THE LIMITED LIABILITY COMPANY (PERSERO) (Government Regulation No. 12/1998, dated January 17, 1998) THE PRESIDENT OF THE REPUBLIC OF INDONESIA

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1 THE LIMITED LIABILITY COMPANY (PERSERO) (Government Regulation No. 12/1998, dated January 17, 1998) THE PRESIDENT OF THE REPUBLIC OF INDONESIA Considering: a. that the economic development and world trade have brought about ever increasing trade competition so that it is deemed necessary to take several measures to step up PERSERO's competitive power and business development; b. that in the context of stepping up competitive power and business development it is deemed necessary to emphasize the work mechanism of PERSERO's organ in accordance with the principles of Limited Liability Company; c. that to this end, it is deemed necessary to improve provisions on PERSERO through a Government Regulation; In view of: 1. Article 5, paragraph -(2), and Article 33 of the 1945 Constitution; 2. Law No. 9/1969 on the Stipulation of Government Regulation Substituting Law No. 1/1969 (Statute Book of 1969 No. 16, Supplement to Statute Book No. 2890) on Types of State Corporations, which becomes a Law (Statute Book of 1969 No. 40, Supplement to Statute Book No. 2904); 3. Law No. 1/1995 on Limited Liability Company (Statute Book of 1995 No. 13, Supplement to Statute Book No. 3857);

2 DECIDES: To stipulate: GOVERNMENT REGULATION ON THE LIMITED LIABILITY COMPANY (PERSERO) CHAPTER 1 GENERAL PROVISIONS Article 1 In this Government Regulation, what is meant by: 1 Minister of Finance is the Minister representing the government as the State's shareholder in PERSERO. 2. A Limited Liability Company, hereinafter referred to as PERSERO, is a Stateowned company established under Law No. 9/1969, having the form of a limited liability company as meant in Law No. 1/1995, the entire capital of which or at least 51 % of its capital, is owned by the State through direct participation of capital. 3. An Open PERSERO is a PERSERO whose capital and number of shares meet certain criteria or a PERSERO which makes public offering in accordance with the regulations and legislations in the capital market. Article 2 (1) Every participation of State capital in PERSERO's equity shall be stipdated in a Government Regulation containing the goal of participation and the amount of the State assets set aside for the said capital participation.

3 (2) Every amendment of State's capital participation as meant in paragraph (1) which covers the adding and reducing of State's capital, shall be stipulated in a Government Regulation. (3) The implementation of State's capital participation and its amendment at meant in paragraphs (1) and (2), shall be made according to the provisions stipulated in Law No. 1/1995 on Limited Liability Company. Article 3 The principles of Limited Liability Company as stipulated in Law No. 1/1995 shall apply to PERSERO. Article 4 (1) The purpose and objectives of the establishment of PERSERO shall be: a. to provide goods and/or services with high quality and strong competitive power both in the domestic and international markets; and b. to accrue profits to increase the.company's value. (2) PERSERO with its certain commercial characteristics can carry out a special assignment to administer the' functions of public utilities, but shall consistently care for the purpose and objectives of its operations as mearit in paragraph (1).

4 CHAPTER II ORGAN OF PERSERO Part 1 General Meeting of Shareholders Article 5 (1) The Minister of Finance can delegate his authority with substitution right to the Director General for the Development of State-Owned Companies, an individual or a legal body to represent him in PERSERO's General Meeting of Shareholders. (2) The party receiving authority as meant in paragraph (1) shall first receive approval from the Finance Minister to make decions in the General Meeting of Shareholders regarding a. Amendment of total capital; b. Amendment of Articles of Association; c. Plan for distribution and utilization of profits; d. Unification, merger and division of PERSERO; e. Investment and long term financing; f. PERSERO's cooperation; g. Formation of affiliate companies and participation; h. Transfer of assets. Part 2 Board of Executive Directors (Direksi)

