1. INDONESIA FISCAL STIMULUS IN 2009 Directorate General of Budget – Ministry of Finance Republic of Indonesia February 2010

2. Fiscal Stimulus: Aims 1.Increasing purchasing power: –Lowering personal income tax rate (PPh); –Increasing non-taxable amount of gross income (PTKP); –Subsidy of generic medicine and free tax for cooking oil; –Increasing social expenditure and direct subsidy to poor families 2.Maintaining competitiveness & resilience : –Lowering company income tax rate ; –Free import tax for import of goods & services used for public facilities/utilities; –Discounted electricity rate for industrial usage; –Interest subsidy for clean-water companies; –Decreasing diesel fuel price for industrial usage; –Increasing government stake on two export insurance companies. 3.Increasing employment: labor intensive infrastructure development in sectors such as public work, transportations, energy, people houses;labor intensive infrastructure development in sectors such as public work, transportations, energy, people houses; additional allocation for community development projects (PNPM),additional allocation for community development projects (PNPM), training for unemployed labor forcetraining for unemployed labor force 2

3. Instrument Stimulus Fiscal 2009 3 National Budget Laws 2009 (A+B)56.300,0 A. Tax Payment Saving 1. Lowering Personal Income Tax Rate (35% to 30%) and increase tax bracket/layers 2. Increasing non-taxable amount of gross income (PTKP) to Rp. 15,8 million 3. Lowering Company Income Tax Tariff (30% to 28%), and for go public company  5% lower B. Tax Subsidies 1. Value Added Tax on cooking oil 2. Value Added Tax on bio fuel 3. Import duties for material and capital goods 4. Value Added Tax on gas and oil exploration 5. Income tax for geothermal electricity producers 6. Personal/ Employee Income Tax 43.000,0 13.500,0 11.000,0 18.500,0 13.300,0 800,0 200,0 2.500,0 800,0 6.500,0 Additional16.959,3 C. Non tax subsidies, state expenditure and financing on business and employment 1. Decreasing diesel fuel price for industrial usage (from Rp 4.500/litre to Rp. 3000/litre) 2. Discounted electricity rates for industrial usage 3. Community Development (PNPM) 4. Additional Stimulus a. Interest subsidy for clean water company b. Subsidy for generic medicine c. Infrastructure stimulus expenditure d. Government Stake (PMN) to export insurance companies (Jamkrindo & Askrindo) e. Subsidy seeds f. Subsidy fertilizer 16.959,3 2.779,9 1.337,9 601,5 12.200,0 150 350,0 10.945,0 500,0 295,0 95,0 Total Stimulus (A+B+C)73.259,3

4. Stimulus for Increasing Purchasing Power, 2009 (in Billion Rupiah) 4 DESCRIPTIONALLOCATION A. Tax Revenues 1. Lowering non-oil and gas income tax rate 1. Lowering non-oil and gas income tax rate - lowering personal income tax (35% → 30%) and widening tax bracket - lowering personal income tax (35% → 30%) and widening tax bracket 2. Increasing non-taxable amount of gross income (PTKP) 2. Increasing non-taxable amount of gross income (PTKP) B. Subsidy 1. Tax Subsidy 1. Tax Subsidy - Value Added Tax on Cooking Oil - Value Added Tax on Cooking Oil - Value Added Tax on Bio Fuel - Value Added Tax on Bio Fuel 2. Non-Tax Subsidy 2. Non-Tax Subsidy - Generic medicine subsidy - Generic medicine subsidy 24.500,0 13.500,0 11.000,0 1.350,0 1.000,0 800,0 200,0 350,0 TOTAL STIMULUS25.850

