GOVERNMENT SECURITIES

MANAGEMENTAUGUST 8, 2018

DIRECTORATE OF GOVERNMENT DEBT SECURITIESDIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENTMINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

DEBT FINANCING STRATEGY

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia

2018 FINANCING NEEDFulfilled from Government Securities IDR730.2 tn (92%) and Loan IDR63.1 tn (8%)

Domestic Debt

IDR595.5 tn

(75%)

Foreign

Denominated Debt

IDR197.8 tn

(25%)

Domestic GS

IDR591.0 tn

Budget

Deficit

IDR325.9 tn

Matured

Debt

IDR394.1 tn

Investment

Financing

IDR65.7 tn

Guarantee

IDR1.1 tn

Loan

IDR6.7 tn

Other

Financing

(IDR0.2 tn)

Financing

Need

IDR793.3

tn

Domestic Loan

IDR4.5 tn

Foreign Loan

(Program &

Project)

IDR58.5 tn

Foreign

Denominated

Bonds

(JPY, EUR, USD)

IDR139.3 tn

GS (SBN) Gross

IDR591.0 tn(Domestic)

IDR139.2 tn(Foreign)

IDR92.0 tn

(SPN/S CM)

∑ IDR822.2tn

Loan Gross

IDR4.5tn (Domestic)

IDR58.6tn (Foreign)

∑ IDR63.1tn

3

GOVERNMENT SECURITIES INDICATIVE FINANCING PLAN FOR 2018

70% - 75%

25% - 30%

Government Debt Securities Government Sukuk

Government Securities to Meet State Budget Financing Domestic Government Securities

Weekly auction:

Conventional securities 25x

Islamic securities 24x

Non-Auction

Retail bonds (ORI, Retail Sukuk, Online Retail Bonds)

Private PlacementBased on request

Target avg. tenor maturity for Government Securities Issuance

7-8 yearsIssuance Targets for Government Securities

International Government Securities

InstrumentsIndicative Budget Target*

IDR Tn USD Bn

Budget Deficit (2.19%) 325.9 24.3

Government Securities (Net) 407.4 30.4

Government Securities (Gross) 822.2 61.4

Composition

Domestic Government Securities 80 - 83%

International Government Securities 17 - 20%

*exchange rate assumption in 2018 budget: IDR13,400/USD

USD

Sukuk USD

EUR

JPY

Avoid crowding out indomestic market

Provide benchmarks forcorporate bonds

Investor basediversification

4

2018 GOVERNMENT SECURITIES

FINANCING REALIZATION

(In Million IDR)

*Global Bonds issuance (prefunding) using SEC format amounted USD4 bn and USD1 bn** EURO issuance using SEC format amounted EUR1 bn*** Samurai Bonds issuance amounted JPY100 bn

5

Budget 2018Budget Realization

(as of August 7, 2018)

% Realization to

Budget 2018

Government Securities Net 407.484.526 240.297.774 58,97%

Issuance Need for 2018 822.269.800 527.241.895 64,12%

Government Debt Securities (GDS) 368.025.611

IDR Denominated GDS 270.148.066

-Coupon GDS 157.420.000

-Conventional T-Bills 105.400.000

-Private Placement 5.400.000

-Retail Bonds 1.928.066

Foreign Denominated Bonds 97.877.545

-SEC USD* 68.068.000

-SEC Euro** 16.969.815

-Samurai Bonds*** 12.839.730

-USD Onshore Bonds -

Sovereign Sharia Securities (Sukuk) 159.216.284

Domestic Sovereign Sharia Securities 117.837.284

- IFR/PBS/T-Bills Sukuk (Islamic Fixed Rated Bond/Project Based Sukuk) 100.250.714

- Retail Sukuk 8.436.570

- Private Placement 9.150.000

Global Sukuk 41.379.000

GOVERNMENT SECURITIES PERFORMANCE

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management| Ministry of Finance of The Republic of Indonesia

GDS* PRIMARY MARKET PERFORMANCE 2017-2018THROUGH AUCTION (AS OF JULY 31, 2018)

7

• Average incoming bid for GDS in 2018 = IDR40.18 tn/auction while average awarded bid for GDS in 2018 = IDR17.97 tn/auction

