Investor Update Untuk Meeting Mar2010 Rev2

8/7/2019 Investor Update Untuk Meeting Mar2010 Rev2

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PT Perusahaan Listrik Negara (Persero)

Investor Update Electricity for a Better Life

STRICTLY CONFIDENTIAL

Maret 2010


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TABLE OF CONTENTS

COMPANY OVERVIEW2

INVESTMENT STORY3

REGULATORY UPDATE4

FINANCIAL UPDATE5

1

APPENDIX6

PLN PROGRESS UPDATE1


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PLN PROGRESS UPDATE

2


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PLN Progress Update

3

From H1 2008 to H1 2009, EBITDA has increased from Rp 8,690bn to Rp 12,578bn

while the EBITDA margins increased from 11.1% to 18.3%

The EBITDA interest coverage has also increased to 4.1x in H1 2009 from 2.8x in H1

2008

Improvements infinancial

performance

In October 2009, MoF issued letter for 5% margin in the 2009

While 5% margin for 2010 has been approved and stipulated in the 2010 State Budget

Law

PLN continues to improve operations efficiency thereby reduce subsidy requirement

Notable improvements include improvement in energy mix and reduction in system

losses

Approved 5%margin

New ElectricityLaw

ContinuedOperationalEfficiency

improvement

New capacitydevelopment

Further significant progress has been made in the 10,000 MW Fast Track Program

11 projects, equivalent to 6.2GW, have achieved 50% completion

100% of the required funding for generation projects have been signed

Law No. 30 of 2009 on Electricity (New Electricity Law) issued in Sept 2009

Once implemented, private business enterprises, cooperatives and non-governmental

enterprises will be permitted to participate in electricity generation, transmission and

supply to customers

However, PLN will retain first priority to be the electricity supplier for the public needs

New Law will potentially support PLN to achieve a more solid financial position

There have been a number of notable improvements and updates at PLN in the last few months


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COMPANY OVERVIEW

4


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5

PLN is the major electricity producer and supplier in Indonesia through its portfolio of Generation,Transmission and Distribution assets with generation capacity of about 25,611 MW1

In accordance with the Law no.19/2003 governing SOEs, Government is under obligation to provide subsidy

for PLN in carrying PSO mission

Wholly-owned by Republic of Indonesia, supervised by MSOE, regulated by Ministry of Energy and Mineral

Resources (MEMR) and monitored by the Ministry of Finance (MoF)

Mandated to implement the Fast Track Program to build 10,000 MW of coal-fired generating plants(Presidential Decree No. 71/2006)

Company Overview

PLN is the only state-owned power utility company in Indonesia

5

Controls over 85%1 of nationalgeneration capacity

Main purchaser of electricityfrom Independent PowerProducers (IPPs)

Sole provider of powertransmission in Indonesia

Transmission linesapproximately 34,000 kmcand 59,000 MVA of powertransformer capacity1

Sole distributor of electricityto end customers in

Indonesia Distribution lines of

approximately 623,000 kmcand 34,000 MVA oftransformer capacity, serving39 million customers1

Generation Transmission Distribution

Note:

1 As of June 30,2009


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6

100% Owned by GoI

99.99% 99.99%

99.99%99.99% 99.33%

99.99% 99.97%

Indonesia Power

ElectricityGeneration

PT PLN (Persero)

99.99%

PLN Geothermal

Geothermal

Ministry of State OwnedEnterprises (MSOE)

Ministry of Energy andMineral Resources (MEMR)

Ministry of Finance (MoF) Oversight

Corporate Structure

100%

PLN Batu Bara

Coal

Majapahit Holding B.V.

