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About Investor Relations Unit (IRU)


ABOUT THE REPUBLIC OF INDONESIA INVESTOR RELATIONS UNIT
The Republic of Indonesia Investor Relations Unit (IRU) has been established as the joint effort between the 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 address
concerns of investors, especially financial market investors. IRU is expected to serve as a single point of contact for the financial market participants.
As an important part of its communication measures, IRU maintains a website under Bank Indonesia website which is being administrated by the

International Department of Bank Indonesia. However, investor relations activities involve a coordinated efforts which are supported by all relevant
government agencies, i.e. Bank Indonesia, the Ministry of Finance, the Coordinating Ministry for Economic Affairs, Investment Coordinating Board,
Ministry of Trade, Ministry of Industry, State Ministry of State Owned Enterprises, State Asset Management Company, and the Central Bureau of

Statistics.
IRU also holds 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


Contact:

Wiwit Widyastuti K. (International Department - Bank Indonesia, Phone: +6221 2981 8279)
Abdurohman (Fiscal Policy Office Ministry of Finance, Phone: +6221 384 6379)
Subhan Noor (Debt Management Office - Ministry of Finance, Phone: +6221 381 0175)
E-mail: contactIRU-DL@bi.go.id

Table of Content

Executive Summary
Improved International Perception and Rising Investment
Preserved Macroeconomic Stability
Prudent Fiscal Management

Government Debt Performance

Executive Summary

Executive Summary
Economic growth accelerated in Indonesia during the fourth quarter of 2014 in comparison to the preceding quarter, despite annual growth
for 2014 slowing down. The Indonesian economy achieved 5.01% (yoy) growth in the fourth quarter, up from 4.92% (yoy) in the previous period.
Despite early signs of improvement during the fourth quarter of 2014, annual growth slowed in 2014 to 5.02%, which is lower than that posted in the
preceding year, consistent with weaker global economic growth and macroeconomic stabilization policy. Stronger economic growth is projected in
2015, in the range of 5.4-5.8%, bolstered by expansive government investment as fiscal capacity expands to catalyze productive economic activity,
including infrastructure development as approved in the 2015 budget.
The Indonesia balance of payments (BOP) improved in the fourth quarter of 2014, primarily due to a smaller current account deficit. The
current account deficit totaled US$6.2 billion (2.81% of GDP) in the fourth quarter, down from US$7 billion (2.99% of GDP) in the third. A growing nonoil/gas trade surplus, together with a decreasing oil and gas deficit, helped boost current account performance. Meanwhile, the financial and capital
account recorded a large surplus, backed predominantly by foreign direct investment (FDI) congruent with the positive perception investors hold
concerning the domestic economic outlook. In January 2015, the trade surplus totaled US$0.7 billion, exceeding that posted in the preceding quarter,
bolstered by a smaller oil and gas deficit.

Inflation remained under control, thus supporting the prospect of achieving the 2015 inflation target, namely 41%. The Consumer Price
Index (CPI) experienced deflation of 0.24% (mtm) in January 2015 as a tangible outcome of lower fuel prices and less intense inflationary pressures on
volatile foods. In addition, core inflation was controlled at a level of 0.61% (mtm) or 4.99% (yoy).
Financial system stability was maintained with the support of steadfast banking system resilience and relatively sound financial market
performance. Banking industry resilience remained solid with credit risk, liquidity risk and market risk well mitigated and the support of a healthy
capital base. At the end of the reporting quarter, the Capital Adequacy Ratio soared to 19.40%, well above the statutory minimum of 8%, while nonperforming loans (NPL) were low and stable at around 2.0%.

On 17th February 2015, the Bank Indonesia Board of Governors decided to lower the BI Rate 25 bps to 7.50%, with the Deposit Facility rate
also reduced 25 bps to 5.50% and the Lending Facility rate maintained at 8.00%, effective 18th February 2015. Such policy measures were
instituted based on Bank Indonesias conviction that inflation will remain under control at the lower end of the 41% range in 2015 and 2016.
Bank Indonesia will continue to strengthen its monetary and macroprudential policy mix, bolster the payment system and intensify
coordination with the Government in terms of controlling inflation, reducing the current account deficit and promoting structural reforms in order to
support higher economic growth.
On the fiscal front, Indonesia will continue its prudent fiscal management in 2015 with strong commitment to fiscal consolidation. Recent
reform policy represents an essential step and integral part of structural reforms to strengthen economic fundamentals in Indonesia. 2015 revised
4
budget deficit is projected at a safe level of 1.91% of GDP.

Executive Summary

* Preliminary Figures

GDP Growth

Inflation

Balance of Payments

Foreign Exchange Reserves

Executive Summary
Central Government Debt to GDP Ratio (% of GDP)
35%

Debt Composition

33.0%

120%

28.3%

30%

26.2%

25%

24.4%

24.0%

26.2%

24.7%

100%

80%

20%

52.1%

47.4%

46.3%

45.1%

44.5%

46.8%

43.3%

44.1%

47.9%

52.6%

53.7%

54.9%

55.5%

53.2%

56.7%

55.9%

2008

2009

2010

2011

2012

2013

2014

Jan-15

60%

15%

40%

10%
5%

20%

0%

0%

2008

2009

2010

2011

2012

2013

2014*

Domestic Debt

Foreign Debt

Table of Debt to GDP Ratio

End of Year
2008

2009

2010

2011

2012

2013

2014

GDP

4,954,028.9

5,613,441.7

6,422,918.2

7,427,086.1

8,241,864.3

9,083,972.2

10,542,700.0

Debt Outstanding (billion IDR)


- Domestic Debt (Loan+Securities)
- Foreign Debt (Loan+Securities)

1,636,740.7
783,855.1
852,885.6

1,590,656.1
836,308.9
754,347.2

1,681,656.5
902,823.4
778,833.1

1,808,946.8
993,038.2
815,908.6

1,977,706.4
1,097,993.2
879,713.2

2,375,495.5
1,263,928.6
1,111,567.0

2,604,932.6
1,477,516.7
1,127,415.8

33.0%
15.8%
17.2%

28.3%
14.9%
13.4%

26.2%
14.1%
12.1%

24.4%
13.4%
11.0%

24.0%
13.3%
10.7%

26.2%
13.9%
12.2%

24.7%
14.0%
10.7%

Debt to GDP Ratio


- Domestic Debt to GDP Ratio
- Foreign Debt to GDP Ratio

Source: Ministry of Finance

2015 Policy Summary


Government coordinates policy tools to stabilize growth with macroeconomic management
Revenue and tax policy
Improvement of tax revenue administration.
Improvement of regulations related to tax revenues, especially

income tax, VAT, and VAT Luxury Goods.

Increase law enforcement conducted through intensification and

improved examination of the taxpayer and certain business sectors.

Extending additional new tax subject and VAT Activities related to

Build Your Own.

Optimization of customs and excise policy implementation as it has

been presented in the State Budget 2015.

Monetary policy mix


Bold and pre-emptive policy through regulation of BI Policy Rate,

responsively adjusting to current macroeconomic condition.

Exchange rate flexibility to facilitate external adjustments.

Financial market deepening and capital flows management.


Macroprudential and supervisory actions.
Policy coordination with the government and financial stability

forum.

Central bank cooperations, including second line of defences.

Optimization of oil & gas lifting and cost recovery, as well as the

improvement of the system and administration of non-tax state


revenues.
Expenditure policy

Increasing infrastructure spending to support growing economy.


Reduction of poverty through conditional cash transfers.
Increase the effectiveness of targeted subsidies.
Support the accelerated achievement of minimum essential force in
national defense
Support the management of natural resources in improving food,
water, and energy security.
Expanding access and quality of education.
Improve the implementation quality of the National Social Security
System in terms of health and employment.
Minimizing the impact of uncertainty through the support of fiscal
risk reserves.