• The first auction in 2018 recorded highest incoming bid ever, amounted IDR86.2 tn or equiv. USD6.39 bn (JISDOR a.o. Jan. 3, 2018 =

IDR13,498/USD)

*) Surat Utang Negara (SUN)7

2,44

1,93 2,01

2,62

2,38

1,31

1,83

2,80

3,16

1,76 2,01

3,00

1,97 1,86

1,57

2,58 2,50

2,05

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

0

50

100

150

200

250Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)

[In Trillion IDR ]

Average

Incoming

Bid 2017 =

IDR39.72T/

auction

Average

Awarded

Bid 2017 =

IDR17.61T/

auction

2,67

2,00

2,07

2,81

2,37

2,04 1,98

2,83

3,36

1,84

2,12

2,95

1,92

1,78 1,85

2,48

2,16

1,99 2,11

-

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

-

50

100

150

200

250

300Incoming Bids Awarded Bids % Bid to Cover Ratio (RHS)

GS* PRIMARY MARKET PERFORMANCE 2017-2018THROUGH AUCTION (AS OF AUGUST 7, 2018)

*) Surat Berharga Negara (SBN)

Average

Incoming

Bid 2017 =

IDR27.99T/

auction

Average

Awarded

Bid 2017 =

IDR11.74T/

auction

[In Trillion IDR ]

Average incoming bid for GS in 2018 = IDR27.33 tn/auction while Average awarded bid for GS in 2018 = IDR12.38 tn/auction

8

REPUBLIC OF INDONESIA JPY100BN 3YR, 5YR, 7YR

and 10YR FIXED SAMURAI BONDS

9

SEC-REGISTERED SHELF EUR1bn 7-YEAR and

USD1bn 10-YEAR ISSUANCE

8

Breakdown of Distribution by Geography Breakdown of Distribution by Investor Type

EUR 7-year USD 10-yearEUR 7-year USD 10-year

US50%

Asia ex-Indonesia

24%

Indonesia7%

Europe19%

Indonesia12%

Asia ex-Indonesia

15%

UK16%

Germany17%

France5%

Italy13%

Switzerland4%

Rest of Europe

11%

US7%

Asset Managers

50%

Central Banks / SWFs18%

Banks15%

Insurance / Pension

16%

Private Banks

1%Asset Managers

61%

Central Banks / SWFs

4%

Banks23%

Insurance / Pension

11%

Private Banks

1%

Pricing Date: 17 April 2018

Issuer: Republic of Indonesia

Issue Rating: Baa2 (Moody’s) / BBB- (S&P) / BBB (Fitch)

Issue: Senior Unsecured, Fixed Rate Notes

Format: SEC-registered

Settlement Date: 24 April 2018

Currency: EUR USD

Tenor: 7-year 10-year

Maturity Date: 24 April 2025 24 April 2028

Tranche Size: EUR1bn USD1bn

Benchmark Yield: 0.630% (MS) 2.816% (UST)

Spread to Benchmark: MS+115bps UST+131.4bps

Re-offer Yield: 1.780% 4.130%

Coupon: 1.750% 4.100%

Listing: SGX-ST, Frankfurt Stock Exchange

Terms: USD200k/1k denoms, New York law

Joint Bookrunners: CA-CIB / Deutsche Bank / GS / HSBC / Mandiri

Billing & Delivery: Deutsche Bank

Capitalizing on the positive tone following Moody’supgrade of the sovereign rating to Baa2 from Baa3 on 13April 2018, the Republic launched the USD tranche on 16April 2018 Asia morning and the EUR tranche on Europeopen

Started at 4.40% area Initial Price Guidance, the USD1bn10-year tranche was eventually priced at 4.13%,representing a 27bps compression from start to finish

Similarly, the EUR1bn 7-year tranche was launched atMS+137.5bps area and compressed 22.5bps to price atMS+115bps

Total orderbook was 2.9x oversubscribed at Final PriceGuidance, with EUR3.0bn orders on the EUR tranche andUSD2.7bn orders on the USD tranche

Diversification of investor base – 179 total accounts onthe EUR tranche and 136 accounts on the USD tranche