5 Article 6 The Direksi is PERSERO's organ whose duties are to administer PERSERO in the interests and objectives of PERSERO, and to represent PERSERO before and outside the court. Article 7 The Direksi shall be responsible for the management of PERSERO in, accordance with the provisions in Law No.1/1995 on limited Liability Company. Article 8 (1) The appointment and release of the Direksi shall be carried out by the General Meeting of Shareholders. (2) If the Finance Minister acts as the General Meeting of Shareholders, the appointment of the Direksi shall be exercised by the Finane Minister. (3) PERSERO's Direksi shall be appointed by virtue of expertise, integrity, leadership, experience and good conduct, with dedication to develop business for the progress of PERSERO. (4) In appointing and releasing the Direksi as meant in paragraphs (1) and (2), the General Meeting Shareholders shall ask the opinion of the Board of Directors (Komisaris) or another party deemed necessary. (5) The number of members of PERSERO's Direksi shall be adjusted to the PERSERO's need, and one of the Direksi's members shall be appointed as President Director. (6) The terms of office of PER,SERO's Direksi shall be 5 (five) years, and reappointment is possible.

6 Article 9 (1) In performing its duties, the Direksi shall fully devote its power, mind and attention to its tasks, obligations and achievements of PERSERO's objectives' (2) A member of the Direksi shall be forbidden to hold another position as mentioned below: a. President Director or Director of a State-Owned Corporation, a Regional Government-Owned Corporation, a private company or another position relating to the management of a company. b. another structural and functional position in an institution/agency of the central and regional governments. c. another position in accordance with the provisions in the Articles of Association and the legislations in force. Article 10 (1) The General Meeting of shareholders can discharge a member of the Direksi termination of his terms of office, if the member of the Direksi : a. does not perform his duties well; b. does not implement the provisions contained in the legislations and/or Articles of Association; c. is invoived in an action inflicting PERSERO or in other actions inflicting PERSERO; d. is sentenced to imprisonment because of committing crime and/or mistakes in relation to the management of the corporation.

7 Article 11 (1) The Direksi shall prepare a Long Term Plan which constitutes a strategic plan containing PERSERO's targets and objectives to be obtained in a 5 (five) year period..(2) The long term plan as-intended in clause (1) shall at least contain a. evaluation of implementation of the previous Long Term Plan; b. PERSERO's present position; c. the assumptions used in preparing the Long Term Plan; d. stipulation of the targets, strategy, policies and work program of the Long Term Plan. (3) The Draft of the Long Term Plan already signed jointly with by the Komisaris, shall be submitted to the General Meeting of Shareholders for legalization. Article 12 (1) The Direksi shall prepare a Draft of the Work Plan and Corporate Budget as the annual specifications of the Long Term Plan as meant in Article 11. (2) The Draft of the Work Plan and the Corporate Budget as meant in paragraph (1) shall at least contain a. a specified working plan of PERSERO's mission, business targets, business strategy, corporate policies, and work/operational programs; b. a specified corporate budget of every budget for operational program., c. a financial projection of PERSERO and its affiliates; d. other matters requiring resolutions of the General Meeting of Shareholders.

8 Article 13 (1) The Direksi shall submit the Draft of the Work Plan and Corporate Budget to the Shareholders' General Meeting at the latest 60 (sixty) before entering the current fiscal year. (2) The Shareholders' General Meeting shall approve the Work Plan and Corporate Budget as meant in paragraph (1) at the latest 30 (thirty) days after the end of the current fiscal year. (3) In case the Work Plan and Corporate Budget have not yet been approved'by the Shareholders' General Meeting as indicated in paragraph (2), the Work Plan and Corporate Budget shall be considered lawful for implementation as far as they meet the provisions on the procedure for preparation of the Work Plan and Corporate Budget. (4) The Shareholders' General Meeting shall delegate its authority as meant in Paragraph (2) to the Komisaris is PERSERO has been declared sound for 2 (two) consecutive years. Article 14 The forms, contents and Procedure for preparing the Long Term Plan and the Work Plan and Corporate Budget as meant in Articles 11 and 12, shall be stipulated by the Shareholders' General Meeting. Article 15 The Direksi shall submit PERSERO's annual calculation to public accountant or the Supervisory Body of Financial and Development Affairs (BPKP) as determined by the Share holders' General Meeting.