Financing and debt management policy


Capital injection to state-owned companies, as
development in supporting national priorities

agents of

Optimizes Governments securities issuance from domestic sources


to fulfill Budget need and uses foreign debts as complimentary.
Determines debt instrument by taken into account of market need
in regard to market development and portfolio management.
Issues Retail Bond for instrument diversification and financial
inclusion.
Optimizes foreign and domestic loan instrument to fulfill Budget
need on capital expenditure.
Conducts active portfolio management of Government securities in
order to promote market liquidity and stability.
Strengthens the function of Investor Relations Unit.

Improved International Perception


and Rising Investment

Improving International Perception:


Acknowledged by Rating Agencies
Baa3

Moody's

Ba1

Investment grade

Baa3 / Stable

Moodys

Ba2

Jan 2012 (affirmed Dec 2013)

Ba3

Indonesia's rating is based on the country's resilient growth, low debt


burden, favorable maturity profile, and high debt affordability. Indonesia has
demonstrated resilience to large external shocks [with] sustainably high
trend growth over the medium term. Prudent fiscal management has
contained budget deficits and steadily reduced the government's debt
burden over the past decade.

B1
B2
B3

CCC+

BBB-

S&P

BB+

Dec-13

Mar-13

Jul-12

Oct-11

Jan-11

Apr-10

Jul-09

Oct-08

Jan-08

May-07

Aug-06

Nov-05

Feb-05

May-04

Aug-03

Dec-02

Mar-02

Jun-01

Sep-00

Dec-99

Mar-99

CCC

Investment grade

BB+ / Stable

BB

28 April 2014

BB-

The sovereign credit ratings reflect the economy's low per capita income, a
relatively weak policy environment, and rising external leverage from a
moderate level. These rating constraints are weighed against the country's
well-entrenched cautious fiscal management and resultant modest general
government debt and interest burden, which make for a favorable debt
profile.

S&P

B+
B
BCCC+

BBB-

Fitch

BB+

Dec-13

Mar-13

Jul-12

Oct-11

Jan-11

Apr-10

Jul-09

Oct-08

Jan-08

May-07

Aug-06

Nov-05

Feb-05

May-04

Aug-03

Dec-02

Mar-02

Jun-01

Sep-00

Dec-99

Mar-99

CCC

BBB- / Stable

Investment grade

BB

Dec 2011 (affirmed Nov 2014)

B+

Positive Watch

Positive Outlook

B-

Negative Outlook

Caa1

Stable Outlook
Dec-13

Mar-13

Jul-12

Oct-11

Jan-11

Apr-10

Jul-09

Oct-08

Jan-08

May-07

Aug-06

Nov-05

Feb-05

May-04

Aug-03

Dec-02

Mar-02

Jun-01

Sep-00

Dec-99

Caa2

Mar-99

Fitch

BB-

The authorities' explicit and consistent preference for stability over


economic growth since the "taper tantrum related market pressures in the
summer of 2013 has strengthened their macro-economic policy track record.
Real GDP growth continues to be high compared with peers. Fitch expects
real GDP growth to bottom out at 5.1% in 2014, before gradually picking up
to 5.4% in 2015 and 5.9% in 2016. This compares favorably with the 'BBB'
category median of 3.0%. Moreover, GDP growth is much less volatile in
Indonesia compared with peers.

Source: Moodys, S&P, Fitch

International institutions outlook shows some


optimism though there is still downside risk for
Indonesia in 2015
IMF Staff Visit
(December 2014)

Sound macroeconomic
management has bolstered
policy credibility and external
resiliency in Indonesia.
GDP growth is projected to be
sustained at 5.1 percent in 2015
- Recovery in investment
demand
- More buoyant manufacture
exports
Inflation is expected to return to
2015 target band (4.0 1
percent) by the end of next year.
Current account deficit is
projected to decline to around
2 percent of GDP in 2015,
supported by rising manufacture
exports as well as a lower oil
import bill.

Risk
Global headwinds from
weakening commodity prices
and tightening financial
conditions.
Slowdown in emerging market
trading partners and surges in
global financial market volatility.

World Bank IEQ


(December 2014)

The World Bank projects a


moderate near-term growth
outlook for Indonesia of 5.15.5 %
Fuel subsidies adjustment in
November 2014 suggests the new
governments commitment and
willingness to address many of
Indonesias long-standing
structural priorities.
The growth in economic activity
was moderate in the third quarter
of 2014 due to weaker
investment and exports while
private consumption has
continued to support growth.
The Rupiah has depreciated
further against the US dollar since
July, but strengthened in real
effective terms through October.

Risk
Slower projected global recovery
could weaken commodity price
trajectory in the next few years.
Several implementation
challenges faced by the new
government, including a complex
domestic political environment.

Asian Development
Outlook
(December 2014)

10

OECD
Economic
Forecast
(November
2014)

GDP growth decelerated further


to 5.0% in the third quarter of
2014

Growth is projected to
remain moderate through
2015 before picking up
somewhat in 2016

Private consumption remained


robust as expected, however
gross fixed investment and net
exports contributed less to GDP
growth than in the second
quarter.
Investment recovery following
the elections has been slower
than anticipated, and recovery in
export markets remains
uncertain.
The effect of higher
administered prices on inflation
is expected to be short-lived, and
the rate should taper toward the
end of 2015.

due largely to an
acceleration in investment
and firming consumption.
Economic growth has
continued to slow as
investment and exports
have softened, although
`
household consumption is
holding up.
The current account has
widened again, and the
rupiah has depreciated as a
result.
The recent second round of
cuts in fuel subsidies lift
headline inflation, but core
measures should remain
well anchored,

Risk
Downside risks to this outlook
center on further deterioration
of export performance and
changes in market sentiment
that cause capital outows

Risk
Risks to the outlook are
mainly on the external side.

Preserved Macroeconomic Stability

11

Domestic Economic Adjustment Continues


The Indonesian economy recorded 5.01% (yoy) growth in Q4-2014, accelerating from 4.92% (yoy) in the preceding period. Consequently, the
economy grew at 5.02% in 2014, which is in line with Bank Indonesias previous projection.
Robust economic growth in Q4-2014 was achieved on the back of stronger domestic demand, predominantly in the form of construction
investment and government consumption. Meanwhile, resilient household consumption endured despite moderating slightly in line with economic
stabilization policy.
From an external standpoint, a deep contraction was felt in terms of export performance, decelerating to 4.53% (yoy) due to weak demand from
emerging market countries and lower commodity prices.
Stronger economic growth is projected in 2015, in the range of 5.4-5.8%, bolstered by expansive government investment as fiscal capacity expands
to catalyze productive economic activity, including infrastructure development as approved in the 2015 budget.
Economic Growth - Expenditure Side
Sector
Household Consumption
Gross Fixed Capital Formation
Government Consumption
Exports of Goods and Services
Imports of Goods and Services
GDP
Sector
Agriculture, Forestry, and Fisheries
Mining and Quarrying
Manufacturing
Electricity and Gas
Water Supply, Waste Management and Recycling
Construction
Wholesale and Retail Trade; Automotives
Transportation and Warehousing
Provision of Accommodation and Food & Beverage
Information and Communication
Financial Services and Insurance
Real Estate
Business Services
Administration, Defence, and Social Security
Education Services
Health Services and Social Activities
Other Services
GDP

2012

I
5.5
5.5
6.7
6.5
4.5
3.0
1.6
3.5
8.0
2.9
6.0
5.6
Economic Growth
2012
4.6
3.0
5.6
10.1
3.3
6.6
5.4
7.1
6.6
12.3
9.5
7.4
7.4
2.1
8.2
8.0
5.8
6.0

I
4.2
0.9
4.7
9.8
3.5
5.4
3.0
7.4
7.0
10.6
13.2
8.9
7.8
1.6
11.7
6.9
5.6
5.6

2013
II
III
IV
5.2
5.4
5.4
6.4
6.7
12.8
3.2
12.4
7.9
2.1
1.3
9.4
0.9
4.9
(-0.9)
5.6
5.5
5.6
- Supply Side

2013
II
III
4.6
3.5
0.7
2.7
5.4
3.7
4.7
2.4
3.6
4.7
6.3
6.5
4.8
4.9
8.9
8.3
7.0
6.9
11.4 10.1
11.0
9.2
7.7
5.4
7.6
8.2
(-2.1) 6.4
3.2
8.6
5.2
8.3
5.6
6.2
5.6
5.5