SPC

Icon+

ICT

PLN Enjiniring

Engineering Services

PembangkitanJawa Bali

ElectricityGeneration

PLN Batam

Electric Utility

PLN Tarakan

Electric Utility

6


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7

Strong Management TeamCombination of Technical, Operations and Business Competence

Name Title Other/ Previous Experience

Board of Commissioners

Yogo Pratomo President CommissionerDaily Coordinating Team and formerly Director General ofElectricity and The Utilization

Rahmat Waluyanto CommissionerDirector General of Debt Management, Ministry of FinanceRepublic of Indonesia

Adang Firman Independent Commissioner Former Head of Metro Jaya Police Dept

Wimpy S. Tjetjep CommissionerFormer Deputy of Energy, Mineral Resources and ForestryCoordination for Ministry of Economic Coordinator

Lutfi Hamid Independent Commissioner Former Consultant in Civil Engineering

Syahrial Loetan CommissionerFormer Secretary for State Minister of PPN/ Head ofSecretary for Bappenas

Abdul Aziz CommissionerFormer Special Staff for Minister of State Owned

Enterprises


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8

Strong Management TeamCombination of Technical, Operations and Business Competence

Dahlan Iskan President Director

Owner of Jawa Pos Group, President Director/ CEO of PT PWU

Jatim Group, President Director of Power Plant - PT Cahaya FajarKaltim

I.G.A. Ngurah Adnyana Director of Java Bali OperationFormer Deputy Director of Distribution and General Manager in PLNBali Distribution Unit.

Harry Jaya Pahlawan Director of West Indonesian OperationFormer PLN Vice President of International Relations and CorporateSecretary

Vickner S inaga Director of East Indonesian OperationFormer Vice President of IPP Construction Services of PLN HeadOffice

Murtaqi Syamsudin Director of Business and Risk ManagementFormer PLN Director of Java Bali, Corporate Secretary and GeneralManager of PLN Banten and West Java Distribution Unit

Nasri S ebayang Director of Planning & TechnologyFormer PLN Head of Primary Energy & Deputy Director ofIndependent Power Producers

Nur Pamuji Director of Primary EnergyFormer General Manager of PLN Java-Bali Transmission and LoadDispatch Center

Bagyo Riawan Director of Strategic Procurement Former PLN Deputy Director of Java-Bali Power Generation

Eddy D. Erningpraja Director of HR and General Affairs Former PLN Deputy Director of HR System Development

Setio Anggoro Dewo Director of Finance

Former Independent Commissioner of Indonesia Power and Indosat,

Chairman of Accounting Post Graduate Program and Senior Lecturerin Economics at University of Indonesia

8

Board of Directors

Name Title Other Experience


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INVESTMENT STORY

9


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Investment Story

StrongGovernment

Support

FavourableDemand and

Supply Dynamics

1

2

Fast Trackand

IPP Program

3

OperationalExcellence

4

10


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MoF Decree No. 111/PMK.02/2007 and its amendments ensure the difference between revenues and

costs are covered without being subject to a cap Continuous review to ensure adequacy and timely payments Rising subsidy trend under challenging operating conditions

In 2008 subsidy over the budgeted amount had been revised three times (from IDR 29.8 tn to IDR80.42 tn, in the last revision) to cover energy price increase

In October 2009, MoF issued letter for 5% margin in the 2009 While 5% margin for 2010 has been approved and stipulated in the 2010 State Budget Law

GoI emphasizes the importance of PLNs financial soundness to ensure stable electricity supply

Notes:

1. PSO : Public Service Obligation

2. Latest budgeted amount (November/December 2008)

3. Government budgeted subsidy for 2009 based on a 61$US/barrel oil cost assumption and foreign exchange 10,500 IDR/USD

4. 2004-2008 are total revenues from electricity subsidies recognized by PLN in its audited financial statements

Total Government Subsidy to PLN4

Strong Government Support

Extended government loan maturities, converted overdue interest and penalty charges into equity duringfinancial crisis

Waived interest on certain tax payment deferrals and channels 2-step loans to PLN but remains theprimary obligor to lenders

Law no. 19/2003 demonstrates GoIs willingness to support PLN through legislative provisions which cover

the shortfall between revenues and costs for doing PSO1

Government availability to inject equity in PLN in accordance with the prevailing laws to fund thedevelopment plan

GovernmentFinancial

Assistance

GoI is involved in almost every critical stage of PLNs operations

Budget setting, capex plans, IPP developments, primary energy supplyGovernment

Close Involvement

Provision of Timelyand Adequate

Subsidies

11

1

3.512.5

32.9 36.6

78.6

45.03

0

30

60

90

2004 2005 2006 2007 2008 2009E

(Rptrillion)


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Clear Legal Framework to Support PLN Subsidy Mechanism

Mechanism based on the Ministry of Finance Regulation No. 111/PMK.02/2007 and its amendmentsensures certainty of the subsidy amount and timely cost recovery...