9 Article 16 (1) The level of PERSERO's soundness shall be stipulated every year. (2) The level of soundness as meant in paragraph (1) shall be categorized into : Sound. Less Sound and Unsound. (3) The level difference as meant in paragraph (2) shall be stipulated in accordance with the PERSERO's financial condition and nature of assignment. (4) Further provisions on the stipulation of soundness level as meant in paragraph (2) shall be arranged by the Finance Minister. Article 17 A sound PERSERO for 2 (two) consecutive years can prepare itself and take measures to become an Open PERSERO. Third Part Komisaris (Board of Directors) Article 18 (1) The Board of Directors (Komisaris) is PERSERO's organ in charge of supervising and giving advices to the Direksi in managing the PERSERO and in the implementation of the Long Term Plan, the Work Plan and the Corporate Budget, the provisions in the Articles of Association and in the regulations and legislations in force. (2) The Komisaris shall perform duties and shall have authority in accordance with the provision in Law No.1/1995 on Limited Liability Company.

10 Article 19 (1) It remains to be stipulated in the Articles of Association that the Komisaris shall be given authority to give approval or assistance to the Direksi in taking a certain legal measure. (2) By virtue of the Articles of Association or a resolution of the Shareholders' General Meeting, the Komisaris can carry out PERSERO's managerial measures in a certain situation for a certain period. Article 20 The Komisaris in performing its duties shall: a. give opinion and suggestions to the Shareholders' General Meeting regarding the Work Plan and Corporate Budget proposed by the Direksi. b. follow PERSERO's development, give opinion and suggestions to the Shareholders' General Meeting concerning every problem deemed necessary for PERSERO's management. c. report immediately to the Shareholders' General Meeting if there is a phenomenon of the decline of PERSERO's performance. d. give advices to'the Direksi in implementing PERSERO's management. e. carry out other supervisory duties stipulated in the PERSERO'S Articles of Association.

11 Article 21 The appointment and relief of the Komisaris shall be carried out by the General Meeting of Shareholders. Article 22 The Komisaris are appointed from among individuals who have integrity, dedication, are familiar with the problems of corporate management relating to one of managerial functions, and have a considerable knowledge in the PERSERO's line of business, and who can provide enough time to carry out their tasks. Article 23 (1) The number of members of the Komisaris shall be adjusted to the PERSERO's need, at least 2 (two) persons, and one of them shall be appointed as Chairman of the Board. (2) The Komisaris shall be appointed for a period similar to the Direksi's terms of office, and they can be reappointed. (3) The appointment of members of the Komisaris shall not be concurrently with that of the Direksi. Article 24 The Shareholders' General Meeting can discharge a member of the Komisaris. before termination of his terms of office, if he : a. does not perform his duties well; b. does not implement the provisions contained in the legislations and/or the Articles of Association;

12 c. commits an activity inflicting the PERSERO or is involved in other activities inflicting the PERSERO; d. is sentenced to imprisonment because of committing a criminal act and/or making mistakes relating to his duties in supervising the corporation. Article 25 (1) The Komisaris shall hold a meeting once a month and at any time deemed necessary. (2) If deemed necessary, the Komisaris can ask the Direksi to attend the Komisaris' meeting. Article 26 The Komisaris is /are forbidden to hold other positions that can give rise to a conflict of interests inflicting the PERSERO as mentioned below: a. President Director or Director of a State-Owned Corporation, a regional State- Owned Corporation, a private company or another position relating to the management of a company; b. other positions in accordance with the provisions contained in the Articles of Association and the legislations in force. Article 27 (1) To help smoothen the implementation of their duties, the Komisaris can appoint a Secretary to the Komisaris at PERSERO's expense. (2) If deemed necessary, the Komisaris in performing their duties can employ an expert for a certain period of time at PERSERO's expense.

13 (3) All the expenses required by the Komisaris to perform and meet their duties and obligations shall be borne by PERSERO and shall be clearly stated in the Work Plan and Corporate Budget. CHAPTER III INTERNAL SUPERVISORY UNIT Article 28 (1) In every PERSERO an Internal Supervisory Unit which is the corporation's internal supervisory unit, shall be established. (2) The Internal Supervisory Unit as meant in clause (1) is led by a Head who reports to the President Director. Article 29 (1) The Internal Supervisory Unit shall be in charge of assisting the President Director in the implementation of an internal examination of PERSERO's finance and operations, in the evaluation of PERSERO's control, management and performance, and in giving suggestions for improvement. (2) At a written request from the Komisaris, the Direksi gives explanation on the results of the examination or the results of the implementing duties of the Internal Supervisory Unit as meant in paragraph (1).