IV
4.6
2.7
4.2
4.4
4.5
6.2
6.1
8.9
6.3
9.5
3.5
4.3
8.0
3.8
9.4
10.7
8.2
5.6

2013
5.4
8.2
6.9
4.2
1.9
5.6
2013
4.2
1.7
4.5
5.2
4.1
6.1
4.7
8.4
6.8
10.4
9.1
6.5
7.9
2.4
8.2
7.8
6.4
5.6

I
5.4
23.7
6.1
3.2
5.0
5.1

2014
II
III
5.1
5.1
22.8
5.6
(-1.5)
1.3
1.4
4.9
0.4
0.3
5.0
4.9

IV
5.0
(-0.2)
2.8
(-4.5)
3.2
5.0

I
5.3
(-2.0)
4.5
3.3
3.6
7.2
6.1
8.4
6.5
9.8
3.2
4.7
10.3
2.9
5.2
7.7
8.4
5.1

2014
II
III
5.0
3.6
1.1
0.8
4.8
5.0
6.5
6.0
3.2
2.8
6.5
6.5
5.1
4.8
8.5
8.0
6.4
5.9
10.5
9.8
4.9
1.5
4.9
5.1
10.0
9.3
(-2.5)
2.6
5.4
7.3
8.5
9.9
9.5
9.5
5.0
4.9

IV
2.8
2.2
4.2
6.5
2.7
7.7
3.5
7.1
4.9
10.0
10.2
5.3
9.7
6.9
7.1
6.1
8.4
5.0

2014
5.1
12.4
2.0
1.0
2.2
5.0
2014
4.2
0.5
4.6
5.6
3.0
7.0
4.8
8.0
5.9
10.0
4.9
5.0
9.8
2.5
6.3
8.0
8.9
5.0

12

13

Conducive Environment Underpinning Growth


Fundamentals
The fundamental long term growth drivers for Indonesia remain strong equipped with abundant natural resources, a young and technically
trained workforce and a large consumer base with a fast growing spending power

The largest economy in


South-East Asia

According to McKinsey, Indonesia is


projected to be the 7th largest
economy in the world by 2030
5.9% average real GDP growth over
the period 2008-2013
Exports are 23.7% of GDP for the
year of 2013, one of the lowest in
Asia, creating low volatility in GDP
Foreign direct investment grew at
an average rate of 21.1% from
2010-2013

Nominal GDP Strong Growth to


Continue
1.14

(USD tn)

0.88

A large, culturally diverse, young


and vibrant workforce

4th most populous country in the


world
66.6% of the population is of
working age(1) and 68.5% were 39
years and younger as of 2012
Working population projected to
grow at 0.7% compared to 0.5%
CAGR for total population from
2012-2017
A high literacy rate of more than
90%

~7mn people are expected to join


the middle class each year
Consumer expenditure has grown
at a 12.3% CAGR from 2007-2012
and is expected to continue at a
9.1% rate from 2012-2017
Disposable incomes are projected
to grow at 12.1% from 2012-2017
According to McKinsey, 135-170mn
people will join the consuming class
by 2030

Middle Class Households

Demographic Dividend Young


Population
(000)
Male

Increase in infrastructure
investment to improve overall
efficiency

Large consumer base with fast


growing spending power

60,740

Announced an expansion of fiscal


spending on infrastructure by 19.2%
CAGR from 2012 to 2014
Infrastructure investments are
spread over Indonesias 6 economic
corridors
Encompass various sectors such as
seaports, roads, railways, airports,
energy and many others
Government continues to align
regional and national regulations to
attract further private sector
investors
Annual Budgeted Capital Spending
(IDR tn)

Female

39,340

21,980

0.43

2007

2012

2017E

2007

2012

176.1

172.4

2017E

Source: KPMG, Ernst and Young, Jefferies Economist Intelligence Unit, Ministry of Finance, BPS and CIA World Factbook
(1) Working age defined as being between 15-54 years old

145.1

145.8

2012

2013
2014
2015
Realized Realized* Budget

Globally Competitive and a Top Investment


Destination
Indonesias stage of development is categorized as efficiency-driven with a strong and well balanced performance across all 12 pillars of competitiveness
Indonesia is in the Top 40 of the Global Competitiveness Index (GCI)

Rank

(1)

Country

2008

(2)

2014

Health and
primary
education

Higher
education and
training

Goods
market
efficiency

Labor
market
efficiency

Financial market
development

Technological
readiness

Market
size

Business
sophistication

Innovation

Institutions

Infrastructure

Macro-economic
Environtment

Score

Score

Score

Score

Score

Score

Score

Score

Score

Score

Score

Score

(2)

Spain

29

35

3.8

6.0

3.8

6.3

5.2

4.3

3.9

3.8

5.4

5.4

4.4

3.7

Thailand

34

31

3.7

4.6

6.0

5.8

4.6

4.7

4.2

4.6

3.9

5.1

4.4

3.3

Indonesia

55

34

4.1

4.4

5.5

5.7

4.5

4.5

3.8

4.5

3.6

5.3

4.5

3.9

Turkey

63

45

3.9

4.6

4.8

5.8

4.7

4.6

3.5

4.2

4.3

5.3

4.3

3.4

Italy

49

49

3.4

5.4

4.1

6.4

4.8

4.3

3.3

3.3

4.8

5.6

4.8

3.7

South Africa

45

56

4.5

4.3

4.5

4.0

4.0

4.7

3.8

5.4

3.9

4.9

4.5

3.6

Mexico

60

61

3.4

4.2

5.0

5.7

4.0

4.2

3.7

4.1

3.6

5.6

4.1

3.3

Brazil

64

57

3.5

4.0

4.5

5.7

4.9

3.8

3.8

4.3

4.2

5.7

4.3

3.3

Philippines

71

52

3.9

3.5

5.8

5.4

4.4

4.3

4.0

4.4

3.8

4.7

4.3

3.5

Source: Global Competitiveness Index 2014-2015, WEF


(1)

Countries with sovereign ratings in the Eaa1-Baa1 category and population larger than 40 million

(2)

Rank among 144 countries

JBIC: Indonesia lost to India by a narrow margin, though it continued to


be rated highly.
Rank
2013

2014

2
1
4
3
5
7
6
10
9
8

1
2
3
4
5
6
7
8
9
10

Source:
(1)

Country / Region
India
Indonesia
China
Thailand
Vietnam
Mexico
Brazil
USA
Russia
Myanmar

No. of Companies(1)

Percentage Share (%)

229
228
218
176
155
101
83
66
60
55

45.9
45.7
43.7
35.3
31.1
20.2
16.6
13.2
12.0
11.0

Japan Bank for International Cooperation (JBIC) FY2014 Survey Report on Overseas Business Operations by Japanese
Manufacturing Companies

Total number of companies that responded was 499

The Economist January 2015: Indonesia has taken over India in #2


Investment Destination in Asia since 2014
China
Indonesia
India
Malaysia
Vietnam
Singapore
Thailand
Philippines
Australia
Hong Kong
South Korea
Myanmar
Japan
Taiwan

71
59.9
57.9
42.1
41.3
41.2
36.2
33.3
32.2
31.3
30.3
29.6
24.3
18.3
0

10

20

30

Source: The Economist Asia Economic Outlook Survey 2015

40

50
60
70
80
% of surveyed who plan to invest in each country

14

Strong Investment Underpinned by Competitiveness


and Stability

Investment Realization in Jan-Dec 2014 is Rp463.1 trillion, an increase around 16.2% from the same period in previous year (Rp398.6 trillion). The
value of investment is based on investment realization report by the DDI and FDI companies (Oil and Gas, Banking, Non-Bank Financial Institution,
Insurance, Leasing and SMEs are excluded).
Foreign Direct Investment realization along the year 2014 based on sectors (five leading sectors) were: Mining (US$ 4.67 billion); Food Industry (US$
3.14 billion); Transportation, Warehouse, and Telecommunication (US$ 3.00 billion); Metal, Machinery, and Electronic Industry (US$ 2.47 billion); and
Chemical and Pharmaceutical Industry (US$ 2.32 billion).
Investment Realization Progress Q4-2014

Source: BKPM
*)Revised 2014 Investment Target, BKPMs Strategic Planning 2010 2014

FDI by Sectors (Millions USD)

Source: BKPM

**) Achievements January December 2014 towards 2014 target

15

Java is Still the Main Investment Destination


Realized Foreign Direct Investment (Jan Dec 2014)

Based on Economic Corridor in January December 2014 period, the


highest realization of DDI and FDI was located in Java Corridor.

