"Indonesia Economy and ASEAN Economic Community" Leeds, March 14th, 2015

1. 0
Indonesian
Economy and
ASEAN Economic
Community
Leeds, March 14th, 2015

2. Indonesian Fundamental
GDP Growth Inflation
Foreign Exchange ReservesBalance of Payments
1
* Preliminary Figures

3. 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 Indonesia’s 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.
2
Economic Growth - Expenditure Side
S e c t o r 2012
2013
2013
2014
2014
I II III IV I II III IV
Household Consumption 5.5 5.5 5.2 5.4 5.4 5.4 5.4 5.1 5.1 5.0 5.1
Gross Fixed Capital Formation 6.7 6.5 6.4 6.7 12.8 8.2 23.7 22.8 5.6 (-0.2) 12.4
Government Consumption 4.5 3.0 3.2 12.4 7.9 6.9 6.1 (-1.5) 1.3 2.8 2.0
Exports of Goods and Services 1.6 3.5 2.1 1.3 9.4 4.2 3.2 1.4 4.9 (-4.5) 1.0
Imports of Goods and Services 8.0 2.9 0.9 4.9 (-0.9) 1.9 5.0 0.4 0.3 3.2 2.2
GDP 6.0 5.6 5.6 5.5 5.6 5.6 5.1 5.0 4.9 5.0 5.0
Economic Growth - Supply Side
S e c t o r 2012
2013
2013
2014
2014
I II III IV I II III IV
Agriculture, Forestry, and Fisheries 4.6 4.2 4.6 3.5 4.6 4.2 5.3 5.0 3.6 2.8 4.2
Mining and Quarrying 3.0 0.9 0.7 2.7 2.7 1.7 (-2.0) 1.1 0.8 2.2 0.5
Manufacturing 5.6 4.7 5.4 3.7 4.2 4.5 4.5 4.8 5.0 4.2 4.6
Electricity and Gas 10.1 9.8 4.7 2.4 4.4 5.2 3.3 6.5 6.0 6.5 5.6
Water Supply, Waste Management and Recycling 3.3 3.5 3.6 4.7 4.5 4.1 3.6 3.2 2.8 2.7 3.0
Construction 6.6 5.4 6.3 6.5 6.2 6.1 7.2 6.5 6.5 7.7 7.0
Wholesale and Retail Trade; Automotives 5.4 3.0 4.8 4.9 6.1 4.7 6.1 5.1 4.8 3.5 4.8
Transportation and Warehousing 7.1 7.4 8.9 8.3 8.9 8.4 8.4 8.5 8.0 7.1 8.0
Provision of Accommodation and Food & Beverage 6.6 7.0 7.0 6.9 6.3 6.8 6.5 6.4 5.9 4.9 5.9
Information and Communication 12.3 10.6 11.4 10.1 9.5 10.4 9.8 10.5 9.8 10.0 10.0
Financial Services and Insurance 9.5 13.2 11.0 9.2 3.5 9.1 3.2 4.9 1.5 10.2 4.9
Real Estate 7.4 8.9 7.7 5.4 4.3 6.5 4.7 4.9 5.1 5.3 5.0
Business Services 7.4 7.8 7.6 8.2 8.0 7.9 10.3 10.0 9.3 9.7 9.8
Administration, Defence, and Social Security 2.1 1.6 (-2.1) 6.4 3.8 2.4 2.9 (-2.5) 2.6 6.9 2.5
Education Services 8.2 11.7 3.2 8.6 9.4 8.2 5.2 5.4 7.3 7.1 6.3
Health Services and Social Activities 8.0 6.9 5.2 8.3 10.7 7.8 7.7 8.5 9.9 6.1 8.0
Other Services 5.8 5.6 5.6 6.2 8.2 6.4 8.4 9.5 9.5 8.4 8.9
GDP 6.0 5.6 5.6 5.5 5.6 5.6 5.1 5.0 4.9 5.0 5.0

4. Decreasing Pressure of Inflation
Disaggregation of Inflation
Source: BPS, Bank Indonesia
• 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 Government’s 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.
Consensus Forecast
Source: Consensus Forecast
3

5. • 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 Indonesia’s 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 Recorded a Surplus in Q4-2014

6. • 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.
Balance of Payments Q4-2014: Current Account
• 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.
Trade Balance: Non-Oil & Gas
Trade Balance: Oil & Gas
• 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.
Current Account - Services, Primary Income, and Secondary Income

7. 6
Balance of Payments Q4-2014: Capital & Financial
Account
Financial Account: Assets
Financial Account Liabilities: Direct Investment
• On the assets side, Indonesia’s 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 sector’s 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 Indonesia’s direct investment assets
slowed and portfolio investment assets decreased.
• 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.