Transaction Highlights

Republic of Indonesia’s

inaugural SEC Shelf

takedown

At MS+115bps (1.750%), the

EUR tranche represents the

lowest-ever EUR cost of

funding for the Republic

The transaction achieved the

sovereign’s funding

objectives with limited New

Issue Concessions

5bps on the EUR and 10bps

USD tranches

P

P

P

10

Sukuk Global Issuance – USD3 bn

Trust Certificates due 2023 and 2028

On February 22, 2018, the Republic of Indonesia successfully priced an international sukuk offering totaling USD3 bn, including its debut offering in green format. Summary Terms of Offering

Obligor The Government of the Republic of Indonesia, represented by the Ministry of Finance

Issuer Perusahaan Penerbit SBSN Indonesia III

Issuer Rating Baa3 Moody’s (Positive) / BBB- S&P (Stable) / BBB Fitch (Stable)

Exp. Issue Rating Baa3 Moody’s / BBB- S&P / BBB- Fitch

Instrument USD Wakala Trust Certificates (“Sukuk”), issued under a USD25 bn Trust Certificate Programme

Format. Status 144A / RegS registered, senior unsecured

Aggregate Size USD3,000 mm

5-year 10-year

Maturity Mar 1, 2023 Mar 1, 2028

Tranche Size USD1,250 mm USD1,750 mm

Profit Rate 3.750% p.a. (30/360) 4.400% p.a. (30/360)

Reoffer Price / Yield 100.000 / 3.750% 100.000 / 4.400%

UST Benchmark (Price / Yield)

2.375% 01/31/23(98-22¾ / 2.655%)

2.750% 02/15/28(98-16+ / 2.923%)

Reoffer Spread +109.5 bp +147.7 bp

Use of Proceeds General financing requirements in line with the Green Bond

and Green Sukuk Framework

General financingrequirements

External Reviewer CICERO second party opinion ㄧ

Other Terms USD200k/1k denominations, English and Indonesia law, Singapore and NASDAQ Dubai listing

First-ever green sukuk offering by any sovereign globally

First USD sovereign green offering, in either sukuk or conventional formats

Transaction Highlights

Set the flattest curve between any 5- and 10-year sukuk offering by the Republic, at 65 bp

Accessed a window of relative stability without any competing supply for aggregate size of USD3 bn, which remains to be the largest sukuk offering by a non-GCC issuer to-date

Maximized green structure and full investment grade ratings to set all-time low spreads to U.S. Treasury for any sukuk offering by the Republic of Indonesia

Over USD7 bn of demand at pricing, featuring sponsorship from investors of the highest quality, green focused funds and sovereign-related entities inclusive

Demand and Allocation Statistics

5-year Green Sukuk 10-year Sukuk

Indications / Book Cover USD3,000 mm / 2.4x USD4,200 mm / 2.4x

Allocations USD1,250 mm USD1,750 mm

Number of Accounts 145 165

Allocations by

Geography

Allocation by Type

Islamic Asia EU US Indonesia

Asset Manager / Fund Manager Bank

Pension Fund / Insurance SWF / Central Bank

Private Bank Green

Non Green

32%

25%15%

18%

10% 24%

12%32%

22%

10%

29%

40%

10%

20%1%

47%

39%

6%7%

1%29%

71%

11

Issuer Republic of Indonesia

Series RI0123 RI0128 RI0148

Issuer Rating Baa3 (Moody’s) / BBB- (S&P) / BBB- (Fitch)

Issue Rating Baa3 (Moody’s) / BBB- (S&P) / BBB- (Fitch)

Pricing Date December 4, 2017

Settlement Date December 11, 2017

Maturity January 11, 2023 January 11, 2028 January 11, 2048

Size USD$1.00bn USD$1.25bn USD$1.75bn

Tenor 5yr 10yr 30yr

Coupon (p.a.) 2.950% 3.500% 4.350%

Re-offer Yield 3.000% 3.550% 4.400%

Re-offer Spread 85.6 bps 117.6 bps 163.3 bps

Format SEC-Registered Standalone

Listing Singapore Stock Exchange and Frankfurt Stock Exchange

25%

40%

21%

14%

RI0123

22%

48%

20%

10%

RI0128

12%

65%

22%

1% RI0148

Investor Breakdownby Investor Type

Investor Breakdown by Region

54%26%

10%

2% 8% RI0123

47%32%

19%

0% 2% RI0128

59%

10%

27%

0% 4% RI0148

Europe

USA

Asia (ex-Indonesia)