Costs covered by Subsidy

Power purchase

Fuel

Maintenance

Personnel

Administration

Depreciation

Interest and financingcosts

1

Note:

1 Public Service Obligation 12

Cost of Supply in Gov Budget Un-Audited Cost of Supply

Audited Cost of Supply

MOF Regulation No. 111/PMK.02/2007 and No. 162/PMK.02/2007

95%

Dec

95%

Dec

95%

Jan

95%

Feb

95%

Mar

95%

Apr

95%

May

95%

Jun

95%

Jul

95%

Aug

95%

Sep

95%

Oct

2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Assumption

Exchange rate Rp/USD

Oil price, coal price

Fuel mix

Average selling price

T&D losses

etc

Cost of Supply

LV, MV, HV

PSO1

Jan

100%

1Q 100%

2Q

100%

3Q

100%

PSO1

2007

95%

Nov

2009

95%

Jan

95%

Feb

Feb Mar Apr

95%

Jan

95%

Jan

95%

Oct

95%

Jul

95%

Mar

May

Quarterly adjustment

95%

Apr

Jun

100%

1Q


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Favourable Demand / Supply DynamicsBacked by strong macro indicators, energy demand in Indonesia is expected to grow at more than9% p.a. in next few years1

with planned capacity additions from the Fast Track Program to address the rise in demand

2

Projected Indonesian Energy Demand 2009 2018

Low electrification ratio (62%) underlines the undersupply of electricity in Indonesia and shows the intrinsic growth potential forPLN

More than 9% p.a. is projected demand growth over the next few years

Urgent need for new generation capacity due to frequent power outages in recent years

PLNs diversified asset base is located across Indonesia, with a large portion serving the most populated area of Indonesia, theJava-Bali region

60% of the population in Indonesia (140 million) live on the island of Java, with nearly 1,000 people per square kilometer

Java-Bali represents ~80% of energy demand requirements in Indonesia, with nearly of total generating capacity located there

Peak load of 16.3 GW in Java-Bali in 2008 represents ~75% of overall Indonesia demand (Indonesia 22 GW)

Reserve Margin of Java-Bali system in 2008 was 28%

Unit 2009 2010 2012 2014 2018

1.Energy Demand

- Indonesia TWh 137.9 149.3 179.2 215.6 309.4

- Java-Bali TWh 107.0 115.3 137.5 165.0 235.3

- Outside Java-Bali TWh 30.9 34.0 41.7 50.6 74.1

2.Electrification Ratio

- Indonesia % 66.9 69.3 75.0 81.2 93.6

- Java-Bali % 70.0 72.6 78.7 85.4 97.9

- Outside Java-Bali % 61.3 63.2 68.3 73.6 86.1

13

0

50

100150

200

250

300

350

2007 2009 2011 2013 2015 2017

T

Wh

Indonesia Jawa Bali Outside Jawa Bali

Note:1 Based on RUPTL (Long Term Power System Expansion Plan) endorsed by Ministry of Energy Mineral Resources Decree No. 2780.K/21/MEM/2009 dated

December 19, 2008


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14

JavaBali Generation Development

To meet growing electricity demand, Indonesia has plans to develop a further 35.7 GW by 2018

3

2009 2018 JavaBali Development Plan1

Note:1 Minister of Energy and Mineral Resources Decree No. 2780.K/21/MEM/2008 dated 19 December 2008, with updated COD schedule on the projects

currently under construction/process

which will be initially achieved via the Fast Track program and IPP developments

0

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Capacityad

dition(MW)

PLN IPP


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Shortage of electricity in Indonesia