8. 7
Balance of Payments Q4-2014: Capital & Financial
Account
Financial Account Liabilities: Portfolio Investment
Financial Account Liabilities: Foreign Other 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.
• 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 sector’s foreign loans.

9. Exchange Rate In Line With Fundamentals
• 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 ECB’s 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.
Movement of Rupiah
International Reserves
8
• 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, Government’s 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.

10. Monetary Policy Stance
BI Rate
Source: Bank Indonesia
• 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 Indonesia’s conviction that inflation will remain under control at the lower end of the 4±1% range in
2015 and 2016. The current policy direction is consistent with Bank Indonesia’s 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.
9
6.50
6.75
6.50
6.00
5.75
6.00
6.50
7.00
7.25
7.50
7.75
7.50
5.00
5.50
6.00
6.50
7.00
7.50
8.00
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
(%)(%)

11. 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.
• 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
Slowdown in Loan Growth
Stock Market Strengthened
10

12. 11
Source: Ministry of Finance
Debt Composition
Table of Debt to GDP Ratio
Central Government Debt to GDP Ratio (% of GDP)
47.9% 52.6% 53.7% 54.9% 55.5% 53.2% 56.7% 55.9%
52.1% 47.4% 46.3% 45.1% 44.5% 46.8% 43.3% 44.1%
0%
20%
40%
60%
80%
100%
120%
2008 2009 2010 2011 2012 2013 2014 Jan-15
Domestic Debt Foreign Debt
33.0%
28.3%
26.2%
24.4% 24.0%
26.2% 24.7%
0%
5%
10%
15%
20%
25%
30%
35%
2008 2009 2010 2011 2012 2013 2014*
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) 1,636,740.7 1,590,656.1 1,681,656.5 1,808,946.8 1,977,706.4 2,375,495.5 2,604,932.6
- Domestic Debt (Loan+Securities) 783,855.1 836,308.9 902,823.4 993,038.2 1,097,993.2 1,263,928.6 1,477,516.7
- Foreign Debt (Loan+Securities) 852,885.6 754,347.2 778,833.1 815,908.6 879,713.2 1,111,567.0 1,127,415.8
Debt to GDP Ratio 33.0% 28.3% 26.2% 24.4% 24.0% 26.2% 24.7%
- Domestic Debt to GDP Ratio 15.8% 14.9% 14.1% 13.4% 13.3% 13.9% 14.0%
- Foreign Debt to GDP Ratio 17.2% 13.4% 12.1% 11.0% 10.7% 12.2% 10.7%
End of Year
Contained Sovereign Debt Position

13. Improving Budget Structure
Manageable
Fiscal Deficit
Quality of
Spending
Sustainable
Revenue Source
• 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.
• 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
Better fiscal profile through improved budget structure

14. Spending Re-Allocation To Achieve Greater
Productivity
Infrastructure Plan 2015-2019
New Sea Ports - 24
Sea Port Development - 59
Pioneer Cargo Ships
New Airports - 15
Airport Infrastructure
Development
Airplanes - 20
Rail lines - 2,159 km
Intra City Rail Lines - 1,099 km
New Roads - 2,650 km
Highway - 1,000 km
Road Maintainance - 46,770 km
Bus Corridors - 2
Source: Ministry of Finance
 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
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.
IDR Tn % Total Spending
1 2 3
91.3 84 114.2 145.5 155.9 206.6
9.7
8.3
8.8
9.8
9.0
11.0
6
8
10
12
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014
Infrastructure Spending (LHS) % Total Spending (RHS)
Source: Bappenas
Renewed focus on Infrastructure and Poverty Reduction

15. 2015 Policy Summary
Government coordinates policy tools to stabilize growth with macroeconomic management
 Capital injection to state-owned companies, as agents of
development in supporting national priorities
 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.
Revenue and tax policy
Financing and debt management policyExpenditure policy
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.
14
 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.
 Optimization of oil & gas lifting and cost recovery, as well as the
improvement of the system and administration of non-tax state
revenues.
 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.