14 Article 30 The Direksi shall pay attention thereto and shall soon take the necessary steps to respond to the matters mentioned in every report on the results of the examination made by the Internal Supervisory Unit. CHAPTER IV OPEN PUBLIC PERSERO Article 31 The provisions contained in the regulations and legislation on the capital market shall also be valid for an Open Public PERSERO. Article 32 The administering of State's assets Invested in PERSERO shall be exercised by the Finance Minister who epresents the State's shares in Open Persero. Article 33 (1) The Finance Minister acting as Open PERSERO's shareholder can delegate his authority to the Director General for the Cultivation of State-Owned Companies, an individual or a legal body to represent him in PERSERO's General Meeting of Shareholders. (2) The party receiving authority as meant in paragraph (1) shall first receive approval from the Finance Minister to make resolutions in the General Meeting of Shareholders concerning: a. Amendment to the total capital;

15 b. Amendment to the Articles of Association; c. Plan for the distribution and utilization of profits; d. Merger, liquidation and division of PERSERO; e. Investment and long term financing; f. PERSERO's cooperation; g. Formation of affiliate companies and participation; h. Transfer of assets. CHAPTER V ADMINISTERING AND PARTICIPATION OF STATE'S CAPITAL IN PERSERO Article 34 (1) The Finance Minister shall administer every participation of the State's Capital and its amendment in a limited liability company's equity as meant in paragraph (2) and in the participations exercised by the PERSERO. (2) The daily implementation of activities as meant in paragraph (1) shall be exercised by the Directorate General for the Cultivation of State-Owned Companies. CHAPTER VI OTHER PROVISIONS Article 35 The dividend to which the State is entitled shall be paid to the State's General Treasury soon after having been resolved by the Shareholders' General Meeting.

16 Article 36 (1) The status of a business company which is non-persero can be converted into PERSERO. (2) The conversion of business company's status as meant in paragraph (1), shall meet the following conditions: a. it has made itself sound with respect to its financial and operational achievements, so that it is capable of developing by itself; b. it has prepared a closing balance sheet and balance sheet of liquidation audited by the Upervisory Board of Financial and Development Affairs (BPKP) or public accountant designated by the Finance Minister. c. k has prepared an opening balance sheet for approval by the Finance Minister. Article 37 The following Items do not apply to PERSERO : a. Presidential Decree No. 16/1994 on Implementation of the State Income and Budget, as already amended by Presidential Decree No. 24/1995; b. Presidential Instruction No. 9/1970 on Sale and/or Handing Over of Assets owned /supervised by the State; c. all the provisions on echelonization of positions which apply to civil servants. Article 38 PERSERO's employees shall be those whose appointment and dismissal, positions, rights and obligations, shall be stipulated on the basis of employment contracts in accordance with the legislations on manpower.

17 Article 39 Except the management of PERSERO itself, no other party shall get involved in the management of PERSERO. CHAPTER VIl TRANSITIONAL PROVISIONS Article 40 At the latest 3 (three) months after the enforcement of this Government Regulation, all the documents concerned with PERSERO's operations, which all this time have been administered by the Minister who supervises and is responsible for PERSERO's technical aspect by virtue of the authority received through Government Regulation No. 12/1969 on Limited Liability Company (PERSERO) and Government Regulation No. 3/1983 on Procedures for the Cultivation and Supervision of Public Service Agency (PERJAN). Public Company (PERUM) and Limited Liability Company (PERSERO), shall have been completed and forwarded to the Minister of Finance, for further administering in accordance with this Governent Regulation. CHAPTER VIII CLOSING Article 41 With the enforcement of this Government Regulation; a. Government Regulation No. 12/1968 on Limited Liability Company (PERSERO) (Statute Book of 1969 No. 21,' Supplement to Statute Book No.

18 2894) as already amended by Government Regulation No. 24/1972 (StatuteBook of 1972 No. 32, Supplement to Statute Book No. 2987); b. Government Regulation No. 3/1983 on the Procedures for the Cultivation and Supervision of Public Service Agency (PERJAN). Public Corporation (PERUM). and Limited Liability Company (PERSERO) (Statute Book of 1983 No. 3, Supplement to Statute Book No. 3246) as amended by Government Regulation No. 28/1983 (Statute Book of 1983 No. 37); and c. Government Regulation No. 55/1990 on Limited Liability Company (PERSERO) which sells its Shares to the public through Capital Market (Statute Book of 1990 No. 79. Supplement to Statute Book No. 3428) as already amended by Government Regulation No. 59/1996 (Statute Book of 1996 No. 89, Supplement to Statute Book No. 3654); and d. the provisions in the regulations and legislations that are contrary to this Government Regulation; are declared to be no longer in force. Article 42 This Government Regulation comes into force as from the date of promulgation. For public cognizance, let this Government Regulation be promulgated by publishing it in the Statute Book of the Republic of Indonesia.