DDI and FDI by Economic Corridor Jan-Dec 2014 (Million USD)

Source: BKPM

Realized Domestic Direct Investment (Jan Dec 2014)

Source: BKPM

Source: BKPM

Decreasing Pressure of Inflation


Consumer Price Index (CPI) in January 2015 records deflation of 0.24% (mtm), which results from deflation of administered prices and decreasing
pressure of inflation of volatile food prices. Annual inflation is recorded 6.96% (yoy).
The administered prices record a significantly high deflation in January by 3.51% (mtm). Annually, the inflation of administered prices is recorded
12.31% (yoy). Deflation of administered prices results from the Governments policy to adjust the fuel prices and inner city transport tarriff.
Inline with the deflation of administered prices, the pressure of volatile food inflation also decreases to 0.55% (mtm) or 8.35% (yoy) from 3.53% (mtm)
or 10.88% (yoy) in the previous month.
Actual core inflation is still relatively controlled at the level of 0.61% (mtm) or 4.99% (yoy), supported by lower external and domestic pressures.
Bank Indonesia will continue to strengthen coordination with the central and local government in terms of managing inflation of volatile foods and
administered prices in order to ensure attainment of the inflation target of 4.0 1% in 2015.

Disaggregation of Inflation

Source: BPS, Bank Indonesia

Consensus Forecast

Source: Consensus Forecast

17

Balance of Payments Recorded a Surplus in Q4-2014


Indonesia's Balance of Payments (BOP) posted a US$2.4 billion surplus in Q4/2014. The
BOP surplus was supported by capital and financial account surplus of US$7.8 billion, which
exceeded current account deficit of US$6.2 billion (2.81% of GDP). The Q4/2014 BOP surplus
in turn increased reserve assets from US$111.2 billion at the end of Q3/2014 to US$111.9
billion at the end of Q4/2014 (equal to 6.4 months of imports and servicing of government
external debt repayment).
The BOP in 2014 improved significantly on account of effective synergy of stabilization
policy adopted by Bank Indonesia and the Government. BOP in 2014 recorded a surplus of
US$15.2 billion, as against a deficit of US$7.3 billion in 2013. This improvement was supported
by shrinking current account deficit and rising capital and financial account surplus.

Amid slower than expected global economic recovery, the current account performance
improved. The current account deficit in Q4/2014 was lower than the deficit of US$7.0 billion
(2.99% of GDP) in Q3/2014. This improvement was mainly driven by increased trade surplus in
line with a rise in non-oil & gas trade surplus and decline in oil and gas trade deficit. However,
the current account deficit in Q4/2014 was bigger than the deficit of US$4.3 billion (2.05% of
GDP) in the same period in 2013, primarily due to weak performance of non-oil & gas exports
and widened oil & gas trade deficit .
For the whole 2014, current account improved with deficit amounted to US$26.2 billion
(2.95% GDP), lower than US$29.1 billion (3.18% GDP) in 2013.
Investors' positive perception on Indonesias economic prospect and remained
attractive yields encouraged foreign capital influx that could fully financed the current
account deficit. In Q4/2014, the capital and financial account surplus was supported by
inflows of Foreign Direct Investment (FDI) and other investment surplus sourced from
withdrawal of domestic private sector's deposits abroad and corporates foreign loans.
However, the surplus was lower than that in Q3/2014 amounted to US$14.7 billion due to
foreign capital outflows from Rupiah portfolio instruments in December 2014 triggered by
rising investor concerns related to the planned Fed Fund Rate hike following release of
improved US economic data.
The capital and financial account surplus in 2014 amounted to US$43.6 billion, an increase
from US$22.0 billion in 2013. Higher surplus was boosted by positive investor confidence in
Indonesia's economic outlook.

Balance of Payments Q4-2014: Current Account


Trade Balance: Non-Oil & Gas
Trade surplus increased from US$1.6 billion in Q3/2014 to US$2.4 billion in Q4/2014 on account of
higher non-oil & gas trade surplus and widened oil & gas trade deficit.
Non-oil & gas exports increased as exports grew (1.4%, qtq) higher than imports (0.2%, qtq). The
export growth was supported by increased demand, especially for vegetable oil and manufactured
products, amid slump in the global commodity prices.

Trade Balance: Oil & Gas


In oil & gas front, although oil import volume increased, oil & gas trade deficit shrank as a result of
continuing drop in world crude oil price.
For 2014, trade surplus reached US$6.9 billion, increased from US$5,8 billion in 2013 supported by
higher non-oil & gas trade surplus.

Current Account - Services, Primary Income, and Secondary Income


Compared to Q3/2014, services account deficit increased as surplus in travel services narrowed
following its seasonal pattern. Services account deficit in 2014 was US$10.5 billion, smaller than
US$12.1 billion deficit in 2013, primarily due to lower freight payments following subdued imports
In the same period, the primary income account deficit increased from hikes in interest payments
of foreign loans following its scheduled. The deficit for the whole 2014 also larger than that in 2013 as
payments for dividends and interests on inter-company loans and domestic debt securities increased
inline with surged inflows of foreign capital.
Meanwhile, secondary income surpluses in Q4/2014 and 2014 was higher than those in the
previous period mainly contributed by the increase in net income of personal transfers.

Balance of Payments Q4-2014: Capital & Financial


Account
Financial Account: Assets
On the assets side, Indonesias financial account charted net inflow of
US$1.0 billion in Q4/2014, in contrast with deficit US$3.9 billion in Q3/2014
primarily due to withdrawal of private sectors deposits abroad as well as
receipts from trade receivables.
For 2014, financial assets posted net outflow of US$12,0 billion, lower than
US$15,5 billion net outflow in 2013 as Indonesias direct investment assets
slowed and portfolio investment assets decreased.

Financial Account Liabilities: Direct Investment


Direct investment inflows (liability side) in Q4/2014 remained in surplus of US$5.5 billion. However, these inflows was lower than that in the previous quarter
(US$8,2 billion) in line with slowing economic growth (2.1%; qtq). For the whole 2014, direct investment inflows grew 9.7% to reach US$25.7 billion.
On directional basis, Foreign direct investment (FDI) during Q4/2014 decreased US$4,7 billion from US$7,6 billion in Q3/2014. By sector, manufacturing,
agriculture, fishery & forestry, and financial intermediaries (incl. Insurance) were the main sectors attracting FDI inflows during Q4/2014. While based on the country
of origin, the inflows of FDI were dominated by countries in the ASEAN region, followed by Japan and Emerging Markets of Asia (incl. China). FDI for 2014 amounted
to US$22.3 billion, higher than US$18.9 billion in 2013.

20

Balance of Payments Q4-2014: Capital & Financial


Account
Financial Account Liabilities: Portfolio Investment

Foreign portfolio investment charted a tiny outflows in Q4/2014 due to foreign capital outflows from rupiah portfolio instruments in
December 2014 triggered by elevated investors worries related to the planned Fed Funds Rate hikes.
For the whole 2014, foreign portfolio investment inflows reached US$23.4 billion, almost double than US$12,1 billion inflows recorded in 2013.

Financial Account Liabilities: Foreign Other Investment

Other investment liabilities in Q4/2014 charted US$1.3 billion surplus,


lower than the surplus of US$4.3 billion in the previous quarter. The
decreased surplus was mainly influenced by withdrawal of nonresident
deposits in domestic banks and increased payments of other liabilities.
For the whole 2014, other investment liabilities registered US$6,9
billion surplus, increased from US$2.6 surplus in 2013 primarily due to
higher net drawings of private sectors foreign loans.
21

Exchange Rate In Line With Fundamentals


Movement of Rupiah
The rupiah depreciated in line with broader US dollar appreciation. In Q4-2014, the rupiah sank on average by 3.9% (qtq) to a level of Rp12,244 per US dollar. An
increasingly solid US economy precipitated US dollar appreciation against all global currencies.

