
Jawa & Bali
PLN: 5,000 MW
Private: 13,697 MW
Transmission: 9,185 ckt.km
Substation: 66,265 MVA
35,000 MW Program Distribution
Source: PLN
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
Note : Progress of 35,000 MW Electricity Program as of August 2019
128
Energy Sector: the Progress of 35.000 MW Program
December 2016
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
706 MW in operating
phase
10,141 MW in
construction phase
8,478 MW sighned
Power-purchase
Agreement
10,560 MW in
procurement phase
2%
28%
24%
30%
16%
5,824 MW in planning
phase
3%
44%
38%
9%6%
8%
52%
32%
5%
3%19%
57%
19%
3%
2%
998 MW in operating
phase
15,676 MW in
construction phase
13,782 MW sighned
Power-purchase
Agreement
3,163 MW in procurement
phase
2,228 MW in planning
phase
2,899 MW in operating
phase
18,207 MW in
construction phase
11,467 MW sighned
Power-purchase
Agreement
1,683 MW in procurement
phase
954 MW in planning phase
6,811 MW in operating
phase
20,168 MW in
construction phase
6,678 MW sighned
Power-purchase
Agreement
829 MW in procurement
phase
734 MW in planning phase
November 2017 December 2018 December 2019
129
Acceleration of 35.000 MW Program
Government
PT PLN
EPC Powerplant
and TransmissionPLN Subsidiary
(Joint Venture)
Independent
Power Producer
Strengthen Equity
2B1
Government Support (outside Guarantee)
• Provision of Primary Energy
• Provision of Renewable Energy
• Simplicity of Permits and non-Licensing
• Spatial Planning
• Land acquisition
• Resolution on Legal Matters
Local Content
Obligation on the usage of local content through
an open book system, price guideline, reverse
engineering or other methods to maximise the
local content.
2A
Assignment
SJKU* Ministry
of Finance
Strengthen PLN‘s Balance Sheet
*)SJKU=Surat Jaminan
Kelayakan Usaha/
Business Viability
Guarantee Letter
The Government has issued Presidential Regulation No. 4/2016 on Electricity Infrastructure Acceleration to accelerate power projects
Provision of Electricity
Refinancing Hedging
Financial Asset Optimization
Direct Lending
Direct LendingBond issuance by
PT PLN
Company
Tax Holiday
PT PLN’s divident
allocationLoan from independent
lenders
Asset
Revaluation
Other types of
funding
Equity Injection by the
Government
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
130
Significant Progress on Infrastructure Projects
Database
Project information
such as map, track,
existing study and
latest project status.
An integrated IT
system with
monitoring capacity
for stakeholders, so
that they can have
real time data.
Platform data outlook
that is efficient and
functional using a user-
friendly framework.
Record decisions related to
projects and synchronize
the implementation
schedule that can be
utilized by stakeholders.
KPPIP developed an integrated IT System for monitoring of national
strategic and priority projects, providing database on projects’ latest
status which can be effectively utilized for monitoring and decision-
making purposes.
Improving Monitoring System on Infrastructure Projects1Roads
Trans-Sumatra Toll Road Merah Putih Bridge, Ambon
Dams
Jatigede Dam (Operational)
Transportation
Jakarta MRT Project2
Drinking Water Processing
Umbulan Drinking Water Provision System, East Java
1 Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
2 Not funded from National Budget
Terminal 3 Ultimate Soekarno-Hatta2
New Tanjung Priok Port Project2 Nop Goliat Dekai, Papua
131
Infrastructure Projects and Financing SchemesPromotion of Infrastructure Development to Accelerate Economic Growth
Establishment of PPP Unit
Broad
Objective
Champion project preparation and acceleration of the PPP agenda in
Indonesia
Core
Mandates
Improve quality of project selection under KPPIP – OBC criteria
Support project preparation through PDF support and highlyqualified
transactionadvisors
Act on behalf the Minister of Finance in providing government support and
approvals for projects
Additional
Mandates
Coordinate all public financeinstruments
Provide input for PPP Policy program Development andRegulations
Implement capacity building forGovt. Contracting Agency(GCAs) One stop shop for PPP promotion & Information
Budget Public Private Partnership SOE & Private Sector
Central & regional budget
(special allocation fund &
rural transfer)
Primarily to support basic
infrastructure projects:
– Food security:
Irrigation, dams etc.
– Maritime: Seaports,
shipyardsetc.
– Connectivity: Village
roads, public
transportationetc.