Abundance of coal in Indonesia Electricity generation with coal is much cheaper than with oil fuel

Long term strategy to replace oil fuel generation with coal fuel generation to lower fuel costs

Key Drivers

Overview ofFast TrackProgram

Formalised through Presidential Regulation no. 71/2006 in which PLN was mandated by GoIto build coal-fired power plants throughout Indonesia

To reduce subsidy burden for the GoI, to reduce PLNs costs and to meet rising domestic

electricity demand

A Committee is set up through Presidential Regulation No. 72/2006, whose membersinclude Coordinating Minister of Economics, MOF, MSOE, MEMR and BAPPENAS

Develop 10 coal-fired power plants in Java-Bali and 25 coal-fired power plants outside Java-Bali totaling of approx. 9.5 GW, to be largely completed by 2011

Once completed, significantly reduce oil fuel as a proportion of total fuel from 35.2%1 in 2008to below 10%1 in 2012

All new IPP power plants will continue to be based on non-oil fuel

ProgramDescription

15% equity funding from PLN already committed

85% bank financing guaranteed by the GOI already committedFinancing

Fast Track Program Overview3

15

Note:1 Excludes IPPs and it is expressed in terms of percentage of total kilowatt hours generated by each fuel source


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221 210 268

1,391 1,461

2,359

1,314

167 174 249366

367

0

500

1,000

1,500

2,000

2,500

2006 2007 2008 H1 2009

(Rp/kWh)

Coal Natural Gas Oil Fuel

Breakdown of Fuel and Lubricants CostsBreakdown of Total Operating Expenses

As a material portion of PLN's generation capacity is oil fuel fired, increasing oil fuel pricessignificantly increased operating expenses....

...creating the need for PLN to replace oil fuel fired facilities with coal fired power stations

Rationale for Fast Track Program Fuel Mix Improvement3

Fuel Cost Comparison

16

0

30,000

60,000

90,000

120,000

2006 2007 2008 H1 2008 H1 2009

(Rpbn)

Oil Fuel Natural Gas Coal

Geothermal Lubricants Water

63,401 65,560

107,783

34,30751,271

0

50,000

100,000

150,000

200,000

2006 2007 2008 H1 2008 H1 2009

(Rpbn)

Fuel and Lubricants Electricity Purchase Maintenance

Personnel Depreciation Others

105,228111,506

160,598

62,81275,490


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Fast Track Program in Progress Overview

Project progress varies, 11 projects, equivalent to 6.2GW, have achieved more than 50%progress

- 3 power plants, equivalent to approximately 1.0GW, are expected to be commissioned by

end of 2009- The remainder will be largely completed by 2011

ProjectConstruction

33 EPCContracts

signed

33 EPC contracts signed including 10 locations in Java-Bali (7.5GW) and 23 locationsoutside Java-Bali (2.0GW)

Total capacity of approximately 9.5 GW if all 33 locations are built

More than half of coal requirements have been secured by long term coal supply contracts(20 years)

Most of the remaining balance is under contract finalization process while the rest of thebalance will be tendered out

Coal Supply

Transmission is being developed in parallel with the power station construction

Total investment estimate is USD 2.2 billion

Transmissionsystem

17

3


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Funding for Fast Track Program

PLN has made significant progress in securing the required funding for the Fast Track Program

Transmission

Generation

3

Disbursement as of 31 December 2009

As of February 2010


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Coal

68%

Geothermal

15%

Gas

16%

Oil

1%

17 IPPs totaling 4,247MW currently under development

23 small IPPs (less than 50MW) totaling 227MW currently under development

Underdevelopment

In Operation 4,568 MW in operation or about 15% of total national capacity

Supplied by 21 IPPs

IPP Program Overview3

19

Under Development (4,474 MW)1In Operation (4,568 MW)1

Coal

74%

Geothermal

17%

Hydro

9%

Note:

1 As of June 30 2009

The Fast Track Program is complimented by a strong pipeline of IPP developments


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Corporate Strategy Clear Roadmap Ahead for PLN

