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LIST OF CONTENT
Page
CHAPTER I THE PROGRESS ON BASIC ASSUMPTIONS
AND PRINCIPLES OF FISCAL POLICIES OF
THE REVISED BUDGET FOR THE FISCAL YEAR
2010

1.1 Introduction ............................................................................................. I-1

1.2 Global Economy ...................................................................................... I-2

1.3 General Remarks in The Indonesian Economy ......................................... I-6

1.4 Growth in Macroeconomic Indicators in 2010 .................................... I-9

1.4.1 Economic Growth .................................................................................... I-9


1.4.2 Inflation ......................................................................................................... I-14
1.4.3 Rupiah Exchange Rate ............................................................................ I-15
1.4.4 Three-Month SBI Interest Rate ................................................................. I-17
1.4.5 Indonesia Crude Price (ICP) ........................................................................ I-19
1.4.6 Lifting ............................................................................................................ I-19
1.4.7 Balance of Payment ................................................................................... I-20

1.5 Principles of Fiscal Policy of APBN 2010 ................................................... I-23

CHAPTER II REVENUES AND GRANTS IN THE REVISED


INDONESIAN BUDGET 2010

2.1 Introduction ............................................................................................. II-1

2.2 Changes in Revenues and Grants 2010 ................................................. II-1


2.2.1 Domestic Revenues .................................................................................. II-2
2.2.1.1 Fundamental Changes in Tax Revenue ................................................. II-2
2.2.1.2 Tax Revenues in The APBN-P 2010 ....................................................... II-5
2.2.1.3 Fundamental Changes in Non-Tax Revenues ....................................... II-10
2.2.1.4 Non-Tax Revenues in APBN-P 2010 ..................................................... II-10
2.2.2 Grants in 2010 ........................................................................................... II-13

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List of Content

Page

CHAPTER III REVISIONS IN EXPENDITURE

3.1 Introduction ............................................................................................. III-1

3.2 Fundamental Revisions in Policy And Central Government’s


Expenditure 2010...................................................................................... III-2

3.2.1 Revision of Central Government Expenditure by Economic


Classification ............................................................................................. III-4

3.2.2 The Revision in Education Budget .......................................................... III-12

3.2.3 The Revision in Central Government Expenditure by Organizations .... III-14

3.3 Principles of Allocation Revision of Transfer to Region in 2010 ............. III-23


3.3.1 Revisions in Balanced Fund ................................................................... III-24
3.3.1.1 Revision in Revenue Sharing Fund (DBH) ............................................. III-24
3.3.1.2 The Revision in the General Allocation Fund (DAU) ............................ III-28
3.3.1.3 Revision in Specific Allocation Fund (DAK) ............................................. III-29
3.3.2 Revision in The Special Autonomy and Adjustment Fund ....................... III-33
3.3.2.1 Revision in Special Autonomy Fund ......................................................... III-33
3.3.2.2 Revision in Adjustment Fund ..................................................................... III-34

CHAPTER IV PRINCIPAL CHANGES IN BUDGET DEFICIT


AND BUDGET FINANCING

4.1 Introduction ............................................................................................. IV-1

4.2 Budget Deficit Financing .......................................................................... IV-2


4.2.1 Non Debt Financing ................................................................................ IV-2
4.2.2 Debt Financing (Net) .............................................................................. IV-9
4.2.3 Standby Loan (Public Expenditure Financing Facility / Contingency
Loan) ......................................................................................................... IV-14

4.3 Fiscal Risk ................................................................................................. IV-16


4.3.1 Sensitivity Analysis .................................................................................. IV-16
4.3.1.1 Sensitivity Of Macroeconomic Assumptions .......................................... IV-16
4.3.1.2 Sensitivity Of Macroeconomic Variables On BUMN Fiscal Risks ........... IV-18
4.3.2 Central Government Contingent Liabilities: Infrastructure Develop
ment Project .............................................................................................. IV-20

ii
List Of Tables

LIST OF TABLES
Page
Table I.1 World Economic Growth, 2009 .................................................... I-5
Table I.2 Macroeconomic Basic Assumptions 2010 ..................................... I-9
Table I.3 GDP Growth By Sectors, 2008 – 2009 ......................................... I-11
Table I.4 GDP Growth By Sectors, 2008 – 2010 .......................................... I-13
Table I.5 Indonesia Balance of Payment, 2008 – 2010 .............................. I-22
Table I.6 Summary of The 2010 Indonesian Budget and Revised Budget I-26
Table II.1 Revenues and Grants, 2009–2010 .............................................. II-2
Table II.2 Taxes Borne by Government (DTP), 2010 ................................. II-3
Table II.3 Tax Revenues, 2009 - 2010 ......................................................... II-5
Table II.4 Non-Oil and Gas Income Tax Revenues by Sector, 2009 –
2010 ............................................................................................. II-6
Table II.5 Domestic Value Added Taxes Revenues by Sectors, 2009 – 2010 II-7
Table II.6 Import Value Added Tax Revenues by Sector,
2009 – 2010 ................................................................................. II-8
Table II.7 Import Duties Revenues 2010 .................................................... II-9
Table II.8 Non-Tax Revenues in 2009 – 2010 ............................................ II-11
Table II.9 The Largest Line Ministries Contributing to The Non-Tax
Revenues, 2009 – 2010 ................................................................. II-12
Table III.1 Government Expenditure, 2010 .................................................. III-3
Table III.2 Subsidy Expenditure, 2010 ........................................................ III-8
Table III.3 Revision in Expenditures of Line Ministries/Agencies, 2010 ...... III-15
Table III.4 Transfer to Regions, 2010 .............................................................. III-35
Table IV.1 Non-Debt Financing in APBN 2010 and APBN-P 2010 ............. IV-3
Table IV.2 Financing Gap of PT. PLN (Persero) .......................................... IV-8
Table IV.3 Debt Financing in APBN 2010 and APBN-P 2010 .................... IV-10
Table IV.4 Subsidiary Loan in APBN-P 2010 .............................................. IV-13
Table IV.5 Standby Loan That Have Been Signed ....................................... IV-15
Table IV.6 Discrepancy Between Macroeconomic Assumption and
Realization .................................................................................... IV-16
Table IV.7 Macroeconomic Assumption Sensitivity to APBN-P Deficit
2010 ................................................................................................. IV-18
Table IV.8 Stress Test of Economic Growth Change, Exchange Rate, Oil
Price, and Interest Rate to BUMN Fiscal Risk ........................... IV-20

iii
List Of Graphs

LIST OF GRAPHS
Page
Graph I.1 Economic Growth in Developed Countries, Usa and Europe,
2008 – 2009 ................................................................................. I-3
Graph I.2 Economic Growth in Developed Countries in Asia Regions, 2008
– 2009 ............................................................................................ I-3
Graph I.3 Economic Growth in China and India, 2008 – 2009 ................ I-4
Graph I.4 Economic Growth in The ASEAN Regions, 2008 – 2009 ......... I-4
Graph I.5 Global Manufacturing Index (PMI) ........................................... I-4
Graph I.6 Global Economic Growth Projection, 2009 – 2010 ................. I-5
Graph I.7 Growth of Balance of Trade and Global Inflation, 2005 – 2010 I-5
Graph I.8 Rupiah And JCI Index, 2009 ..................................................... I-6
Graph I.9 Net Foreign Buying of Stock ........................................................ I-7
Graph I.10 Yield SUN Growth ........................................................................ I-7
Graph I.11 10-Year CDS (Credit Default Swap) .......................................... I-8
Graph I.12 Net Foreign Buying/Selling SUN ................................................ I-8
Graph I.13 Source of GDP Growth and Its Consumption, 2008 – 2009 ... I-10
Graph I.14 GDP by Expenditure Growth, 2008 – 2009 ................................ I-10
Graph I.15 Growth of GDP in 2008 – 2010 ..................................................... I-12
Graph I.16 GDP and Its Consumption Growth , 2009 – 2010 ........................ I-13
Graph I.17 Inflation Rates, 2008 – 2009 ...................................................... I-14
Graph I.18 Inflation by Group Of Commodities , July 2009 – 2010 ......... I-15
Graph I.19 Inflation Components, July 2009 & 2010 ................................. I-15
Graph I.20 Rupiah Exchange Rate and Foreign Exchange Reserve, 2008
– 2010 .......................................................................................... I-16
Graph I.21 BI Rate, BI Deposit Facility, BI Certificate REPO & Overnight
Inter-Bank Money Market, 2008 – 2009 .................................. I-17
Graph I.22 Lending Rate and Deposit Rate, 2008 – 2009 ........................... I-17
Graph I.23 Inflation Growth and Interest Rate, 2008 – 2010 ................... I-18
Graph I.24 Growth of demand, supply, and World Oil Price, 2008 – 2009 I-19
Graph I.25 WTI Oil Price, 2009 – 2010 ......................................................... I-19
Graph I.26 Indonesia Oil Lifting, 2008 – 2010 ............................................ I-19
Graph II.1 Oil & Gas Income Tax Revenue, 2009 – 2010 ......................... II-6
Graph II.2 Non-Oil and Gas Income Tax, 2009 – 2010 ............................. II-6

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List Of Graphs

Page
Graph II.3 The Value Added Tax And The Sales Tax on Luxury Goods
Revenue, 2009 – 2010 ...............................................................
II-7
Graph II.4 Land And Building Tax Revenues, 2009 – 2010 ......................
II-8
Graph II.5 The Duties On Land & Building Transfer Revenue, 2009 –
2010 ................................................................................................
II-8
Graph II.6 Customs Revenue, 2009 – 2010 ...................................................
II-8
Graph II.7 Other Tax Revenues, 2009 – 2010 ...........................................
II-9
Graph II.8 Export Duties Revenues, 2009 – 2010 ........................................
II-9
Graph II.9 Oil & Gas Natural Resources Revenues, 2009 – 2010 ..............
II-11
Graph II.10 Dividend From BUMN, 2009 – 2010.........................................
II-12
Graph II.11 Other Non Tax Revenues, 2009 – 2010 ...................................
II-12
Graph II.12 Public Service Agency Revenues, 2009 – 2010 ..........................
II-13
Graph II.13 Grants , 2009 – 2010 ..................................................................
II-13
Graph III.1 Central Government Expenditure, 2009 – 2010 .......................
III-4
Graph III.2 Central Government Expenditure, 2010 ....................................
III-14
Graph IV.1 Budget Deficit Financing APBN 2010 and APBN-P 2010 .........
IV-2
Graph IV.2 Government Investment Fund and PMN APBN 2010 and
APBN-P 2010 ..............................................................................
IV-5
Graph IV.3 Government Capital Participation In APBN 2010 and APBN-
P 2010 ...........................................................................................
IV-5
Graph IV.4 Revolving Fund in APBN 2010 and RAPBN-P 2010 .................
IV-7
Graph IV.5 Foreign Loan in APBN 2010 and RAPBN-P 2010 .....................
IV-13
Graph IV.6 BUMN Contribution to APBN .....................................................
IV-18

v
Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

CHAPTER I
THE PROGRESS ON BASIC ASSUMPTIONS AND
PRINCIPLES OF FISCAL POLICIES OF THE REVISED
BUDGET FOR THE FISCAL YEAR 2010

1.1 Introduction
Global economic condition in 2009 has been sluggish, as a affect of the global financial
crisis that hit the country in the mid of 2007. Many countries in various regions were
affected by the crisis, resulting in negative growth during the first two quarters respectively
in 2009, namely the United States, countries within Europe, Japan, and some ASEAN
countries including Singapore, Malaysia and Thailand. Nevertheless, in the half of 2009,
the global economy performance recovery was indicated by the economic improvements
in some Asian countries, which showed a positive growth up to fourth quarter of 2009.
In addition, the global economic recovery was marked by the improvement in
manufacturing industries, the increase in retail sales, the growth in consumer confidence
index, the slow expansion in housing-sector, and the increase in commodity prices in the
world.
The global economy recovery also occurred in a number of developed and developing
countries. In the fourth quarter of 2009, some countries were able to boost their economy
acceleration growth compared with the previous quarters, namely, the United States grew
by 0.2 percent, Japan was minus 1.1 percent, China increased by 10.7 percent, Singapore
raised by 3.8 percent, and South Korea grew by 6.0 percent. This economic improvement
was strengthened by the policies issued by the Government and the central banks of each
country through their fiscal stimulus packages, and the applicable interest rate policies in
each country in order to minimise the impact of crisis.
Despite having suffered from the global crisis, Indonesia was one of three countries that
have delivered its best economy performance after China and India. The national economy
stability was maintained shown by the more strengthening of rupiah exchange rate since
April 2009, which reached the highest appreciation in Asia. Inflation rate was managed
to a modest 2.78 percent, and the improvement in capital market reflected by the increase
in Jakarta Composite Index – Indeks Harga Saham Gabungan (IHSG) around 101.76
percent since March 2009 up to the end of 2009, which was the second best after Shenzen
China. In addition to these indicators, other indicators such as Government Bond Yield
(SUN – Surat Utang Negara) and the level of Credit Default Swap (CDS) have decreased.
This has indicated that the national economy performance in 2009 was promoting the
period of recovery.
The national economy was able to accelerate and to reach the positive growth 4.5 percent
in 2009 amid the global economic which was not fully recovered. The driven factors
were the consumption of the households and Government that grew respectively 4.8 percent
and 15.7 percent supported by the improvements in some indicators such as motor vehicle
and car sales, electricity and consumption credits. Besides consumptions, another

Financial Note and Indonesian Revised Budget 2010 I-1


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

economic expansion was driven by the growth of investment which was 3.3 percent in
2009. The investment growth was reflected by the increase in total credit, especially the
Credit Investment which still grew by two digit points. On the other hand, the contribution
of external sectors such as exports and imports also made recoveries since the middle of
2009, supported by the increase in demand and the prices of commodities.
The Indonesian economy is predicted to improve in 2010. The economy recovery and
macroeconomic indicator behaviour are predicted to continue. Economy activities are
predicted to develop which will result in the increase in prices of the main world
commodities, a rise in inflation and the interest rate, as well as the growth in capital
inflows. This condition is slightly different from the one which was previously predicted,
so that it is important to be prepared and to anticipate the impacts that may arise. The
macroeconomic basic assumptions that have been determined in the APBN 2010 (APBN
2010) are deemed necessary to be adjusted to the current conditions.
In relation with the above matters, the Government has expeditiously submitted the 2010
Draft of Law on the Revised Bill on the Indonesian Budget (Revisi RUU RAPBN). This
was faster than the regular schedule, which was normally proposed after the
implementation of the Indonesian Budget in the first semester. The purpose of the rapid
submission of the Revised Bill on the Indonesian Budget was not only to address the
current national economy conditions, particularly in relation to macroeconomic variables
that had significantly changed, but also to contain the additional prioritised expenditures
that had not been included in the Law of the APBN 2010. This was based on the provision
under article 27 of Law Number 47 Year 2009 regarding APBN 2010.
Having highly intensive discussions in the plenary session of the House of Representatives
of the Republic Indonesia on 3 May 2010, the Draft of Law of the Revised Bill on the
Indonesian Budget (RUU APBN-P) has been approved to be passed the Law. Further, the
Revised Bill on the Indonesian Budget was enacted by the Law Number Year 2010 dated
25 May 2010.

1.2 Global Economy


The first half of 2009 was the period of weak for the global economy. Impact of the global
financial crisis prevailed over the real sector. The slowing economic growth started to
perceive since the second semester of 2008. Entering 2009, declining economic growth
was more devastating, and it fell down dramatically in the third quarter of the second
semester of 2009. During this period, many countries experienced the negative growth
amid further escalation in other economic problems, such as: the low level of productivity
and economy activities, and an increase in unemployment. This phenomenon was clearly
appeared in some developed countries that had been the engine for economic growth in
the world. This condition encouraged various countries to work together to formulate
the joint strategic and focused policies aiming at devoting efforts effectively to survive the
crisis. These efforts brought about fairly well results, in which the global economy has
reached a faster recovery than it had been previously estimated.
In 2009, most developed countries experienced a low level of growth in the first semester.
Entering the second semester some improvements showed; however, the growth rates
were still negative. This trend mainly occurred in the United States and Europe. The
United States whose economy contribution to the world was 28 percent of the total GDP

I-2 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

achieved a negative growth in the first and GRAPH I.1


ECONOMIC GROWTH IN DEVELOPED COUNTRIES, USA AND EUROPE,
second quarters of 2009, minus 3.8 percent 2008-2009 (y-o-y, percent)
4
and minus 4.1 percent respectively. During 2 1.9 1.9
2.9
2
1.8

the third and fourth quarters the economy 0 1.2-0.3 0.2 1-0.4 0.7
-0.2
0.8
growth increased to minus 2.7 percent and -2 USD U.K Germany France -0.5

-1.8 -2
0.2 percent. The similar improvement was -4 -2.8
-3.8
-2.7
-2.7 -2.9
-2.2
-3.9
-2.6
-3.1

also demonstrated by some developed -6


-4.1 -4.8
-5.3
-5.5 -5.8
-5.9
countries in Europe. England recorded its -8
-6.7

economy growth of minus 5.5 percent and Source : Bloomberg


Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

minus 5.9 percent in first two quarters of


2009. Entering the third and fourth quarter, the growth of England has improved slightly
to minus 5.3 percent and 2.9 percent. Germany and France reached their lowest growth
in the first quarter, which were minus 6.7 percent and minus 3.9 percent. These countries
achieved their growth in the following quarters. In the fourth quarter of 2009, the rate of
economic growth in these two countries reached minus 2.2 percent and minus 0.5 percent
respectively (Graph I.1).
GRAPH 1.2 The rate of economic growth in developed
ECONOMIC GROWTH IN DEVELOPED COUNTRIES IN ASIA REGIONS, 2008-2009

10
(y-o-y, percent) countries in Asia reflected a faster recovery,
5,5
4,4
6,0 which was slightly different from what
5
1,2
3,3
1,0
happened in developed countries in North
0
-0,4
America and Europe. Japan was the most
Jepang Korsel
-5
-1,4
-4,1
‐1,1
-3,3
-2,2 devastating country hit by the hardest crisis
-4,3
-5,7
-5,2
in the first quarter of 2009, in which its
-10
Q1 2008
-8,9
Q2 2008 Q3 2008 Q4 2008 Q1 2009 economic growth was minus 8.9 percent.
Q2 2009 Q3 2009 Q4 2009
Source : Bloomberg Nevertheless, in the second, the third and
the fourth semester the economic growth
in Japan recovered, although it still recorded a negative growth of minus 5.7 percent,
minus 5.2 percent, and minus 1.1 percent respectively. South Korea was able to reach its
positive growth in the third and fourth quarters, which were 1.0 percent and 6.0 percent
(Graph I.2), after encountering the negative growth in the first and the second quarters
of 2009.
The economic growth in Japan and South Korea was relatively better compared with the
economic growth in other developed countries. This was caused by, among others the
conducive economy condition in Asia region, which was mainly sustained by the economy
performance in some developing countries, in particular China and India. These two
countries were big countries initially expected to become the “key” to reduce crisis, and
also to become driving force of economy recovery in the Asia region. Despite the impact
of global crisis and having encountered economic slowdown, these two countries still
maintained s moderate rate of economic growth, which had positive impacts on the
countries in the Asia region. China experienced an economic downturn reaching 6.2
percent in the first quarter of 2009, although China had shown a consistent growth in the
last few years at a level of 10 percent or above. Yet, China’s economy was back to improve
in the second, third and fourth quarters growing by 7.9 percent, 9.1 percent and 10.7
percent respectively. Similarly, in India its economic growth reached 7.3 percent in 2008,
and dropped to 5.8 percent in the first quarter of 2009. During the next period, the growth

Financial Note and Indonesian Revised Budget 2010 I-3


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

rate in India increased again achieving 6.0 percent, 8.6 percent, and 6.5 percent in the
second, third, and fourth quarters of 2009 (Graph I.3).

GRAPH I.3
In the region of South East Asia, the
ECONOMIC GROWTH IN CHINA AND INDIA, economic contraction occurring in 2009 has
2008-2009 (y-o-y, percent)
12 10,6 10,7
also been faced by the three of five main
10
10,1
9,0 9,1
8,5 8,6 ASEAN countries (ASEAN-5), namely
7,5
8
6,2
7,9 7,8 5,8
6,5 Malaysia, Singapore, and Thailand. The
6 6,8
4
6,1 6,0 three countries recorded the lowest growth
2 in the first quarter of 2009, minus 6.2
0
Cina India
percent, minus 8.9 percent and minus 7.1
Q1 2008
Q2 2009
Q2 2008
Q3 2009
Q3 2008
Q4 2009
Q4 2008 Q1 2009 percent respectively; however, in the next
Source :  Bloomberg period it has improved. Singapore achieved
a positive growth by 3.8 percent in the
fourth quarter of 2009. Whereas, Malaysia and Thailand grew by each 4.4 percent and
5.9 percent.
Philippine and Indonesia are two of ASEAN GRAPH I.4

countries that are undergoing economic 10 ECONOMIC GROWTH IN THE ASEAN REGIONS, 2008-2009
(y-o-y, percent)
8 7,4 7,4

expansion at slow speed. In the first quarter 6


6,3 6,4

4,5
5,4
4,2
4,8 4,4 4,6
3,8
6,4
5,9

3,9

of 2009, the economic growth in Philippine 4

2
2,1
2,7
1,8
2,9

reached 0.5 percent, whereas in the second,


0,5
6,4 5,3 4,1 6,6 0,1 4,2 2,9 1,2 0,2 0,0 5,2
0
Indonesia Malaysia Phillipines Singapore Thailand
third and fourth quarters of 2009 it has ‐2

‐4
-1,2
-2,5
-1,7
-2,7

increased by 1.2 percent, 0.2 percent and


-3,9 -4,2
-4,9
‐6
-6,2

2.1 percent. Indonesia is one country of the ‐8

‐10 -8,9
-7,1

ASEAN-5 countries attaining the highest


Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

economic growth whose economic rate


Source : Bloomberg

grew in the range of 4.0 percent. In the


first quarter of 2009 Indonesia economic had grown by 4.5 percent; however, it declined
4.1 percent in the second quarter. In the third and fourth quarters of 2009, the Indonesian
economic growth improved 4.2 percent and 5.4 percent (Graph I.4).
GRAPH I.5 Entering the second semester of 2009, there
has been a positive development in which
GLOBAL MANUFACTURING INDEX (PMI)
(Point)

optimism about the faster proceeding of


economy recovery has prevailed than it had
been initially expected. This optimism
prevailed amid the economic activity
indicators and international trades in several
indicators. Baltik Dry Index indicator that
had plunged sharply in the mid of 2008,
  Sumber: ISM 
Source : ISM
started to increase in the beginning of 2009
Sumber: ISM
marking the beginning of an increased
activities in shipping and trading among countries. Meanwhile, the Purchasing Managers
Index (PMI) published by JP Morgan as one indicator of manufacturing industrial
activities in the world has indicated an economic expansion in the middle of 2009 (Graph
I.5).

I-4 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

The optimism about global economy recovery and current indicators is a consideration in
revising the estimation of economic growth rate in the world in 2009 to a higher level.
Having undertaken some downward revisions, IMF again made a revision to the projection
on the economic growth in the world from minus 0.8 percent (published in January
2010) to an increase by minus 0.6 percent in April 2010 (Table I.1). On the other hand,
IMF also revised the growth in the international trade volume to its lower level. In this
case the projection on the international trade volume in the world was also revised from
minus 12.3 percent to minus 10.7 percent in April 2010, which will also be revised to 11.3
according to July 2010 publication.