Pressures on the rupiah persisted into January 2015 as the US dollar continued to appreciate in light of the ECBs plan to loosen its monetary policy stance, which was
repeated in a number of other countries.
On average, the rupiah depreciated 1.21% (mtm) to a level of Rp12,581 per US dollar.
Bank Indonesia considers the recent rupiah fluctuations beneficial in terms of the current account deficit through lower imports, in particular of consumer goods, as
well as greater export competitiveness, especially of manufacturing exports.

International Reserves
Indonesia's official reserve asset position as of end-January 2015 reached U.S.$114.2
billion, up from the end of December 2014 level of U.S.$111.9 billion.
Increasing reserves were mainly attributable to receipts of the global bonds issued by
Government, foreign currency deposits of banks at Bank Indonesia, Governments oil
and gas export proceeds, and other Government revenue in the form of foreign
currency that exceed the needs of Government external debt payments.
Official reserve assets at the end of January 2015 can adequately cover 6.8 months of
imports or 6.6 months of imports and servicing of government external debt
repayment, well above the international standards of reserves adequacy at 3 months
of imports.
22

Monetary Policy Stance


The Bank Indonesia Board of Governors, convened on 17th February 2015, lower the BI Rate 25 bps to 7.50%, with the Deposit Facility rate also reduced 25
bps to 5.50% and the Lending Facility rate maintained at 8.00%, effective 18th February 2015.
Such policy measures were instituted based on Bank Indonesias conviction that inflation will remain under control at the lower end of the 41% range in
2015 and 2016. The current policy direction is consistent with Bank Indonesias efforts to reduce the current account deficit to a more sustainable level.
Bank Indonesia perceives that with approval of the 2015 budget, government-led fiscal stimuli and structural reform policy will catalyze stronger and
higher quality economic growth.
Bank Indonesia will continue to strengthen its monetary and macroprudential policy mix, bolster the payment system and intensify coordination with the
Government in terms of controlling inflation, reducing the current account deficit and promoting structural reforms in order to support higher economic
growth.

BI Rate
(%)
8.00

7.75
7.50

7.50

7.50

7.25

7.00
7.00

6.75
6.50

6.50

6.50

6.50

6.00

6.00

6.00

5.75
5.50

5.00
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2
2010

2011

2012

2013

2014

2015

23
Source: Bank Indonesia

Solid Financial System Stability


Banking industry resilience remained solid with credit risk, liquidity risk and
market risk well mitigated and the support of a healthy capital base.

Slowdown in Loan Growth

In January 2015, the Capital Adequacy Ratio soared to 19.50%, well above
the statutory minimum of 8%, while non-performing loans (NPL) were low
and stable at around 2.2%.
In terms of the intermediation function, credit growth decelerated to 11.6%
(yoy) from 13.2% (yoy) at the end of the third quarter in line with ongoing
economic moderation. Meanwhile, deposit growth in December 2014 was
12.3%, down from 13.3% in the preceding quarter.
In line with an expected economic upswing, deposit and credit growth are
projected to accelerate respectively to 14-16% and 15-17%.
On the other hand, capital market performance improved as the IDX
Composite continued to rally.
CAR Comfortably High, NPL Favorably Low

Stock Market Strengthened

24

Prudent Fiscal Management

25

Improving Budget Structure

Develop effective taxation policy and


tax administration
Focus not only on the corporate but
also on personal income tax & improve
value added tax system.
Provide fiscal incentive for investment
with better targeted system

Change subsidy paradigm


Shift from price (commodity) subsidy to
targeted subsidy system
Reallocate budget to productive spending,
such as infrastructure and direct assistance.
Prioritize basic infrastructure to support
food security, agriculture and fisheries
sectors as well as job creation.

Sustainable
Revenue Source

Quality of
Spending

Manageable
Fiscal Deficit

Provide a greater room on our fiscal to anticipate the uncertainty


coming from global economic development.

Encourage private
sector to help
infrastructure
development, among
other through PPP
scheme

Spending Re-Allocation To Achieve Greater


Productivity
IDR Tn

% Total Spending

250
200

12

11.0

9.8

9.7

150

8.3

10

9.0

8.8

100
50
0

Infrastructure Plan 2015-2019


New Roads - 2,650 km
Highway - 1,000 km
Road Maintainance - 46,770 km
Bus Corridors - 2

Rail lines - 2,159 km


Intra City Rail Lines - 1,099 km

8
91.3

84

114.2

2009
2010
2011
Infrastructure Spending (LHS)

145.5
2012

155.9

206.6

2013
2014
% Total Spending (RHS)

New Airports - 15
Airport Infrastructure
Development
Airplanes - 20

New Sea Ports - 24


Sea Port Development - 59
Pioneer Cargo Ships
Source: Bappenas

Source: Ministry of Finance

Reduction of poverty through conditional cash transfers


Ahead of the fuel subsidy hike, a systemic change in the provision of subsidies to the communities in need was implemented.

Kartu Indonesia Pintar


(Indonesian Smart Card) Education subsidies for the poor
and families near the poverty
threshold

Kartu Keluarga Sejahtera


Bi-monthly credits for
eligible families to offset
increasing costs of living

Kartu Indonesia Sehat


(Indonesian Health Card) Free health insurance and
medical benefits

28

Indonesian 2014 Revised State Budget Realization

In the 2014 revised budget, the


deficit will target 2.4% of GDP

A decrease in tax revenue will be


offset by the increase in non-tax
revenue, mainly through the
optimization of revenue from
natural resources

The government will implement


several crucial measures:

Expenditure is cut by around


IDR 43tn (from the original
budget) in order to meet the
budget ceiling deficit (3% of
GDP for Central and Local
Government budget)

Electricity tariff will be


gradually adjusted to reduce
the energy subsidy

Subsidized fuel consumption


volume is revised down
through, among others items,
conversion and consumption
control policies
Greater focus on regional budget,
as transfer to region increased
along with fund sharing allocation
to region
Domestic financing is expected to
play an even more prominent role
than originally expected in closing
the budget deficit

2014 Budget

Items
A. State revenue and grants
I. Domestic revenue
1.Tax revenue
2.Non tax revenue
II. Grants
B. State expenditure

2014 Revised Budget

2014 Realization (Oct 31,2014)


% of 2014
% of
% of
IDR tn US$bn*
IDR tn US$bn*
IDR tn
US$bn*
Revised
GDP
GDP
Budget
1,667.10 134.01 16.10% 1,635.40 131.46 16.30% 1,218.70
97.97
74.50%
1,665.80

133.91

16.10% 1,633.10

131.28

16.20% 1,216.40

97.78

74.50%

1,280.40

102.93

12.40% 1,246.10

100.17

12.40%

906.6

72.88

72.80%

385.4

30.98

3.70%

386.9

31.10

3.80%

309.9

24.91

80.10%

1.4

0.11

0.00%

2.3

0.18

0.00%

2.2

0.18

95.80%

113.56

75.30%

1,842.50 148.11

17.80% 1,876.90 150.88

18.70% 1,412.70

I. Central gov. expenditure

1,249.90

100.47

12.10% 1,280.40

102.93

12.70%

930

74.76

72.60%

1. Personnel
2. Goods & Services and
Capital*
3. Interest payments

263

21.14

2.50%

258.8

20.80

2.60%

203.4

16.35

78.70%

399.8

32.14

3.90%

356

28.62

3.60%

184.5

14.83

51.83%

121.3

9.75

1.20%

135.5

10.89

1.30%

113.3

9.11

83.60%

333.7

26.82

3.20%

403

32.40

4.00%

354.6

28.5

88.00%

5. Grants

3.5

0.28

0.00%

2.9

0.23

0.00%

0.3

0.02

10.90%

6. Social expenditure

91.8

7.38

0.90%

96.7

7.77

0.90%

71.7

5.76

74.20%

7. Other expenditure

36.9

2.97

0.40%

27.9

2.24

0.30%

2.3

0.18

8.40%

592.6

47.64

5.70%

596.5

47.95

5.90%

482.7

38.8

80.90%

-54.10

-4.35

-0.50%

-106.00

-8.52

-1.10%

-80.80

-6.5

76.20%

-175.40

-14.10

-1.70%

-241.50

-19.41

-2.40%

-194.10

-15.6

80.40%

175.4

14.10

1.70%

241.5

19.41

2.40%

250.1

20.1

103.60%

I. Domestic financing

196.3

15.78

1.90%

254.9

20.49

2.50%

275.8

22.17

108.20%

II. Foreign financing

-20.9

-1.68

-0.20%

-13.4

-1.08

-0.10%

-25.7

-2.07

191.30%

4. Subsidies

II. Transfer to region

Primary balance

(1)