Certain infrastructure projects to be funded and operated through a partnership
between the Indonesian government and the private sector
– Projects ready for auction under the PPP Scheme:
– Toll roads projects such as Balikpapan-Samarinda and Manado-Bitung– Railway projects such as an express line into Soekarno-Hatta International Airport
– Water supply projects such as the West SemarangProject
Various government support for PPP:
– Project Development Facility (PDF): Helps Government Contracting Agencies (GCAs) in project preparation and transaction
– Viability Gap Fund: improves financial viability of PPP projects
– Government Guarantees: Supports PPP projects’ bankability by providing sovereignguarantees
– Infrastructure Financing Fund: Provided through PT SMI and IIGF
– Availability Payment (AP): GCA pays private partner based of availability of
infrastructure services
Government to inject capital into SOEs: Intended
multiplier effect to develop more infrastructure
projects
Key focus areas:
– Infrastructure and maritimedevelopment
– Transportation and connectivity
– Food security
Medium term infrastructure developments to
focus on:
– Water Supply
– Airports
– Seaports
– Electricity and power plants
– Housing
– Mining
Source : Ministry of Finance; Bappenas; KPPIP: “Komite Kebijakan Percepatan Penyediaan Infrastruktur” or National Committee for the Acceleration of Infrastructure Delivery
Note: OBC: Outline Business Case; PDF: Project Development Facility; GCA: Government Contracting Activity
Infrastructure Development in order to:
1. Accelerate growth particularly in rural areas
2. Support industrial development and tourism
3. Reduce unemployment and poverty
Infrastructure fundraising needs: $357.9 bn (or equivalent to IDR4,796.2 tn)
245 National Strategy Projects under National Medium Term Plan for 2015 – 2019 with an
estimated total cost of IDR 4,197 tn (USD 313 bn)
37 priority infrastructure projects with an estimated cost of IDR 2,490 tn (USD 180 billion)
Majority of 37 priority projects are expected to commence commercial operation by 2018 -
2022
Infrastructure Development is a Key Priority
132
Government Guarantee For Basic Infrastructure DevelopmentReflects strong commitment to national development planning
Source: Ministry of Finance
No. Central Government Guarantee for Infrastructure Programs
Exposure/
Outstanding
(USD bn)
1 Coal Power Plant 10,000 MW Fast Track Program (FTP 1) 1.75
2 Clean Water Supply Program 0.01
3 Direct Lending from International Financial Institution to SOEs 1.46
4 Sumatra Toll Road 1.53
5 Renewable energy, Coals & Gas Power Plant 10,000 MW (FTP 2) 6.78
6 Public-Private Partnerships (PPP) 3.35
7 Regional Infrastructure Financing 0.19
8 Public Transportation (Light Rail Transit) 0.07
9 Electricity Infrastructure Fast Track Program (35GW) 0.06
Total 15.20
Contingent Liabilities from Government GuaranteesGovernment Guarantee Program
Credit
Guarantee
PPP Guarantee
Business Viability
Guarantee (BVG)
Power (Electricity) – Full credit guarantee for PT PLN’s
debt payment obligation under FTP 1 10,000MW and
35GW programs*.
Clean Water – Guarantee for 70% of PDAM’s debt
principal payment obligations.
Toll road – Full credit guarantee for PT Hutama Karya’s
debt payment obligations for the development of
Sumatra Toll Roads.
Infrastructure - Full credit guarantee on SOE’s borrowing
from international financial institution & guarantee for
PT SMI’s local infrastructure financing.
Public Transportation (Light Rail Transit) – Full credit
guarantee for PT Kereta Api Indonesia’s debt payment
obligations for the development of LRT Jabodebek.
Power (Electricity) – Guarantee for PT PLN’s obligations
under Power Purchase Agreements with IPPs (off-take
and political risk) under FTP-2 10.000MW and 35GW
programs*
Infrastructure – Guarantee for Government-related
entities obligations (line ministries, local governments,
SOEs, local SOEs) under PPP contracts/agreements
From 2008 to Q3-2019, the Government has issued 84 guarantee documents with total
value of USD35.44 billion, 23 of which (worth USD3.44 billion) have expired.
The Maximum Guarantee Limit for the period 2018 – 2021 is set at 6% of GDP.
The space for guarantee issuance for the period 2018-2021 is approximately IDR 1,200
trillion (cumulative).