19 Stipulated in Jakarta on January 17, 1998 THE PRESIDENT OF THE REPUBLIC OF INDONESIA sgd SOEHARTO Promulgated in Jakarta on January 17, 1998 THE MINISTER/STATE SECRETARY sgd MOERDIONO

20 STATUTE OF THE REPUBLIC OF INDONESIA OF 1998 NO. 15 ELUCIDATION OF INDONESIAN GOVERNMENT REGULATION NO. 12/1998 ON LIMITED LIABILITY COMPANY (PERSERO) GENERAL In line with the increase of the implementation of development and the results achieved, the productivity and efficiency of the entire economic power needs to be re-enhanced, so that its role and contribution to the national development can bring about an optimum result for the improvement of public welfare. The (State) Limited Liability Company (PERSERO), whose shares are partly or wholly owned by the State, which is one of the State's business enterprises as stipulated in Law No. 9/1969, is not beyond the thought mentioned above. PERSERO plays an important role in national economy as provider of goods and services to meet consumers' need and production process. Various endeavours to. step up PERSERO's performance have been made by the Government all this time, and such endeavours will continually be made to enable PERSERO to act as a sound and efficient business enterprise which is also capable of increasing its contributions to lndonesia's economic growth and to the State in the form of dividends, to which the State as shareholder is entitled, and in the form of taxes. The global economic development has given rise to an ever increasing market competition, which is in line with the tendency of economic globalization and business liberalization. Indonesia as an active participant in several regional and multilateral forums, has agreed to participate in the free trade era through its participations in several accords obtained in various forums, i.e. the General Agreement on Tariff and Trade, General Agreement on Trade In Services, ASEAN

21 Free Trade Area, ASEAN Framework Agreement on Services, and the free trade agreement APEC. Based on the evaluations of current achievements, and in accordance with the tendency of free trade and the said era of globalization, it is time for PERSERO to be given the biggest opportunity to develop its business so that PERSERO can become a more advanced and self supporting business enterprise. The policy for stepping up PERSERO's self supporting level is also aimed at giving PERSERO possibilities to sell its shares to the public (to go public). A sound PERSERO, whose criteria of soundness are stipulated by the Finance Minister, requires a frame of rules which provides PERSERO with more chances to make use of the existing public financial potentlais so as to become more powerfully competitive at home and abroad in the era of globalization. This Government Regulation is prepared, fully in accordance with the provisions in force that are valid for Limited Liability Company as contained in Law No. 1/1995 on Limited Liability Company, except that this Government Regulation stipulates special provisions related to the characteristics of PERSERO, which is a limited liability company whose shares are partly or entirely owned by the State. while there is no difference in the PERSERO's organ, which is composed of the Shareholders' General Meeting, the Direksi and the Komisaris. In Government Regulation No. 3/1983, it is mentioned that the Technical Minister hat the authority to exercise the cultivation of State-Owned Corporations and is concurrently the Proxy of Shareholders. With the promulgation of Law No. 1/1995 on Limited Liability Company, the mechanism of PERSERO's operations and cultivation is based on that Law. This also applies to PERSERO which basically has the legal status of Limited Liability Company. Therefore, in this Government Regulation, PERSERO's operational mechanism is differently stipulated from that contained in Law No. 3/1983. In Law No. 1/1995 on Limited Liability Company, PERSERO's operational mechanism is carried out by 3 PERSEROAN's organs, I.e.

22 the General Meeting of Shareholders, the Komisaris and the Direksi. Meanwhile, the Finance Minister acts as the Shareholders' General Meeting if the PERSERO's entire shares are owned by the State, and as a shareholder 9 PERSERO's shares are omly partly owned by the State. And the Technical Ministers, in accordance with the Government's functions, and based on the existing descriptions of tasks, are authorized to stipulate policies on the administering of business operations and products produced either in the form of commodities or services, which as a rule apply to either State-Owned Emterprises or private companies. As such, the Cultivation of State-Owned Corporation which is part of PERSEROAN's operational mechanism, is exercised by the Finance Minister if he acts as the General Meeting of Shareholders. or by the General Meeting of Shareholders if he acts as a shareholder, and this is to be exercised by viewing the general policy of the Minister who is competent in the State-owned Company's line of business. ARTICLE BY ARTICLE Article 1 Figure 1 Figure 2 Here, direct participation of capital includes participation in PERSERO's equity. A limited liability company whose shares are fully owned by the company is not categorized as PERSERO.