Corporate Strategy to maximize achievement of PLNs Strategic Objectives

4

Price restructuring

Margin optimization

Sales optimization

Margin optimization

Increase sales

Immediate (2009) Mid Term (2010-2011) Long Term (> 2011)

Fuel mix improvement

Continuous efficiencyimprovement

Demand Side Management

Continuous efficiencyimprovement

10,000 MW Fast TrackProgram

Maximize asset utilization

Accelerate IPP participation

Maximize assetutilization

Operational Excellenceimprovement

Corporate wide onlinesystem information

Competency basedHRM

B2B initiatives

Pre-paid meter

Demand-Side Management

Business process improvement

GCG/Compliance (ERM)

HR competencies

ICT system improvement (ERP, EAM, CCB)

Subsidiaries/ affiliates alignment

Securing Primary Energy

Fuel mix improvement

Efficiency program: eg Reduce Losses,

Maintenance, Adm. costs

10,000 MW Fast Track Program

Increase T&D capacity

Capacity optimization

Connection cost paid by customers

Improve operating procedures

Availability and reliability improvement

RevenueManagement

CostManagement

CapacityManagement

OperationalPerformance

Management

Supporting /Enabler

20

Operational Excellenceimplementation

System & organizationrevitalization

Competencies based HRM

Continuous ERMimprovement

Continuous ICT systemimprovement


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48.0% 48.9% 50.6% 50.2%

2006 2007 2008 H1 2009

Operations Efficiency Program

System (Transmission & Distribution) Losses Collection Period (days)

Reducing System Losses1

Implementing Efficiency Drive Program2

Improving Operation and Maintenance System3

4 Reducing Collection Period

Efficiency ProgramCapacity Factor

21

4

Effective revenue and cost management provided for improved profitability in 2008

10.9 10.8

8.4 8.6

2006 2007 2008 H1 2009

11.5% 11.1% 10.5% 10.1%

0%

5%

10%

15%

2006 2007 2008 H1 2009

Transmission Losses Distribution Losses System Losses


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REGULATORY UPDATE

22


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Regulatory update

Private business enterprises, cooperatives and non-governmental enterprises are allowed

to participate in the electricity supply business under the New Electricity Law However, PLN still has a first priority to be the electricity supplier for the public needs1

Industry

framework

Overview

On 23 September 2009, the Government issued Law No. 30 of 2009 on Electricity (New

Electricity Law) which replaces Law No. 15 of 1985 (Old Electricity Law)

The implementing regulations of the New Electricity Law shall be issued within one yearafter its enactment, before which the implementing regulations of the Old Electricity Law stillis still deemed valid

Allows differentiation of tariffs across regions

Parliament approval will be required for tariff settingTariff structure

No specific provisions concerning PLNs Government subsidies has been provided

PLN believes that the subsidy policy will remain in forceSubsidies

Electricity supply business now requires Electricity Supply Business License (IUPTL) for

the purpose of supplying electricity for public use

PLN is deemed as having already obtained the IUPTL

Licensing

23

The New Electricity Law will open up the Indonesian electricity supply market to new participants

Note:

1 The new law does not specifically state that the priority is given to PLN, but given to state owned enterprise (which PLN is one of them)


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FINANCIAL UPDATE

24


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Strong Financial Profile

EBITDA and EBITDA Margin

EBITDA to Interest

Sales and GoI Subsidy

Total Debt and Cash

PLN enjoys positive cash flows and EBITDA and a healthy balance sheet

25

53,382 66,482

93,809 97,896

12,968 16,2916,388 9,637

0

30,000

60,000

90,000

120,000

2006 2007 2008 H1 2009

(Rpbn

)

Debt Cash

4.4x

3.0x 2.4x

4.1x

2006 2007 2008 H1 2009

0

45,000

90,000

135,000

180,000

2006 2007 2008 H1 2008 H1 2009

(Rpbn)

Sales Government Subsidy

103,644 112,891

162,827

68,19477,282

10,827

14,32116,109

12,5788,690

10.3%12.6%

9.8%

11.1%

18.3%

2006 2007 2008 H1 2008 H1 2009

(Rpbn)