Overall balance (A - B)

Financing

Source: Ministry of Finance

*IDR/USD Rate as of 31 December 2014


(1)

Represents revenues less expenditures excluding interest expenditures

Macroeconomic Assumptions Require Adjustments


to Reflect Recent Economic Developments

Budget Assumptions

2014

2014
Revised
Budget

2015
Budget

2015
Revised
Budget

Growth (%)

6.0

5.5

5.8

5.8

Inflation (%)

5.5

5.3

4.4

5.0

10,500

11,600

11,900

12,200

5.5

6.0

6.0

6.2

105.0

105.0

105.0

70.0

0.870

0.818

0.900

0.849

Macroeconomic
Assumptions

Exchange Rate (IDR/US$)

Interest Rate (3 month


Govt Bond, %)
ICP (US$/barrel)

Economic growth
Lower global growth outlook leads to slower domestic growth,
mainly due to exports and capital flows
Impact of governments effort in easing Current Account
pressure and maintaining stability

Inflation rate in a downward trend


Fiscal, Monetary, and Real Sector policies coordination among
Government and Central Bank to reduce inflationary pressures
and maintain a conducive macroeconomic condition
The increase of agriculture productivity will allow food supply
sufficiency and avoid commodity and food price fluctuations

Exchange rate and interest rate revised according to the global and
domestic financial market
Liquidity tightening and tapering policy in US
Capital outflow from EM to US economy
Competition and liquidity tightening resulted in the hike in
interest rates, even within domestic Indonesian economy

Oil and gas lifting revised down due to technical issues and
production delays in Cepu and other new oil blocks

Oil and Gas Lifting


a. Oil lifting (Mil bbl/day)

b. Gas lifting (Mil bbl/day


eopd)

1.240

1.224

1.248

1.177

29

Government Budget FY 2015


In billion IDR

2015
Description

Budget

% to
GDP

Financing sources Revised Budget 2015

Revised
Budget

% to
GDP

A. Total Revenue

1,793,588.9

16.1

1,761,642.8

15.1

B. Total Expenditure
Interest Payment

2,039,483.6
151,968.3

18.3
1.4

1,984,149.7
155,730.9

17.0
1.3

C. Primary Balance
D. Deficit
E. Financing
I. Non Debt
II. Debt
1. Government Securities (Net)
2. Loan (Net)
i. Foreign Loan (Net)
Disbursement
- Program Loan
- Project Loan
On Lending
Foreign Loan Principal Payment
ii. Domestic Loan (Net)
Disbursement
Domestic Loan Principal Payment
Assumptions :
GDP (trillion IDR) (Y.o.Y)
Growth (%)
Inflation (%) y-o-y
3-month-SPN (%)
IDR/USD (average)

come from debt financing (85.78% from


Government Securities, 9.62% from Loan)
and the rest 4.61% from non debt financing.
In the proposed Revised Budget 2015

(93,926.4)

(0.8)

(66,776.0)

(0.6)

(RAPBN-P 2015), deficit is narrowing from


2.21% to 1.91% of GDP

(245,894.7)

(2.2)

(222,506.9)

(1.9)

245,894.7
(8,961.2)

2.2
(0.1)

222,506.9
(56,874.0)

1.9
(0.5)

254,855.9
277,049.8
(22,193.9)
(23,815.1)
47,037.1
7,140.0
39,897.1
(4,319.4)
(66,532.8)
1,621.2

2.3
2.5
(0.2)
(0.2)
0.4
0.1
0.4
(0.0)
(0.6)
0.0

279,380.9
297,698.4
(18,317.5)
(20,008.1)
48,647.0
7,500.0
41,147.0
(4,471.9)
(64,183.2)
1,690.6

2.4
2.5
(0.2)
(0.2)
0.4
0.1
0.4
(0.0)
(0.5)
0.0

2,000.0
(378.8)
11,146,943.0
5.8
4.4
6.0
11,900

0.0
(0.0)

2,000.0
(309.4)
11,700,808.0
5.7
5.0
6.2
12,500

0.0
(0.0)

To maintain resilience and fiscal sustainability

Despite lower budget deficit, net debt in

2015 is higher

Government injects equity to SOEs to


increase their capacity to support the
achievement of the national priority agenda

Stand-by loans are in place to anticipate

adverse situations.

Government Securities Financing (Gross) Revised Budget


2015
Domestic:
Auction:
conventional securities: 23 x
Islamic securities: 22 x

Issuance targets for GDS,


Sukuk and ATM target:

GDS (SUN): 79.9%


Sukuk: 20.1%
ATM for auctions: 8.2 year

Non-Auction:
retail bonds: ORI + Sukuk Retail.

International Bonds:
Issuance of International Bonds as
complement to avoid crowding
out in domestic market and
provide benchmark for corporate
issuance, consist of USD, YEN or
EURO global bonds

Front Loading strategy:


in the first semester is
targeted at 63%.
for domestic issuance is also
targeted at first semester at
59%

Maximum issuance international bond


22.6% from target gross
Benchmark Series for 2014 & 2015

FR 69 5 Y

FR 70 10 Y

FR 71 15 Y

FR 68 20 Y
31

Financing Realization FY 2014

In billion IDR

Debt Financing
Cash Debt
Govt Securities (net)
Govt Securities (gross)
Redemption
Buyback
Program Loan
Non-Cash Debt
Project Loan
External Loan
Domestic Loan
Repayment

Realization ao
Budget
Revised 2014
Dec 2014 *)
253,724
250,607
281,883
282,745
264,984
264,978
428,135
428,129
(161,800)
(161,800)
(1,351)
(1,351)
16,900
17,767
(28,159)
(32,138)
36,246
29,135
33,823
28,628
2,423
507
(64,405)
(61,273)

Percentage
Realization
98.8%
100.3%
100.0%
100.0%
100.0%
100.0%
105.1%
114.1%
80.4%
84.6%
20.9%
95.1%

Note: *) Based on DMFAS

32

Improved Government Debt Position

33

Secondary Market Performance of Central


Government Bonds
Yield of Benchmark Series

[In Percentage]

As of Jan 30, 2015

22
20
18
16
14
12
10
8
6
4
2

Global
Financial
Crisis

5Y

10Y

15Y

20Y

6.82 (5Y), 7.01 (10Y), 7.26 (15Y), 7.37 (20Y)

Eurozone
sovereign debt
crisis

Jan'15

Oct'14

Jul'14

Apr'14

Jan'14

Oct'13

Jul'13

Apr'13

Jan'13

Oct'12

Jul'12

Apr'12

Jan'12

Oct'11

Jul'11

Apr'11

Jan'11

Oct'10

Jul'10

Apr'10

Jan'10

Oct'09

Jul'09

Apr'09

Jan'09

Oct'08

Jul'08

Apr'08

Source: Ministry of Finance, Bloomberg

Government Securities Realization


*(Million IDR)
Budget 2015*
Government Securities Net
Government Securities Maturing in 2015
-Buyback
Issuance Need 2015*

277,049,800
153,612,324
3,000,000
430,662,124

Realization

% Realization to

(ao Jan 30, 2015)*

Budget 2015

84,862,000
6,875,000
91,737,000

Government Debt Securities (GDS)