23 Figure 3 Article 2 Paragraphs (1) and (2) The setting aside of State's assets for the State's participation in a limited liability company can only be carried out by way of direct participation of the State's assets in that limited liability company's equity. The putting aside of State's assets as the equity of a limited liability company can be exercised, inter alia, for the purpose of : a. establishing a new Limited Liability Company or participating in an already existing Limited Liability Company which is non-persero; b. increasing the capacity of a Limited Liability Company; c. restructuring the capital of a limited liability company. With this provision, every additional participation in PERSERO of the State's capital originating either from the State's lncome and Budget or other sources such as capitalization of PERSERO's reserves, shall be stipulated in a Government Regulation. Paragraph (3) Article 3

24 Article 4 Paragraph (1) PERSERO's purpose and objectives are to enhance PERSERO's value. This can be achieved If the PERSERO concerned can meet market demands through providing goods and/or services with good quality and highly competitive power, both in the domestic and international markets. If the business profits resulting from PERSERO's performance can enhance the value of the PERSERO concerned, then its shareholders, employees and creditors will benefit from the enhancement. Paragraph (2) Though PERSERO is established with the purpose and objectives of seeking profits, it can also be established to perform a special assignment, I.e. a PERSERO whose business charateristics are to serve public interests. Apart from it, it there is an urgent need of the public at large, the Government can also assign a PERSERO to do the function of offering assistancy to the people at large for their benefits. Belonging to that function is the materialization of programs for the partnership and cultivation of small undertakings and cooperatives. Article 5 Paragraph (1) The intended authority is given to the Director General for the Cultivation of State- Owned Companies, because technically, the person assisting the Finance Minister

25 who acts as shareholder, Is the Director General for the Cultivation of State-Owned Companies. Nevertheless, if deemed necessary, it is possible to delegate the authority to another Individual or legal body in accordance with the provisions in force. Paragraph (2) Article 6 Article 7 In accordance with Law No. 1/1995 on Limited Liability Company, the Direksi is responsible for the administering of the Company in the interests and objectives of the Company. Every member of the Direksi shall with a good faith and full responsibility perform his duties in the company's interests. If the person concerned is guilty or fails to perform his duties, he is fully responsible personally, and if it causes losses to the company, then on behalf of the company, the shareholders meeting a certain condition can file a claim against the member of the Direksi concerned to the District Court. Further if bankruptcy occurs because of the Direksi's fault or negligence, and the company's assets are not sufficient to settle the losses, then each member of the Direksi, unless he can prove otherwise, is jointly responsible for the losses. Based on the colleaguelike principles, each of the Direksi is fully and collectively responsible for the management of the company. Because of the nature of the Direksi's responsibility, each member of the Direksi needs to know the

26 consequences of the policies made in administering the company. That's why PERSERO's policy on the aspects of corporate management is stipulated in the Direksi's meeting. The Direksi does its work by using a colleaguelike representation system, but each member of the Direksi is authorized to represent the company, provided the decision binding the company in relation to that representation, is still within the scope of policy stipulated in the Direksi's meeting. It is possible to stipulate in the Articles of Association that for certain matters the company can be represented by the President Director or by the President Director and another member of the Direksi, provided the principles of colleaguelike representation are firmly maintained. This is necessary, because actually the President Director, like the other members of the Direksi, has an equal authority and responsibility. Article 8 Paragraphs (1) and (2) Paragraph (3) The condition to be stipulated by the Finance Minister here is an additional condition to the general conditions already stipulated in Article 79 of Law No. 1 /1 995 on the ability to make legal actions, free from bankruptcy problems or never been punished for a criminal act inflicting the State's finance within 5 (five) years before appointment.

