INDONESIA @ 70:

A GREAT STORY,

A GREAT FUTURE

UMAR HADI

Consul General of Indonesia

Los Angeles

SECURITY FOR ALL

ENLIGHTENED SOCIETY

PROSPERITY AND WELFARE

A WORLD OF FREEDOM, PEACE,

AND SOCIAL JUSTICE

THE INDONESIAN DREAM

Democratic Transformation

Economic Performance

Demographic Dividend

THREE GREAT STORIES

The Election Capital of the WorldConstitutional Reform: Human

Rights, Check and Balance, Supremacy of Law

Free MediaDynamic Civil SocietyEffective Civilian Control over the

Military

A STRONG DEMOCRACY

Stable and steady growth

Reduced unemployment, reduced poverty

Infrastructure challenges

Sustainability issues

A THRIVING ECONOMY

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Indonesia Philippines Singapore Malaysia Thailand

0.8 0.80.9

1.11.2

1.3

1.6

1.9

2.22.3

2.9

3.53.6 3.5 3.5

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Indonesia GDP/Capita (US$'000)

Source: World Bank and National Statistic BureauSource: World Bank

Source: Badan Nasional StatistikSource: Badan Nasional Statistik

AND A GREAT PEOPLE !

Young population

Rising middle class

IT-friendly folks

∑ Great pool of workers, great pool

of consumers

10

11

12

GREAT WORK IN PROGRESS

Anti-corruption, bureaucratic

reform, and legal certainty

Infrastructure projects

Maritime economy

The ASEAN Community

Recent Policies and Innovations

14

One Stop Service

simplified licensing processfrom 1,125 daysto 221 days

15

US$ 545 billion in the next 5 years to improve infrastructure

Recent Policies and Innovations

• Increasing tax ratio will be one of the top priority for President Jokowi.

• The main target is to increase tax ratio to 14%-15% from current level at ~12%. This will increase tax revenue by ~US$ 25-35 billion per year for the next 5 years.

• One key step to increase tax revenue is to give autonomy in human resources, budget, and organizational structure to the tax office, and reducing corporate income tax to make it competitive with Singapore, hence avoid transfer pricing

54.2%

58.2%

52.7% 53.7% 53.0%

11.1%

11.3%

11.8%

12.5%

11.9%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

-5%

5%

15%

25%

35%

45%

55%

65%

2009 2010 2011 2012 2013

Compliance Ratio Tax Ratio

Source: Directorate of Tax Annual Report 2009 - 2012

Tax and compliance ratio relatively flat during

2009-2013…

Recent Policies and Innovations

17

45 82

165

212 210 247

50

58

91

95 100

104

-

50

100

150

200

250

300

350

400

2009 2010 2011 2012 2013 2014E

Fuel & LPG Electricity

IDR Trillion

Energy subsidy has increased from IDR 95 Tn (~US$ 10 bn) in 2009 to IDR 351

Tn (~US$ 31 bn) in 2014…

…Recent fuel price hike provide more than Rp 120 Trilion for infrastructure, education

and healthcare development in 2015

Source: GoI Audited Financial Statement 2009-2013, internal calculation

276.4

54.2

92.8

45.8

83.6

0

50

100

150

200

250

300

Fuel & LPGSubsidyAPBN2015

Oil pricedecrease

Increaseon DieselRp 2000

Increaseon

GasolineRp 2000

RevisedSubsidies

2015

IDR Trillion

Recent Policies and Innovations

18

• Development of infrastructure will be focused on improving transportation and logistics to reduce transportation cost

• In addition to transportation, improve electricity capacity also becoming our top priorities to push growth in the economy

Infrastructure

Education and Health

Agriculture

• Increase in the human capital through improving education and health infrastructure, with the main on the outside Java

• Main target is to improve productivities and welfare of the farmers and providing affordable food to the countries.

• Through development of irrigation, dams, research and innovations

Government infrastructure budget in 2015 increase to US$

23 billion or double from 2014’s allocation

Government committed to allocate 20% of total budget

for education, with 2015 budget US$ 32 billion

The budget for Ministry of Agriculture in 2015 is US$ 2.6 billion or double from 2014’s

allocation

Recent Policies and Innovations

19

THE ASEAN COMMUNITY

20

* GDP Nominal 2013 (in billion US$) and GDP Annual Growth Rate (2014 estimation) of ASEAN Member Countries

* Total GDP nominal ASEAN : US$ 2,4 trillion, with more then 600 million people

21

A SUCCESS STORY OF THE 21ST CENTURY

Indonesians are among the most optimistic people in the world about the future of their country

Indonesia is a strong democracy, a thriving economy, and an open and tolerant society

Indonesia is committed to exercise responsible leadership in its immediate region

Indonesia is a strong proponent of peace and stability in Asia-Pacific

Indonesia is an active contributor to the United Nations, the G-20, APEC, ASEAN, and other international organizations