16. Mar-99
Dec-99
Sep-00
Jun-01
Mar-02
Dec-02
Aug-03
May-04
Feb-05
Nov-05
Aug-06
May-07
Jan-08
Oct-08
Jul-09
Apr-10
Jan-11
Oct-11
Jul-12
Mar-13
Dec-13
Fitch
Mar-99
Dec-99
Sep-00
Jun-01
Mar-02
Dec-02
Aug-03
May-04
Feb-05
Nov-05
Aug-06
May-07
Jan-08
Oct-08
Jul-09
Apr-10
Jan-11
Oct-11
Jul-12
Mar-13
Dec-13
S&P
Mar-99
Dec-99
Sep-00
Jun-01
Mar-02
Dec-02
Aug-03
May-04
Feb-05
Nov-05
Aug-06
May-07
Jan-08
Oct-08
Jul-09
Apr-10
Jan-11
Oct-11
Jul-12
Mar-13
Dec-13
Moody's
Moody’s
Dec 2011 (affirmed Nov 2014)
“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.”
Jan 2012 (affirmed Dec 2013)
“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.”
28 April 2014
“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.”
BBB- / Stable
Baa3 /
Stable
BB+ / Stable
Source: Moody’s, S&P, Fitch
Improving International Perception:
Acknowledged by Rating Agencies
S&PFitch
Investment grade
Baa3
B3
B2
B1
Ba3
Ba2
Ba1
CCC+
CCC
Positive Outlook
Negative Outlook
Stable Outlook
Positive Watch
B-
B
B+
BB-
BB
BB+
BBB-
CCC+
CCC
B-
B
B+
BB-
BB
BB+
BBB-
Caa1
Caa2
Investment grade
Investment grade
1

17. International institutions outlook shows some
optimism though there is still downside risk for
Indonesia in 2015 …
16
`
IMF Staff Visit
(December 2014)
World Bank IEQ
(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 2¾
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.
“The World Bank projects a
moderate near-term growth
outlook for Indonesia of 5.1-
5.5 %”
• Fuel subsidies adjustment in
November 2014 suggests the new
government’s commitment and
willingness to address many of
Indonesia’s 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)
“GDP growth decelerated
further to 5.0% in the third
quarter of 2014”
• 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.
Risk
• Downside risks to this outlook
center on further deterioration of
export performance and changes
in market sentiment that cause
capital outflows
OECD
Economic
Forecast
(November
2014)
“Growth is projected to
remain moderate through
2015 before picking up
somewhat in 2016…”
• …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
• Risks to the outlook are
mainly on the external side.

18. Historical Timeline MEA 2015
17
Pembentukan Masyarakat Ekonomi ASEAN (MEA) telah melalui proses yang berlangsung lama. Proses integrasi ekonomi di ASEAN telah
dimulai dengan integrasi sektor barang sejak 1977 melalui Preferential Tariff Arrangement (PTA). Integrasi sektor jasa dimulai tahun 1995
dengan disepakatinya ASEAN Framework Agreement on Services (AFAS). Integrasi sektor investasi dimulai dengan kesepakatan ASEAN
Investment Agreement (AIA) tahun 1998.
1967
Deklarasi
ASEAN oleh 5
Negara
1992 20031997
2006
2007
2008
Krisis Asia memicu
gagasan MEA
ASEAN Vision 2020
Bali Concord II
Gagasan
Pembentukan KEA
2020
Kesepakatan
pembentukan blueprint
untuk mendorong
implementasi MEA
Cebu Declaration
Percepatan
komitmen MEA
menjadi 2015;
ASEAN Charter;
ASEAN Blueprint
Tahun pertama
blueprint MEA;
ASEAN Charter
berlaku efektif
Pembentukan AFTA
dg Common
Effective
Preferential
Tariff (CEPT)
2015
Implementasi
MEA (Akhir
Desember)
2015
1998
Kesepakatan
ASEAN Investment
Agreement
1995
Kesepakatan
ASEAN Framework
Agreement on
Services (AFAS)
1977
Kesepakatan
Preferential Tarif
Arrangement

19. Blueprint MEA 2015
18
Free flow of goods
Free flow of services
Free flow of investment
Free flow of capital
Free flow of skilled labor
Priority integration sectors
Food, agriculture and
forestry
Competition policy
Consumer protection
Intellectual property right
Transport
Energy
ICT
Taxation
E-commerce
Small and medium enterprise
Initiative for ASEAN
Integration
Coherent approach towards
external economic relations
Enhanced participation in
global supply network
Single Market and
Production Base
Competitive
Economic Region
Equitable Economic
Development
Integration into the
Global Economy
Asean Economic Community 2015
 Ditetapkan 12 sektor prioritas untuk memperoleh
quick win integrasi di ASEAN: pertanian, kayu,
karet, angkutan udara, otomotif, elektronik,
tekstil dan produknya, perikanan, jasa kesehatan,
logistik, turisme, dan E-ASEAN