27 Paragraph (4) The Komisaris' opinion is needed, because the Komisaris' duties are to supervise the Direksi's policy in managing the PERSERO and to give advice to the Direksi, so that the Komisaris in this case needs to know the Direksi's performance and the PERSERO's condition. Likewise, the General Meeting of Shareholders if deemed necessary can seek the opinion of another party who is considered important. for example the Minister supervising the sector of the PERSERO concerned. Paragraph (5) Paragraph (6) A member of the Direksi who has completed his terms of office can be considered for re-appointment by virtue of an evaluation of his performance during the previous terms of office. Article 9 Paragraphs (1) and (2)

28 Article 10 In line with the provisions in Article 8 paragraph (2), if the Finance Minister acts as the Shareholders' General Meeting, the dismissal of a member of the Direksi before the end of his terms of office is also stipulated by the Finance Minister. The meaning of 'does not perform his duties well' includes a situation where the said member of the Direksi turns out to have had insufficient qualifications in performing his tasks. Letters b and c Letter d What is meant by 'is sentenced to imprisonment' is imprisoned on the strength of. a judgment that bears a definitive legal power. Article 11 Paragraph (1) PERSERO's long term plan is highly needed to determine the 5 (five) year long term direction which will serve as the guidelines of PERSERO's management in running the Company. The long term plan must contain the targets and objectives to be achieved and the policy and work plan for obtaining the intended long term targets.

29 Paragraphs (2) and (3) Article 12 Paragraph (1) Paragraph (2) The Work Plan and Corporate Budget must contain the corporate work plan covering its mission, targets, strategy, policies, oprational programs and corporate budget on income. spending. investments, and projection of corporate finance, which in its entirety describes the work plan and corporate budget for one fiscal year. Letters a and b What is meant by operational programs in this provision are programs supporting PERSERO's business activities and/or social programs stipulated according to the regulations and legislations in force. Letter c The intended financial projection is the main financial projection embracing balance sheet, Profit/Loss report, and cash flow report.

30 Letter d Article 13 Paragraphs (1) to (3) Paragraph (4) The authority of the Shareholders' General Meeting can be delegated if the PERSERO is declared sound for 2 (two) consecutive years or if the company is a (go) public PERSERO. Article 14 Article 15 In this case, the Shareholders' General Meeting can designate a public accountant or the Supervisory Body of Financial and Development Affairs (BPKP) to audit PERSERO's annual calculation. This provision serves to elucidate the administrative aspects of PERSERO, which is a State-Owned Company. Since the administering of the State's assets invested in PERSERO is exercised by the Finance Minister, and the Finance Minister represents the Government in his capacity as the shareholder or the General

31 Meeting of Shareholders, for reasons of orderliness, if a public accountant is not appointed by the Shareholders' Meeting to do the audit, the audit of annual calculation is carried out by BPKP, which is a government agency. For a (go) public PERSERO, the provisions contained in the legislations on capital market are valid. Other indicators are those related to the implementation of PERSERO's strategic role in a large scale, either economic or social etc, which as a rule are also related to governmental assignments in accordance with the regulations and legislations in force. Article 16 Paragraph (1) The indicated level of soundness is the result of management by the Direksi. Paragraph (2) Paragraph (3) The Stipulation of the Finance Minister on the level of performance is based on economic and other criteria which need attention. Belonging to economic criteria are Remunerativeness, Liquidity, and Solvency (RLS) with certain weight. Paragraph (4)

32 Article 17 The preparation for becoming a public PERSERO requires considerable endeavours and time, therefore a PERSERO which has been sound for 2 (two) consecutive years can start to prepare itself to take concrete steps for becoming a public PERSERO, so that later when the time has come everything can run well. Article 1 8 Paragraph (1) The Komisaris in performing their duties shall have a good faith and full responsibility in the interests of the company. If because of the Komisaris fault or negligence the PERSERO suffers from losses, then on behalf of the PERSERO, the shareholders who meet certain requirements can sue the Komisaris in the District Court. Paragraph (2) Article 19 Paragraph (1)

33 Paragraph (2) This provision gives the Komisaris authority to exercise PERSERO's management which in fact can only be done by the Direksi. whenever the Direksi are not available. If the Direksi are available, the Komisaris can only take certain steps stipulated in the General Meeting of Shareholders, the Articles of Association, and the regulations and legislations in force. Article 20 Article 21 In the context of the appointment and dismissal of the Komisaris, the General Meeting of Shareholders can ask the opinion of a party deemed important, for example the Minister supervising the PERSERO's sector concerned. If the PERSERO is fully owned by the State, the appointment and dismissal of the Komisaris is exercised by the Minister of Finance. Article 22 ArticJe 23 Paragraph (1)