TABLE I.1
WORLD ECONOMIC GROWTH, 2009 (Percent)
Publication Apr 08 Oct 08 Apr 09 Oct 09 Jan 1 0 Apr 1 0 Jul 1 0
GDP Growth 3.8 3.0 -1 .3 -1 .1 -0.8 -0.6 -0.6
Trade V olume 5.8 4.1 -1 1 .0 -1 1 .9 -1 2.3 -1 0.7 -1 1 .3
Source : WEO, IMF

The current development in the global GRAPH I.6


economy has also exerted on the revision of GLOBAL ECONOMIC GROWTH PROJECTION, 2009-2010
(y-o-y, percent)

the global economy projection in 2010 8 2009 2010 6,8


which had been initially estimated to reach 6
4,6
2.9 percent and had been revised to 4.2 4
2,6
percent (WEO – World Economic Outlook, 2 2,5

April 2010), and later was revised to 4.6 0 -0,6

percent (WEO, July 2010). The growth in -2 World Developed Countries Developing Counries

developed countries had improved from -4


-3,2
minus 3.2 percent in 2009, became 2.6 Source : WEO, IMF

percent in 2010. Whereas the economic


growth in developing countries has increased from 2.5 percent to 6.8 percent. The economic
growth in developing countries in the Asia region has indicated the highest level of growth
compared with that in other regions, 9.2 percent (Graph I.6).
GRAPH I.7 The revision in the economic growth
GROWTH OF BALANCE OF TRADE AND GLOBAL
15
INFLATION, 2005-2010 projection above is also supported by the
(Percent)

9,095
revised projection in the international trade
10 7,801
7,53 9,05
7,33
6,64 5,8 volume growth in the world together with
5 5,983
2,951 2,72 an increase in demand in the world. The
4,005 2,7
0
3,769 3,714 2,548 2,893 improvement in such demand is estimated
-5
2005 2006 2007 2008 2009 2010
to have an impact upon the global inflation
Inflation
level. The growth of goods and services
-10 Goods and Services
Goods
-12,3 trading volume is projected to increase from
-15
Source : WEO, IMF
-13
minus 11.3 percent in 2009 to 9.0 percent
in the following year (Graph I.7).

Financial Note and Indonesian Revised Budget 2010 I-5


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

1.3 General Remarks in the Indonesian Economy


Approaching the end of 2009, the progress in macroeconomic indicator of Indonesia showed
a continuous improvement. This was bolstered by considerable optimism for the global
and domestic economic improvements, and maintained stability of macroeconomic. The
increased global economy has extended positively over the development of export and
investment. The export performance which dropped in the first semester was starting to
improve in the second semester in 2009, in line with the increases in demand and the
commodity prices in global market. Meanwhile, the stable purchasing power of people
and the growing confidence of the people about the economic growth, have promoted the
level of consumption to be maintained at the significant high level. The growth of household
and government consumptions which were persistently high at the level of 4.9 percent
and 15.7 percent in 2009, and the improved export performance, have strengthened the
optimism among business actors to increase the investment. The indicators of the increased
investment reflected in the improved demand of cement and the growth of capital import
commodities. By these progresses, the realisation of economic growth in 2009 reached
4.5 percent.
Meanwhile, the inflation rate in 2009 GRAPH I.8

reached 2.78 percent (y-o-y), which was


RUPIAH AND JCI INDEX, 2009
Rp/US$ Point
05/01/2009,
12,500 3,100
lower than it had been estimated in the 11.013
29/01/2010,
2.610,8
2009 Indonesian Budget, 4.5 percent. The 11,500 2,600
low rate of inflation in 2009 was mainly
influenced by the decline in subsidized fuel 10,500 2,100

price (BBM – Bahan Bakar Minyak) in 02/03/2009,


early 200, the control of supply and 9,500
1.256,1
1,600

distribution of food mainly rice, and the kurs Rp/US$ IHSG


29/01/2010,
9.365

relatively stable rupiah exchange rate. The 8,500 1,100

swift capital inflow penetrating domestic


financial market has encouraged the Source: Bloomberg

appreciation of rupiah exchange rate. The


rupiah exchange rate by the end of 2008 was in a close position at the level of Rp. 10.950/
USD inclining toward a strong level up to Rp. 9.400/USD by the end of 2009, or it would
show an appreciation around 14.16 percent in 2009. The average level of rupiah exchange
rate during 2009 reached about Rp. 10.408/USD (Graph I.8).
In line with the decline in inflation and a relatively stable rupiah exchange rate, the
monetary authority has undertaken loose monetary policies reflecting in declining BI
(Bank Indonesia) rate from 275 bps to 6.5 percent in August 2009. This level of BI rate
would constantly be maintained until the end of 2009. This declining BI rate was
transmitted to the inter-bank money market rate of interest shown in the daily average
decrease of the interest rate from 9.44 percent by the end of 2008 to 6.47 percent by the
end of 2009. The decline in BI rate was followed by the average interest rate of Bank
Indonesia Certificate (SBI – Sertifikat Bank Indonesia) from 11.9 percent by the end of
2008 to 6.58 percent by the end of 2009. Thus, during 2009, the average interest rate of
three-month Bank Indonesia Certificate reached approximately 7.59 percent, lower than
previous year reached 9.34 percent.

I-6 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

Capital market performance also improved. After experiencing a severe hit stemming
from the financial and global economic crisis resulting in a decrease interest of foreign
and domestic investors in investment, the IHSG price started to increase in 2009. The
return of foreign investors to the market during 2009 has indicated a growing confidence
in a tremendous potential of Indonesian economy supported by macroeconomic stability,
which was well maintained. This positive sentiment would entice more investors into
Indonesian market either capital market or real sector.
During 2009, Indonesia capital market performance exceeded that of other countries,
although in the beginning year of IHSG it had plunged down reaching the lowest level at
1.256.11 point, due to mortgage crises attack. Furthermore, the IHSG increased
significantly. By the end of December 2009, the IHSG closed at the level of 2.534,36 point
(the highest level during 2009) having the increase by 101.76 percent. This condition was
continuously improving up to 31 January 2010 in which the IHSG reached the level of
2,610.8 point (Graph I.8).
The growth of capital market performance GRAPH I.9

has brought about the Indonesia index to NET FOREIGN BUYING STOCK
( Rp Billion )

the second highest level amongst the capital


5000
3839.367
4000

market performance in Asia, in which the 3000 2601.982


1973.807
3089.83

2044.412

Shenzhen index was at the first level,


1815.338 1793.852
2000
746.511 924.924
1000
followed by the Shanghai and China index
430.2

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
at the third level. Meanwhile, the value of -1000
-561.546

foreign buying stock in December 2009


-2000 -1160.242

-3000

reached Rp. 3.84 trillion which was the -4000


-3118.102

highest value of buying by foreign parties Source : Bloomberg

during 2009 (Graph I.9)


To stimulate the growth of capital market, the Government will continuously maintain
the economy condition, so that it will remain conducive for the development of capital
market. In addition, the Government together with related institutions will pursue its
maximum endeavours in facilitating a forum for investor protection through the
supervision of infrastructure or a series of stock exchange regulations; encourage
dissemination information; and educate the public about the capital market; as well as
promote the improvement of good corporate governance to business actors by enforcing
a discipline within business actors to obey the prevailing rules.
GRAPH I.10
YIELD SUN GROWTH (Percent)
Conventional Based Government Securities
22
Market (SUN) had improved, reflecting in the
20 decrease in the SUN yield of 5-year-tenure,
18

16
10-year-tenure and 30-year-tenure in the
14 period of end of December 2008 until end of
12
2009 by 282.4 bps, 182.9 bps and 120.6 bps
10

8
respectively. With this growth, on 31
6 December 2009 the SUN yield of all tenures,
1Y 3Y 5Y 7Y 10Y 15 Y 30 Y
39749 39813 30 June 09 31 Dec 09 29 Jan 10 5, 10 and 30-year-tenure decreased by 8.98
Source: Bloomberg percent, 10.06 percent and 10.99 percent
respectively, and on 31 January 2010 these
value decreased again by 8.54, 9.79 percent and 10.81 percent respectively (Graph I.10).

Financial Note and Indonesian Revised Budget 2010 I-7


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

The decrease in the SUN yield was


GRAPH I.11
10-YEAR CDS (CREDIT DEFAULT SWAP) influenced by abundant liquidity in the
1400

1200
Indonesia global market, the Fed Fund Rate cut, and
1000
Brazil
Columbia
the decline in risk premium reflecting in the
800 Phillipine decrease in credit default swap (CDS) from
600
its highest rate of 1,236.4 on 24 October
2008 to 626.0 on 31 December 2008. This
400

200

0
further decreased by 224.0 on 31 December
2009 and increase by 245.6 on February
Jul-09
Feb-08

Jan-09
Feb-09
Mar-09
Apr-09

Sep-09
Jun-08

Jun-09

Dec-09
Jul-08
Aug-08

May-09

Aug-09

Oct-09

Jan-10
Jan-08

Sep-08

Nov-08

Nov-09
Mar-08
Apr-08

Dec-08
May-08

Oct-08

2010. The level of decrease in CDS in


Source : Blooomberg
Indonesia was the largest compared with
other countries having the same rate of
obligation. Besides, the improvement in global perception about Indonesia, the decline in
the inflation growth, and the sustainability of fiscal has given a positive sign for investors
to invest their assets in SUN (Graphic I.11). Since September 2009, foreign investors
constantly bought the SUN making the total of net foreign buying of SUN Rp. 23.86
trillion until 31 January 2010 (Graphic I.12).

GRAPH I.12
NET FOREIGN BUYING/SELLING SUN
9 (Billion Rp)
8.19
5.464 6.649 7.02
7 5.911
5.45 5.19
4.308 4.43
5 3.88
3.05 3.53
2.442 2.07
3
0.918 1.187
1 0.42

-1 -2.604
-1.172 -1.582 -1.17
-3 -1.75
2010
-5 2009
2008 -5.122
-7
-6.389
-9

-11
-12.679
Source : Ministry of Finance
-13

The growth of Balance of Payment has also improved shown by an increase in a surplus
of Balance of Payment Surplus, so that the foreign exchange reserve by the end of 2009
was projected to reach the amount of USD 66.1 billion, or equivalent to 6.6 months of
imports and foreign debt repayment. The significant increase in the foreign exchange
reserve was enormously contributed by the increase in the capital inflows and the
improvement of the export performance.
Banking sector performance in 2009 in general was improving. The growth of asset up to
2009 reached 9.7 percent, third party fund (DPK) grew by 12.5 percent, and banking loan
grew by 8.7 percent. Other indicators of the growth of bank such as credit ratio to third
party fund reached 74.5 percent, Non Performing Loan/NPL ratio was 3.8 percent, and
Capital Adequacy Ratio/CAR was 17.4 percent (far above the CAR required by Bank
Indonesia, 8.0 percent), and Net Interest Margin was 11.9 percent by end of December
2009.

I-8 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

1.4Growth in Macroeconomic Indicators in 2010


According to the Indonesian Budget Law of 2010, basic assumptions of macroeconomic
are projected as follows: (1) economic growth by 5.5 percent, (2) the inflation rate by 5.0
percent, (3) the interest rate of SBI by 6.5 percent, (4) Rupiah exchange rate by Rp10.000/
USD, (5) the average price of Indonesia crude oil by approximately USD 65.0 per barrel,
and (6) oil lifting by 0.965 million per barrel per day.
Having taken into account global and domestic economic growth within 2009, and current
development, basic assumption of economic variables used as the reference in calculating
variables in the APBN 2010 are considered to be adjusted. In order to up-date basic
assumption of macroeconomic to be more realistic, the following are basic assumption of
macroeconomic in the APBN-P 2010 : (1) the projection of the economic growth about
5.8 percent, (2) the increase in inflation by 5.3 percent (3) the stable average interest rate
of SBI at 6.5 percent , (4) Rupiah exchange rate appreciation by Rp9.200/USD, (5) the
average increase in Indonesia crude oil price by USD 80 per barrel, and (6) the stable
price of lifting oil at 0.965 million barrel per day (Table I.2). These adjustments are
required to determine the variables of Indonesian Budget in order to face the changing
economy condition, so that the target and economic goals will be more realistic.

T ABLE I.2
MACROECONOMI C BASIC ASSUMPT IONS 2010

Description APBN APBN-P


Gross Domestic Product (billion Rp) 5,981 ,37 3.1 6,253,7 89.5

Economic growth (%) 5.5 5.8

Inflation (%) y -o-y 5.0 5.3

Three-month interest rate of BI 6.5 6.5


Certificate (%)
Ex change Rate (Rp/USD1 ) 1 0,000 9,200

Oil Price (USD/barrel) 65 80

Oil lifting (thousand barrel/day ) 965 965

Sou r ce : Min ist r y of Fin a n ce

1.4.1 Economic Growth


Economic growth until end of 2009 was marked by the sharply fall in the performance of
external sector as the impact of the decline in global demand which had started in the mid
of 2008. As a result, economic growth was slowdown compared with the realisation in
2008. In 2009 economic grew by 4.5 percent (y-o-y), which was lower compared with

Financial Note and Indonesian Revised Budget 2010 I-9


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

the previous realisation, 6.01 percent. This economic growth was bolstered by household
consumption 4.85 percent; Government consumption 15.72 percent; investment 3.32
percent and the contraction of export-import minus 9.70 percent and minus 14.97 percent
respectively.
GRAPH.13
SOURCE OF GDP GROWTH AND ITS CONSUMPTION, 2008 - 2009
(Percent) Household consumption grew significantly
20% within 2009 by 4.85 percent (y-o-y), which
17,0%

10%
was lower than the realisation in the period
3,7%
4,0%
of 2008 around 5.34 percent. This decline
4,2%
1,6%

was caused by a reduced in purchasing power


0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

-10% 2008 2009 of public as the impact of global crisis.


-20% However, some factors that were able to
-30%
restrain from dramatic fall of the household
Household Cons. Gov. Cons. PMTB Export Import
consumption were : the implementation of
Source: BPS dan Ministry of Finance National Election, the fiscal stimulus namely
the fiscal incentives, the increase in the base
salary, and the payment for the thirteenth month salary for government civil servants
(PNS) / members of Indonesian Armed Forces (TNI) / the Republic of Indonesia Police
Force (POLRI) and the Retirees, as well as
the distribution of the Unconditional Cash
GRAPH I.14
GDP BY EXPENDITURE GROWTH, 2008-2009 Transfer (BLT) for the poor. The
(Percent)
20
15.7 consumption of non-food grew by 5.97
15
10
10.4
11.9
percent relating to the Legislative Election
5
5.3 4.8
3.3 campaigns (for example: shirts/banners/
9.5 10
0
-9.7 -15
brochures), whereas, the consumption of
2008 2009
-5
Household Consumption food increased by 3.57 percent. The cyclical
-10 Government Consumption

-15
Investment/Gross Fixed Capital Formation
Export
push factor by end of year boosted the
-20
Import
household consumption to remain strong.
Sourse: Central Bureau of Statistics
& the Ministry of Finance The growth of the household consumption
reflected in the increase in real disposable
income along with the decrease in the inflation rate and the rise in the exchange value of
the farmers as well as the labour wages (Graph I.14).
The Government Consumption grew by 15.72 percent (y-o-y), which was greater than
with the realisation during the same period of the previous year, 10.43 percent. The
implementation of the National Election and the Legislative Election has boosted the
increase in the good consumption to 21.06 percent. In addition, the employee expenditures
grew by 5.10 percent relating to the policy on the increase in the base salary and pension,
as well as the payment for the thirteenth month salary.
Investment fell down drastically from 11.86 percent in 2008 to 3.32 percent in 2009 (y-o-
y), due to the decrease in the production as a result of sluggish global activities and the
drop in domestic demand. The investment decline was indicated in the reduction of the
capital import commodities, cement sale, Foreign Investment – Domestic Investment
(PMA-PMDN). The majority types of investment grew negatively mostly investment of
non-building, showed by a drop in capital import goods. Meanwhile, the investment on
building in 2009 still recorded a positive growth by 7.05 percent, which was slightly lower
compared with the realisation in the previous year by 7.51 percent. This was due to the

I-10 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

continuing development in property sector and the rehabilitation programme following


the Padang earthquake disaster that was starting to commence. This number also showed
that the investment by end of year was improving amid the global and domestic demand
recovery, and the conducive climatic investment after the National Election.
On the international trade side, the export-import activities contracted sharply, due to
tumbling global demand and the decline in the export-import value because of the drop in
the global oil price, the decrease in the production of domestic crude oil, and the falling
prices of several commodities in the first semester of 2009. In conjunction with the
improving global demand and the increase in the prices of international commodities, the
export growth was starting to improve. The indicator of the export growth was
demonstrated by the volume growth of the international trade. The import was projected
to grow significantly along with the increases in household consumption and investment,
primarily the increase in the raw material import and capital goods for activities of
production. In 2009, the export-import reached minus growth by 9.70 percent and minus
14.97 percent, which were lower than the realisation in the previous year minus 9.5
percent and minus 10.0 percent. Good exports grew by minus 10.57 percent and service
exports reached minus 2.07 percent. Meanwhile, good imports reached minus 18.56
percent and service imports grew minus by 1.53 percent.
On the supply side, the economy growth performance within 2009 was marked by the
global economic slowdown in the majority economic sectors due to the plunge on the
global economic (Table I.3). Nevertheless, of the existing nine sectors, three sectors
recorded a higher growth than those in the previous year, namely mining and quarrying,
electricity, gas and water supply, as well as service sector.

Table I.3
GDP GROWTH BY SECTORS, 2008 - 2009
(Percent, y-o-y)

2008 2009 Distribution

BUSINESS SECT OR IV
I II III I II III IV
Quarte 2008 2009
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
r

1. Agriculture, Livestock, Forestry, and Fisheries 6.44 4.81 3.25 5.12 5.91 2.95 3.29 4.61 14.46 15.29
2. Minning and Quarrying (1.62) (0.37) 2.32 2.43 2.61 3.37 6.20 5.22 10.92 10.54
3. Manufacturing Industries 4.28 4.23 4.31 1.85 1.50 1.53 1.28 4.16 27.89 26.38
4. Electricity, Gas and Water Supply 12.34 11.77 10.41 9.34 11.25 15.29 14.47 13.99 0.82 0.83
5.Construction 8.20 8.31 7.76 5.88 6.25 6.09 7.73 8.03 8.48 9.89
6. Trade, Hotels and Restaurant 6.75 7.68 7.59 5.47 0.63 (0.02) (0.23) 4.17 13.97 13.37
7. Transportation and Communication 18.12 16.57 15.64 16.12 16.78 17.03 16.45 12.22 6.31 6.28
8. Financial, Real Estate, and Business Services 8.34 8.66 8.60 7.42 6.26 5.33 4.90 3.77 7.43 7.20
9. Services 5.52 6.51 6.95 5.93 6.70 7.19 6.04 5.69 9.73 10.22
GROSS DOMESTIC PRODUCT 6.21 6.30 6.25 5.27 4.53 4.08 4.16 5.43 100.00 100.00
Source : BPS & the Ministry of Finance

* provisional figures
** Very very provisional figures

Meanwhile, transport and telecommunication sectors recorded the most significant in


growth by 15.53 percent (y-o-y) by 2009. This was chiefly due to the telecommunication
sector growing by 23.80 percent as a result of the use of cellular telephones, either online
speaking or text sending messages (SMS-Short Message Services).

Financial Note and Indonesian Revised Budget 2010 I-11


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

GRAPH I.15 During 2009, the agriculture, livestock,


GROWTH OF GDP IN 2008 - 2010
(Percent) forestry and fisheries sectors grew by 4.13
percent (y-o-y), which was lower than
6%
6.0%
those in the same period of the previous
5.8%
5% year, 4.83 percent. The most significant
4% 4.5% growth was achieved by the fisheries sub
3% sector by 5.20 percent. In addition, the
2% most substantial contribution came from
1% food crop subsector growing by 4.71
0% percent.
2008 2009 the 2010 Revised
The manufacturing sector within 2009
State Budget
Source : Ministry of Finance slightly grew by 2.11 percent (y-o-y),
which was slowdown compared with that
in the previous year reaching 3.66 percent. Oil and gas industrial sectors contracted by
2.21 percent. Meanwhile, non oil and gas industrial sectors increased by 2.52 percent
which was mainly bolstered by food and beverage and tobacco industries, as well as
paper and printed material industries growing by 11.29 percent and 6.27 percent
respectively.
Trade sectors, hotel and restaurant industries recorded a positive growth by 1.14 percent
(y-o-y) within 2009 which was slowdown compared with the realisation in the previous
year reaching 6.87 percent. This was due to the sharp contraction in import performance
since the fourth quarter of 2008. The growth of these sectors was buttressed by the
restaurant subsector performance reaching up by 7.53 percent.
Entering 2010, the improvement in global economy has brought about an impact to
domestic economy. In the APBN 2010, the assumptions of domestic economic growth is
projected to grow about 5.5 percent surpassing the that in 2009 by 4.5 percent. Looking
at the current conditions, the projection on economic growth has applied the corrections
that are projected to grow by 5.8 percent. Nevertheless, it is forecasted that its source of
growth will change.
The household consumption that previously reached 4.9 percent in 2009 has increased to
5.2 percent in 2010. The increase in the household consumption was in line with the
gradual recovery in global and domestic economy. The consumption indicators were
reflected in the following: car and motor vehicle sales, electricity consumption, and good
consumption goods. Several policies will be issued, namely the Conditional Cash Transfer
Program (PKH), the School Operational Assistance (BOS), and other subsidies that will
be expected to reduce the growth of household consumption.
On the other hand, the government consumption is projected to decline from 15.7 percent
in 2009 to 8.8 percent in 2010. This is due to the fiscal stimulus that is no longer provided
in the consumption in 2010. Within 2010, the government consumption will be directed
to consistently support the education budget, to precede the bureaucracy reforms and to
manage the sustainability of people’s welfare.
Investment is projected to grow by 8.7 percent in 2010, which mainly relates to the
Government capital expenditure to serve the purpose on the infrastructure developments.

I-12 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

Besides, the investment growth is bolstered by GRAPH I.16


GDP AND ITS CONSUMPTION GROWTH,
the acceleration in the household consumption 20
15,7
2009 - 2010 (Percent) 17,2
14,2
increase, and the improvement of export 15
8,8 8,7
followed by the increase in business activities. 10
4,9
3,3
5,2
5
On the banking side, the decline in the credit 0
rate interest has encouraged the building and -5 2009 2010

non-building investment. In the international -10


-9,7
-15
perspective, the economy prospect -15
-20 Household Consumption Government Consumption

improvement is expected to stimulate the Investment/Gross Fixed Capial Formation Export

Source : Ministry of Finance


investors’ interest in investing capital inflows.
On the international trade side, exports and imports in 2010 are forecasted to start reaching
a positive growth due to the global economic recovery. Export is predicted to grow
considerable, from minus 9.7 percent in 2009 to 14.2 percent in 2010. This is in line with
the beginning of the improvement in the global trade volume and commodity prices. In
addition, the increase in export also relates to the characteristics of Indonesia export
commodities having a basis in primary commodities allowing a rapid recovery from the
counterparty demand. In line with the improvement in domestic and export demand,
import is growing from minus 15.0 percent in 2009 to 17.2 percent in 2010.
In 2010, the pillars of Indonesian economy that will start to grow substantially are the
following: manufacturing industry, agriculture sector, trade sector and hotel and
restaurant. This is in line with the global economic recovery which will result in the rise
of demand of Indonesian products (Table I.4).