EBITDA EBITDA Margin (%)


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4.9x4.6x

5.8x

3.9x

2006 2007 2008 H1 2009

Strong Financial Profile

Debt to EBITDA

Debt to Equity Ratio

Net Debt / EBITDA

Total Debt / Total Capitalization

The Company has sustainable gearing and good cash flow coverage

26

Note:

1 On annualised basis

27.6%32.8%

42.5% 42.3%

2006 2007 2008 H1 2009

38.2%

48.7%

73.9% 73.2%

2006 2007 2008 H1 2009

3.7x3.5x

5.4x

3.5x

2006 2007 2008 H1 2009


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THANK YOU

27


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APPENDIX

28


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Fast Track Program Status Update Java Bali Island3

29

Size Total(MW) (MW) (millions) *) Bank (billions) *) Bank 2009 2010 2011 2012 2013

1 Labuan, Banten 2 x 300 600 289 BNI 1,189 BCA 300 300 - - -

2 Rembang, Jateng 2 x 315 630 262 CDB / Barclays 1,911 Mandiri - 630 - - -

3 Suralaya, Banten 1 x 625 625 284 CEXIM 735 Mega - 625 - - -

4 Indramayu, Jabar 3 x 330 990 592 BOC 1,273 BNI - 990 - - -

5 Paiton, Jatim 1 x 660 660 331 CEXIM 601 Mega - 660 - - -

6 Pacitan, Jatim 2 x 315 630 293 CEXIM 1,046 Bukopin - - 630 - -

7 Teluk Naga, Banten 3 x 315 945 455 BOC 1,607 Bukopin - - 945 - -

8 Pelabuhan Ratu, Jabar 3 x 350 1,050 482 CEXIM 1,874 Mega - - 700 350

9 Tanjung Awar2, Jatim 2 x 350 700 372 BOC 1,155 BNI - - - 700

10 Adipala, Jateng 1 x 660 660 468 CDB / ICBC 1,890 CDB / ICBC - - - - 660

7,490 3,828 13,281 300 3,205 2,275 1,050 660

Loan effective Note: *) Status as of 15 Feb 2010

Loan signed but not effective yet

Total

No Project USD Portion IDR Portion Expected capacity in the year commercial


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Fast Track Program Status Update Other Islands3

30

Size Total

(MW) (MW) (millions) *) Bank (billions) *) Bank 2010 2011 2012

1 Ende, East Nusa Tenggara 2 X 7 14 8 Asbanda 73 Mega 14 - -

2 Tjg Bale Karimun, Riau Islands 2 X 7 14 7 BRI 71 Mega 7 7 -3 Kendari, Southeast Sulawesi 2 X 10 20 10 Asbanda 97 Mega 10 10 -