As of end of September 2019; currency conversion of IDR 14,147/USD1 (Sept 30, 2019)
Political Risk
Guarantee
Infrastructure – Guarantee against infrastructure risks
for National Strategic Projects (Presidential Decree
No.58/2017) which are not covered by other type of
guarantees
*) MOF provides both credit guarantees and BVGs for 35GW program
133
Government Financial Facilities for PPP Projects
Financial Facilities to Attract More Private Participation
Those financial facilities were instrumental in supporting the execution of PPP
projects, indicated by the signing of financial close
of the following PPP projects:
Viability Gap Fund
(VGF)
Project Development
Facility (PDF)
Government Guarantees (directly
by MoF or through IIGF)
Financing from
PT. SMI and PT. IIF
Availability Payment
Schemes
More Funding Schemes are on the Pipelines
Project Financing funded by the private sector through
the granting of concessions for an operating asset
owned by the Government/SOE (based on the policy
of the Government) to the private sector to be
operated & managed.
Project Financing funded by any source of funds
other than Government’s budget, e.g. long term
management funds (insurance, repatriated funds
from tax amnesty, pension funds, etc.), private equity
investors and infrastructure funds. Supported &
facilitated by National Development Planning
Ministry/Bappenas.
• Asset is owned by public sector
• Operating asset, not greenfield project
• Records positive cash flow for the last several
years
• Predicted revenue
• Asset is owned by private sector
• Greenfield / brownfield / operating projects
Scheme Characteristics
Scheme Characteristics
LCS
(Limited
Concession
Scheme)
PINA
(Non-Government
Budget
Infrastructure
Financing)
Source: Ministry of Finance
134
Progress of PPP Infrastructure Projects
No Project NameProject Cost
(IDR tn)Financial Facilities Status
1 Central Java Power Plant 40 Guarantee (MoF & IIGF) FC on June 6th, 2016; Construction 30%; COD Target: May 2020
2 Palapa Ring – West Package 1.28 PDF, IIGF Guarantee & AP FC on August 11th, 2016; COD target: February 2018
3 Palapa Ring – Central Package 1.38 PDF, IIGF Guarantee & AP FC on September 29th, 2016; COD target: March 2018
4 Palapa Ring – East Package 5.13 PDF, IIGF Guarantee & AP FC on March 29th, 2017; COD target: September 2018
5 Umbulan Water 2.1 PDF, VGF & IIGF Guarantee FC on August 30th, 2016; COD target: July 2019
Successful Projects Reaching Financial Close in 2016 and 2017
No Project NameProject Cost
(IDR tn)Financial Facilities Status
1 Batang–Semarang Toll Road 11 IIGF Guarantee PPP & guarantee contracts signed on April 27th, 2016
2 Manado–Bitung Toll Road 5.1 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
3 Samarinda–Balikpapan Toll Road 9.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
4 Pandaan–Malang Toll Road 5.9 IIGF Guarantee PPP & guarantee contracts signed on June 8th, 2016
5 Serpong–Balaraja Toll Road 6.0 - PPP contracts signed on June 8th, 2016
6 Jakarta–Cikampek Elevated Toll Road 14.8 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and
February 22nd, 2017
7 Krian–Legundi-Krian Toll Road 9.0 Co guarantee (MoF & IIGF) PPP & guarantee contracts both signed on December 5th, 2016 and
February 22nd, 2017
8 Serang–Panimbang Toll Road 5.3 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
9 Cileunyi–Sumedang-Dawuan Toll Road 8.2 Co guarantee (MoF & IIGF) PPP & guarantee contracts signed on February 22nd, 2017
Signed PPP Projects in 2016 and 2017
Source: Ministry of Finance, as of July 2017
135
New Guarantee Schemes for Non-PPP Projects
The Government had issued Presidential Regulation No 82/2015 and Ministry of Finance Regulation No 189/2015 to provide guarantee for SOEDirect Lending from IFIs for the Development of Infrastructure Projects.
Guarantee on SOE Direct Lending from International Financial Institutions (IFIs)
Guarantee for Regional Infrastructure Financing Provision
State finance soundness Fiscal sustainabiliyBest practice of fiscal risk
management
The objective of this guarantee is to provide credit enhancement in terms of low interest rate and long tenor financing,
with 3 main principles:
The Government had issued Ministry ofFinance Regulation No 174 of 2016 toprovide guarantee to PT SMI on theassignment of regional infrastructurefinancing provision, by loan to localgovernments that is transferred from PIPto PT SMI, and new loan channeled by PTSMI to the local government.
Based on Government RegulationNo. 95/2015 and Ministry of FinanceRegulation No. 232/2015, Minister ofFinance assigns PT SMI (Sarana MultiInfrastruktur) to carry out functions inproviding loan to local government, aspreviously carried out by PIP(Government Investment Center).
The objective is to give stimulus to the
acceleration of local infrastructure
development through the ease of access
to infrastructure financing and to boost
local economic growth, as well as to
provide alternative financing schemes in
order to meet local infrastructure
development needs and to reduce
reliance on state/local budget.
136
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