5. Stimulus for Maintaining Competitiveness & Resilience, 2009 (in Billion Rupiah) 5 DESCRIPTIONALLOCATION A. Tax Revenues 1. Lowering company income tax rate 1. Lowering company income tax rate –Lowering company income tax rate (30% → 28%), and for Go-Public Company → 5% lower tax rate B. Subsidy 1. Tax Subsidy 1. Tax Subsidy - Customs for Industry - Customs for Industry - Value Added Tax on oil and gas exploration - Value Added Tax on oil and gas exploration - Income tax rate for geothermal power producers - Income tax rate for geothermal power producers - Employee Income tax (PPh Pasal 21) - Employee Income tax (PPh Pasal 21) 2. Non-Tax Subsidy 2. Non-Tax Subsidy - Decreasing Diesel Fuel Price (Rp4500/ltr  Rp. 3000/ltr) - Decreasing Diesel Fuel Price (Rp4500/ltr  Rp. 3000/ltr) - Discounted electricity rate for industrial usage - Discounted electricity rate for industrial usage - Interest subsidy for clean water company - Interest subsidy for clean water company - Fertilize - Fertilize - Seeds - Seeds C. Financing – Government stake in export insurance companies (Askrindo and Jamkrindo) 18.500,0 16.862,8 12.300,0 2.500,0 800,0 4.562,8 2.779,9 1.377,9 15,0 95,0 295,0 500,0 TOTAL STIMULUS 35.862,8

6. Realization of Tax Subsidy, 2009 (in Billion Rupiah) 6 DESCRIPTIONRealization (up to 31 Dec 2009) 1. Income Tax Subsidy 2. Value Added Tax Subsidy 3. Property Transfer tax subsidy 4. Import tax subsidy 2.836,3 26.295,6 495,14 7,19 TOTAL STIMULUS29.634,22

7. Criteria for Programs/Activities eligible to be financed with Stimulus Fiscal Fund 1.Employ significant labors; 2.Can be finished in 2009; 3.Comply to President Instruction No. 5 Year 2008 on Economy Program Focus 2008-2009; and consistent with the government strategic plan; 4.Complete the existing infrastructures, so the whole system can be more efficient; 5.Project design already prepared, or can be prepared immediately; 6.No land procurement problem; 7.Can absorb the fund in the 2009 (no carry over to 2010) 7

8. Realization of Stimulus Fiscal Expenditure FY 2009  Realization amount to Rp. 11,2 trillion (91,9 % of the allocation Rp. 12,2 trillion). It’s not 100% absorbed because of ( 1) operational efficiency;(2) land procurement problem; (3) force majeure condition (earthquake)

9. TABEL 1 STIMULUS FISCAL REALIZATION FISCAL YEAR 2009 (in billion rupiahs) NO.BSState Ministry /AgencyCEILING REALIZATION (UNTIL DEC 31 ST 2009) % FROM CEILING I. State Ministry /Agency10.945,010.328,894,37 1018Ministry of Agriculture260,0 235,290,13 2020Ministry of Energy and Mineral Resources500,0491,798,31 3022Ministry of Transportation2.198,8 2.078,294,48 4024Ministry of Health150,0 149,899,86 5026Ministry of Manpower and Transmigration300,0 254,280,04 6032Ministry of Marine Affairs and Fisheries100,0 96,794,71 7033Ministry of Public Works6.601,2 6.211,593,16 8044State Ministry of Cooperatives & SME100,0 89.989,12 9090Ministry of Trade335,0 323,596,48 10091Ministry of Public Housing400,0 398,099,49 II. Non State Ministry /Agency1.255,0886,470,63 11999State General Treasurer1.255,0886,470,63 - Generic Drug Subsidy350,00,00,00 - Subsidy for Water Supply15,00,00,00 - State Capital Investments to Jamkrindo Askrindo 500,0 100,00 - Subsidy for Seeds Excellent295,0291,498,76 - Subsidy for fertilizer95,0 99,99 T O T A L12.200,011.215,291,93 SOURCE : DIT.AKLAP DJ OF TREASURY As of January 19, 2010

10. THANK YOU 10