Introduction to INDONESIA

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3 Introduction to INDONESIA Indonesia is the fifth largest economy in Asia in nominal GDP terms and the third most populous nation behind China and India. It has recorded strong economic growth over the last five years (5.3% per year on average), bolstered by strong domestic demand, with a growing middle class and sustained investment activity. The economy has been transformed since its last financial crisis in 1997 and Indonesia s growth prospects should be one of the highest in Asia in the medium term. Macroeconomic fundamentals are fairly good (low public debt, low fiscal deficit and low external debt to GDP ratios) and even though the country remains vulnerable to the external environment (commodity exports account for more than 54% of total exports) Indonesia has proved its resilience in a very volatile environment. However, to stimulate medium and long-term growth, the government has to pursue its economic reforms and increase expenditure on education, health, infrastructure while easing access to finance for small and medium-sized enterprises. Indeed, even though macroeconomic fundamentals are fairly robust, GDP per capita has remained fairly stable since 2011 (at USD 3,600) which remains much lower than that of Thailand or Malaysia. Summary BNP Paribas presence BNP Paribas has been active in Indonesia since 1970 and is currently the only French bank, and one of only a few global banks, with a full service offering in Indonesia. BNP Paribas offers a multi-disciplined team to support a wide range of customer requirements, including cash management and trade finance. The bank has a full banking license which permits activities in all currencies including IDR. BNP Paribas is a major player in trade finance throughout Asia, offering a full suite of traditional trade (letters of credit, bankers guarantee, trade financing, standby letters of credit, etc.) and supply chain financing solutions (receivables purchase programmes, supplier financing etc.) products, including a unique inventory solution offered through its trade centres in Australia, China, Japan and Singapore, specifically for companies engaged in international trade, as part of a wider network of more than 100 trade centres globally. BNP Paribas has experienced trade finance advisors and personnel who deliver a range of customised trade solutions and advise on local market practices. These solutions are supported by the bank's ISO-certified trade services support team. Working with BNP Paribas BNP Paribas has invested substantially in its processing capabilities to enhance STP and achieve highly competitive cut-off times for customers. It is one of the few international banks catering for both the domestic and international cash management and trade finance requirements of customers, including both foreign companies doing business in Indonesia and Indonesian entities seeking to expand their international focus. One of the reasons that companies choose to work with BNP Paribas in Indonesia is its experienced local team that can understand a customer's needs and aspirations and develop solutions that are integrated with their regional and global objectives whilst being consistent with local regulatory, infrastructure and cultural requirements. The bank has a well-established partner bank network in order to provide customers with physical payment, collection and cash management services through an extensive branch network. BNP Paribas also continues to invest in solutions that specifically meet customer needs in Indonesia, including an innovative EIPP (electronic invoice presentment and payment) solution to enable customers to manage invoices through a web-enabled Connexis-SCM portal for both payables and receivables. The bank's ereceipt solution, which

4 includes an ereporting feature, enables customers to mitigate risk in their receivables process and obtain timely and complete information. The bank is one of only a few globally to have processed a live Bank Payment Obligation ('BPO') transaction, and was the first bank worldwide to transmit information via SWIFTNet Trade for Corporates. BNP Paribas' robust e-banking platform, Connexis Trade, offers automated, paperless transaction processing in a secure environment, with multilingual capabilities, and customisable reporting and workflow controls. Currency Currency Indonesian rupiah (IDR) Bank accounts Resident / non-resident status A company is considered resident in Indonesia if it is domiciled in or incorporated in Indonesia. Bank accounts for resident entities Within Indonesia Outside Indonesia Local Currency Permitted without restriction, fully convertible Not permitted Foreign Currency Permitted without restriction, fully convertible Permitted without restriction, fully convertible Bank accounts for non-resident entities Within Indonesia Outside Indonesia Local Currency Permitted with restrictions, fully convertible Not permitted Foreign Currency Permitted subject to restrictions, convertible Not applicable

5 Payments & Collections Credit transfers Credit transfers are used by companies to pay salaries and suppliers, and to make tax and treasury payments. High-value (in excess of IDR 500 million) and urgent IDR-denominated credit transfers are settled on a sameday basis via BI-RTGS. Transfers with a value between IDR 100 million and IDR 500 million can be settled on a same-day basis via either BI-RTGS or via Credit Clearing. Low-value (IDR 100 million and below) and high-volume credit transfers are settled on a same-day or next-day basis via Credit Clearing. Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad. Direct debits Direct debits are used for regular payments, such as utility bills. Indonesia does not have a national interbank direct debit system. PT Artajasa has implemented an independent interbank direct debit system. Payments can be initiated via ATM terminals. Direct debits can also be arranged on a bilateral basis between banks. Liquidity management Domestic: notional pooling Domestic notional cash pools are available to resident entities and their subsidiaries. Single-currency notional pooling is available in IDR and foreign currency. Restrictions to non-resident borrowing prevent non-residents participating in notional cash pools in Indonesia. Domestic: cash concentration Domestic cash concentration structures are available to resident entities. Restrictions to non-resident borrowing prevent non-residents participating in domestic cash concentration structures in Indonesia. Cross-border notional pooling Cross-border notional cash pools are not widely used in Indonesia because of legal restrictions. Cross-border cash concentration Cross-border cash concentration structures are available to resident entities.

6 International trade General trade rules As a member of the Association of Southeast Asian Nations (ASEAN), Indonesia has entered into the ASEAN Trade in Goods Agreement (ATIGA) between member states (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam). Indonesia is also a member of the ASEAN Free Trade Area (AFTA) and is committed to reducing and eliminating tariffs between members. As a member of the Asia-Pacific Economic Cooperation (APEC) forum, Indonesia has agreed to liberalise trade and investment rules between members. As a signatory to the D-8 Preferential Tariff Agreement, Indonesia has agreed to reduce tariffs on trade between member states (Bangladesh, Indonesia, Iran, Malaysia, Egypt, Nigeria, Pakistan and Turkey). Imports / exports Imports Machinery and equipment Iron and steel Fuels Foodstuffs Primary Import sources China (20.6%) Singapore (12.6%) Japan (9.3%) Malaysia (6.0%) South Korea (5.9%) Exports Oil and gas Electrical appliances Animal and vegetable fats Machinery Rubber Export markets Japan (12.0%) USA (10.2%) China (10.0%) Singapore (8.4%) India (7.8%) Thailand (5.7%) USA (5.3%) South Korea (5.1%) Malaysia (5.1%) Import / export volumes Exports Imports USD m 187, , , , ,441 - services USD m 23,660 22,944 23,531 22,221 24,151 - goods 178, , , , ,051 34,224 35,014 33,541 30,918 30, goods USD m - services USD m Current account as % GDP

7 Sources: IMF, International Financial Statistics, June 2017 and Bank Indonesia, July Market data updated as of

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