TABLE I.4
GDP GROWTH BY SECTORS, 2008-2010
(Percent, y-o-y)
SECT ORS 2008 2009 2010*
1. Agriculture, Livestock, Forestry, and Fisheries 4.8 4.1 4.0
2. Minning and Quarrying 0.7 4.4 3.1
3. Manufacturing Industries 3.7 2.1 4.0
4. Electricity, Gas and Water Supply 1 0.9 1 3.8 8.9
5.Construction 7 .5 7 .0 7 .3
6. Trade, Hotels and Restaurant 6.9 1 .1 7 .5
7. Transportation and Communication 1 6.6 1 5.5 1 1 .9
8. Financial, Real Estate, and Business Services 8.2 5.1 5.2
9. Services 6.2 6.4 6.5
GROSS DOMESTIC PRODUCT 6.0 4.5 5.8

Notes : (*) Estimation of APBN-P


Source : BPS & Ministry of Finance

The agriculture, livestock, forestry and fisheries sectors are forecasted to grow by 4.0
percent in 2010. Meanwhile, the manufacturing sector is expected to return to increase
as it was before the crisis growing by 4.0 percent. Trade, hotel and restaurant sectors
which closely relate to import activity are projected to grow by 7.5 percent. During the
same period, transport and telecommunication sectors are predicted to remain growing
most significantly reaching about 11.9 percent, compared with other sectors. Another

Financial Note and Indonesian Revised Budget 2010 I-13


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

sector that is predicted to be able to achieve the most significant increase in 2010, namely
electricity, gas and water supply sectors by 8.9 percent. This is in line with the beginning
of the operation of new electric power plant and the completion of water supply projects
in the regions.

1.4.2 Inflation
The global economic slowdown occurring in the first semester of 2009 and the positive
contribution of domestic policies have influenced the decline in inflationary pressures in
2009. The decrease in international commodity prices particularly crude oil price has
pushed the Government to reduce the BBM price at the beginning of 2009 as a continuation
of the fuel price reduction at the end of 2008. This policy had brought about an impact in
a decline in transportation tariff which finally pushed down the inflation significantly.
Furthermore, the global economic slowdown followed by the inflation decline in the
counterparty countries have caused the decline in imported inflation. Rupiah exchange
rate appreciation of US dollar and public expectation of inflation having improved gradually,
have pushed down the rate of inflation in 2009.
Several factors above have caused a sharp
GRAPH I.17
decline in inflation, based on headline inflation INFLATION RATES, 2008 - 2010 (percent)
3.0 14.0

(IHK – Consumer Index Price). On the yearly 2.5


2.46
12.0

basis, the rate of inflation in 2009 recorded about 2.0 1.77 10.0

2.78 percent (y-o-y), which was lower than


1.57
1.41 1.37
1.5 8.0
1.05
that in 2008 of 11.06 percent. Historically, the 0.95 0.97 0.97
1.0 0.84 6.0
0.65 0.57
0.51 0.45 0.56
0.45
inflation rate in 2009 reached down the lowest 0.5
0.12
0.210.22
0.11
0.04
0.19
0.33 0.30 0.29
0.15
4.0

inflation in the last 10 years. Deflation occurred


- 2.0
-0.04-0.07 -0.03
-0.14
(0.5) -0.31 -
three times within 2009, in January, April, and
July

July

July
Jun

Jun

Jun
Feb

Feb
Agust
Sept

Agust
Sept

Feb
May

May

May
Jan

Jan

Jan
Mart

Nov

Mart

Nov

Mart
Des

Des
Apr

Apr

Apr
Oct

Oct

November reaching about 0.07 percent, 0.31 2008 2009 2010

percent, and 0.03 percent respectively that have Source : BPS inflation rate inflation rate

contributed to the decline in the inflation rate


in the fiscal year (Graphic I.17). The realisation of inflation in 2009 was extremely
lower than the assumption of inflation in the APBN-P 2009 by 4.5 percent.
According to its group, the inflation in 2009 was caused by the rise in nearly all prices of
the expenditure categories except the groups of transportation, communication and
financial services. The relatively high inflation rate was in the category of prepared food,
beverages, cigarettes and tobacco as well as the category of clothing reaching about 7.81
percent (y-o-y) and 6.00 (y-o-y) respectively. On the other hand, the transportation
category recorded a deflation at 3.67 percent (y-o-y), as a result in the decline in BBM
price in December 2008 and January 2009. The BBM price and local transportation tariff
were particularly the two commodities contributing to the sharp deflation rate in IHK
growth in 2009 (Graphic I.18).
Based on its component, the yearly inflation decline in 2009 was mainly caused by
deflationary components of administered prices, which was about minus 3.26 percent.
These deflationary components occurred as a result in the Government policy in reducing
subsidised fuel prices (regular and diesel fuel), which finally caused in the decline in other
domestic commodities, including the transportation tariffs. Besides, core inflation has
declined in response to pressure on external factors, and the improvement in the inflation

I-14 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

GRA PH I.18
INFLATION BY GROUP OF COMMODITIES,
JULY 2009 - 2010 (y-o-y, percent)

-6.71
Transportation, Communication and Financial Se rvice s
2.51

4.53
Education, Recreation and Sport
3.34

4.71
Medical Care

4.89
Clothing
5.19

3.56
Housing, Ele ctricity and Water Supply
2.4

8.0
Prepared Food, Beverages, Cigarettes and Tobacco
8.2

4.3
Food Stuff
14.1

-10 -5 0 5 10 15 20

Source : Central Bureau Of Statistics 39995 40360


Juli 2009 Juli 2010

expectation. In the same period, volatile foods inflation showed a sharp fell as a result of
security of supplies and distribution of several main people’s commodities as well as the
impact of global food commodity prices within 2009. Until the end of 2009, the core
inflation and volatile food inflation have recorded 4.28 percent and 3.95 percent respectively
(Graph I.19).
In 2010, the inflationary pressures are
GRAPH I.19
forecasted to have a tendency toward an INFLATION COMPONENTS , JULY 2009 & 2010
(y-o-y, percent)
increase. Entering 2010, the inflation rate 20 16.18

(m-t-m) in January until June 2010 reached 15


about 0.84 percent, 0.30 percent, -0.14 10
percent, 0.15 percent, 0.29 percent and 0.97 5.56
4.14 4.31
5 3.74
percent respectively. In July 2010 the
inflation rate reached about 1.57 percent (m- 0
t-m) or 6.22 percent (y-o-y), which were -5 -3,22

higher than those in December 2009, which Core Administered Price Volatility

Source : Ce ntral Bure au Of Statistics


had reached 2.78 percent (y-o-y). The 39995
Juli 2009 40360
Juli 2010

beginning improvement of global economy


is predicted to push the increase in global commodity prices and the inflation rate in the
main Indonesia’s counterparty countries. The inflationary pressures from the external
factors are predicted to have an impact in the public inflation rate. On the internal side,
the increase in domestic demand is in line with the national economy recovery which is
projected to push the inflation rate in 2010. In addition, the Government policy in the
main commodity prices is also predicted to drive the inflation rate in 2010. Having
considered the inflationary factors mentioned, the inflation rate assumptions in the APBN-
P 2010 would increase to 5.3 percent, which is slightly higher than the assumptions in the
APBN 2010 by 5.0 percent.
1.4.3 Rupiah Exchange Rate
During 2009 in general the rupiah exchange rate tended to appreciate. In January 2009,
the rupiah exchange rate in average recorded the value of Rp. 11.167/USD. In February

Financial Note and Indonesian Revised Budget 2010 I-15


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

The transmission of BI rate cut onto lending rate was slowly shown and more limited.
During 2009 (January until December) the aggregate of lending rate in average has
declined by 99 bps. The inadequate response of lending rate has connected to several
factors such as: high inter-bank perception about the real sector risk.
The transmission of BI rate cut onto PUAB, deposit rate and lending rate was followed by
the decline in the three-month SBI rate. Within 2009, the average rate of the 3-month
SBI has tended to continuously decline consistently. Overall, the average rate of the
three-month SBI within 2009 reached into 7.59 percent, lower than that in 2008, which
was at the range of 9.34 percent (Graph I.23).

GRAPH I.23
INFLATION GROWTH AND INTEREST RATE, 2008 - 2010 (percent)
14
12
10
8
6
4 Infl.growth
2 BI Rate
0
Fed Fund Rate
July

July

July
Jun

Jun

Jun
Feb

Agust
Sept

Feb

Agust
Sept

Feb
May

May

May
Mart

Mart

Mart
Jan

Jan

Jan
Nov

Nov
Des

Des
Apr

Apr

Apr
Oct

Oct

3-month BI Certificate

2008 2009 2010

Source : The Fed, BI, Statistics

In 2010, the assumption of 3-month SBI rate is forecasted to increase. During January-
July 2010, the realisation of 3-month SBI rate in average will reach into 6.58 percent,
same as the average rate in December 2009, which was at the level of 6.58 percent. Two
main factors have influenced the rise in the 3-month SBI rate. On the internal side,
within 2010 Bank Indonesia is estimated to take tight monetary policies. This is connected
to the high inflation expectation in 2010 triggered by a global strong demand as an impact
of global economic recovery and the increase in prices of international commodities
particularly global crude oil. In addition, the high inflation expectation is also bolstered
by the policy on the rise in tobacco excise tax rates issued the Government at the beginning
of 2010.
On the external side, within 2010 the US is predicted to issue government bonds to cover
its state deficit in the 2010 budget reaching in USD 1.42 trillion or about 10 percent to its
Gross Domestic Product (GDP). The issuance of the US Government Bond will take the
form of short-term obligation (Treasury Bills), medium-term (Treasury Notes), and long-
term (Treasury Bonds). In line with the increase in the issuance of government bond and
the beginning process of the US economy recovery, the Fed as the monetary authority is
predicted to commence its tight monetary policy. Considering this condition, the interest
rate of the Fund Rate will be predicted to be above 0.25 percent.
The abovementioned progress is projected to influence in the growth of 3-month SBI
interest rate. The assumption of the average interest rate of 3-month SBI is predicted to be
at the level of 6.5 percent same as that of the APBN 2010.

I-18 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

1.4.5 Indonesia Crude Price (ICP)


The global economy recovery has brought
GRAPH I.24
GROWTH OF DEMAND, SUPPLY, AND WORLD OIL PRICE,
about an increase in a world demand of oil,
2008-2009 (USD per barrel)

88.0

87.0 particularly in the last semester of 2009. An 160

140

86.0

85.0 institution in the US, namely the Energy 120

100

84.0

83.0 Information Administration / EIA has 80

60

recorded a total realisation of the oil global


82.0 40

81.0 20

demand reaching about 85.9 million barrel


80.0 0

per day, at the end of December 2009. EIA


Source: Bloomberg, EIA & Ministry of Energy and Mineral Resources 
Demand Supply WTI Brent ICP

has predicted that the high world demand


of oil will remain within 2010 amid China’s economy recovery as one of the biggest oil
consumer in the world. Along with the increase in the world demand of oil, EIA has
estimated that the world crude oil price WTI in 2010 will be at the level of USD78.7 per
barrel or increasing in 27.6 percent from the average of crude oil price of WTI in 2009
reaching by USD61.7 per barrel.
The ICP in 2010 is predicted to increase in GRAPH I.25

accordance with the trend in the 90


WTI OIL PRICE, 2009-2010
(USD per barrel)

international oil price. Until the end of July 80

2010, the price average ICP will reach about 70 Average estimation =US$78,7 per bareel

the level of USD77.4 per barrel, which is 60


Average realisation S$61,7 per barrel
higher than the realisation in the period of 50

2009 amounting to USD53.5 per barrel. In 40

2010, ICP was estimated to rise 30


39814 39904 39995 Oct 2009 40179 40269

approximately amounting to USD80 per


barrel or it increased to USD18.4 per barrel Source: Bloomberg, EIA & Ministry  of Energy and  Mineral Resources 

compared with the average ICP in 2009


reaching about USD61.6 per barrel.

1.4.6 Lifting

GRAPH I.26
The realisation of oil lifting in 2009
(December 2008-November 2009) has
INDONESIA OIL LIFTING, 2008 - 2010
(million barrel per day)
reached 0.944 million per barrel per
0.97 Target Realisation
day, which was lower than the target
0.96
0.95 0.965 0.965 set up for the APBN-P 2009 amounting
0.94 to 0.960 million barrel per day (Graph
0.96
0.93 0.944 I.26). Some problems preventing
0.92
0.927
0.936 from the achievement of oil production
0.91
0.9
target in 2009 were, among others,
2008 2009 2010* either the projects delay or unplanned
shutdown, such as bad weather and
*) the Revised Budget
the damage in electric facilities.
Source: Ministry of Finance & BP Oil & Gas Furthermore, problems faced by some
counterparty contractors failing to
reach the production target was caused by the delay in a development of production

Financial Note and Indonesian Revised Budget 2010 I-19


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

facilities, technical problem of equipment / production facilities and problem in procuring


floating production facilities (Floating Storage Offshore / FSO).
The achievement of oil lifting in 2009 that was below the target set up was influenced by
the realisation of oil and gas investment. Until 30 December 2009 the realisation of
investment in oil and gas reached about USD12,184 billion below the target, USD13,778
billion. Within the same period the realisation of upstream investment in oil and gas
dropped down from the target about USD13,166 billion to USD10,874 billion, and the
realisation of downstream investment grew from the target about USD612 million to
USD1,310 billion. The Government has set up to reach the target of investment in oil and
gas sector in 2010 by USD15,988 billion consisting of investment in upstream sector by
USD13,628 billion and investment in downstream sector by USD2,360 billion.
In order to stimulate sound investment in oil and gas sector, the Government issued a
series of regulation in 2009, among others, two Laws, three Government Regulations,
two Presidential Rules/ Presidential Decree, 32 Minister of Energy and Mineral Resources
Regulations, 51 Minister of Energy and Mineral Resources Decrees, and other 390 legal
products.
In the APBN 2010, the Government and the House of Representatives have agreed on the
target of oil lifting about 0.965 million barrel per day. Considering the realisation of oil
lifting in 2009 that was lower than the target set up in the APBN-P 2009, the Government
has taken a number of precautionary steps in achieving the target on oil production.
These steps are as follows: issuing the provision of not to peg the cost recovery (replacement
cost of exploration and production activities), granting tax incentives on import oil and
gas equipment, optimising oil production from oil wells having been abandoned, and
enhancing an effective communication with the contractors having worked under a joint
contract to improve the performance on the production in order to achieve the target. In
2010 additional oil lifting is predicted from an area operated by PT Chevron Pacific
Indonesia about 364,800 barrel per day, and from PT Pertamina and its counterparty
about 131,800 barrel per day. Based on this progress, the target on oil lifting of crude oil
in the APBN-P 2010 is set up by 0.965 million barrel per day, which is same as the
assumption on the APBN 2010.

1.4.7 Balance of Payments


Along with the improving outlook on the global and domestic economy, balance of
payments performance in 2009, in terms of both current account and capital and financial
transactions are expected to improve compared to its performance in previous years. The
improvement on balance of payments performance was mainly due to the increasing
demand from exports and capital inflows, in form of project loans and loan programmes,
as well as direct and portfolio investments.
The current account in 2009 was expected to record a surplus of USD10.746 million,
driven by an increase in the surplus in the balance of trade and a deficit in the balance of
income, which was slightly lower than that in the previous year, although the balance of
services showed a deficit. The balance of trade in 2009 showed a surplus of USD35.133
million, which was greater than that in the previous year amounting to USD22.916 million.
This was due to the decrease in imports relative to exports. Meanwhile, the increase in
deficit in the balance of service was mainly influenced by the increase in service spending,

I-20 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

and imports of transportation of goods, in line with an improvement of in domestic


economic absorption that have encouraged the increase in imports.
Meanwhile, the capital and financial account in 2009 were estimated to record a surplus
amounting to USD3.548 million. This surplus was mainly from a large surplus in direct
investment and portfolio investment, in line with an estimated increase in direct investment
in oil and gas sector and improving perception of the risk in the domestic market. Surplus
on portfolio investment was supported by the issuance of global bonds, foreign currency
of sukuk, and shibosai bonds by the Government. Another investment performance was
boosted by additional allocation of special drawing rights, or Special Drawing Rights (SDR)
amounting to USD2.720 million which was under the agreement of the G-20 leaders
(Group of 20). This additional allocation of SDR was aimed at strengthening the position
of foreign exchange reserves of developing countries, including Indonesia, as an effort to
handle the global economic crisis.
Based on development in balance of payment variables in 2009, the general equilibrium
was estimated to generate a surplus in USD 12,506 million, so that the foreign exchange
reserve was estimated to reach by USD 66,105 million or equal to equivalent to 6.6 months
of imports and foreign debt repayment (Table I.5).
In 2010, the performance of balance of payments is projected to remain fairly strong, as
a result of rising surplus in the capital and financial accounts, alongside with a decline in
the current account surplus. Balance of trade as one component of the current accounts
is supported by the improved performance of exports and capital inflows, although at the
same time imports are also expected to rise. Export performance improvement connected
with economic recovery and the volume of world trade is moving to the positive growth.
In line with this, exports are expected to grow by 24.4 percent reaching USD148, 660
million. On the other hand, a slight growing of economic activities and investment will
encourage an increase in imports of raw materials and capital goods. In 2010, imports
are expected to increase significantly to 35.2 percent, reaching USD11.051 million.
Considering these conditions, the balance of trade will generate a surplus in USD34.609
million. Meanwhile, the deficit in the balance of trade is estimated to reach USD15.958
million, which is approximately 13.1 percent higher than the realisation in 2009. This is
primarily due to the increase in imports of transportation (freight) and expenditures of
other services. Deficit in the balance of revenue is estimated to reach USD17.561 million
which is 16.0 percent larger than the realisation in 2009. While the balance of transfer is
estimated to generate a surplus USD4.960 million or 2.0 percent increase when compared
with that in the previous year. Considering these conditions, the current account in 2010
is estimated to produce a surplus USD6.050 million.
On the other hand, capital and financial accounts in 2010 are estimated to have a surplus
of USD12.889 million, which is higher than that in 2009 amounting to USD3.548 million.
The increase surplus in financial and capital accounts are caused by the balance sheet of
public sector increasing in 8.5 percent compared with the conditions in 2009, and also by
the balance sheet of private sector returning to positive. The more conducive investment
and the liquidity recovery in the global financial market is estimated to encourage foreign
capital inflows, so the balance sheet of private sector will generate a surplus USD830
million, whereas in 2009 it had a deficit of USD7,565 million.

Financial Note and Indonesian Revised Budget 2010 I-21


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

TABLE I.5
INDONESIA BALANCE OF PAYMENT, 2008-2010
(in billion of USD)

Items 2008 2009* 2010**


A. CURRENT ACCOUNT 126 10,7 46 6,050
1 . Trade Balance 22,91 6 35,1 33 34,609
a. Ex port, fob 1 39,606 1 1 9,480 1 48,660
- Oil and Gas 31 ,7 21 20,451 25,31 5
- Non-Oil and Gas 1 07 ,885 99,063 1 09,484
b. Import, fob -1 1 6,690 -84,347 -1 1 4,051
- Oil and Gas -23,935 -1 2,1 1 3 -1 4,1 1 2
- Non-Oil and Migas -92,7 55 -7 2,202 -89,642
2. Serv ices -1 2,998 -1 4,1 08 -1 5,958
3. Income -1 5,1 55 -1 5,1 40 -1 7 ,561
4. Current Transfer 5,364 4,861 4,960

B. CAPIT AL AND FI NANCIAL ACCOUNT -1,87 6 3,548 12,889


1 . Public Sector 1 ,903 1 1 ,1 1 3 1 2,059
- Capital Transaction 21 11 45
- Financial Transaction 1 ,882 1 1 ,1 03 1 2,01 4
a. Portfolio Inv estment 3,31 7 9,57 8 1 1 ,223
b. Other Inv estment -1 ,436 1 ,525 7 92
- Programme Loan 2,7 43 2,962 2,444
- Project Loan 2,201 2,567 2,81 9
- Debt repay ment -6,380 -6,7 24 -6,07 5
- Allocation of SDR (Special Drawing
Right) 0 2,7 20 0

2. Priv ate Sector -3,7 7 8 -7 ,565 830


- Capital Transaction 27 3 85 62
- Financial Transaction -4,052 -7 ,650 7 67
a. Direct Inv estment, net 3,41 9 1 ,928 6,459
b.Portfolio Inv estment -1 ,597 7 58 356
c. Other Inv estment -5,87 3 -1 0,337 -6,048

C. T OT AL (A+B) -1,7 50 14,294 18,939

D. NET ERRORS AND OMMISSIONS -195 -1,7 88 -263

E. OVERALL BALANCE (C+D) -1,945 12,506 18,67 6

Mem orandum
International Reserv e 51,639 66,105 83,188
(in m onths of im ports and official foreign debt
repay m ent)
4.0 6.6 6.5

* Provisional figures
**Projection
Source : Bank Of Indonesia

I-22 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

The improving balance of payments is reflected in the increase in foreign exchange reserve
which is expected to support the domestic stability and economic growth. The foreign
exchange reserve is projected to reach USD83.118 million in 2010.