4 Amurang Baru, North Sulawesi 2 X 25 50 27 Asbanda 305 Mega - 50 -

5 Bangka Baru, Bangka Belitung 2 X 30 60 23 BRI 317 BRI 30 30 -

6 Gorontalo Baru, Gorontalo 2 X 25 50 26 Asbanda 265 Mega - 50 -

7 Pangkalan Susu, North Sumatera 2 X 220 440 209 BRI 781 Mega - 440 -

8 Barru, South Sulawesi 2 X 50 100 52 BRI 380 BRI - 100 -

9 Tarahan, Lampung 2 X 100 200 119 BRI 460 Mega - 200 -

10 Meulaboh, Nanggroe Aceh D. 2 X 110 220 124 CEXIM 614 Asbanda - 220 -

11 Tidore, North Maluku 2 X 7 14 10 Asbanda 100 Asbanda - 14 -12 Jayapura, Papua 2 X 10 20 14 BRI 141 BRI - 20 -

13 Kupang, East Nusa Tenggara 2 X 16.5 33 23 Asbanda 135 Asbanda - 33 -

14 Asam-Asam, South Kalimantan 2 X 65 130 84 BRI 313 BRI - 130 -

15 Bima, West Nusa Tenggara 2 X 10 20 8 Asbanda 120 Asbanda - 20 -

16 Belitung Baru, Bangka Belitung 2 X 16.5 33 24 Asbanda 142 Asbanda - 33 -

17 Teluk Sirih, West Sumatera 2 X 112 224 138 CDB 521 Asbanda - - 224

18 Lombok, West Nusa Tenggara 2 X 25 50 24 Asbanda 274 Mega - 50 -

19 Bengkalis, Riau 2 X 10 20 8 BRI 132 BRI - 20 -

20 Pulang Pisau, Central Kalimantan 2 X 60 120 62 Asbanda 414 Mega - 120 -

21Singkawang Baru, West

Kalimantan2 X 27.5 55 31 Asbanda 172 Asbanda - 55 -

22 Selat Panjang, Riau 2 X 7 14 9 BRI 111 BRI - 14 -

23 Parit Baru, West Kalimantan 2 X 50 100 62 BRI 392 BRI - - 100

2,001 1,102 6,330 61 1,616 324

Loan effective Note: *) Status as of 15 Feb 2010

Loan signed but not effective yet

Total

No ProjectExpected capacity in theUSD Portion IDR Portion


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Indonesia remains in strong position to continue the improvement in its economy

Steady Economic Prospect

Indonesias economic momentum was better than

expected in Q2 2009. Private consumption andinvestment continued to lead GDP growth in Q22009 (4.0% YoY) and for 1H2009 (4.2% YoY)

Indonesias GDP in Q2 2009 is one of the highest

in Asia, if this momentum is maintained, there willlikely be upward revisions to consensusexpectations for GDP forecast of 4.0% in 2009

Stable government and stable economicdevelopment will likely to continue given that theincumbent president, SBY, will run the office for

the next 5 years

Improved Investment Climate

Foreign capital continues to pour into thedomestic market while adding to foreign exchangesupply on the money market.

Capital inflows in Indonesia are supported byoptimism for global and domestic economicrecovery, attractive yields on Rupiah instrumentsand improving perceptions of risk.

Moodys upgraded Indonesias rating to Ba2 inSeptember 2009 which was prompted by theIndonesian economy's relatively strong resilienceto the global recession as well as its healthy

medium-term growth prospects

Solid Current Account & FX Reserves

Support

FX reserves stood at US$62.3 billion as ofSeptember 2009; equivalent to a healthy 6.2months import and government debt payments

Structural improvement on non-oil trade trends,spurred by mining, plantation and commoditiesproducts

Govt budget deficit is expected to expand fromUS$0.4bn to US$11.8bn (2.5% of GDP) in 2009,which can be sufficiently funded by 2008 financingsurplus, standby loans from multilateral partner,planned samurai and sukuk bonds issuance

2009 Government Fiscal Stimulus

Accelerate job and small business creationthrough peoples empowerment (PNPM),expansion credit programs (KUR) and newinfrastructure projects

Increase purchasing power through basic goods

(medicine, cooking oil) subsidies, direct cash andnon-cash subsidies for low income householdsand subsidies for health and education sectors

Stimulate trade through import duty facilities,export financing, tax rate reductions and discounton peak electricity and diesel cost

Source: Bank Indonesia, Ministry of Finance

Reduced Risk to Inflation

The ongoing downward trend in core inflation isbolstered by appreciation in the exchange rate,low imported inflation and declining public inflationexpectations.

Volatile food inflation is down significantly

consistent with the ongoing decline ininternational commodity prices

September 2009 inflation eased to 2.8% from ahigh of 12.1% in September 2008

The annual rate of inflation for 2009 is predictedto maintain a downward trend.

Interest Rate Easing

BI remains focused on easing liquidity tightnessby lowering BI interbank rate. Interbank rateshave come down by 225bps YTD and arecurrently at 6.50%

BI will continue to monitor and respond in order to

maintain currency strength and anchor inflationaryexpectations

The Indonesian banking system remains in strongcondition with the CAR and NPLs within safelimits and generally CAR higher than mostregional banks

PLN Backed by Resilience of the Indonesian Economy

32

Documents

Investor Update Untuk Meeting Mar2010 Rev2