20. 19
MEA vs EU
AEC is not an EU-style economic integration. ASEAN integration is more market-driven, while
EU is institution-driven.
Source: various sources
Characteristic AEC EU
Main principle Non-interference and respect of
national sovereignties of each member
state
Pooling of sovereignty for common gains
with EU as a supranational entity adopting
legal act
Main driver Market-driven Government-driven
Binding
Commitment
Lack of binding commitment; AEC runs
under ASEAN-minus-X formula
Strictly binding for all member states; EU
is a rules-based economic integration
backed by hard laws
Enforcement of
agreement
ASEAN Integration Monitoring Office
with no specific enforcement power
Enforcement by the EU Council and
Parliament, EU Commission, and the Court
of Justice of the EU
Single currency No Euro
Supranational
entity
No ECB, Banking Union, etc.

21. 20
Tingkatan Implementasi per Pilar di
ASEAN
Key Areas Phase I
(2008-2009)
Phase II
(2010-2011)
Phase III
(2012-2013)
Single Market and Production Base 93.8% 49.1% 54.4%
Free Flow of Goods 100.0% 48.9% 34.6%
Free Flow of Services 76.9% 43.3% 0.0%
Free Flow of Investment 83.3% 38.5% 100.0%
Freer Flow of Capital 100.0% 100.0% 37.5%
Free Flow of Skilled Labor - 100.0% 71.4%
Priority Integration Sector 100.0% 100.0% 93.3%
Food, Agriculture and Forestry 100.0% 45.5% 37.5%
Competitive Economic Region 68.8% 67.4% 55.7%
Competition Policy 100.0% 100.0% 100.0%
Consumer Protection 100.0% 55.6% 33.3%
Intellectual Property Rights - 80.0% 100.0%
Transport 60.0% 42.9% 47.8%
Energy - 66.7% 47.1%
Mineral 100.0% 100.0% 66.7%
ICT 100.0% 100.0% 75.0%
Taxation - 0.0% 0.0%
E-commerce - 100.0% 100.0%
Equitable Economic Development 100.0% 55.6% 72.7%
SME Development 100.0% 57.1% 70.0%
Initiative for ASEAN Integration 100.0% 50.0% 100.0%
Integration into the Global Economy 100.0% 77.8% 33.3%
External Economic Relation 100.0% 77.8% 33.3%
Source: ASEAN Secretariat, BI Staff’s Calculation, as of 31 Dec 2013

22. ASEAN Post-2015 Vision
ACC-WG
HLTF
ACC
AEM
HLTF-EI
HLTF-EI WG
AFMGM
WC
CAL
WC
PS
S
WC
FSL
WC
CMP
SLC
AFDM
WG
Lead: Kemenlu
Lead: Kemendag
Lead: Kemenkeu/BI/OJK
ASEAN Community
Post Vision 2015
Political-Security
Community
Socio-Cultural
Community
Economic
Community
AEC Beyond 2015
Elemen-elemen
Lain
Elemen
Financial Services:
Vision for Fin.
Integration
CAL PSS FSL
Cap.
Market
Strategic Schedule
AMAF, AMEM, AMMin, AMMST,
TELMIN, ATM, M-ATM

23. MEA 2025
Draft Framework 10 Tahun MEA 2025
22
22
Strengthening the Role of
SMEs
Strengthening Role of
Private Sector
Public Private Partnership
(PPP)
Narrowing the
Development Gaps
Financial Inclusion
Engagement with Civil
Society
Integrated & Highly
Cohesive Economy
Competitive,
Innovative, and
Dynamic ASEAN
Resilient, Inclusive,
People-Oriented & People-
Centered ASEAN
Enhanced Sectoral
Integration and
Cooperation
Global ASEAN
Review & Improve
ASEAN FTAs
Engaging with
Regional and Global
Partners
Role of ASEAN in
International
Economic Forums
Trade in Goods
Trade in Services
Investment
Environment
Financial Services
Liberalization &
Capital Market
Development and
Integration
Facilitating Movement
of Skilled Labor &
Business Persons
Towards facilitative
standards &
conformance
Trade facilitation
Enhancing
participation in GVC
Effective Competition
policy
Consumer protection
Strengthening IPR
Cooperation
Productivity-Driven
Growth, Innovation,
Research and
Technology
Commercialization
Taxation Issues
Regulatory Coherence
Sustainable
development
Emerging, Trade-
Related Issues
Transport
Telecommunication
& Information
Technology
E-Commerce
Finance
Energy, power and
utilities
Food, agriculture
and forestry
Tourism
Healthcare
Minerals
Science and
technology
Mega-trends
Good Governance