IndonesiaInsurance /Pension Funds

Asset / Fund Manager

Banks Private Banks

Sovereign Wealth Funds

USD GLOBAL BONDS ISSUANCE

(PREFUNDING)

Some achievements of Indonesia’s International Bonds issuance with SEC-Registered format:1. Lowest re-offer spread for 5yr, 10yr, and 30yr tenors, with the final order book of issuance totaling USD9.93 billion of 715 bookings;2. Lowest yield for 5yr and 30yr tenors;3. New issue concession negative with total transaction USD4 billion, including the largest for the issuance of Government bonds in the Asian region;4. Flattest curve ever between 5yr, 10yr, and 30yr tenors.

12

SECONDARY MARKET PERFORMANCE

13

LCY 10 Year Government Bonds (as of August 3, 2018)

Latest YieldPrev

Day Change(in bps)

YTD Change (in bps)

CN 3.57 ▼ 1.0 ▼ 45.0

HK 2.27 ▲ 1.2 ▲ 43.1

ID 7.83 ▲ 4.8 ▲ 150.6

JP 0.11 ▼ 1.6 ▲ 6.2

KR 2.58 ▲ 0.3 ▲ 10.8

MY 4.05 ▲ 1.0 ▲ 13.2

PH 6.45 ▼ 3.8 ▲ 75.1

SG 2.48 ▼ 2.2 ▲ 47.3

TH 2.73 ▲ 1.0 ▲ 40.7

US 2.95 ▼ 3.7 ▲ 54.3

VN 5.00 0.0 ▼ 20.4

Source: Market Watch Asian Bond Online

(%)

Average Daily TradingYields of Benchmark Series

Peers 10y Govt Bonds’ Yield

As of August 3, 2018As of August 3, 2018

Foreign Ownership V. 10Y Yield Movement

Source: IBPA

As of August 3, 2018

2

4

6

8

10

12

14

16

18

20

22

Jun'1

1

Sep'1

1

Dec'1

1

Mar'1

2

Jun'1

2

Sep'1

2

Dec'1

2

Mar'1

3

Jun'1

3

Sep'1

3

Dec'1

3

Mar'1

4

Jun'1

4

Sep'1

4

Dec'1

4

Mar'1

5

Jun'1

5

Sep'1

5

Dec'1

5

Mar'1

6

Jun'1

6

Sep'1

6

Dec'1

6

Mar'1

7

Jun'1

7

Sep'1

7

Dec'1

7

Mar'1

8

Jun'1

8

5Y 10Y 15Y 20Y

7.65 (5Y), 7.78 (10Y), 8.14 (15Y), 8.15 (20Y)

10.67 12.19 16.61 15.84 12.95 17.07

0.69 0.92

1.39 1.36

1.03

0.69

17.73

20.80 17.23

14.97 21.22

22.88

-

15.00

30.00

45.00

2016 2017 Mar-18 Jun-18 Jul-18 s.d 3 August-18

OUTRIGHT REPO BANK REPO BI

600

650

700

750

800

850

900

5.00

5.50

6.00

6.50

7.00

7.50

8.00

Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18

[%] [Rp Triliun]

Non Residen [RHS] Yield 10 Y [LHS]

(in trillion IDR)

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.

OWNERSHIP OF TRADABLE DOMESTIC

GOVERNMENT SECURITIES

Description Dec-14 Dec-15 Dec-16 Jan-17 Dec-17 3-Aug-18

Banks* 375.55 31.04% 350.07 23.95% 399.46 22.53% 493.82 27.27% 491.61 23.41% 597.38 26.60%

Govt Institutions

(Bank Indonesia**)41.63 3.44% 148.91 10.19% 134.25 7.57% 53.31 2.94% 141.83 6.75% 92.99 4.14%

Bank Indonesia

(gross)157.88 8.90% 163.63 9.03% 179.84 8.56% 204.90 9.12%

GS used for

Monetary Operation 23.63 1.33% 110.32 6.09% 38.01 1.81% 111.91 4.98%

Non-Banks 792.78 65.52% 962.86 65.87% 1,239.57 69.90% 1,264.02 69.79% 1,466.33 69.83% 1,555.69 69.26%