34 Paragraph (2) A member of the Komisaris who has completed his terms of office can be considered for re-appointment by virtue of the evaluation of his performance during the previous terms of office. Paragraph (3) This provision is meant to maintain the continuation of the implementation of the provisions contained in this Government Regulation, particularly the provisions on the Komisaris'duties and authority. Article 24 letter a The meaning of 'does not perform his duties well' includes the fact that the member of the Komisaris turns out to be incapable of performing his tasks. Letters b and c Letter d What is meant by being sentenced to imprisonment is being imprisoned on the basis of a judgment having a definite judicial effect.

35 Article 25 Paragraph (1) In exercising supervision, the Komisaris must hold a meeting once a month and at any time if deemed necessary by one of the Komisaris members and/or the Direksi, with the purpose of making the Komisaris meet more frequently so that the supervisory assignments can be carried out more accurately. Paragraph (2) Article 26 The prohibition of holding two positions is aimed at avoiding conflicts of interests with the supervisory duties carried out by the Komisaris. Article 27 Paragraph (l) Paragraph (2) What is meant by a certain period of time in this provision is the expert is only hired for a certain purpose and the employment will not last continually.

36 Paragraph (3) For the implementation of the Komisaris duties, a special budget separated from the Direksi's budget, is provided. Article 28 Paragraphs (1) and (2) Article 29 Paragraphs (1) and (2) Article 30 Paragraphs (30) to (32) Article 33 Paragraph (1) See elucidation of Article 5 paragraph (1)

37 Paragraph (2) Article 33 What Is meant by administering in this case is recording in the context of administration in order to know the State's financial position in the Stationed Companies. Paragraph (2) Article 35 The dividends payable to the State which acts as shareholder, shall be paid to the account of the State's General Treasury after the amount to be paid has been stipulated by the Finance Minister who represents the Government as the State's shareholder in the PERSERO. The stipulation of the amount is based on the calculation of the spendings borne by the State of relation to the various programs stipulated in accordance with the regulations and legislators. Article 36 Paragraph (1) Belonging to this category of business enterprises are PERUM and non- PERSERO limited liability company. I.e. the State-Owned Umked Liability

38 Companies established under the provisions stipulated before the enforcement of Law No. 9/1969 and Government Regulation No. 12/1969 or other limited liability companies. Paragraph (2) The conditions are aimed at making the State's business enterprise concerned have a sound basis and know the actual value of the State's assets invested in the business enterprise concerned. Article 37 To give PERSERO and Open PERSERO freedom in running their business, the provisions on the procedures for the Implementation of the State's Income and Budget, procurement of goods and services, sale and transfer of goods owned/controlled by the State, are declared to be not valid for PERSERO and Open PERSERO. With this provision, other regulations and legislations to be stipulated later which will stipulate provisions similar to these letters a and b, do not apply either to PERSERO. Article 38 With this status, the regulations on nianpower's welfare such as health, accident and life or ageing insurances. are stipulated by PERSERO, either through 'jamsostek' (manpower social insurance) programs or pension funds.

39 Article 39 For the Direksi to carry out its duties autonomously without interference by other parties, there should be no interference to the management of PERSERO. Belonging to the notion of interference Is an action or a directive which directly affects the management of PERSERO or the process of decision making by the Direksi. This provision aims at emphasizing the autonomy of PERSERO as a business enterprise so that if can be managed professionally and is capable of growing well in line with the PERSERO's objectives. This also applies to Departments and other governmental Institutions since the needs of departments and governmental Institutions for funds have been arranged and stipulated separately, departments and governmental institutions shall not Impose PERSERO with all kinds of expenses, and on the other hand PERSERO shall not finance the needs of departments and government institutions in its bookkeeping. STATUTE OF THE REPUBLIC OF INDONESIA OF 1998 NO. 15 (Editor's note: ln'order to avoid confusion and misinterpretation, any reference to the term "limited liability company for Perseroo in Government Regulation No.12/1998, as published in BN No. 6123/ pages 9A 12A and following editions, should mean slate limited liability companyo, as distinct from the limited liability company under Law No. 1/1995).