1.5 Principles of Fiscal Policy of APBN 2010


Since the end of the year 2009 and at the beginning of the implementation of the APBN
2010, the Government continues to monitor global and domestic economic developments,
the implementation of the APBN-P 2009 and its impacts on the implementation of the
APBN 2010. As a result of this monitoring process, the performance of national economy
in 2009 is able to survive from the pressure of the global crisis, compared with the
performance of other countries that have also been affected by the sharp global crisis.
From the macroeconomic perspective, the strengthening of rupiah particularly in the
second semester of 2009 and the decline in the inflation rate have created a positive impact
on the decline in the interest rate of Bank Indonesia Certificate. These indicators and
effective polices introduced by the Government have buttressed the economic growth to
remain positive and relatively high in 2009 reaching about 4.5 percent. In addition, the
inflation rate was managed to reach 2.78 percent.
Achievement in the national economy and global economic conditions have also exerted
impacts on the realisation of the APBN-P 2009 variables. In general the realisation of
APBN-P 2009 was managed well, as reflected in the deficit realisation of APBN-P 2009
amounting to Rp88.618,8 billion (1.6 percent of GDP), which was below the target of
Rp129.844, 9 billion (2.4 percent of GDP). This is as a consequence of the realisation of
the revenues and grants reaching 97.4 percent of the target, while the realisation of the
state expenditures reached 93.7 percent of the ceiling. On the other hand, the realisation
of net financing has amounted to Rp12,583.2 billion, so that it generated a surplus net
financing (SILPA – a surplus/deficit of budget and net financing in the budget year)
amounting to Rp. 23,964.4 billion.
Entering 2010, although signs of global economic recovery have appeared, the
implementation of national development still continue to face challenges that need to be
anticipated in the future. From the external side, the global economic recovery is predicted
to improve indicated by the growing prices of primary commodities especially crude oil
price which will finally affect primary commodities, especially crude oil prices which will
also affect the posture of the APBN 2010. On the internal side, the growth of inflation is
predicted to rise surpassing its target in 2009, as a result of the increase in purchasing
power of people and the policy on administered prices. In addition, the national development
will continuously put in a great deal of effort to reduce the rate of unemployment and
poverty, and to build basic and supporting infrastructure, including removing impediment
in building the infrastructure.
Considering the evaluation in the economy performance in 2009, and the economic growth
as well as the national development in 2010, the Government has deemed it necessary to
make some revisions in the APBN 2010. The legal basis of the APBN-P is under the article
27 of Law Number 47 year 2009 regarding the APBN 2010, in which verse (1) gives a
mandate to the Government to propose the Bill on the Indonesian Budget for the 1010
fiscal year, in the event that :

Financial Note and Indonesian Revised Budget 2010 I-23


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

a. Progress of macroeconomic is unsuitable with the assumption supported on the


Indonesian Budget for the 2010 fiscal year;
b. Changes in principles of fiscal policy have occurred;
c. Conditions exist that have caused a budget shift between organisational units,
programmes, and / or inter types of expenditures;
d. Conditions exist that have caused a budget surplus in the previous year to be
spent for financing the budget year of 2010;
Within this framework, changes in the APBN 2010 are aimed at: (a) anticipating the
changes in macroeconomic indicators in 2010, (b) maintaining the stability of prices of
goods and services within the country; and (c) accelerating the implementation of prioritised
national development programmes both in the medium-term and in 2010. The changes
in the APBN 2010 are made comprehensively, so that it will include all changes in the
budgets of income, expenditure, budget deficit and financing the budget.
On the national income side, the changes occur, either in the plan of projection on of tax
revenue or and PNBP. On the tax revenue side, the adjustments in the target variables
are made based on the changes in the macroeconomic variables projection in the APBN-
P 2010, and the realisation of tax revenues in 2009. The change in basic macroeconomic
assumptions in 2010 affecting the tax revenue is mainly the change in the projection on
Rupiah exchange rate against the US dollar. In addition, a deviation in the realisation of
tax revenue in 2009 from the target set in the APBN-P 2009 will be incorporated as a
baseline of revising the projection on of the new tax revenue in 2010.
Meanwhile, non-tax revenues estimated to increase related to higher ICP assumption as
a basic for calculating revenue oil and gas resources and increase on government’s revenue
target based on estimate State Owned Enterprises financial performance improvement in
2009 . Based on these development, APBN-P 2010 expected to be Rp992,398.8 billion, or
4.5 percent higher than the target of APBN 2010 amounting to Rp949,656.1 billion.
On the goverment expenditure side, change comes from a combination ceiling of the
addition of a new state budget, and budget reallocation. The addition of the goverment
expenditure in APBN-P 2010 was due to the addition of the central government budget,
and the addition of transfers to local budgets. Changes in central government expenditure
in APBN-P 2010 is influenced by several factors. First, changes in macroeconomic
assumptions, particularly the projection of higher oil prices into USD80/barel, resulting
in increased energy subsidy. Second, the Government’s policy to maintain stability of
prices of goods and services, by retaining the current fuel prices, fertilizer and HET policy
adjustments in electricity based tariffs, tax incentives, adjustments of food subsidies in
the form of additional allocation of subsidized rice to targeted households and price
adjustment purchase of rice, and cooking oil subsidies. The main objective of price
stabilization policies are directed to the needs of goods and services can be maintained it’s
availability, easily obtained, as well as with good quality and price. Third, to accommodate
budget for priority development programs that have not been accommodated in Law
Number 47 Year 2009 regarding APBN 2010. As stipulated in Presidential Instruction
Number 1 Year 2010 regarding the Implementation Acceleration of the National
Development Priorities in 2010. In addition, the APBN-P 2010 also allocated funds for

I-24 Financial Note and Indonesian Revised Budget 2010


Basic Assumption and Fiscal Policy Highlights, APBN-P 2010 Chapter I

rehabilitation programs and post-disaster reconstruction in West Java and West Sumatra.
Fourth, keep the ratio of education spending remains 20 percent. In APBN-P 2010,
estimated that there are additional budget for education amounted to Rp15.691, 7 billion,
consisting of additional education spending through central Government expenditure
amounted to Rp13,310. 3 billion, transfers to the regions of Rp1,381. 4 billion, and through
financing in the form of endowment fund that management education undertaken by
public service agencies (BLU) in the education sector amounted to Rp1,000. 0 billion.
Besides the addition of the budget, the central Government spending will also be carried
out reallocation of spending to finance, from mortgage interest subsidy program for KPRSh
to investment capital in the financing country.
Meanwhile, in the expenditure transfers to the regions, the additional budget in APBN-P
2010 derived from increase in revenue sharing from natural resources due to rising oil
and gas targets which some non-tax revenues distributed back to regions, and the lack of
allocation of funds to pay for oil and gas results in previous years. In addition, transfers to
the regions also increased relating to the transfer of grants to the area, which was originally
housed in central government spending.
Additional funding requirements to expenditure met from the reallocation of expenditures
that are already available, and also met from other funding sources, both from the revenue
side as well as from the financing side. Overall additional required state spending estimated
at Rp78,480.4 billion, so in 2010 state budget spending is estimated to be Rp1,126,146. 5
billion.
Having the target on the state revenue and grants of Rp992,398,8 set, and the estimate
expenditure of Rp 1,126,145.5 billion contained in the APBN-P 2010 resulting from a
revision, the APBN-P 2010 will have a deficit amounting to Rp133,747.7 billion. (2.1
percent of GDP). Compared with the deficit in the APBN 2010 reaching by Rp98,009.9
billion (1.6 percent of GDP), deficit budget in the APBN-P 2010 2010 is surpassing 36.5
percent. The plan to increase the budget deficit in the 2010 Revised State is at least based
on two factors. Firstly, the increase in the budget deficit will enable the implementation
of the prioritised programs to accelerate the achievement of the development targets, to
maintain the stability of prices of goods and services in the country, and to improve the
protection for the public. Secondly, the level of increase in the budget deficit is still below
the level of tolerance in accordance with the statutory provisions, and the source of
financing is mostly from domestic fund.
Furthermore, the budget financing planned in the APBN-P 2010 will be Rp. 133,747.7
billion, surpassing 36.5 percent of the target set in the APBN 2010 valuing in Rp.98,009.9
billion. The budget financing planned in APBN-P 2010 will be used to finance the budget
deficit, and to contain the financing required for increasing the Government investment
(including the endowment fund for education), and the capital investment to support the
infrastructure building, to enhance the micro credit, and to assist the development of
small housing. In addition, the source of financing in the APBN-P 2010 will be obtained
from the followings: the withdrawal of foreign loan, the utilisation of the SILPA 2009
and the Cumulated Budget Surplus (SAL) in the previous years. Summary of the
Indonesian Budget and the 2010 Revised Indonesian Budget are presented in
Table I.6.

Financial Note and Indonesian Revised Budget 2010 I-25


Chapter I Basic Assumption And Fiscal Policy Highlights, APBN-P 2010

TABLE 1.6
SUMMARY OF THE 2010 INDONESI AN BUDGET AND REVISED BUDGET
(in billion rupiah)

2010 2010 2010


Deviation
REVISED
BUDGET from the
Items BUDGET
Budget

A. REVENUES AND GRANTS 949,656.1 992,398.8 42,742.7


I. DOMESTIC REVENUES 948,149.3 990,502.3 42,353.0
1. TAX REVENUES 742,738.0 743,325.9 587.9
a. Domestic Taxes 715,534.5 720,764.5 5,230.0
b. International Trade Taxes 27,203.5 22,561.4 (4,642.1)
2. NON-TAX REVENUES 205,411.3 247,176.4 41,765.1
a. Natural Resources Revenues A 132,030.2 164,726.7 32,696.5
1) Natural Resources - Oil and 120,529.8 151,719.9 31,190.2
2) Non-Oil and Gas 11,500.5 13,006.9 1,506.4
b. Profit 24,000.0 29,500.0 5,500.0
c. Other Non-Tax Revenues 39,894.2 43,462.8 3,568.6
Revenues from Public Service
d. Agencies (BLU - Badan Layanan 9,486.9 9,486.9 0.0
Umum) / Bank Indonesia
II. GRANTS 1,506.8 1,896.5 389.7

B. GOVERNMENT EXPENDITURES 1,047,666.0 1,126,146.5 78,480.5


I. CENTRAL GOVERNMENT
725,243.0 781,533.6 56,290.6
EXPENDITURES (K/L & Non K/L)
1. K/L Expenditures 340,149.2 366,134.5 25,985.3
2. Non K/L Expenditures 385,093.8 415,399.1 30,305.3
a.l a. Loan Interest Payment
115,594.6 105,650.2 (9,944.4)
1) Domestic Loan 77,436.8 71,857.6 (5,579.2)
2) International Loan 38,157.8 33,792.6 (4,365.2)
b. Subsidies 157,820.3 201,263.0 43,442.7
1) Fuel Subsidy 106,526.7 143,997.1 37,470.4
2) Non-Fuel Subsidy 51,293.6 57,265.9 5,972.3
c. Other Expenditures 30,714.9 32,926.7 2,211.8
II. REGIONAL EXPENDITURES 322,423.0 344,612.9 22,189.9
1. Balanced Funds 306,023.4 314,363.3 8,339.9
a. Revenue Sharing 81,404.8 89,618.4 8,213.6
b. General Allocation Funds 203,485.2 203,606.5 121.3
c. Special Allocation Funds 21,133.4 21,138.4 5.0
2. Special Autonomy and Adjustment 16,399.6 30,249.6 13,850.0
3. Regional Grants 0.0 0.0 0.0

C. SURPLUS/ DEFICIT BUDGET (A - B) (98,009.9) 133,747.7 231,757.6


% of Deficit to GDP (1.6) (2.1) (0.4)

D. FINANCING (I + II) 98,009.9 133,747.1 35,737.2


I. DOMESTIC FINANCING 107,891.5 133,903.2 26,011.8
1. Domestic Banks 7,129.2 45,477.1 38,347.9
2. Non-Domestic Banks 100,762.3 88,426.1 (12,336.2)
II. FOREIGN FINANCING (net) (9,881.5) (155.5) 9,726.0
1. Foreign Loan (gross) 57,605.8 70,777.1 13,171.3
2. SLA - Subsidiary Loan Agreement (8,643.8) (16,796.6) (8,152.8)
3. Amortization (58,843.5) (54,136.0) 4,707.5

Source : Ministry of Finance

I-26 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

CHAPTER II
REVENUES AND GRANTS IN THE REVISED
INDONESIAN BUDGET 2010

2.1. Introduction
Entering 2010 the ongoing growth of global and domestic economic are still facing challenges.
This was triggered by a trend in the increasing international oil prices encouraging the
commodity prices to rise simultaneously. To anticipate the negative impacts of the rising
prices, the Government has decided to make some changes in the APBN 2010 according to
the current economic development conditions. Another factor determining the change in the
APBN 2010 is that the realization of some revenue items did not reach the targets. The
realization of revenue and grants in 2009 was 97.4 percent of the target set in the APBN-P
2009 detailing the followings: tax revenue achieved 95.1 percent, while non-tax revenue
reached 104.2 percent.
Considering the above factors, the revenues and grants in the APBN 2010 are expected to
change. The revenues and grants in the APBN-P 2010 are estimated to increase to Rp992,398.8
billion (15.9 percent of the GDP) growing up by 4.5 percent compared with that in the APBN
2010 at Rp949,656.1 billion. Meanwhile, the revenues and grants in the APBN 2010 have
risen by 16.9 percent surpassing the realization in 2009 at Rp848,763.2 billion.

2.2 Changes in Revenues and Grants 2010


The preparations for revising the estimate figures of revenue and grants in 2010 are influenced
by several important factors. Firstly, the realization of revenue and grants being achieved in
2009. Secondly, the world economy developments, and its impact on the Indonesian economy,
include the resilience and the preventive actions taken by domestic businesses. Thirdly, changes
made in macroeconomic assumptions in 2010, particularly in inflation, exchange rate, and
ICP.
The revenues and grants in the APBN-P 2010 are estimated to exceed the target set in the
APBN 2010, although the realization of the revenues in 2009 was slightly below the figure in
the APBN-P 2009. This was caused by the change in the ICP assumption from USD 65 per
barrel to USD 80 per barrel.
The revenues and grants in the APBN-P 2010 are estimated to reach Rp992,398.8 billion,
consisting of domestic revenue and grants amounting to Rp990,502.3 billion and Rp1,896.5
billion respectively. Compared with the target set in the APBN 2010 at Rp949,656.1 billion,
the revenues and grants determined in the APBN-P 2010 are exceeding Rp42,742.7 billion or
4.5 percent. The increase occurred in either domestic revenue items and grants growing by
4.5 percent and 25.9 percent respectively. Furthermore, revenues and grants determined in
the APBN-P 2010 grow by Rp143,635.6 billion or 16.9 percent exceeding the realization achieved
in 2009. Details are as follows: domestic revenue and grants grow by 16.9 percent and 13.8
percent respectively. The growth of revenues and grants from 2009 to 2010 are shown in
Table II.1

Financial Note and Indonesian Revised Budget 2010 II-1


Chapter II Revenues and Grants

TABLE II.1
REVENUES AND GRANTS, 2009-2010
(billion rupiah)
2009 2010
Items % to % to
APBN-P LKPP APBN APBN-P
APBN-P APBN

Revenues and Grants 870,999.0 848,763.2 97.4 949,656.1 992,398.8 104.5


A. Domestic Revenues 869,992.5 847,096.6 97.4 948,149.3 990,502.3 104.5
1 Tax Revenues 651,954.8 619,922.2 95.1 742,738.0 743,325.9 100.1
2 Non-Tax Revenues 218,037.6 227,174.4 104.2 205,411.3 247,176.4 120.3
B. Grants 1,006.5 1,666.6 165.6 1,506.8 1,896.5 125.9

Source : Ministry of Finance

2.2.1 Domestic Revenues


Domestic revenues in the APBN-P 2010 are estimated to reach Rp990,502. 3 billion, consisting
of tax revenues Rp743,325. 9 billion and non-tax revenues Rp247,176.4 billion. Compared
with the target set in the APBN 2010, domestic revenues increased to 4.5 percent, detailing
the following: tax revenues and non-tax revenues grew up by 0.1 percent and 20.3 percent
respectively. In general, the increase in domestic revenues was due to the growth in oil and
gas revenue as a result of the changes in the assumption of ICP (Indonesia Crude oil Price) in
the APBN-P 2010. Meanwhile, compared with the realization in 2009, the projection of
domestic revenues in the APBN-P 2010 increased by Rp143,405.7 billion or 16.9 percent.
The increase occurred in tax revenue and non-tax revenue amounting to 19.9 percent and
8.8 percent respectively.

2.2.1.1 Fundamental Changes in Tax Revenue


World economic conditions in 2010 are projected to improve, compared with those in 2009
amid the pressures stemming from the global economy crisis. To anticipate the crisis, the
Government will continue providing fiscal stimulus in taxation, especially to (a) increase
people’s purchasing power, (b) maintain the business resilience to the global crisis, and
(c) improve the competitiveness of business and industry.
As a continuation of the tax stimulus programme in 2009, the provision of customs duty
facility namely the Tax Borne by the Government policy (DTP) serves the purposes as follows:
to supply goods and services for the public, to encourage the real sector, and to improve the
competitiveness of certain industries in the country. In accordance with the recommendation
from the ministries as the supervising sector, the import duty subsidy will be granted to some
selected industrial sectors having met the certain criteria. Meanwhile, the additional facilities
on the Value Added Tax (PPN) Borne by Government on cooking oil is intended for stabilising
the cooking oil price in the domestic market to anticipate the increase in the price of Crude
Palm Oil (CPO) in the international market.
All DTP facilities provided in order to continue the programme of fiscal taxation stimulus are
part of the policy of DTP or general tax subsidies. The total value of DTP provided in the
APBN 2010 is Rp16,872.8 billion, whereas in the APBN-P 2010 the DTP value is planned for

II-2 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

Rp18,434.4 billion increasing by Rp1,561.6 billion. The changes are required in the following:
the Value Added Tax on
cooking oil DTP , import TABLE II.2
TAXES BORNE BY GOVERNMENT (DTP ), 2010
duties DTP, income tax , and (billion rupiah)

additional DTP on tax APBN APBN-P

receivables of some State- 1. Income Taxes 3,624.3 4,424.6


Owned Enterprises (BUMN), a. Income Tax on the geothermal commodity 624.3 624.3
b. Income tax for interest on the Government Securities issued in the international markets 2,000.0 2,000.0
and DTP on murabaha
c. Income tax on grants and international financing from multilateral financial institutions 1,000.0 1,000.0
Islamic banking d. Income tax on the transfer of transactions on land ownership rights and / or buildings owned by
the citizens of the victims of mud disaster of Sidoarjo and PT Minarak Lapindo Jaya Lapindo
- 205.0

transactions. The total DTP e. Income tax on Biofuel (BBN)


f. Account receivable taxes from the former National Bank Restructuring Agency (BPPN) and
-
-
100.0
495.330
on receivable taxes of several Television of the Republic of Indonesia (TVRI)

BUMN will amount to 2. Value Added Taxes 10,248.5 12,009.8


a. VAT on fuel, geothermal commodities and 3-kg subsidized LPG 5,897.5 5,897.5
Rp1,787.3 billion consisting of b. Tax on import of oil and gas exploration (PDRI) 2,500.0 2,500.0
c. VAT on the imports of cooking oil and wheat / wheat flour 851.0 1,091.8
DTP income taxes receivables d. VAT on adaptation & mitigation of climate change - 900.0
e. VAT on Biofuel (BBN) 1,000.0 -
on the former National Bank f. VAT on Murabaha transactions of Islamic banking
g. VAT on the Account receivable taxes from the former BPPN and TVRI
-
-
328.5
1,292.03
Restructuring Agency
3. Import Duties 3,000.0 2,000.0
(BPPN) and the Republic of Import Duties Facilities (except the Ministry of Finance Regulation No 135 of 2007 - PMK

Indonesia Television (TVRI)


135/2007)
- 3,000.0 2,000.0

amounting to Rp495.3 Total of Taxes Borne by Government (DTP) 16,872.8 18,434.4

Source : Ministry of Finance


billion, and the DTP Value
Added Tax receivable on the former IBRA, TVRI and Indonesia Train Company (PT. KAI)
amounting to Rp1,292.0 billion. The total of Value Added Tax DTP provided for murabahah
Islamic banking transactions is Rp328.5 billion, which will be distributed to Bank Muamalat
Rp76.4 billion, Bank Negara Indonesia Rp150.1 billion, Bank Syariah Mandiri Rp25.4 billion
and Bank Bukopin Rp76.4 billion. Details of DTP in 2010 are presented in Table II.2.
Furthermore, in line with the Government’s efforts to develop the utilisation of renewable
energy sources in 2010, the Government has provided tax incentives, namely, the income
tax of DTP on bio fuel and the Value Added Tax of DTP on adaptation and mitigation of
climate change. The facilities are provided for entrepreneurs working in the field of renewable
energy resources, having the purposes for stimulating investment and increasing the
competitiveness in the field of renewable energy.
The strategy and protection of policies on tax revenue in 2010 are formulated by the following
steps: (a) conducting extensification activities to increase potential income from the new
taxpayers; and (b) conducting intensification activities as the following: (1) exploiting the
potential tax on the basis of profile-based for all taxpayers within the regions of the following:
the Medium Tax Office (KPP Madya), the Regional Office of the Directorate General of Tax
for Large Taxpayers; and the Special Regional Office Jakarta; 1,000 taxpayers within the
region of Small Tax Office (KPP Pratama), exploiting the potential taxpayers on the High
Rise Building, as well as continuous monitoring the potential individual and treasurer
taxpayers; (2) exploiting the potential taxpayers by implementing the programme on
optimizing data of taxation, (3) encouraging law enforcement for potential taxpayers that
have not used the Sunset Policy facility, or providing the taxpayers with counselling through
conducting the inspections, taking the collections of claim and undertaking the investigations,
(4) enforcing the level of compliance with the regulation on the tariff reduction along with
the programme provided such as counselling and service rendered for taxpayers having used

Financial Note and Indonesian Revised Budget 2010 II-3


Chapter II Revenues and Grants

the facility of Sunset Policy. Thus, these taxpayers are expected to pay the taxes correctly
after having been provided the programmes such as : tax education and counselling to
increase the compliance. (5) developing the potential of particular sectors such as mining,
plantation, and manufacturing industry sectors, and (6) providing potential taxpayers with
responses given to a number of 1.000 Yearly Annual Income Tax Reports (SPT).
Furthermore, the government will continue to provide the business sector with the tax facilities
(tax incentives), without hampering the attainment of income tax target. In addition, the
Government will continuously take steps in reforming and improving the tax policies and tax
administration (tax policy and administration reform).
The implementation of above strategy and protection policy have resulted in the optimal tax
revenue in the APBN-P 2010 amounting to Rp64,125.2 billion, growing by Rp5,322.6 billion
compared with that in the APBN 2010 at Rp58,802.6 billion. The extensification programme
on tax implemented for both employees and non-employees has resulted in an additional
income tax amounting to Rp2,257.6 billion. The intensistification programme capable of
additional tax revenue of Rp61,867.0 billion or increased by Rp5,322.6 billion compared with
APBN 2010.
On the excises side, strategies and policies issued to achieve the revenue target in 2010 are as
follows : (a) implementing various intensification and extensification policies; (b) improving
several excises regulations; (c) establishing mode modern excises service offices as part of a
modernisation programme in customs and excise administration, (d) improving the
supervision efforts in the excises, especially in the distribution of illegal cigarettes, and
counterfeit excise taxes, and (e) implementing risk management in excise taxes.
On the other hand, the policies in customs in 2010 are formulated by enhancing the
import duties tariff harmonisation programme, which will encourage the roadmap on the
national industrial development policy. Tariff adjustment and improvement of harmonious
rates between customs import tariff for upstream, intermediary and downstream industrial
raw material imports, which will create a conducive climate to encourage the competitiveness
of Indonesian products. Similarly, in the co-operation in international goods trade (Free
Trade Agreement or FTA), the Government continuously takes an active participation in,
and maximises the benefits from the international trade under the regional, bilateral and
multilateral co-operation schemes. In addition, the Government has implemented the
established FTA policies focusing on the implementation of Early Warning System on the
imported goods that may threaten the domestic industries. For this reason, a various policies
on trade came into effect to protect the domestic industries.
Considering the fundamental changes abovementioned, and the realization of tax revenue in
2009 as well as the changes in macroeconomic assumptions in 2010, tax revenue in the
APBN-P 2010 is estimated at Rp743,325.9 billion, increasing by Rp587. 9 billion or 0.1 percent
of the target set in the APBN 2010. The increase was primarily due to changes in the basis
used for making calculation (baseline). The baseline applied in the APBN 2010 was the
figure in the APBN-P 2009, while the baseline applied in the APBN-P 2010 is the realization
of 2009. Compared with the realization in 2009, tax revenue in the APBN-P 2010 grew by
Rp123,403.7 billion or surpassing that in 2009 at 19.9 percent. The estimation of tax revenue
in 2009-2010 is presented in Table II.3.

II-4 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

TABLE II.3
TAX REVENUES, 2009 - 2010
(billion rupiah)

2009 2010
Item s % to % to
APBN-P LKPP APBN APBN-P
APBN-P A PBN

T ax Rev enu es 65 1,95 4.8 619,922.2 95 .1 7 42,7 38.0 7 43,325 .9 100.1


a. Dom esticT axes 631,931.7 601,251.7 95 .1 7 15 ,5 34.5 7 20,7 64.5 100.7
i. Income Tax es 340,209.3 317 ,61 5.0 93.4 350,958.0 362,21 9.0 1 03.2
1 Oil and gas 49,033.4 50,043.7 1 02.1 47 ,023.4 55,382.4 11 7 .8
2 Non-Oil and Gas 291 ,1 7 5.8 267 ,57 1 .3 91 .9 303,934.6 306,836.6 1 01 .0
ii. Value Added Tax es 203,084.0 1 93,067 .5 95.1 269,537 .0 262,963.0 97 .6
- Domestic V alue Added Tax 1 20,692.8 1 26,81 1 .9 1 05.1 1 67 ,369.1 1 7 7 ,1 91.2 1 05.9
- Import Value Added Tax 82,391 .2 66,255.6 80.4 1 02,1 67 .9 82,454.7 80.7
iii Land and Building Tax 23,863.6 24,27 0.2 1 01 .7 26,506.4 25,31 9.1 95.5
iv Duties on Land & Building Transfer 6,980.0 6,464.5 92.6 7 ,392.9 7 ,1 55.5 96.8
v . Customs 54,545.0 56,7 18.5 1 04.0 57 ,289.2 59,265.9 1 03.5
v i Other tax es 3,250.0 3,1 1 6.0 95.9 3,851 .0 3,841.9 99.8
b. International T rade T ax es 20,023.1 18,67 0.4 93.2 27 ,203.5 22,561.4 82.9
i. Import Duties 1 8,623.5 1 8,1 05.5 97 .2 1 9,569.9 1 7 ,106.8 87 .4
ii. Ex port Duties 1 ,399.6 565.0 40.4 7 ,633.6 5,454.6 7 1 .5

Source : Ministry of Finance

2.2.1.2 Tax Revenues in The APBN-P 2010


Tax revenues consist of domestic and international trade taxes. In the APBN-P 2010 ,
domestic and international trade taxes are projected to reach Rp720,764.5 billion and
Rp22,561.4 billion respectively, or each has contributed 97.0 percent and 3.0 percent
respectively of the total tax revenues. Compared with the APBN 2010, domestic tax has
increased by 0.7 percent, and international tax has decreased by 17.1 percent, making the
total tax revenue has increased by 0.1 percent.
As a major contributor to tax revenues, income tax revenue in the APBN-P 2010 is estimated
at Rp362,219.0 billion, increasing to Rp11,261.0 billion or 3.2 percent from Rp350,958.0 billion
in the APBN 2010. This increase has occurred because of the changes in the ICP assumptions.
These changes have given significant influence in increasing the target in income tax revenue,
although the basis figure used as a baseline in calculating income tax revenue had declined.
The data used as baseline in making the APBN-P 2010 calculation is the realization of income
tax revenue in 2009 having only achieved Rp317,615.0 billion. Whereas in the APBN 2010
the data used as baseline is the APBN-P 2009 having achieved Rp340,209.3 billion.
Compared with its realization in 2009, the income tax revenue in the 2010 APBN-P has
grown up Rp44,604.0 billion or 14.0 percent. The increase was driven by an increase in ICP
assumptions supported in the APBN-P 2010, encouraging the increase in oil and gas income
taxes. In the APBN-P 2010, income tax and oil gas are estimated at
Rp55,382. 4 billion, or surpassing those in the APBN 2010 plan at 17.8 percent. This increase
has occurred because the ICP assumptions supported in the APBN-P 2010 is USD80 per
barrel higher than that for the APBN 2010 at USD65 per barrel. The estimation of income
tax oil and gas revenue in 2009-2010 is shown in Graph II.1.