82,672,000

Domestic GDS
-Coupon GDS
-Conventional T-Bills
-Private Placement
-Retail Bonds
International Bonds
-USD GMTN
-Euro GMTN

32,300,000
21,300,000
8,000,000
3,000,000
50,372,000
50,372,000
-

-Samurai Bonds

Government Islamic Debt Securities

9,065,000

Domestic Government Islamic Debt Securities


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

9,065,000
9,065,000
-

*Adjusted by changes in Cash Management & Debt Switch

30.63%
4.48%
0.00%
21.30%

Outstanding of Total Central Government Debt


[USD billion]

250

Loan

200

Government Securities

150
118.39

100

130.97

140.75

136.27

155.23

160.08

104.20

70.51

82.34

85.26

82.78

68.59

63.09

62.02

62.25

66.69

65.02

68.65

68.51

63.76

58.28

54.18

53.94

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Jan 30,
2015

76.64

71.29

68.91

2003

50

[in percentage]

Year

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Jan 30, 2015

Loan

47%

49%

47%

43%

42%

45%

38%

37%

37%

31%

30%

26%

25%

Government Securities

53%

51%

53%

57%

58%

55%

62%

63%

63%

69%

70%

74%

75%

Source: Ministry of Finance

36

Total Debt Maturity Profile as of January 2015


Maturity Profile of Central Government by Instruments (in trillion IDR)

2041-2060

2040

2039

2038

2037

2036

2035

2033

Loan

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

Gov't Securities

2034

240
220
200
180
160
140
120
100
80
60
40
20
0

Maturity Profile of Central Government by Currencies (in trillion IDR)

240
220
200
180
160
140
120
100
80
60
40
20
0

Foreign

Foreign

44.1%

Domestic

2041-2060

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

55.9%

Domestik

37

Holders of Tradable Central Government Securities

Continued increasing proportion of foreign ownership of Indonesian Government securities.


Holders of Tradable Domestic Government Securities

Foreign Ownership of Govt Domestic Debt Securities

100%
30.53%

30.80%

32.98%

32.54%

38.13%

40.25%

46% 38% 45% 44% 41% 40% 41% 41% 42% 43% 42% 43% 42%

80%
30.53% 30.80%

43%

45.00%

43%

40.25%

39.41% 38.13%
36.33%36.81%37.30% 37.80%
35.66%
35.72%
34.59%
33.64%
32.98% 32.54%
25.00%

60%
35.59%

32.58%

30.49%

33.76%

30.83%

29.81%

25%
28% 32% 38% 34% 33% 33% 33% 34% 34% 34% 33% 34% 34%

40% 21%

5.00%

33.88%

36.63%

36.53%

33.70%

31.04%

29.95%

Dec-10

Dec-11

Dec-12

Dec-13

31-Dec-14

30-Jan-15

Foreign Holders

Domestic Non-Banks

20%

18%

15% 15% 16%


16% 13%
11% 15%
15% 15% 15% 16% 15% 14%
5%
3% 5% 5% 4% 5% 3%
3% 4% 4% 4% 4% 4%
10% 12% 8% 5% 6% 7% 7% 7% 3%
6% 6% 5% 5% 5% 5% 5% -15.00%
0%
8%

Dec-10 Dec-11 Dec-12 Dec-13 Mar-14 Apr-14 May-14 June 14 July 14 Aug 14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

Domestic Banks
>10

Source:

Ministry of Finance

17%

>5-10

>2-5

>1-2

0-1

% Foreign Ownership to Total (RHS)


38

Profile of Central Government Debt Securities


GOVERNMENT DEBT SECURITIES (GDS)
1. Domestic Tradable GDS
a. Zero Coupon
1. Government Treasury Bills
2. Zero Coupon Bond
b. Government Domestic Bonds
1. Fixed Rate *) +)
2. Variable Rate *)
2. Promissory Notes to Bank Indonesia **) ***)

Dec-12

Dec-13

Mar-14

IDR 757,231

IDR 908,078

IDR 975,977

IDR 1,030,301

IDR 1,089,951

IDR 1,104,898

IDR 1,099,257

IDR 1,125,557

IDR 24,083
IDR 22,820
IDR 1,263

IDR 34,050
IDR 34,050
IDR -

IDR 40,300
IDR 40,300
IDR -

IDR 42,600
IDR 42,600
IDR -

IDR 36,100
IDR 36,100
IDR -

IDR 40,100
IDR 40,100
IDR -

IDR 39,950
IDR 39,950
IDR -

IDR 41,950
IDR 41,950
IDR -

IDR 733,148
IDR 610,393
IDR 122,755

IDR 874,028
IDR 751,273
IDR 122,755

IDR 935,677
IDR 812,922
IDR 122,755

IDR 987,701
IDR 864,946
IDR 122,755

IDR 1,053,851
IDR 931,096
IDR 122,755

IDR 1,064,798
IDR 942,044
IDR 122,755

IDR 1,059,307
IDR 945,964
IDR 113,344

IDR 1,083,607
IDR 970,264
IDR 113,344

IDR 240,144

IDR 234,870

IDR 233,505

IDR 232,033

IDR 230,600

IDR 230,162

IDR 229,054

IDR 227,942

3. SPNNT
4 Retail Saving Bonds
5 Total GDS (1+2+3+4)
5. Total Government International Bonds *)

6. TOTAL GOV'T DEBT SECURITIES (3+(4*Exchange Rate Assumption))

Jun-14

Sep-14

Oct-14

Dec-14

Jan-15

IDR -

IDR -

IDR -

IDR -

IDR -

IDR -

IDR -

IDR 2,391

IDR 2,391

IDR 2,391

IDR 2,391

IDR 2,391

IDR 997,376

IDR 1,142,948

IDR 1,209,483

IDR 1,264,725

IDR 1,322,942

IDR 1,337,451

IDR 1,330,702

IDR 1,355,890

USD 22,950

USD 27,140

USD 30,190

USD 29,190

USD 29,190

USD 29,190

USD 29,190

USD 33,190

155,000

155,000

155,000

155,000

155,000
1,000

155,000
1,000

155,000
1,000

155,000
1,000

IDR 1,219,302

IDR 1,473,757

IDR 1,553,769

IDR 1,632,413

IDR 1,712,219

IDR 1,722,464

IDR 1,725,118

IDR 1,805,804

a. Domestic Tradable GIDS

IDR 63,035

IDR 87,174

IDR 96,764

IDR 101,329

IDR 109,444

IDR 111,509

IDR 110,704

IDR 118,894

a. Fixed Rate *)++)

IDR 62,840

IDR 78,541

IDR 92,409

IDR 95,894

IDR 99,504

IDR 99,969

IDR 99,969

IDR 108,034

IDR 195

IDR 8,633

IDR 4,355

IDR 5,435

IDR 9,940

IDR 11,540

IDR 10,735

IDR 10,860

IDR 35,783

IDR 31,533

IDR 35,533

IDR 35,533

IDR 35,197

IDR 33,197

IDR 33,197

IDR 33,197

GOVERNMENT ISLAMIC DEBT SECURITIES (GIDS)

b. Zero Coupon
b. Domestic Non Tradable GIDS

c. Government International Islamic Bonds


1. Fixed Rate *)
7. TOTAL GOV'T DEBT SECURITIES (6+(8*Exchange Rate Assumption))
8. TOTAL GOVERNMENT SECURITIES

USD 2,650

USD 4,150

USD 4,150

USD 3,500

USD 5,000

USD 5,000

USD 5,000

USD 5,000

IDR 88,660

IDR 137,758

IDR 144,090

IDR 143,220

IDR 170,504

IDR 171,919

IDR 172,904

IDR 182,019

IDR 1,343,746

IDR 1,643,048

IDR 1,733,393

IDR 1,811,166

IDR 1,917,920

IDR 1,927,579

IDR 1,931,218

IDR 2,021,020

Notes:
- Nominal in billion rupiah (domestic bonds), million USD & million JPY (international bonds)
- *) Tradable
- **) Non-Tradable
- +) Including ORI (IDR Billion))
IDR 34,153
IDR 43,882
IDR 43,882
IDR 43,882
IDR 43,882
IDR 54,098
IDR 54,098
- ++) Including Sukuk Ritel/SR (IDR Billion)
IDR 28,989
IDR 35,924
IDR 47,906
IDR 47,906
IDR 47,906
IDR 47,906
IDR 47,906
- Exchange Rate Assumption (IDR/USD1)
IDR 9,670
IDR 12,189
IDR 11,404
IDR 11,969
IDR 12,212
IDR 12,082
IDR 12,440
- Exchange Rate Assumption (IDR/JPY1)
IDR 111.97
IDR 116.17
IDR 111.65
IDR 118.15
IDR 111.70
IDR 110.43
IDR 104.25
- Exchange Rate Assumption (IDR/EUR1)
IDR 15,495
IDR 15,222
IDR 15,133
- Since October 2006, government and the Central Bank committed to replace interest payment of Promissory Notes to Bank Indonesia (SU-002 & SU-004) with new bond (SU-007) and omitted
indexation of SU-002 & SU-004