Mutual Funds 45.79 3.78% 61.60 4.21% 85.66 4.83% 87.84 4.85% 104.00 4.95% 113.31 5.04%

Insurance Company

and Pension Fund193.90 16.03% 221.45 15.15% 325.52 18.36% 328.20 18.12% 348.86 16.61% 399.51 17.79%

Foreign Holders 461.35 38.13% 558.52 38.21% 665.81 37.55% 685.51 37.85% 836.15 39.82% 847.14 37.72%

Foreign Govt's &

Central Banks103.42 8.55% 110.32 7.55% 120.84 6.81% 118.91 6.57% 146.88 6.99% 155,80 6.94%

Individual 30.41 2.51% 42.53 2.91% 57.75 3.26% 57.69 3.19% 59.84 2.85% 63.47 2.83%

Others 60.51 5.00% 78.50 5.37% 104.84 5.91% 104.78 5.79% 117.48 5.60% 132.25 5.89%

Total 1,209.96 100% 1,461.85 100% 1,773.28 100% 1,811.14 100% 2,099.77 100% 2,246.06 100%

14

FOREIGN INVESTORS ARE MOSTLY DOMINATED BY HIGH QUALITY LONG TERM INVESTORS

FOREIGN INVESTOR ACTIVITY

Monthly Net Buyer (Seller) - Non Resident Foreign Ownership - Proportion by Tenor

15

[In Trillion IDR ] As of August 3, 2018As of August 3, 2018

5,2% 4,6% 3,2% 3,5% 5,0% 6,3%

5,4% 3,7%1,3%

5,3%5,1% 1,2%

12,9% 15,2%

11,8%

17,8% 17,3% 20,5%

32,0% 33,6%

39,0%

37,4% 35,6% 37,0%

44,5% 42,8% 44,7%

36,0% 37,0% 34,9%

32,5%

38,1% 38,2% 37,5%39,8%

37,7%

0%

20%

40%

60%

80%

100%

Dec 13 Dec 14 Dec-15 Dec-16 Dec-17 3-Aug-18

0-1 ≥1-2 ≥2-5 ≥5-10 ≥10 %Foreign Ownership of Total

SOUND GOVERNMENT DEBT PORTFOLIO MANAGEMENTStable debt to GDP ratio with diversified funding profile

Well Diversified Across Different

Currencies56% 53% 57% 55% 58% 60%

24% 29% 29% 32% 31% 29%14% 12% 9% 8% 7% 6%3% 3% 3% 3% 4% 4%

3% 3% 2% 2% 1% 1%

2012 2013 2014 2015 2016 2017

IDR USD JPY EUR Other

Financing needs mostly fulfilled from

Gov’t Securities Issuance

*Note: using GDP assumption IDR14,092.72 as mentioned in APBN Kita

31,2% 30,0% 25,9% 23,8% 20,9% 18,9% 18,8%

68,8% 70,0% 74,1% 76,2% 79,1% 81,1% 81,2%

23.0% 24.9% 24.7%27.5% 29% 29.6%*

-5,0%

5,0%

15,0%

25,0%

35,0%

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015 2016 2017 2018

Loans (LHS) Securities (LHS) Govt Debt / GDP (%) (RHS)

28.3%

16

SOLID POLICY COORDINATION IN MANAGING FINANCIAL MARKETS VOLATILITY

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

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)

Specific policies in place to address crises enacted in 2018

Budget Law (Law No. 15/2017, article 25):

• Govt (with legislative approval) could utilize AccummulatedCash Surplus (SAL) for stabilizing market

• Legislative approval should be received within 24 hr after Govt proposed

Bond Stabilization Framework

Swap facility arrangements based on international

cooperation

Enhancing coordination between government institutions

and continuous dialogue with market participants

Implementing Crisis Management Protocol (CMP)

Implementing Bond Stabilization Framework (BSF)

CMP

BSF17

Directorate of Government Debt SecuritiesDirectorate General of Budget Financing and Risk Management

Ministry of Finance of The Republic of Indonesia

Frans Seda building, 4th FloorJl. Wahidin Raya No. 1, Jakarta Pusat – Postal Code: 10710

Phone: +6221 3810175Fax. : +6221 3846516

Website: www.djppr.kemenkeu.go.idEmail: surat.utang.negara@kemenkeu.go.id

END OF PRESENTATION