Financial Note and Indonesian Revised Budget 2010 II-5


Chapter II Revenues and Grants

GRAPH II.1 Compared with its realization in 2009, the plan


OIL AND GAS INCOME TAX 2009-2010
(trillion rupiah)
for income tax oil and gas in the APBN-P 2010
60
grew up 10.7 percent due to the realization of
50 the ICP in 2009 achieving USD58.5 per barrel
40 (December 2008-November 2009). In
30 55.4
20
50.0 47.0 addition, the increase in income tax oil and
10 gas have also been affected by the increase in
0
Real 2009 2010 2010
lifting from 0.944 MBCD (million barrels of
crude oil per day) in 2009 to 0.965 MBCD in
Source : Ministry of Finance
2010.
GRAPH II.2 Furthermore, income tax non-oil and gas in
NON-OIL AND GAS INCOME TAX
2009 - 2010 the APBN-P 2010 is estimated at Rp306,836.6
(trillion rupiah)
350 billion, or surpassing that in the APBN-P 2010
300 1.0 percent. This increase was influenced by
250 the economic growth assumptions in the
200 APBN-P 2010, which was higher than that in
150
267.6
303.9 306.8 the APBN 2010. In addition, the impact on
100 the Sunset Policy will increase the number of
50 taxpayers, which will boost non-oil and gas
0 income tax revenue. The estimation of non-
Real 2009
Source : Ministry of Finance
APBN 2010 APBN-P 2010
oil and gas income tax revenue in 2009-2010
is presented in Graph II.2.
By sector, non-oil and gas income tax revenue in the APBN-P 2010 will be mainly supported
by the financial, real estate and business service sectors, estimated at Rp61,567.5 billion. Thus,
non-oil and gas income tax revenues from these sectors are projected to decline in 8.9 percent
compared with the realization in 2009.
Furthermore, the second contributor is the manufacturing industry sector, which is predicted
to reach Rp77,755.1 billion in 2010, surpassing that in 2009 at 24.0 percent. The growth in
manufacturing industry is bolstered by the increase in consumption in 2010. This
consumption rise will influence in the growth on food and beverage as well as motor vehicle
industries that finally have contributed
TABLE II.4 greatly to the manufacturing industry. The
NON-OIL AND GAS INCOME TAX REVENUES BY SECTOR, 2009-2010
(billion rupiah) income tax revenues from sectors of trade,
Items
2009 2010 hotels and restaurants are expected to
Audited Projected y-o-y
increase to 16.4 percent. This increase has
Agriculture, Livestock, Forestry and Fisheries 10,530.2 9,319.8 (11.5)
Oil and Gas 8,458.9 8,235.7 (2.6) occurred because the sectors of trade, hotels
Non-Oil and Gas 17,838.9 14,016.2 (21.4)
Excavation 267.5 327.3 22.4 and restaurants are closely linked with public
Manufacturing Industry 62,683.8 77,755.1 24.0
Electricity, Gas & Water Supply 5,426.3 8,285.4 52.7 consumptions, so that when the economy
Construction
improves then the growth will be high.
6,732.5 7,743.4 15.0
Trade, Hotels and Restaurants 27,091.4 31,535.3 16.4

Furthermore, non-oil and gas mining sectors


Transportation and Communication 16,822.1 17,384.4 3.3
Finance, Real Estate and Business Service 67,594.6 61,567.5 (8.9)
Other Services
Other Undefined Activities
17,785.6
2,360.1
20,322.1
2,432.3
14.3
3.1 will decline by 21.4 percent. Non-oil and gas
Total 243,592.0
* Income tax from foreign currency & General Treasury (BUN ), offline
258,924.4 6.3
income tax revenue by sectors in 2009 and
transactions as well as restitutions have not been included

Source : Ministry of Finance 2010 are shown in Table II.4.


The estimation in the Value Added Tax (PPN) and the Sales Tax on Luxury Goods (PPnBM)
revenues in the APBN-P 2010 are Rp262,963.0 billion, declining Rp6,574.1 billion or 2.4

II-6 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

percent from the target set in the APBN-P 2010 of Rp269,537.0 billion. The decline has
occurred because of the decline in baseline, in which the APBN-P 2010 baseline had been
reduced by the arrears on DTP of value
added tax on fuel for the period of 2003-
GRAPH II.3
THE VALUE ADDED TAX AND THE SALES TAX 2005 amounting to Rp19,907.8 billion. The
ON LUXURY GOODS REVENUES
2009 - 2010
decline in the value added tax and the sales
300 tax on luxury also triggered by the changes
250 in the exchange rate assumptions of which
the rupiah against USD has appreciated from
Trillion Rupiah

200
Rp10,000 in the APBN 2010 to Rp9,200 in
150
269.5 263.0 the APBN-P 2010. On the other hand, the
100 193.1 changes in the inflation assumption
50 increasing from 5.0 percent in the APBN
2010 to 5.3 percent in the APBN-P 2010 has
0
real 2009 APBN 2010 APBN-P 2010 boosted the VAT and sales tax on luxury
Source : Ministry of Finance
goods revenues. However, the impact on
the arrears owed in DTP of Value Added Tax
on fuel is greater than that of the inflation assumption, making the projection of the PPN
and PPnBM revenue in the APBN-P 2010 is lower than that in the APBN 2010.
Improvement in world economic has impacted on the enhancement of international trade
activities that will also affect the increase in VAT and sales tax on luxury goods revenue,
especially from imports. Therefore, the VAT and sales tax on luxury goods revenue in 2010
are forecasted to increase Rp69,895.5 billion, or surpassing than that in 2009 at 36.2 percent.
The VAT and sales tax on luxury goods revenue in 2009-2010 are shown in Graph II.3.
The VAT revenues of sectors in the APBN-P are estimated at Rp247,330.2 billion, or surpassing
than that in 2009 at 31.0 percent. From the composition by sectors, the domestic VAT by
sector is Rp152,345.1 billion (62.0 percent) and the import VAT by sector is Rp94,985.1 billion
(38.0 percent).
In term of sector, the domestic VAT revenue in the APBN-P 2010 will be supported primarily
from the manufacturing industry sector, which is estimated at Rp67,294.0 billion, surpassing
than the realization in 2009 at 34.1 percent.
TABLE II.5 The increase accured because the economic
DOMESTIC VALUE ADDED TAX REVENUES BY SECTOR, 2009-2010
(billion rupiah) conditions are beginning to improve
Items
2009 201 0
boosting private consumptions, especially in
the subsectors of food, beverages, tobacco
Audited Projected y -o-y

A griculture, Liv estock, Forestry and Fisheries 3,544.2 3,329.2 (6.1 )


Oil and Gas 3,864.5 2,837 .1 (26.6) and motor vehicle industries. A significant
increase also occurred in the transportation
Non-Oil and Gas 1 ,880.0 2,1 38.4 1 3.7
Ex cav ation 1 22.3 1 68.4 37 .7
Manufacturing Industry
Electricity , Gas & Water Supply
50,1 7 2.5
7 1 8.3
67 ,294.0
938.7
34.1
30.7
and communication sectors increasing from
Construction 1 2,360.0 1 2,084.7 (2.2) Rp9,651.9 billion in the realization in 2009
Trade, Hotels and Restaurants
Transportation and Communication
23,51 2.9
9,651 .9
27 ,97 4.7
1 2,438.0
1 9.0
28.9
to Rp12,438.0 billion in 2010 or growing by
Finance, Real Estate and Business Serv ice
Other Serv ices
1 0,363.3
3,009.6
1 2,086.9
3,7 51 .2
1 6.6
24.6
28.9 percent. The growth of domestic
Other Undefined A ctiv ities 6,481 .0 7 ,303.8 1 2.7 revenue by sectors in 2009 and 2010 is
Total 1 25,680.6 1 52,345.1 21 .2
presented in Table II.5.
* V A T a n d bu y in g tr a n sa ct ion s m a de by Lin e Min ist r ies offlin e t r a n sa c tion s, & r est itu t ion s h a v e
n ot been in c lu ded
Sou r c e : Min ist r y of Fin a n ce

Financial Note and Indonesian Revised Budget 2010 II-7


Chapter II Revenues and Grants

On the other hand, the import VAT revenue by the


TABLE II.6
IMPORT VALUE ADDED TAX REVENUES BY SECTOR, 2009-2010 import sector in the APBN-P 2010 is predicted to
(billion rupiah)
reach Rp94,985.1 billion or an increase of 49.4
percent compared with the realization in 2009. The
2009 2010
Items
A udited Projected y -o-y

A griculture, Liv estock, Forestry and Fisheries 95.3 440.2 362.1


increased import VAT was due to the direct impact
Oil and Gas
Non-Oil and Gas
7 86.1
457 .5
5 54.1
1,928.1
(29.5 )
321 .4
of world economic recovery and was supported by
Excav ation
Manufacturing Industry
37 .69
40,1 50.6
1 0.13
5 9,1 68.6
(7 3.1 )
47 .4
the ASEAN China Free Trade Agreement (ACFTA).
Electricity , Gas & Water Supply 246.7 249.1 1.0 The revenues from the import VAT by sector are
Construction 969.7 91 5.7 (5 .6)
Trade, Hotels and Restaurants 1 8,258.5 28,17 6.6 5 4.3 greatly influenced by the sector of manufacturing
Transportation and Communication 1,47 9.0 1 ,200.1 (18.9)
Finance, Real Estate and Business Serv ice 1,001.5 2,226.3 1 22.3 industry and trade, hotels, and restaurants having
Other Serv ices
Other Undefined Activ ities
94.0
21 .1 6
84.7
31.31
(9.8)
48.0 contributed 63.0 percent and 30.0 percent
Total 63,597 .7 94,985 .1 49.4
* V A T a n d bu y in g t r a n sa ct ion s m a de by Min ist r ies, offlin e t r a n sa ct ion s, & r est it u t ion s a r e n ot in clu de
respectively. The growth of the VAT import
Sou r ce : Min ist r y of Fin a n ce
revenues by sectors in 2009-2010 is shown in.
Table II.6
Land and Building Tax Revenue (PBB) in the APBN-P 2010 is estimated at Rp25,319.1 billion,
a decline of Rp1,187.3 billion or 4.5 per cent compared with that in the APBN 2010. This
decline was due to the enactment of Law Number 28 Year 2009 regarding the Regional Tax
and Retribution (UU PDRD). As a consequence,
GRAPH II.4
LAND AND BUILDING TAX REVENUES,
the authority to manage the land and building
30
2009 - 2010
tax of urban and rural areas is gradually granted
to each regional government upon its readiness.
Trillion Rupiah

25

20
Furthermore, the estimation of the land and
15
24.3
26.5 25.3 building tax revenue in the APBN-P 2010
10
compared with the realization in 2009 has grown
5

0
up Rp1,049.0 billion or 4.3 percent. The land and
Real 2009 APBN 2010 APBN-P 2010 building tax revenues in 2009-2010 are shown
Source : Ministry of Finance in Graph II.4.
The revenue from the duties on land and building transfer (BPHTB) in the APBN-P 2010 is
predicted to decline in Rp7,155.5 billion or 3.2 percent compared with that in the APBN 2010.
The decline was due to the change in the baseline used in the APBN 2010 which is lower that
that in the APBN-P 2009. In addition, the revenue
GRAPH II.5
THE DUTIES ON LAND AND BUILDING from the BPHTB in the APBN-P 2010 is forecasted
8 TRANSFER REVENUES, 2009 - 2010

7
to increase to Rp691,0 billion surpassing the
6 realization in 2009 at 10.7 percent. The increase
Trillion Rupiah

5
is as a result of the estimate increase in the
4
3 6.5
7.4 7.2
property transactions that will be taxable items
2 of BPHTB in line with the projection of the
1
0
improved economy in 2010. The revenue from
Real 2009 APBN 2010 APBN-P 2010 the duties on land and building transfer in 2009-
Source : Ministry of Finance
2010 is shown in Graph II.5.
The revenue from the excise taxes in the APBN 2010 is estimated at Rp59,265.9 billion, an
increase of Rp1,976.8 billion or 3.5 percent compared with that in the APBN 2010. This
increase has occurred because of the increase in the baseline as a result of the higher realization
in 2009 than that in the APBN-P 2009. Besides, the increase is as a result of the shift of
revenue. The revenue from PPnBM for beverage containing ethyl alcohol (MMEA) was

II-8 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

GRAPH II.6 deleted and was replaced by an increase in excise tariff


EXCISE REVENUES, 2009 - 2010
60 on MMEA. Compared with its realization in 2009
50
amounting to Rp56,718.5 billion, the estimate revenue
from excise tax in the APBN-P 2010 has increased by
Trillion Rupiah

40

30 57.3 59.3
4.5 percent. The revenue from excise taxes in 2009-
56.7
20
2010 is shown in Graph II.6.
10 Other tax revenues in the APBN-P 2010 are estimated
0
Real 2009 APBN 2010 APBN-P 2010
at Rp3,841.9 billion, lower than that in the APBN 2010.
Source : Ministry of Finance
This is as a result of the realization of other tax revenues
in 2009 used as the baseline, which was only Rp3,116.0
GRAPH II.7 billion or 95.9 percent of the APBN-P 2009. Compared
OTHER TAX REVENUES, 2009 - 2010
with the realization in 2009, other tax revenues in the
4
APBN-P 2010 are projected to increase by Rp725.9
billion or 23.3 percent. The increase is predicted due to
Trillion Rupiah

3
an increased number of economic transactions using
2 3.9 3.8 stamped documents, in line with the economic
3.1
1
recovery in 2010. Other tax revenues in 2009-2010
are presented in Graph II.7.
0
The import duties revenue in the APBN-P 2010 is
Real 2009 APBN 2010 APBN-P 2010

Source : Ministry of Finance estimated at Rp17,106.8 billion, including the DTP of


Rp2,000.0 billion. Compared with the APBN 2010,
the revenue on import duties declined by Rp2,463.1 billion or 12.6 percent. This was because
of the change in foreign exchange rate assumption to Rp9,200.0/USD from the previous
assumption on Rp10,000.0/USD. In addition, the decline in DTP on import duties from
Rp3,000.0 billion to Rp2,000.0 billion has directly the reduced the revenue on import duties.
Compared with the realization in 2009, the revenue on import duties in the APBN-P 2010
has decreased by 5.5 percent. This is mainly due to the commencement of the implementation
of ACFTA, which has affected in the decline of import tax on goods from China. The target
of import tax revenue in 2010 is shown in Table II.7.
The revenue from export duties in the APBN-
TABLE II.7
IMPORT DUTIES REVENUES, 2010
P 2010 is forecasted about Rp5,454.6 billion,
(billion rupiah)

No
Source of
Countries
a decrease of Rp2,179.1 billion compared with
Dutiable import 2010
(million USD)
Impor Duties
(billion Rp)
Effective Tariff
Average (%)

that in the APBN 2010. This estimation was


APBN APBN-P APBN APBN-P APBN APBN-P

based on the assumption of the increase in


I ASEAN (AFTA) 18,818.2 20,910.8 2,898.3 3,111.8 1.54 1.57
II China (AC-FTA) 15,262.8 16,960.0 4,172.8 3,826.3 2.73 2.37
III
IV
Korea (AK-FTA)
Japan (IJEPA)
reference price of CPO (Crude Palm Oil)
2,860.0
12,937.1
3,178.1
14,375.7
570.9
2,504.8
478.6
1,960.9
2.00
1.94
1.69
1.44
V Others (MFN)
commodity in the international market that
29,512.1 32,793.9 6,423.2 5,930.4 2.18 1.90

Total

Borne By Government
was above USD800 per ton, in line with the
79,390.2 88,218.4 16,569.9

3,000.0
15,308.0

2,000.0
2.09 1.83

Total Import Duties trend in increasing international oil prices.


19,569.9 17,106.8

Considering this assumption, the tariff on


Source : Ministry of Finance

export duties will be applicable about 4.5


percent. Compared with the realization in 2009, the revenue from export duties in the APBN-
P 2010 increased by 865.5 percent. The improved world economic conditions having been
started in 2010 is expected to drive an increase in the volume of palm oil exports, so that the
revenue from export duties in the APBN-P 2010 will considerably increase. Nevertheless,
the increase in the export volume still considers the needs. On the other hand, the low

Financial Note and Indonesian Revised Budget 2010 II-9


Chapter II Revenues and Grants

realization on the export duties in 2009 was caused


GRAPH II.8
EXPORT DUTIES REVENUES, 2009 - 2010 by the low CPO Reference Price, which was below
8 USD700 per ton. If the Reference Price of CPO is
below USD700 per ton, the applicable tariffs on
Trillion Rupiah

7
6
export duties will be zero percent. The revenue from
5
4 7.6
import duties in 2009-2010 is presented in Graph
3 5.6 II.8.
2
1
0 0.6

Real 2009 APBN 2010 APBN-P 2010


Source : Ministry of Finance

2.2.1.3. Fundamental Changes In Non-Tax Revenue


The changes in some macroeconomic assumptions made in the APBN-P 2010 have directly
affected non-tax revenue variables as the source of revenues. These macroeconomic
assumptions include ICP, crude oil lifting, and the rupiah exchange rate against the USD.
The assumption of crude oil lifting in the APBN-P 2010 will be maintained at the level of
0.965 MBCD. Although the target on Indonesia crude oil production in 2009 was not achieved,
the Government will constantly strive to meet the target set in 2010. To meet these targets,
the Government will increase the production from major fields such as Cepu Block that is
expected to cover the natural decline in other oil fields.
The growth in world oil prices that is increasingly rising recently will affect the growth of
ICP. The world oil price in the middle of January 2010 has expanded in a range of USD80
per barrel, which was higher than the assumptions made in the APBN 2010 of USD65 per
barrel. The trend in the increased oil price will have impact on the increase in the revenue
from oil and gas SDA. Meanwhile, the rupiah exchange rate is projected to appreciate from
Rp10,000.0/USD the estimation figure in the APBN 2010 to Rp9,200.0/USD, along with the
depreciation of USD against other currencies.
In line with effort to improve the performance of BUMN, the Government has consistently
taken various steps to reform the internal organisation of BUMN. One of the policies introduced
by the Government in 2009 is to provide a margin to PT PLN (Persero) (National Electricity
Company) at 5.0 percent to enable PT PLN to meet the requirement of investment financing.
Having this policy implemented, in 2009 PT PLN (Persero) has successfully earned a net
profit valuing Rp10,355.7 billion (audited), so that the Government will likely receive dividends
from PT PLN (Persero).
Furthermore, the Government will relentlessly pursue other PNBP and public service agency
revenues (BLU), so that the revenues from these items will be optimal. Other optimising of
non-tax revenues will be from the line ministries (K/L) through the intensification and
extensification activities and the improvement in regulations regarding PNBP. Regarding
the BLU, efforts will be continually devoted to improve the revenue reporting system.

2.2.1.4 Non-Tax Revenues in APBN-P 2010


Based on the policy fundamentals on non-tax revenues (PNBP), which will be applied, and
the changes in macroeconomic assumptions, PNBP in the APBN-P 2010 are estimated at
Rp247,176.4 billion. The predominant source of PNBP is the natural resources (SDA) revenues,

II-10 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

especially from oil and gas revenues. The projection on PNBP in the APBN-P 2010 has
increased by Rp41,765.1 billion or 20.3 percent of the target set in the APBN 2010 amounting
to Rp205,411.3 billion.
The natural resources revenues in the APBN-P 2010 are estimated at Rp164,726.7 billion
surpassing the target set in the APBN 2010 at 24.8 percent amounting to Rp132,030.2 billion.
The increase was primarily due to the increased revenues from oil and gas resources estimated
at Rp151,719.9 billion. The oil and gas SDA revenues are predicted to make the largest
contribution to the PNBP SDA at 92.1 percent. The growth of PNBP in 2009-2010 is presented
in Table II.8.

TABLE II.8
NON-TAX REVENUES IN 2009 - 2010
(billion rupiah)
2009 2010
Description % to % to
APBN-P Real APBN APBN-P
APBN-P APBN
Non-Tax Revenues 218,037.6 227,174.4 104.2 205,411.3 247,176.4 120.3
a. Non- Tax Revenues on
138,653.4 138,959.2 100.2 132,030.2 164,726.7 124.8
1. Oil and Gas Natural
Natural Resources 127,748.2 125,752.0 98.4 120,529.8 151,719.9 125.9
- Oil 91,491.0 90,056.0 98.4 89,226.5 112,515.1 126.1
- Gas 36,257.1 35,696.0 98.5 31,303.2 39,204.8 125.2
2. Non-Oil and Gas Natural
Resources Revenues 10,905.2 13,207.3 121.1 11,500.5 13,006.9 113.1
- Mining 8,720.2 10,369.4 118.9 8,231.6 9,738.0 118.3
- Forestry 1,715.0 2,345.4 136.8 2,874.4 2,874.4 100.0
- Fisheries 150.0 92.0 61.4 150.0 150.0 100.0
- Geothermal Mining 320.0 400.4 125.1 244.4 244.4 100.0
b. Dividends from BUMN 28,614.7 91.0 24,000.0 29,500.0 122.9
26,049.5
c. Other Non-Tax Revenues 44,878.7 53,796.1 119.9 39,894.2 43,462.8 108.9
d. Revenues from BLU 5,890.9 8,369.5 142.1 9,486.9 9,486.9 100.0

Source : The Ministry of Finance

The increased of revenue from oil and gas SDA was caused by the change in ICP assumption
set in the APBN 2010 from USD65 per barrel to USD80 per barrel in the APBN-P 2010. In
addition, the Government will devote its efforts to achieve the target of crude oil lifting of
0.965 MBCD as aimed at the APBN 2010. While the rupiah exchange rate is predicted to be in
the range of Rp9,200.0 per USD, which is strengthened compared with the macro assumptions
set out in the APBN 2010 at Rp10,000.0 per USD.
Revenues from oil and gas SDA in the APBN-P 2010 gained from the oil and gas revenue are
estimated at Rp112,515.1 billion and Rp39,204.8 billion respectively. The oil revenue has
included the revenue planned from the payable oil and gas settlement of PT Pertamina
(Persero) amounting to Rp5,000.0 billion. This amount will be paid to PT Pertamina (Persero)
for the use of oil fuel and lubricants (BMP) by Indonesia Armed Forces (TNI). Compared
with the target set in the APBN 2010, the oil revenue has risen in Rp23.288,6 billion or 26.1
percent. While natural gas revenue is estimated to increase by Rp7,901.5 billion or 25.2 percent.
The oil and gas SDA revenues in 2009-2010 are shown in Graph II.9.