Source: Ministry of Finance

IDR
IDR
IDR
IDR
IDR

54,098
47,906
12,625
106.99
14,307

39

Debt Switch & Cash Buyback Program


Debt Switch Program
Auction Date

Auction
Frequency

Source Bonds Tenor


Series

[in billion IDR]

Offer Received

Offer Aw arded

2005

9 series

7,721

5,673

2006

12

7 up to 21 series

54,177

31,179

2007

12 up to 21 series

30,681

15,782

2008

21 up to 31 series

7,490

4,571

2009

24 up to 28 series

8,663

2,938

2010

11 up to 28 series

8,349

3,920

2011

22 up to 27 series

3,080

664

2012

10 up to 20 series

23,126

11,859

2013

7 up to 13 series

7,222

1,976

2014

9 up to 12 series

10,591

5,944

2015

Total

161,100

84,506

Buyback Program
Freque ncie s
Ye a r

Volume
(IDR billion)

Auctions

Dire ct
Transa ctions

2003

8,127

2004

1,962

2005

5,158

2007

2,859

2008

2,375

2009

8,528

2010

10

3,201

2011

3,500

2012

1,138

2013

1,551

2014

1,351

2015

GRAND TOTAL

39,750

40

Maturity Profile of Tradable Central Government


Securities
as of the end of January 2015
[IDR Trillion]

180.00
160.00
140.00

120.00
100.00
80.00

60.00
40.00
20.00

TOTAL
SUKUK USD
SUKUK IDR

SUN JPY
SUN EUR

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044
122. 95.3 97.8 90.6 129. 78.8 82.7 102. 86.1 162. 52.8 19.6 45.1 50.2 67.4 25.6 27.1 42.8 47.8 76.5 20.2 4.11 35.4 40.9
-

12.6 18.9

28.8 14.9 20.4 8.71


-

12.6

18.9

3.97

1.22

1.55

3.79

2.18

3.74 6.42

6.42

14.3

20.2

18.9 25.2

6.40 15.6

SUN USD

12.6 11.3 19.4 23.9 25.2 25.2 31.5 25.2 31.5 25.2 25.2

SUN IDR

81.5 69.0 57.9 45.3 81.1 43.2 36.8 56.6 54.5 117. 26.0 19.6 41.4 50.2 67.4 23.5 27.1 42.8 47.8 76.5

4.11 10.1

2.75 13.5 40.4 28.8 36.5

2.75

9.93

28.4 18.9 25.2

13.5 12.0

11.2

41
Source: Ministry of Finance

Daily Transaction & Offshore Ownership

Average Daily transaction Govt Bonds

Net Buyer (Seller) Non Resident

Average daily trading (IDR Trilion)

Capital Inflows

25.00

Capital inflows over total foreign holders

50.00

0.10
39.48

40.00

20.00

0.05

30.00
7.90

15.00

11.49

Triliun

9.93
6.19 8.59 10.76

8.69
9.39

10.00

6.30
0.38 0.41

0.91
1.18 0.35

0.96
10.31

5.73 5.31 5.82

7.83

1.04

0.00
(4.99)

(10.00)
10.91

(20.00)
(30.00)

(2.27)

(0.08) (1.41)
(4.37)

17.97
8.44
4.22 2.81

2.68
0.68
(0.88)

20.15
21.34
15.77
15.95
16.10
16.49
14.67 13.17
12.49
10.13
6.43
6.08 4.82

(1.76)

(0.05)

(0.37)

(19.98)

(19.84)

(0.15)
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15

OUTRIGHT

BANKS REPO

(0.10)

(29.29)

(40.00)

0.00

(8.99)

0.79

9.27 8.61 8.45 8.23


8.42 7.45
7.91
6.62 7.10
6.44

7.839.35

4.15

1.69

(1.49)

0.41 0.39 0.98


0.76

10.13

8.06

10.00
1.14

0.36

19.52

20.00
13.11

8.81 9.12 8.80

1.27 7.13 6.95


0.57

3.07

5.00

7.45

23.98

BI REPO

Source: Ministry of Finance

42

Ownership of IDR Tradable Central Government


Securities
(IDR Trillion)
Dec-12

`
Banks
Govt Institutions (Bank Indonesia*)
Non-Banks
Mutual Funds
Insurance Company
Foreign Holders

Dec-13

299.66 36.73% 335.43


3.07

0.37%

33.70%

Mar-14
359.99

Jun-14

33.56%

355.58

Sep-14

31.42%

420.50

Nov-14

35.06%

407.58

Dec-14
33.38%

375.55

Jan-15
31.04%

372.66

29.95%

44.44

4.47%

30.44

2.84%

51.19

4.52%

0.00

0.00%

0.38

0.03%

41.63

3.44%

38.37

3.08%

517.53 63.09% 615.38


43.19 5.27% 42.50

61.83%
4.27%

682.31
44.15

63.60%
4.12%

724.86
45.80

64.05%
4.05%

778.90
46.11

64.94%
3.84%

812.93
45.46

66.58%
3.72%

792.78
45.79

65.52%
3.78%

833.42
47.16

66.97%
3.79%

83.42 10.17% 129.55

13.02%

141.28

13.17%

151.36

13.38%

154.09

12.85%

150.78

12.35%

150.60

12.45%

149.95

12.05%

270.52 32.98% 323.83

32.54%

360.91

33.64%

403.59

35.66%

447.37

37.30%

481.20

39.41%

461.35

38.13%

500.83

40.25%

Foreign Govt's&Central Banks**

50.06

6.10%

78.39

7.88%

86.09

8.03%

93.59

8.27%

100.57

8.38%

102.61

8.40%

103.42

8.55%

104.66

8.41%

Pension Fund

56.46

6.88%

39.47

3.97%

39.66

3.70%

38.95

3.44%

42.63

3.55%

42.48

3.48%

43.30

3.58%

43.00

3.46%

0.30

0.04%

0.88

0.09%

0.83

0.08%

0.96

0.08%

0.99

0.08%

0.89

0.07%

0.81

0.07%

0.65

0.05%

32.48

3.26%

45.75

4.27%

31.42

2.78%

28.88

2.41%

31.91

2.61%

30.41

2.51%

28.35

2.28%

63.64

7.76%

46.68

4.69%

49.72

4.64%

52.78

4.66%

58.83

4.90%

60.21

4.93%

60.51

5.00%

63.49

5.10%

100% 1,244.45

100%

Securities Company
Individual
Others

Total
820.27
100% 995.25
100% 1,072.74
100% 1,131.63
1) Including ownership of SBSN (government sukuk).
2) Foreign are consisted of Private Banking, Fund/Asset Management, Securities, Insurance, Pension Fund.
3) Others are consisted of Corporation, Individual, Foundation.
*) Since February 8th, 2008, repo transaction of Government Securities to Bank Indonesia was included.
**) Since November 21, 2014, foreign government(s) was included to the same category as foreign central bank(s).

100% 1,199.39

100% 1,220.90

100% 1,209.96

In the end of January 2015, foreign investor ownership record the highest percentage, showing their increasing appetite on the
Indonesias government securities.

Source: Ministry of Finance

43

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