Financial Note and Indonesian Revised Budget 2010 II-11


Chapter II Revenues and Grants

GRAPH II.9 Meanwhile, non-oil and gas revenues are estimated


OIL AND GAS NATURAL RESOURCES REVENUES,
160
2009 - 2010 at Rp13,006.9 billion, an increase of Rp1,506.4 billion
140 Oil Gas surpassing that in the APBN 2010 at Rp11,500.5
39.2
120 billion. Non oil and gas natural resource revenues
35.7 31.3
consist of revenues from general mining resource,
Trillion Rupiah

100

80
forestry resources, fishery resources, mining and
60

40 90.1 89.2
112.5
geothermal resources amounting to Rp 9,738.0
20 billion, Rp2,874.4 billion, Rp150.0 billion and
0 Rp244.4 billion respectively.
Real 2009 APBN 2010 APBN‐P 2010
Source : Ministry of Finance The dividends from BUMN in the APBN-P 2010 is
projected to reach Rp29,500.0 billion, increasing by
GRAPH II.10
DIVIDENDS FROM BUMN, 2009 - 2010 Rp5,500.0 billion or 22.9 percent of the target set in
30 the APBN 2010. The increase was partly derived from
25 the additional revenue, as a result of the
29.5
implementation of the payout-ratio policy for PT
TrillionRupiah

20
26.0
15 PLN (Persero) determined as 38.6 percent of the
24.0
10 total net profit earned in 2009 amounting to
5 Rp10,355.7 billion, as reported in the audited financial
0 statement of PT PLN (Persero) of 2009. The
Real 2009 APBN 2010 APBN-P 2010

Source : Ministry of Finance


dividends transfer from BUMN in 2009-2010 is
presented in Graph II.10.
GRAPH II.11 Other non-tax revenues came from: (a) activities
OTHER NON-TAX REVENUES, 2009 - 2010
60
relating to the provision of services and regulations
50
by each related Line Ministries (K/L) according to
its duty and function ; (b) the domestic market
40
obligation (DMO) of crude oil, and (c) sale of
Trillion Rupiah

30
53.8 mining product. Other non-tax, revenue in the
20 39.9 43.5
APBN-P 2010 is estimated at Rp43,462.8 billion,
10
exceeding 8.9 percent or Rp3,568.5 billion from the
0
target set in the APBN 2010 amounting to
Real 2009 APBN 2010 APBN-P 2010
Source : Ministry of Finance Rp39,894.2 billion. The increase of other non-tax
revenue is primarily derived from the increase
T ABLE I I.9
in crude oil DMO revenue, as a result of the
T HE LARGEST LI NE MI NI ST RI ES CONT RIBUT ING T O T HE NON-T A X REVENUES, 2009-2010
(billion rupiah)
followings: the change in oil price assumption
2009 2010 increasing from USD65 per barrel in the APBN
No Ministry / I nstitution
APBN APBN APBN-P
% to
APBN
2010 to USD80 per barrel in the APBN-P 2010,
1 Ministry of Communications and Informatics
(Directorate General of Post & Telecommunication) 6,200.0 9,032.6 10,250.8 113.5
and the deposit put down on the Investment
2 Ministry of National Education
(Directorate General of Higher Education) 5,128.2 6,721.0 6,721.0 100.0
Fund Account (RDI). The figure of other non-
3
4
Ministry of Health
Indonesian National Police
3,367.5
1,800.2
4,022.6
2,001.9
4,022.6
2,001.9
100.0
100.0
tax revenue in 2009-2010 is indicated in
5
6
National Land Agency
Ministry of Law and Human Rights
1,388.0 1,485.5 1,485.5 100.0
Graph II.11.
1,400.0 1,500.0 1,500.0 100.0
Total non-tax revenues from 6 Line Ministries
Non-tax revenues in the APBN-P 2010 derived
19,283.9 24,763.6 25,981.8 104.9

Source : Ministry of Finance


from the K/L are projected to change,
compared with that in the APBN 2010. Non-tax revenue from the six largest K/L contributors
in the APBN-P 2010 is targeted at Rp25,981.8 billion. The six K/L contributing in to non-tax
revenue in 2009-2010 are shown in Table II.9.

II-12 Financial Note and Indonesian Revised Budget 2010


Revenues and Grants Chapter II

GRAPHI II.12
Revenues from Public Service Agency (BLU) in the
PUBLIC SERVICE AGENCY APBN-P 2010 are expected to remain the same as
REVENUES, 2009 - 2010
10 that in the APBN 2010 amounting to Rp9,489.9
8
billion. Compared with the realization achieved in
Trillion Rupiah

2009 by Rp8,369.5 billion, the BLU revenue has


6
9.5 9.5 increased by Rp1,117.3 billion or 13.4 percent. This is
4 8.4
mainly due to the number of business units
2 implementing the financial management of BLU that
0 will be likely to increase. Until the end of the year,
Real 2009 APBN 2010 APBN-P 2010 number of business unit implementing of BLU
Source : Ministry of Finance reached 84 unit and will be likely to increase. The
revenue from BLU is shown in Graph II.12.
The increase number of business unit applying the BLU management model continuously
on one side will increase the BLU, on the other side it will decrease other PNBP. This is caused
by the shift of some sources from other PNBP such as: non-tax revenue from education (
Directorate General for Higher Education), and health (Directorate General for Medical
Service) to the revenue of BLU. However, the transfer of the placement of revenue will not
affect the total amount of PNBP as both are elements of the total PNBP.
2.2.2 Grants In 2010
The revenue from grants in the APBN-P 2010 is estimated at Rp1,896.5 billion, an increase of
Rp389.8 billion (25.9 percent) compared with that in the APBN 2010 amounting to Rp1,506.8
billion. Fund allocation policy states that fund derived
GRAPH II.13 from grants will be focused at funding the programmes
2.0
GRANTS , 2009-2010
of mitigation and adaptation to climate change impacts.
Some other fund will be allocated to lines ministres in
1.5
addition, the grant fund will be allocated to finance
Trillion Rupiah

1.0
1.9 several programmes and projects that have been
1.7 1.5
0.5
mutually agreed between the Government of Indonesia
and the donor based on the MOU (Memorandum of
Understanding). Revenue from grants in 2009-2010 is
0.0
Re al 2009 APBN 2010 APBN-P 2010

Source : Ministry of Finance presented in Graphic II.13.

Financial Note and Indonesian Revised Budget 2010 II-13


Revisions in Expenditure Chapter III

CHAPTER III
REVISIONS IN EXPENDITURE

3.1 Introduction
Revisions made to APBN fiscal year 2010 as set by Law Number 47 year 2009 were urgently
needed due to the following considerations. First, the APBN 2010 was a transition APBN,
which was prepared by the Government together with the DPR, which service periods ended
in 2009, however was carried out by the new Government elected in the national election in
2009. This was intended to fill in the gap in budget planning, and maintaining government
sustainability. Therefore, the APBN 2010 was a baseline budget that only calculated the
basic needs (principal) for smooth administration and public service, which was aimed to
provide space and flexibility for the new government to implement programs and activities
in accordance with vision, mission, and platform of newly elected President, without disrupting
the continuity of governance during the transition. Thus, the APBN 2010 should be revised
to accommodate and support the policies and programs that were prioritized by the
government elected in 2009 to be completed in the year 2010, such as the construction of
correctional/detention facility; Kualanamu airport development; completion of the Eastern
flood canal (BKT) project; activities in response to climate change; and other important
activities that were prioritized in RPJMN 2010-2014 to be completed in fiscal year 2010.
Second, as stated in Law Number 47 Year 2009 regarding the APBN 2010, there had been a
development of macroeconomic indicators that were used as basic assumptions in the
preparation of the APBN 2010, which was no longer suitable to the current real conditions
and the future year estimation. The Revision in macroeconomic basic assumptions included
the followings: (1) inflation rate that was previously assumed in APBN 2010 to be 5.0 percent,
was expected to increase to 5.3 percent, (2) rupiah exchange rate to US dollar was expected
to appreciate, from Rp10,000 in the APBN 2010 to Rp9,200 per US$, and (3) ICP that was
previously assumed to be US$65 per barrel, was expected to reach US$80 per barrel. Various
revisions in the macroeconomic assumptions would affect the various quantities in the APBN
2010, and provide high pressure on government spending, primarily the increase of ICP,
which increased the burden of energy subsidies, both in fuel subsidies and electricity subsidies,
and raised the revenue sharing fund for oil producing region in transfer to region post.
Third, there were revisions in the fundamentals fiscal policy in 2010 as an impact of economic
and social development progress and efforts to accelerate the achievement of development
targets. Such Revisions included: (1) loosening of budget deficit, from 1.6 percent to GDP in
APBN 2010 to 2.1 percent to GDP; (2) price stabilization program implementation plan for
some basic and vital commodities, such as rice, electricity, fertilizer, and cooking oil,
(3) program of earthquake post-disaster rehabilitation and reconstruction in West Sumatra
and West Java; (4) budgetary support for the implementation of Presidential Instruction
Number 1 Year 2010 on the Acceleration of the Implementation of the Year 2010 National
Development Priorities; (5) programs of other priority activities that have not been
accommodated in the budget year 2010; and (6) the use of part of the Cumulative Budget
Surplus (SAL) in 2009 to finance the increased budget deficit in 2010.

Financial Note and Indonesian Revised Budget 2010 III-1


Chapter III Revisions in Expenditure

In Government expenditure side, revisions in fiscal policy principles that had implications
on increasing the expense of non-Line Ministry/Institution (K/L), included: (1) the delay in
the increase of the basic electricity tariff (TDL) that was originally planned to be implemented
in January 2010 to be applied only in the beginning of Semester II 2010; (2) the delay in
the increase of the highest retail price (HET) of fertilizer that was supposed to be applied in
January 2010 to begin in April 2010 in order to adjust to the planting season period that was
usually conducted in October-March; (3) policy to increase the buying price of the harvested
dry-mill rice in order to reduce the impact of increasing fertilizer HET on farmers income
and to improve food stability.
In order to maintain trust and credibility of the implementation of the APBN 2010, so it
could function as a motor of the economic growth, to create employment, and to provide
protection to the poor, it was necessary to accelerate the submission of the draft of APBN-P
2010, in order to accommodate the prioritized programs of the new government (new
initiatives), the revisions and adjustments to current economic progress, as well as the various
policies that have been and will be implemented by the Government in 2010.
The revisions to the APBN 2010 was conducted in accordance with the provisions of article
27 paragraph (1) of Law Number 47 Year 2009 concerning the APBN for Fiscal Year 2010
that mandates “APBN Adjustment for Fiscal Year 2010 with the development and/or revisions
of circumstances, are jointly discussed between The DPR and The Government in order to
prepare the revisions estimation on APBN 2010, in the event of: (a) macro economic
developments were inconsistent with the assumptions used in the APBN 2010, (b) there
were revisions in fiscal policy fundamentals; (c) there were circumstances that led to budget
transfer that should be made between organizational units, among programs, and/or between
types of expenditure; (d) there were circumstances that led the cumulative budget surplus of
the previous years that be used to finance in 2010 budget financing.
With the existence of the new initiative programs, various policy measures revisions in price
stabilization, and revisions in basic macroeconomic assumptions that significantly affected
the amount of expenditure, both at the central government budget allocations and transfer
to region; the expenditure volume in APBN-P 2010 reached Rp1,126,146.5 billion (18.0 percent
to GDP). This amount had increased by Rp78,480.5 billion, or 7.5 percent higher if compared
with the budget ceiling set in APBN 2010 that amounted to Rp1,047,666.0 billion. Most of it,
about 69.4 percent of the total APBN, was allocated for central government expense, while
30.6 percent was allocated for transfer to region. Summary of expenditure allocations in the
APBN and APBN-P 2010 is presented in Table III.1.

3.2 Fundamental Revisions In Policy and Central


Government’s Expenditure 2010
The Revision in the central government expenditure in APBN 2010 was carried out not only
to accommodate the proposed programs or activities of the United Indonesia Cabinet (Kabinet
Indonesia Bersatu) II of the newly elected President in 2009, which had not been
accommodated in the APBN 2010, but also to accommodate the fiscal implications on the
revisions of the policy implementation that had been or would be done by the government,
as well as The Revision in various macroeconomic indicators, and internal or external growth
factors. The above revisions was very dynamic combinations of the increasing budget needs

III-2 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

T ABLE III.1
GOVERNMENT EXPENDIT URE, 2010
(billion Rupiah)

APBN APBN-P
Description % to % to
Am ount Am ount
GDP GDP
I. Central Gov ernm ent Expenditure 7 25,243.1 12.1 7 81,5 33.5 12.5
1 . Personnel Expenditure 1 60,364.3 2.7 1 62,659.0 2.6
2. Material Expenditure 1 07 ,090.0 1 .8 1 1 2,594.0 1 .8
3. Capital Expenditure 82,1 7 5.5 1 .4 95,024.6 1 .5
4. Interest Payments 1 1 5,594.6 1 .9 1 05,650.2 1 .7
5. Subsidy 1 57 ,820.3 2.6 201 ,263.0 3.2
6. Grant Expenditures 7 ,1 92.0 0.1 243.2 0.0
7 . Social Assistance 64,291 .2 1 .1 7 1 ,1 7 2.8 1 .1
8. Other expenditures 30,7 1 5.0 0.5 32,926.7 0.5

II. T ransfer T o Regions 322,423.0 5 .4 344,612.9 5 .5


1 . Balanced Fund 306,023.4 5.1 31 4,363.3 5.0
2. Special Autonomy and Adjustment Fund 1 6,399.6 0.3 30,249.6 0.5

T OT AL 1,047 ,666.0 17 .5 1,126,146.5 18.0

Source : Ministry of Finance

for specific prioritized activities, which was accompanied by the expenditure savings in some
other activities, either as the impact of the development of macroeconomic assumptions or
the impact of policies taken by the Government. The Revision in central government
expenditure were mainly related to several factors, as follows.
First, the fiscal implications of revisions of the basic assumptions in the preparation of the
APBN 2010, which were the revision of the assumption of exchange rate from Rp10,000.0/
US$ to Rp9,200.0/US$, and the revision in assumption of Indonesian Crude Oil Price (ICP)
from the average of US $ 65.0/barrel to an average of U.S$80.0/barrel, which caused the
increase in subsidy, especially energy subsidies for both subsidized fuel and electricity.
Second, the fiscal implications of the revisions of parameters and policy implementation,
such as: (a) the change in the composition of debt financing and the assumption of yield
decrement caused by the improving domestic financial market conditions that made it possible
for interest payment saving in 2010 that amounted to Rp3,141.9 billion; (b) the increase in
purchase price of rice from Rp5,775/kg to Rp6,285/kg; and (c) policy of stabilization of vital
and principal commodity price, which was carried out by increasing the volume of Raskin
(rice for the poor) from the previous allocation of 13 kg/month/RTS to 15 kg/month/RTS,
delay in the implementation of fertilizer HET that was supposedly started in January 2010
to be applied in April 2010, and the delay in the increase of the electricity TDL, which was
originally planned to start in January 2010 to be applied in the second semester of 2010.
Third, the fiscal implications of the new prioritized programs (new initiatives), which were:
the rehabilitation and reconstruction of West Sumatra province after the earthquake,
development of demographic information and administration system (SIAK) program,

Financial Note and Indonesian Revised Budget 2010 III-3


Chapter III Revisions in Expenditure

construction of correctional facility, Kualanamu airport development, construction of road


and bridge infrastructure, completion of the Eastern flood canal (KBT), preparation of the
Sea Games, geothermal exploration, the provision of special allowances for Indonesian Armed
Forces soldiers who served in outermost islands and border areas, the additional budget for
K/L remuneration, revitalization sugar factory, and payments for oil and lubricants (BMP)
debt of The Ministry of Defense to PT.Pertamina.
With the above developments, the central government expenditure budget in APBN-P 2010
reached Rp781,533.6 billion or 12.5 percent to GDP. This amount had increased by Rp56,290.6
billion or 7.8 percent higher if compared with the
allocation of budget ceiling of central government GRAPH III.1
expenditure set in APBN 2010 amounting to CENTRAL GOVERNMENT EXPENDITURE,
2009-2010
Rp725,243.0 billion. This higher estimation of the
central government expenditure budget in 2010 781.5

was particularly related to higher expenditure in 800 725.2

subsidies, and requirement of an additional 750 691.5

trillion rupiah
budget to accommodate new programs. If 700 628.8

APBN-P
650

APBN
compared with the central government

APBN-P

Realization
600
expenditure in 2009 that amounted to 550

Rp628,812.4 billion, the estimated allocation of 500

central government expenditure in APBN-P 2010 2009                                                        2010

had increased by Rp152,721.2 billion or 24.3 Source : Ministry of Finance


percent higher.

3.2.1 Revision of Central Government Expenditure by Economic


Classification
The revision of central government expenditure budget by economic classification occurred
in the entire expenditure types, which included: (1) personnel expenditure; (2) material
expenditure; (3) capital expenditure; (4) interest payment; (5) subsidy; (6) grant expenditure;
(7) social assistance; and (8) other expenditures.
In APBN-P 2010, the personnel expenditure budget reached up to Rp162,659.0 billion, which
had increased by Rp2,294.7 billion or 1,4 percent higher than the budget ceiling in APBN
2010 that amounted to Rp160,364.3 billion. In comparison with the realization in 2009 that
amounted to Rp127,669.8 billion, the expenditure budget allocation in APBN-P 2010 had
increased by 27.4 percent. Such increment was a net impact from the revision in budget
allocation of salary and allowance, honorarium, reward money, overtime, etc, as well as the
social contribution expenditure.
In APBN-P 2010, the salary and allowance expenditure budget was allocated for Rp81,064.9
billion, which had increased by Rp1,543.5 billion (1.9 percent) from the ceiling in APBN
2010 that amounted to Rp79,521.4 billion. The additional budget for salary and allowance
was mainly aimed to cover the budget in providing special allowances for TNI soldiers and
the Ministry of Defense’s employees placed in outermost islands and border areas, in covering
the personnel expenditure shortage, in providing teacher profession allowance in the National
Administration Agency, budget for additional new personnel in KPK, and additional budget
for allowances of PTT midwives and medical doctors/dentists. Aside from the above, the

III-4 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

increment of salary and allowance budget was also influenced by the additional education
budget used to pay the arrears in teacher profession allowance, and additional PNS teacher
salary to reach Rp.2 million.
Meanwhile, the personnel expenditure budget for honorarium, reward money, overtime,
etc, in APBN-P 2010 was allocated to amount to Rp27,267.7 billion, which increased by
Rp1,834.5 billion (7.2 percent) from the ceiling in APBN 2010 that amounted to Rp25,433.3
billion. Such increment was especially planned to cover the additional remuneration budget
in several K/L that was related to the completion of several phases in bureaucratic reform
program implementation that amounted to Rp3,300.0 billion, therefore causing the
remuneration budget to increase by Rp10,616.8 billion in APBN 2010 to reach Rp13,916.8
billion in APBN-P 2010. The increment in K/L remuneration budget derived from the
reallocation of transit personnel expenditure budget.
The personnel expenditure budget for social contribution in APBN-P 2010 was allocated to
reach Rp54,326.4 billion, which decreased by Rp1,083.3 billion from the ceiling in APBN
2010 that amounted to Rp55,409.7 billion. Such decrement was mainly caused by the lower
estimation of realization of pensioner expenditure budget that was managed by PT ASABRI
and the pensioner expenditure budget reserves.
In APBN-P 2010, the material expenditure budget was allocated to reach Rp112,594.0 billion,
which increased by Rp5,504.0 billion (5.1 percent) from the ceiling in APBN 2010 that
amounted to Rp107,090.0 billion. In comparison with the material expenditure realization
in 2009 that amounted to Rp80,667.9 billion, the allocation in APBN-P 2010 had increased
by Rp31,926.1 billion, or around 39.6 percent higher. Such increment was related among
others to the additional budget for correctional facility construction, and addition budget
related to climate change such as tree planting for reforestation of 100,000 Ha area,
preparation for Sea Games 2011, food stability programs, honorary workers verification and
validation activities, and procurement of special measures for Presidential Security Forces
(Paspampres) and Commando Special Forces (Kopassus).
Aside from the above, the increase in material expenditure in APBN-P 2010 was also influenced
by the additional education budget that was used to support: (1) the nine-year compulsory
education program through BOS management activities and new national Islamic school
operational assistance; (2) non-formal education program through development of society
entrepreneurship and enhancement of regional vocation agencies; (3) higher education
program through entrepreneurship and student activities, and to availability of medical
specialist scholarship; and (4) quality improvement program for educator and education
workers through training activities for school principals and supervisors, and implementation
of quality control system in education units.
In line with the above, the capital expenditure budget in APBN-P 2010 was allocated to
Rp95,024.6 billion, which increased by Rp12,849.1 billion, or 15.6 percent higher from the
budget ceiling in APBN 2010 that amounted to Rp82,175.5 billion. In comparison with the
capital expenditure realization in 2009 that amounted to Rp75,870.8 billion, the allocation
in APBN-P 2010 had increased by Rp19,153.9 billion or 25.3 percent higher. Such increment
was mainly related to the additional budget allocation in several K/L to accommodate various
new prioritized programs/activities (new initiatives) in RPJMN 2010 – 2011 of the United
Indonesia Cabinet (KIB) II that needed to complete in 2010 as stipulated in the Presidential

Financial Note and Indonesian Revised Budget 2010 III-5


Chapter III Revisions in Expenditure

Decree (Inpres) Number 1 Year 2010 regarding the Acceleration of National Development
Priorities Implementation in 2010. The programs were as follows: (1) correctional facility
development plan by the Ministry of Law and Human Rights; (2) road and bridge
infrastructure development in order to increase domestic connectivity by the Ministry of
Public Works; (3) Kualanamu airport continued development by the Ministry of
Transportation; (4) development of demographic administration information system by
Ministry of Domestic Affairs; (5) geothermal exploration program to support the national
climate change response actions by the Ministry of Energy and Mineral Resources; and (vi)
sport facility and infrastructure development in preparation for Sea Games 2011, which
required an additional capital expenditure budget.
Aside from the above, the increment of capital expenditure budget allocation in APBN-P
2010 was also related to the need of budget support in several important programs/activities
that would be carried out by several K/L in 2010, however was not accommodated in APBN
2010, like: (1) activities of the Ministry of Communication and Informatics that needed
additional budget to carry out the Improvement on Television Transmitting Station (ITTS)
project as an effort of community empowerment in border areas and isolated areas through
development of broadcast infrastructure, and to support dissemination activities of
government’s program information and socialization; (2) rehabilitation of Ministry of Law
and Human Right’s office in West Sumatra after the earthquake; and (3) rural facility and
infrastructure improvement program through acceleration of development of rural
underdeveloped infrastructure, which would be carried out by the Ministry of Underdeveloped
Area Development.
Aside from the above, the increment of capital expenditure budget in APBN-P 2010 was also
related to the additional budget allocation to implement programs related to educational
function in several K/L, such as in the Ministry of National Education, Ministry of Religious
Affairs, Ministry of Health, and Ministry of Transportation, budget allocation addition for
the above function was planned to support program implementation in: (1) the nine-year
compulsory program that would be used to carry out rehabilitation and development of
elementary education facility and infrastructure, such as development of library and
laboratory; (2) secondary education program that would be used to support rehabilitation
and development of secondary education facility and infrastructure, such as the development
of library, and science and language laboratory, and (3) higher education program that
would be used for rehabilitation and development of higher education facility and
infrastructure, acceleration of teaching hospital development and development of university
dormitory.
In APBN 2010, the interest payment was originally planned to amount to Rp115,594.6 billion,
which consisted of domestic interest amounting to Rp77,436.8 billion and foreign interest
Rp38,157.8 billion. The interest payment budget planning was arranged in consideration to
the economic condition in the end of 2008 up to the beginning of 2009. The above
consideration on the national economic condition was used as the basis in setting the yield
assumption of ABN that would be issued in 2010, the average 3-month SBI rate assumption,
and rupiah exchange rate to US Dollar assumption.
During the arrangement of APBN 2010 draft, the SBN yield that would be issued in 2010
was assumed to be around 14 percent for long-term SBN, and averagely 11 percent for short-
term SBN. Such assumption referred to yield progress in the end of 2008 up until the first

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Revisions in Expenditure Chapter III

half of 2009 that fluctuated around 16 to 18 percent in October 2008, then went down to 10
– 12 percent in December 2008, and came back up to 11 – 15 percent in March 2009. The 3-
month SBI rate and Rupiah exchange rate to US Dollar referred to the assumption that was
set in APBN, each of an average of 6.5 percent and Rp10,000 per US$.
The improving national economic condition in 2009 until the present day, had given a positive
impact on the estimation of interest payment in 2010. The factors that influenced interest
payment were among others, the SBN yield progress that tended to decrease, and the rupiah
exchange rate especially to US Dollar that was appreciated significantly since the third quarter
of 2009.
In relation to the above various progress, the interest payment in APBN-P 2010 was estimated
to decrease by Rp9,944.4 billion (8.6 percent lower than the budget ceiling in APBN 2010) to
reach Rp105,650.2 billion. Such amount consisted of domestic interest amounting to
Rp71,857.6 billion, and foreign interest Rp33,792.6 billion. The decrement of interest payment
plan was caused by the decrease in domestic interest by Rp5,579.2 billion, and in foreign
interest by Rp4,365.2 billion. The decrement of domestic interest payment by Rp5,579.2
billion (7.2 percent of the budget ceiling in APBN 2010) was caused by the decrease in yield
assumption for 2010 SBN issuance that reached averagely 11 percent for long-term SBN
and averagely 7.5 percent for short-term SBN, with an assumption of 3-month SBI rate
averagely 6.5 percent.
Aside from the above, the decrement of domestic interest payment was also caused by the
decrease of gross domestic SBN issuance that resulted from the reallocation planning of a
part of domestic SBN issuance target to foreign exchange SBN in a measured amount to
prevent crowding out effect. Meanwhile, the decrement of foreign interest payment that
amounted to Rp4,365.2 billion (11.4 percent from the budget ceiling in APBN 2010) was
caused by the decrease of foreign exchange SBN issuance, even though there was an additional
financing that derived from foreign drawings, either in program loan or project loan that
amounted to Rp13,171.3 billion. However, such decrement did not occur drastically due to
the appreciation of exchange rate assumption from Rp10,000/US$ to Rp9,200/US$.
Furthermore, the budget subsidies, especially energy subsidies, consisted of fuel subsidy and
electricity subsidy in 2010, were estimated to increase significantly, due to revisions in global
crude oil prices. In late 2009 and early 2010, crude oil prices tended to rise over the crude oil
price assumption in the APBN year 2010. Crude oil price progress on global markets also had
an impact on ICP estimation in the APBN-P 2010, which was projected at an average of
US$80/barel, or US$15/barel higher than the ICP assumption used as the basis for preparing
the APBN 2010 that amounted to US $ 65/barel. Meanwhile, the budget of food subsidies,
fertilizer subsidies, seed subsidies, credit program interest subsidy and tax subsidies in the
year 2010 were also expected to be revised. The Revision in the allocation of food subsidies in
the year 2010 mainly caused by the increase of government purchasing price (HPP) for rice
in the beginning of January 2010 and the revisions of the quantum allocation of RASKIN
from 13 kg/month/RTS to 15 kg/month/RTS. Fertilizer subsidy budget in 2010 was revised
due to delays in increasing Highest Retail Price (HET) of subsidized fertilizer from January
2010 to April 2010.
Based on the above progress, the revision details of subsidy in year 2010 is shown in Table
III.2.

Financial Note and Indonesian Revised Budget 2010 III-7


Chapter III Revisions in Expenditure

TABLE III.2
SUBSIDY EXPENDITURE, 2010
(billion Rupiah)

% to % to
APBN APBN-P
Description GDP GDP

Subsidy 157,820.3 2.6 201,263.0 3.4

a. Energy 106,526.7 1.8 143,997.1 2.4

1) Fuel Subsidy 68,726.7 1.1 88,890.8 1.5

2) Electricity Subsidy 37,800.0 0.6 55,106.3 0.9

b. Non Energy 51,293.6 0.9 57,265.9 1.0

1) Food Subsidy 11,387.3 0.2 13,925.1 0.2


2) Fertilizer Subsidy 14,757.3 0.2 18,411.5 0.3
3) Seed Subsidy 1,563.5 0.0 2,263.5 0.0

4) PSO 1,375.0 0.0 1,375.0 0.0

5) Program Loan Credit 5,337.7 0.1 2,856.4 0.0

6) Tax Subsidy 16,872.8 0.3 18,434.4 0.3

Source : Ministry of Finance

In APBN-P 2010, the allocation of subsidy expenditure was estimated to Rp201,263.0 billion.
This amount had increased by Rp43,442.7 billion, or 27.5 percent higher if compared to the
subsidy budget set in the APBN 2010 amounting to Rp157,820.3 billion. The increase of
subsidies in the APBN-P 2010 was primarily related to the increment of ICP estimated
assumptions to US$ 80/barel during the year 2010. The increased of ICP estimation from
US$65/barrel in the APBN year 2010 to US$80/barel in the APBN-P 2010 had brought a
significant impact on the increment of fuel subsidies and electricity subsidies. To reduce such
budgetary load, a series of policy would be taken in 2010 to reduce fuel subsidy, such as: (i)
continuing the conversion program from kerosene to LPG 3 (three) kg, and (ii) improving
the control in subsidized fuel distribution. With the above mechanisms, the fuel subsidies in
the APBN-P 2010 was estimated to be Rp88,890.8 billion, which was 29.3 percent higher
than the budget ceiling set forth in fuel subsidies in the APBN 2010 that amounted to
Rp68,726.7 billion. If compared with the realization of fuel subsidies in 2009 that amounted
to Rp45,039.4 billion, the estimated budget of fuel subsidies in APBN-P 2010 had increased
by Rp43,851.4 billion, or 97.4 percent higher. The increase of fuel subsidies in 2010 if compared
with the realization in 2009, was caused primarily by the increase of ICP from estimated
US$61/barrel in the period of January to December in 2009 to US$80.0/barrel in the year
2010.
Meanwhile, the budget for electricity subsidy in APBN-P 2010 was estimated to Rp55,106.3
billion, which increased by Rp17,306.3 billion or 45.8 percent higher if compared with the
electricity subsidy budget allocated in APBN 2010 that amounted to Rp37,800.0 billion. If
compared with the budget in the year 2009, the electricity subsidy that amounted to
Rp49,546.5 billion, the above estimation of electricity subsidies in 2010 had increased by
Rp5,559.8 billion, or 11.2 percent higher. The increase of electricity subsidy in 2010, was

III-8 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

caused by: (1) the increase of ICP assumption in the RAPBN-P 2010 from US$65.0/barrel
to US$80.0/barrel; (2) the delay in increasing electricity TDL that had previously scheduled
to begin in January 2010 to be applied only in the second semester of 2010; (3) carry over/
arrears of 2009 electricity subsidy amounting to Rp4,000.0 billion, and (4) the increase in
PT PLN margin from 5% to 8%. The margin adjustment would be more profitable for
operations of PT PLN, which in turn would reduce government’s load. By administering 8%
margin, it would: (1) increase the Consolidated Interest Coverage Ratio (CICR) of PT PLN
in accordance with the global bond requirements (bond covenants); (2) the increase in CICR
might improve the financial capacity of PT PLN to obtain other funding sources outside the
government fund (bond issuance), in relation to the financing of the 10,000 MW phase I
program completion and phase II program development. Therefore, the government’s fiscal
load to PT PLN would reduce. In order to control the electricity subsidy load, the Government
would carry out a series of policies in 2010, namely: (1) the automatic implementation of
TDL that was based on the economical price for energy consumption above 30.0% of national
average consumption in 2009 for household customers (R), business (B), and public (P)
with power capacity above 6,600 VA; (2) to maintain the implementation of tariff policy
that encouraged electricity savings and special services, such as daya max plus, and (3) the
implementation of new TDL after receiving approval from DPR.
Accordingly, the allocation of fertilizer budget subsidies in APBN-P 2010 was estimated to
reach Rp18,411.5 billion, which increased by Rp3,654.2 billion or 29.9 percent higher than
the fertilizer subsidy budget ceiling in the APBN 2010 that amounted to Rp14,757.3 billion.
The increase of fertilizer subsidies that was higher than the budget ceiling in the APBN 2010,
was particularly related to the delay in increasing the HET of subsidized fertilizer from the
original plan in January 2010 to be applied only in April 2010. If compared with the fertilizer
subsidy budget in 2009 that amounted to Rp18,329.0 billion, the estimated fertilizer subsidy
budget in APBN-P 2010 had increased by Rp82.5 billion, or 0.4 percent higher.
The budget allocation for food subsidies in the APBN-P 2010 was estimated to Rp13,925.1
billion, which increased by Rp2.537,8 billion, or 22.3 percent higher than the food subsidy
budget ceiling in APBN 2010 that amounted to Rp11,387.3 billion. The increase of estimated
food subsidy budget from the budget ceiling in the APBN 2010, was mainly related to:
(1) the increase in quantum allocation of Raskin from 13kg/month/RTS to 15kg/month/
RTS commencing in April 2010, therefore the quantum allocation of Raskin had increased
from 2.73 million tons to 2.97 million tons, and (2) the increase of rice purchase price (HPB)
by the government to Perum Bulog from Rp5,775/kg to Rp6,285/kg, due to the increase in
rice HPP. If compared with the food subsidy budget in 2009 that amounted to Rp12,987.0
billion, the estimated food subsidy budget in 2010 had increased by Rp938.1 billion or 7.2
percent higher.
Seed subsidy budget in the APBN-P 2010 was allocated to Rp2,263.5 billion, which increased
by Rp700.0 billion, or 44.8 percent higher than the seed subsidy budget ceiling in APBN
2010 that amounted to Rp1,563.5 billion. The increase of estimated seed subsidies from the
budget ceiling in the APBN 2010 was mainly related to the increment of subsidized seed
volume in order to support national food stability programs in 2010. If compared with the
realization of seed subsidy in 2009 that amounted to Rp1,597.2 billion, the seed subsidy
budget in 2010 had increased by Rp666.3 billion or 41.7 percent higher.

Financial Note and Indonesian Revised Budget 2010 III-9


Chapter III Revisions in Expenditure

Meanwhile, the budget allocation of program credit interest subsidy in the APBN-P in 2010
was Rp2,856.4 billion, which decreased by Rp2,481.3 billion or 46.5 percent lower if compared
with the budget allocation of program credit interest subsidy in the APBN 2010 that amounted
to Rp5,337.7 billion. The decrement of program credit interest subsidy in the APBN-P 2010
was mainly related to the reallocation of a part of KPRSh interest subsidy to government
investment fund that amounted to Rp2,683.0 billion, even though on the other hand, there
was a projection revision of People’s Business Credit Imbal Jasa Panjang (IJP KUR) in 2010
from Rp375.0 billion to Rp576.7 billion, in order to support KUR expansion.
The allocation and budgeting of DTP subsidies were conducted in accordance with the
applicable tax regulations. In APBN-P 2010, the tax subsidy budget (tax expenditure) was
estimated to reach Rp18,434.4 billion, which increased by Rp1,561.6 billion or 9.3 percent of
the tax subsidy budget ceiling in APBN 2010 that amounted to Rp16,872.8 billion. The increase
in budget allocation of tax subsidies in the year 2010, was particularly related to: (1) Additional
PPh DTP for Rp800.3 billion as a result of new PPh DTP that consisted of income tax on land
and/or building transfer transactions of Sidoarjo victims from PT Minarak Lapindo Jaya
that amounted to Rp205.0 billion, PPh DTP on bio fuel (BBN) amounting to Rp100.0 billion,
and PPh DTP of BUMN that amounted to Rp495.3 billion, and (2) the increase in PPN DTP
amounting to Rp1,761.3 billion, that consisted of the additional PPN DTP for cooking oil
amounting to Rp240.8 billion, PPN DTP for adaptation and mitigation of climate change
amounting to Rp900.0 billion, PPN DTP Islamic Banking for Rp328.5 billion, and PPN DTP
BUMN of Rp1,292.0 billion. Overall, tax subsidies in the APBN-P 2010 were as follows:
(1) income tax subsidy amounting to Rp4,424.6 billion, (2) value added tax (PPN) subsidy
amounted to Rp12,009.8 billion; and (3) the import duty DTP amounting to Rp2,000.0
billion. PPh subsidies were another form of PPh DTP that consisted of: (1) geothermal PPh
DTP for Rp624.3 billion, (2) PPh DTP on international bonds interest amounting Rp2,000.0
billion; (3) PPh DTP on international cooperation grants amounting to Rp1,000.0 billion;
(4) PPh DTP on building and land transfer transaction of Sidoarjo victims from PT Minarak
Lapindo Jaya amounting to Rp205.0 billion; (5) PPh DTP on biofuel (BBN) of Rp100.0
billion; and (6) PPh DTP on BUMN amounted to Rp495.3 billion. Meanwhile, the PPN
subsidy were as follows: (1) PPN DTP on the transfer of domestic fuel subsidy amounting to
Rp5,897.6 billion, (2) PPN DTP facility to PDRI for upstream oil and gas exploration and
natural gas amounting to Rp2,500.0 billion; (3) PPN DTP on cooking oil and imported
wheat/wheat flour amounting to Rp1,091.8 billion, (4) PPN DTP on adaptation and
mitigation of climate change for Rp900.0 billion, (5) PPN DTP on Islamic Banking for
Rp328.5 billion; and (6) PPN DTP on BUMN amounted to Rp1,292.0 billion. The Import
Duties DTP facility in the year 2010 was estimated to Rp2,000.0 billion.
Meanwhile, the grants expenditure in APBN-P 2010 was set at Rp243.2 billion. The amount
had decreased by Rp6,948.7 billion from the grants expenditure allocation in APBN 2010
that amounted to Rp7,192.0 billion. The decrease of grant expenditure ceiling in 2010 was
related to the policy to reallocate grant expenditure to transfer to region grant. The components
of grant expenditures reallocated to transfer to region were the central government’s grant
to local governments that amounted to Rp7,100.0 billion.
In APBN-P 2010, the budget for social assistance was set to reach Rp71,172.8 billion. The
amount had increased by Rp6,881.6 billion, or 10.7 percent higher than the ceiling in APBN
2010 that amounted to Rp64,291.3 billion. Such increase was primarily related to the
additional budget to carry out the educational function in the Ministry of National Education

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Revisions in Expenditure Chapter III

and the Ministry of Religious Affairs, glides of DIPA PNPM in 2009 as an additional budget
in 2010 that amounted to Rp379.9 billion, the additional reserve fund for natural disasters,
health operational assistance for public health center (Puskesmas) amounting to Rp40.0
billion. Additional education budget in APBN-P 2010 was allocated to social assistance
expenditure of Ministry of National Education which were used among others to pay special
allowances of teachers in the leading areas and outermost regions, teacher profession
allowance, scholarships, operational assistance in package C implementation, early age child
education (PAUD) unit development fund, healthy PTS development programs, scholarships
for poor students in SD, SMP, SMA and University, providing supplementary food for
kindergarten and elementary school students, operational assistance for quality management
for SMA and SMK. Furthermore, additional education budget in APBN-P 2010 that was
allocated to social assistance expenditure of the Ministry of Religious Affairs was used to:
provide supplementary food for RA and MI students, provide scholarships for poor students
in MI, MTs, and MA, scholarship for talented students and students with special
accomplishments in MTs, as well as operational assistance for quality management of private
MA, scholarship for talented and accomplished MA students, scholarship for government
Islamic university (PTAN) students, internship program in the industrial world, provide
scholarship to poor students, internship for MA students, and internship for Islamic boarding
school students.
The budget ceiling of social assistance expenditure in the APBN-P 2010 had also considered
the reallocation policy of social assistance spending to other spending that amounted to
Rp450.0 billion, which was originally a part of the budget reserve for natural disaster that
was transferred to the rehabilitation and reconstruction programs/activities of West Sumatra
after the earthquake. If compared with the realization of social assistance in 2009 that
amounted to Rp73,813.6 billion, the budget allocation for social assistance in APBN-P 2010
had decreased by Rp2,640.8 billion or about 3.6 percent lower. The decline was caused by
the reallocation of reserve budget for natural disaster to other expenditure, which were also
related to the policy to reallocate teacher profession allowance which was originally distributed
through the Ministry of National Education, to transferred to transfer to region in 2010.
The other expenditures budget in APBN-P 2010 was set to reach Rp32,926.7 billion, which
increased by Rp2,211.7 billion or 7.2 percent higher than the budget in the APBN 2010 that
amounted to Rp30,714.9 billion. The Revision in other expenditure budget in APBN-P 2010
was caused by: (1) budget allocation for the rehabilitation and reconstruction of West Sumatra
and West Java that amounted to Rp1,650.0 billion; (2) additional budget for revitalization
of sugar factory that amounted to Rp300.0 billion; (3) additional budget for BMP debt
payments of Ministry of Defense to Pertamina that amounted to Rp5,500.0 billion;
(4) additional budget for payment of bank services to manage SLA that amounted to Rp77.0
billion; (5) reserve budget allocation for Aceh integration that amounted to Rp200.0 billion
and reserve budget for Jabodetabek flood prevention amounting to Rp1,254.0 billion;
(6) additional budget for contributions to international institutions Rp50.0 billion;
(7) decrement of fiscal risk reserve funds amounting to Rp2,625.0 billion; (8) additional
budget for funding of new agency Rp23.8 billion; (9) additional budget for arrears of TVRI
personnel expenditure amounting to Rp25.9 billion; and (10) additional budget for Ciliwung
River channel and land acquisition amounting to Rp100.0 billion.
The fiscal risk reserve assistance in APBN-P 2010 was previously allocated to Rp8,625.0
billion, which was used to anticipate the risk of revisions in macroeconomic assumptions

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Chapter III Revisions in Expenditure

that amounted to Rp2,800.0 billion, the risk of land price increment (land capping) Rp1,200.0
billion, food price stability reserve Rp1,000.0 billion, and other fiscal risks Rp3,625.0 billion.
The elevated budget allocation for macroeconomic assumptions risk was mainly related with
the uncertainty of international economic developments during the year 2010, when the
APBN was being prepared. In accordance with recent progress, a number of basic
macroeconomic assumptions in APBN-P 2010 were readjusted to be more realistic and to
reflect real conditions. Among a number of macroeconomic assumptions that had been
adjusted were Indonesian crude oil price (ICP) which increased significantly from the initial
US$65/barrel to US$80/barrel, the exchange rate from Rp10,000/USD to Rp9.200/USD
and inflation rate from initially 5.0 percent to 5.3 percent. With these assumptions revisions,
the risk reserve fund in that was budgeted for Rp8,625.0 billion in APBN 2010 needed to be
re-adjusted so that the fiscal risk reserve fund would reach to Rp6,000.0 billion, which consisted
of food price stabilization reserve fund amounting to Rp1,000.0 billion, land capping fiscal
risk reserve Rp1,000.0 billion, and other fiscal risk reserves to be used in anticipating the
failure in the achievement of lifting assumptions and risk of gas price changes for PT PLN
amounting to Rp4,000.0 billion.
In order to support rehabilitation and reconstruction of West Sumatra province after the
earthquake in September 30, 2009, an action plan for the post earthquake rehabilitation and
reconstruction of West Sumatra in 2009 – 2011 was arranged through coordination of Agency
of National Development Planning (Bappenas) and the National Disaster Management
Agency (BNPB) by involving the related line ministries/institutions and the Provincial
Government and all districts and cities in West Sumatra, and had been stipulated in the
Regulation Head of BNPB Number 11 Year 2009. In accordance with the action plan, it had
been determined that the estimated funding needs for rehabilitation and reconstruction in
the area of West Sumatra in 2009, 2010, and 2011, would amount to Rp6.1 trillion. For the
year 2009, the fund allocated for the rehabilitation and reconstruction was Rp313.0 billion.
In APBN-P 2010, the budget allocated was Rp1,650.0 billion, which would be used for
restoration of infrastructure, social, economy and businesses sectors, as well as institutional
sector.
In addition, the revisions of other expenditure budget also accommodated additional expense
for Government’s debt to Pertamina associated with the use of BMP by the Ministry of Defense
that amounted to Rp5,000.0 billion, which represented the accumulated arrears of BMP
since 2007, so that the budget for BMP payment in the APBN-P 2010 was revised from
Rp500.0 billion to Rp5,500.0 billion. The BMP payment mechanism was carried out by
considering PT Pertamina’s oil/gas obligations to the Government (set-off), as had been
implemented in BBM, LPG and electricity subsidy payment.

3.2.2 The Revision in Education Budget


The Education budget in APBN-P 2010 was set to reach Rp225,229.3 billion, increased by
Rp15,691.7 billion or 7.5 percent higher than the education budget allocation in the APBN
2010 amounting to Rp209,537.6 billion. The increase of education budget allocation in the
APBN-P 2010, was applied in line with the mandate of the 1945 Constitution Article 31 Verse
4 “The Government prioritizes the education budget to amount at least 20 percent of the
APBN and APBD to meet the requirement of national education.” The increment/additional
education budget in APBN-P 2010 included an additional education budget through the
Central Government expenditure that amounted to Rp13,310.3 billion, additional education

III-12 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

budget through transfer to the region of Rp1,381.4 billion, and additional education budget
through financing expenditure amounting to Rp1,000.0 billion.
The additional education budget by central government expenditures that amounted to
Rp13,310.3 billion, was allocated for the Ministry of National Education amounting to
Rp8,250.9 billion, for the Ministry of Religious Affairs Rp2,861.0 billion, for the Ministry of
Transportation Rp1,048.4 billion, for the Ministry of Health Rp550.0 billion, and for the
Ministry of Youth and Sports Rp600.0 billion. The policy to utilize the additional education
budget in APBN-P 2010 was directed: (1) to support national prioritized programs RPJMN
2010-2014; (2) to intensify the objective achievement in the prioritized educational
development in RKP 2010; and (3) to support the implementation of Presidential Decree
Number 1 Year 2010 Regarding Acceleration of National Development Priorities. Meanwhile,
the technical criteria to utilize the additional education budget in APBN-P 2010 were as
follows: (1) payment of arrears that had been committed in (including arrears payments of
the teacher profession allowance, additional income for PNS teachers, higher education of
the Ministry of Transportation); (2) program/activity should be completed by the end of the
fiscal year (eight months); and (3) program/activity should produce an output/outcome,
(4) program/activity’s should be ready. The utilization of additional education budget in
APBN-P 2010 would be prioritized to carry out: (1) Programs that had direct benefit to
people such as School Operational Assistance (BOS), scholarships, supplementary food for
Kindergarten and Elementary students, post disaster rehabilitation of facilities and
infrastructure, improvement of student’s internship program in business field, education for
abandoned children through an integrated Islamic boarding school, capacity improvement
program for school principals and educators, educational quality control for higher education
and vocational high schools, acceleration of MDG programs, acceleration of teaching hospital
completion; and (2) programs that required special attention (remote areas, leading areas,
and outermost areas).
The additional education budget through transfer to region was Rp1,381.4 billion that was
allocated for education Revenue Sharing Fund (DBH). The increase in budget allocation for
education DBH in APBN-P 2010 was in accordance with Law Number 33 Year 2004 regarding
Financial Balance between Central and Regional Government; Article 20 Verse (1) that
mandates 0.5 percent of oil and gas DBH to be allocated to increase the elementary education
budget.
Furthermore the additional education budget through the distribution of Rp1,000.0 billion
was allocated for the establishment of endowment funds, which will be managed by BLU in
education sector. Establishment of a education endowment fund was aimed to: (1) guarantee
the sustainability of educational programs for the next generation, which could be used for
investment in education such as scholarships, a revolving fund for students, and as a form of
intergenerational equity; and (2) provide education facility and infrastructure in case of
emergency (natural disasters). Establishment of education endowment funds was expected
to provide benefits, such as: (1) anticipation of previous years of experience related to the
normal APBN-P cycle, where DIPA APBN-P would only be completed around October,
therefore the programs/activities financed by the additional education budget could not be
realized due to lack of time (three months); (2) the scholarship allocated through BA K/L
could only be distributed in March, while scholarship through national education development
fund was expected to be paid from the beginning of the year; (3) to anticipate the decline of

Financial Note and Indonesian Revised Budget 2010 III-13


Chapter III Revisions in Expenditure

education budget allocation caused by the decrease of APBN due to external factors; and
(4) to anticipate force major such as natural disasters, while education activities could not be
disturbed.

3.2.3 The Revision in Central Government Expenditure by Organi-


zations
In general, the central government budget by organizations could be divided into: (a) central
government expenditure managed by K/L; and (b) central government expenditure managed
by the general treasurer (non-K/L). In APBN-P 2010, the central government budget that
was managed by K/L was set at Rp366,134.5 billion. This amount increased by Rp25,985.3
billion or 7.6 percent higher than the budget ceiling of K/L in APBN 2010 that amounted to
Rp340,149.2 billion. The increase in K/L budget allocation was associated with the additional
budget for prioritized needs in several K/L that had not been accommodated in the APBN
2010, the additional expenditure that derived from foreign loans and carried over of Public
Direct Assistance Glide (BLM) for National Program for Community Empowerment (PNPM).
Compared to the K/L budget realization in the year 2009 that amounted to Rp306,999.5
billion, the K/L budget in the APBN-P 2010 had increased by Rp59,134.9 billion or 19.3
percent higher than the budget ceiling.
Meanwhile, the central government
budget allocations which were managed GRAPH III.2
CENTRAL GOVERNMENT EXPENDITURE, 2010
by the General Treasurer (non-K/L) in
APBN-P 2010 was determined at
Rp415,399.1 billion or increased by 800.0
415.4
Rp30,305.3 billion (7.9 percent) from the 600.0 376.8 385.1
321.8
ceiling in APBN 2010 that amounted to 400.0
Rp385,093.8 billion. The increasing
budget ceiling of non-K/L in APBN-P 200.0 314.7 307.0 340.1 366.1

2010 was mainly caused by the increase


APBN Real. APBN
of subsidy expenditure estimation due to 2009 2010
APBN-P

revisions in basic macroeconomic


assumptions, and revisions in the KL Expenditure Non KL Expenditure
Source : Ministry of Finance
parameters and the implementation of
policy related to subsidies. If compared
with non-K/L expenditure realization in 2009 that amounted to Rp321,812.9 billion, the
estimated budget allocation of non-K/L in 2010 had increased by Rp93,586.2 billion or 29.1
percent higher.
In accordance with the mandate of Act Number47 Year 2009 regarding the APBN 2010,
that in order to maintain the continuity of the implementation activities for accelerating
poverty reduction, BLM PNPM in DIPA 2009 could be launched until the end of April 2010.
Based on the above mandate, there were several K/L that received additional budget from
PNPM carried over, such as: (1) The Ministry of Domestic Affairs, (2) Ministry of Public
Works, and (3) Ministry of Underdeveloped Area Development.
In addition, in line with the increase in K/L budget allocation in APBN-P 2010, there were
several K/L to receive an additional budget allocations: (1) Ministry of the Domestic Affairs,

III-14 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

(2) Ministry of Law and Human Rights; (3) Ministry of Agriculture, (4) Ministry of
Transportation, (5) Ministry of National Education, (6) Ministry of Health; (7) Ministry of
Religious Affairs; (8) Ministry of Forestry, (9) Ministry of Public Works; and (10) Ministry of
Youth and Sports. The complete additional K/L budget is detailed in Table III.3.

TABLE III.3
REVISION IN EXPENDITURES OF LINE MINISTRIES/AGENCIES, 2010
(billion rupiah)

No. Line Ministries/Institutions APBN APBN-P Changes


1 People's Consultative Assembly 170.4 260.3 89.9
2 House of Representatives 1,949.6 2,376.2 426.6
3 Supreme Audit Agency 2,028.0 2,297.0 269.1
4 Attorney General 2,534.5 2,940.0 405.5
5 Secretariat of State 1,801.2 1,908.4 107.2
6 Ministry of Domestic Affairs 12,524.8 13,363.3 838.5
7 Ministry of Foreign Affairs 5,561.7 5,563.7 2.0
8 Ministry of Defense 42,310.1 42,899.0 588.8
9 Ministry of Law and Human Rights 4,609.7 5,320.1 710.4
10 Ministry of Finance 15,282.4 15,368.3 85.8
11 Ministry of Agriculture 8,038.0 8,887.7 849.6
12 Ministry of Industry 1,665.1 1,684.6 19.5
13 Ministry of Energy and Mineral Resources 7,797.5 8,002.5 205.0
14 Ministry of Transportation 15,833.8 17,561.1 1,727.2
15 Ministry of National Education 55,187.2 63,438.1 8,250.9
16 Ministry of Health 21,389.6 23,796.8 2,407.2
17 Ministry of Religious Affairs 27,238.7 30,129.7 2,891.0
18 Ministry of Manpower and Transmigration 2,860.3 3,122.1 261.8
19 Ministry of Social Affairs 3,627.7 3,727.7 100.0
20 Ministry of Forestry 3,348.4 4,023.4 675.0
21 Ministry of Maritime and Fisheries 3,190.8 3,380.8 190.0
22 Ministry of Public Works 34,796.5 36,102.1 1,305.6
23 The Coordinating Ministry for Politic, Law and
208.8 238.8 30.0
Security
24 The Coordinating Ministry for Economy 111.4 116.4 5.0
25 Ministry of Culture and Tourism 1,616.6 1,679.6 63.0
26 Ministry of State-Owned Enterprises 114.2 166.2 52.0
27 Ministry of Research and Technology 635.5 650.5 15.0
28 Ministry of Environmental Affairs 404.4 422.3 18.0
29 Ministry of Cooperatives and Small and Medium
733.9 789.3 55.4
Enterprises
30 Ministry of Women Empowerment and Child
133.5 183.5 50.0
Protection
31 Ministry of State Apparatus Empowerment and
123.8 129.8 6.0
Bureaucratic Reform
32 National Crypto Agency 499.8 625.1 125.3

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Chapter III Revisions in Expenditure

33 Central Statistic Agency 5,049.0 5,153.7 104.6


34 Ministry of National Development Planning /
558.3 566.3 8.0
Bappenas
35 National Land Agency 2,944.6 2 951.6 7.0
36 The National Library of Indonesia 343.6 443.6 100.0
37 Ministry of Communications and Information
2,812.0 2,888.7 76.7
Technology
38 Indonesian National Police 27,195.0 27,795.0 600.0
39 National Agency of Food and Drugs Control 627.7 657.9 30.2
40 Agency of National Defense 208.5 238.5 30.0
41 Coordinating Agency for Capital Investment 365.0 428.7 63.7
42 National Narcotics Agency 346.9 368.2 21.3
43 Ministry of Underdeveloped Area Development 927.2 1,040.0 112.8
44 Coordinating Agency for National Family
1,234.0 1,361.0 127.0
Planning
45 Agency of Meteorology, Climatology, and
865.2 947.3 82.1
Geophysics
46 Constitutional Court 169.5 189.3 19.8
47 Agency of the Assessment and Application of
534.0 669.0 135.0
Technology
48 National Aviation and Space Agency 229.0 239.0 10.0
49 Coordinating Agency for National Surveys and
443.0 463.0 20.0
Mapping
50 National Standardization Agency 61.6 121.6 60.0
51 Administration Agency 196.0 199.5 3.5
52 National Archives 104.4 114.0 9.6
53 National Civil Service Agency 437.7 497.7 60.0
54 Agency of Financial and Development Control 642.1 667.0 24.9
55 Ministry of Trade 1,233.2 1,455.3 222.1
56 Ministry of Public Housing 904.5 964.5 60.0
57 Ministry of Youth and Sports 1,553.9 2,503.9 950.0
58 Corruption Eradication Commission 426.4 458.8 32.4
59 Regional Representatives Board 469.6 634.6 165.0
60 National SAR Agency 565.7 589.1 23.4
61 Other K/L 10,373.6 10,373.6 -
Total 340,149.2 366,134.5 25,985.3
Source : Ministry of Finance

Ministry of Domestic Affairs


The expenditure budget of the Ministry of Domestic Affairs was aimed to support the
implementation of a part of governing duties in domestic affairs and regional autonomy;
management and coordination of ministerial administrative duties and services;
implementation of applied research and development, and education and specific training in
order to support policy in domestic and regional autonomy; and implementation of functional
supervision. In APBN-P 2010, the budget allocation assigned to the Ministry of Domestic
affairs was Rp13,363.3 billion, which increased by Rp838.5 billion (6.7 percent) if compared

III-16 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

with the budget ceiling in APBN 2010 that amounted to Rp12,524.8 billion. The increment
of budget allocation for the Ministry of Domestic affairs in APBN-P 2010 was mainly
associated with the additional budget for the followings: (1) demographic administration
management program Rp384.2 billion; (2) rural community empowerment improvement
program (carry over) Rp344.5 billion; and (3) border area development program Rp16.1
billion.
The additional budget allocations for Demographic Administration Management Program
was very important because it was in line with the mandate of Law Number 23 Year 2006
regarding Demographic Administration, which regulates that the Government has the
obligation and is responsible to carry out national demographic administration. The release
of the Law Number 23 Year 2006 reflected the reform in demographic administration, of
which important component was management of Citizen Registration Number (NIK). NIK
is the identity of Indonesian citizen that is a key access to the data verification and validation
of one’s identity in order to support public services in demographic administration sector. As
a key access in demographic services, the NIK would be developed towards a single
identification for each resident. The NIK is unique or exclusive, distinct and attached to a
person who is registered as an Indonesian resident and is linked directly to the entire
demographic documentation. Based on Law Number 23 Year 2006, the Government would
have to finish providing NIK for each resident by the end of 2011.
The implementation of demographic administration information system would be
implemented gradually with a total budget requirement of Rp6.6 trillion for three years,
starting from 2010 to 2012. For the year 2010, the budget allocation would be used to provide
NIK to residents in 497 districts/cities and implementation of e-ID cards (e-KTP) in 6 districts/
cities. The expected outcome from the Demographic Administration Information System
implementation was as follows: (1) implementation of and integrated and orderly
demographic administration in national-scale; (2) implementation of a universal, permanent,
compulsory, and sustainable demographic administration; (3) the fulfillment of people’s right
in demographic administration with professional service; and (4) availability of national
data and information about civil registration in various levels that were accurate, complete,
current and easily accessible to be made a reference for policy formulation and development
in general.
Meanwhile, in border area development programs, the budget allocation would be used to
finance activities that included the followings: (1) the facilitation of development in border
regions in economic, cultural, social sectors and borderline management; (2) the
arrangement, assessment and development of policy and strategy. In the rural community
empowerment improvement programs, the budget allocation would be used to finance
activities that included: (1) improvement of rural communities empowerment, and rural
and sub-district PNPM; (2) management/coordination/monitoring, evaluation and reporting;
(3) rural government institutional consolidation in development management.

Ministry of Law and Human Rights


The budget for Ministry of Law and Human Rights (HAM) was aimed to support law
enforcement efforts and human rights to support the achievement of a safe, united,
harmonious, peaceful, righteous, and prosperous community. In APBN-P 2010, budget

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Chapter III Revisions in Expenditure

allocation of the Ministry of Law and Human Rights was set to reach Rp5,320.1 billion, or
increased by Rp710.4 billion (15.4 percent) when compared with the budget allocation in
APBN 2010 that amounted to Rp4,609.7 billion. The increase of budget allocation for Ministry
of Law and Human rights in the APBN 2010-P was associated with the additional budget for
performance improvement program in the judiciary and other law enforcement agencies.
Budget allocation for the performance improvement program of judiciary and other law
enforcement agencies, would be used to finance activities that included: (1) organizing office
operations and maintenance; (2) improvement/assessment of institutional capacity;
(3) preparation, assessment and development of policies and strategies; (4) organization of
socialization / dissemination / seminars / workshops / publications; and (5) management
and development of information and data utilization.

Ministry of Agriculture
Ministry of Agriculture’s budget was used for performing government’s affairs in agriculture,
with the target to realize a resilient agriculture through the efforts to consolidate food stability,
increase the additional value and competitiveness of agricultural products and increase
farmers’ welfare. In APBN-P 2010, the Agriculture Ministry’s budget allocation was set at
Rp8,887.7 billion, which increased by Rp849.6 billion (10.6 percent) from the budget ceiling
in APBN 2010 that amounted to Rp8,038.0 billion. The budget for Ministry of Agriculture in
APBN-P 2010 was higher than the budget ceiling in APBN 2010 as a result from additional
budget, such as: (1) food stability improvement program Rp823.3 billion; and (2) farmer’s
welfare improvement program Rp26.3 billion.
The additional budget allocations for food stability improvement program, would be utilized
to finance various activities, namely: (1) development of cow breeding; (2) pre and post
harvest agricultural mechanism; (3) availability and improvement of agricultural
infrastructure; (4) pest control (OPT), animal disease, quarantine and food safety
improvement; (5) seed subsidy, agricultural production equipment assistance, and
enhancement of seedling institutions. Further, in farmers’ welfare improvement programs,
the budget allocation would be used to finance various activities, namely: (1) organizing
office operations and maintenance; (2) implementation / development of human resources
education; (3) the development and implementation of agricultural education;
(4) management / creation / development of systems, data, statistics and information. The
outcome expected from these activities was to increase food production and productivity.

Ministry of Transportation
Ministry of Transportation’s budget allocation was directed to improve the quality and capacity
of transport infrastructure development in accordance with minimum service standard, to
improve transport infrastructure support towards the competitiveness of the real sector, and
to increase construction and development investment in transport infrastructure through
cooperation between the government and the private sector, in order to support the
enhancement of domestic economy competitiveness, which was supported by the development
of agriculture, infrastructure and energy. In APBN-P 2010, Ministry of Transportation’s
budget allocation was set at Rp17,561.1 billion, which increased by Rp1,727.2 billion (10.9
percent) from the budget allocation in APBN 2010 that amounted to Rp15,833.8 billion. The
budget allocations of Ministry of Transportation in the APBN-P 2010 was higher than tge
budget ceiling in the APBN 2010 because there were additional budget, namely: (1) air

III-18 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

transport development program Rp541.6 billion, (2) marine transportation development


program Rp127.5 billion; and (3) also for higher education program Rp1,048.4 billion.
Budget allocation for air transport development program would be used for various activities
including: (1) construction of new airports; (2) the development / improvement of airports;
(3) the procurement of aviation safety facilities; (4) construction of runway and its facilities.
In sea transport development program, the budget allocation would be used to finance various
activities, namely: (1) construction / procurement / improvement of infrastructure and
facilities; (2) development of seaport facilities and infrastructure; (3) marine pier construction.
Meanwhile, in higher education programs, budget allocations would be used to finance various
activities, which were: (1) organizing office operations and maintenance, (2) improving and
developing the use of data and information; (3) training / coordination / implementation of
monitoring, evaluation and reporting. The outcome expected from these activities was to
improve the flow of transport, which was expected to accelerate further economic growth
that would increase income and people’s welfare.

Ministry of National Education


Ministry of National Education’s budget was directed to supporting the effort of national
education through even distribution and expansion of education access; quality improvement,
relevance, and education competitiveness; and improvement of governance, accountability,
and public image. In APBN-P 2010, budget allocations for the Ministry of National Education
was set to reach Rp63,438.1 billion, which increased by Rp8,250.9 billion (15.0 percent) if
compared with the budget allocation for the Ministry of National Education in APBN 2010
that amounted to Rp55,187.2 billion. The increase of budget for Ministry of National Education
in APBN-P 2010 was primarily related to the education budget adjustments as a result of the
additional expenditure.
The additional education budget for the Ministry of National Education would be allocated
for the implementation of several programs, that included: (1) PAUD amounting to Rp197.5
billion; (2) the nine-year compulsory education as elementary education program Rp2,484.0
billion; (3) secondary education programs Rp1,238.9 billion; (4) non-formal education
programs Rp137.3 billion, (5) higher education programs Rp3,296.9 billion; (6) quality
improvement program for educators and educational worker at Rp594.6 billion;
(7) educational service management program Rp70.2 billion; (8) research and development
program in education Rp216.5 billion.
In early age children education programs, the additional budget would be used for the
implementation of PAUD expansion. Further, in the nine-year compulsory education
program, the additional budget allocation would be used to finance the implementation of
activities that included: (a) granting scholarships to poor students in SD and SMP, (b) to
provide supplementary food for kindergartens and elementary schools students; (c) improving
the management system of BOS. The secondary education program’s additional budget
allocation would be used to finance the activities in: (a) granting scholarships to poor SMA
and SMK students; (b) providing operational support for quality management of SMA and
SMK, (c) SMA and SMK quality control; (d) construction and rehabilitation of SMA and
SMK buildings.
Meanwhile, in the higher education program, the additional budget would be used to finance
various activities, among others: (a) the scholarships for poor university students;

Financial Note and Indonesian Revised Budget 2010 III-19


Chapter III Revisions in Expenditure

(b) accelerating construction of teaching hospitals, (c) quality control of higher education,
(d) improvement of facilities and infrastructure of higher education, (e) the fulfillment of
allowance shortage for lecturer; (f) improving the academic qualifications of lecturer;
(g) enhancement of research implementation; (h) construction of student dormitories in
universities; (i) the development of entrepreneurship based education. In non-formal education
programs, the additional budget would be used to finance activities such as: (a) the
harmonization of non-formal education with the business world, (b) family education
(parenting education, home schooling); (c) non-formal education for the border areas and
disaster areas.
In quality improvement programs for educators and educational workers, the additional
budget would be used to finance activities that included: (a) training of school principals and
supervisors, (b) acceleration of quality and competency improvement of teachers, including
teachers in remote areas, (c) to provide special allowances for teachers in the leading and
outermost regions; (d) to provide teachers’ functional allowance; (e) to provide teacher
profession allowances in elementary and secondary education. In the education research
and development program, the additional budget would be used to finance various activities
including: (a) the development and review / teaching materials and teaching models;
(b) evaluation of the national final exam (UN) improvements; (c) expansion of educational
census from SD to SMA/SMK. In education services management program, the additional
budget would be used to finance various activities, such as: (a) the acceleration in
implementation of quality control system in education units at all levels of education, (b) the
enhancement of the national education network, (c) the enhancement in information system
planning.

Ministry of Health
Ministry of Health’s budget allocations was directed to support the government’s activities in
the health sector, with the aim to achieve development goals in the physical environment,
biological and socio-economic sector, as well as people’s behavior for clean and healthy living,
and health services condition in order to fulfill people’s right to a healthy living. In APBN-P
2010, the Ministry of Health’s budget allocation was set at Rp23,796.8 billion, which increased
by Rp2,407.2 billion (11.3 percent) from the budget allocation in the APBN 2010 that
amounted to Rp21,389.6 billion. The increase of budget allocations for Ministry of Health in
APBN-P 2010 was associated with the additional budget for: (1) individual health efforts
program for Rp943.0 billion; (2) human resources management program Rp753.0 billion;
and (3) health resources program Rp630.0 billion.
In individual health efforts program, the budget allocation would be used to finance various
activities, which were: (1) the management of salary, honorarium and allowance; (2) public
and bureaucratic services; (3) availability and improvement of infrastructure and facility of
the appointed health facilities. Meanwhile, in human resources management program, the
budget allocation would be used to finance public or bureaucratic service activities. In the
health resources program, the budget allocation would be used to finance management of
personnel and pensioner administration, and also human resource and personnel
administration development.

III-20 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

Ministry of Religious Affairs


Ministry of Religious Affairs is the ministry that is responsible to carry out government’s
affairs in the religious sector, with objective to improve the quality of religious service and
understanding and religious living. In addition, the Ministry of Religious Affairs is also
responsible to improve the harmony of internal believers and interreligious believers, and to
improve access and quality of religious education and religious affairs. In APBN-P 2010, the
Ministry of Religious Affairs’ budget allocation was set to reach Rp30,129.7 billion, which
increased by Rp2,891.0 billion (10.6 percent) if compared with the budget ceiling in APBN
2010 that amounted to Rp27,238.7 billion. The increase of budget allocations for Ministry of
Religious Affairs in APBN-P 2010 was especially related to the additional budget allocations,
which were: (1) the nine-year compulsory elementary education program Rp684.0 billion;
(2) secondary education programs Rp805.7 billion; (3) higher education programs Rp586.7
billion; (4) quality improvement program for educators and educational workers Rp115.3
billion; (5) non-formal education programs Rp24.8 billion; and (6) educational services
management program Rp412.7 billion.
In nine-year the compulsory education program, the budget allocation would be used to
finance various activities, which were: (a) operational support for new government Islamic
school, (b) minor rehabilitation of Islamic school buildings, including post-disaster;
(c) development of MTs libraries; (d) construction of MTs science laboratory; (e) to provide
supplementary food for Islamic Kindergarten (RA) students and Islamic elementary school
(MI) students; (f) to provide scholarships to poor students, (g) scholarship assistance in MTs
for talented students and student with special accomplishments. The expected output from
these activities were: (1) the realization of operational assistance to 19 MI and 31 MTsN;
(2) rehabilitation of 865 MI and 1300 MTs, (3) completion of 1000 libraries and 500
laboratories; (4) the implementation supplementary food for 500,000 RA and MI students;
(5) the implementation of scholarships for 750,000 MI poor students and 600,000 MTs
poor students; (6) the implementation of scholarships for 1,000 MTs talented students and
students with achievement.
In secondary education programs, the budget allocation would be used to finance various
activities, such as: (a) operational assistance to new government MA; (b) MA library
development; (c) the development of science and language laboratories in MA; (d) operational
support for quality management of private MA; (e) scholarship based on talents and
accomplishments for MA students; (f) to provide scholarships for poor students. The output
expected from various activities were: (1) providing operational support for 13 MA;
(2) completion of 500 libraries and 300 laboratories; (3) the realization of operational support
for quality management in 4,399 private MA; (4 ) scholarships for 400,000 poor MA students;
(5) scholarships for 2,000 talented MA students and students with achievement.
In higher education programs, budget allocation would be used to finance various activities,
among others were: (a) to provide facility and infrastructure for Islamic universities (PTA),
including post-disaster; (b) scholarship for SMA/MA students to continue to PTAN;
(c) internship program in industrial world for university students; (d) to provide scholarship
to poor students. The expected output from these activities included: (1) availability of support
in providing facilities and infrastructure in 67 higher education institutions; (2) to provide
scholarship to 2,000 SMA/MA students to continue to PTAN; (3) availability of internship
for 500 students; (4) scholarship for 70,000 poor students.

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Chapter III Revisions in Expenditure

In the quality improvement program for educators and educational workers, the budget
allocation would be used to finance activities that included the followings: (a) additional
allowance for teachers continuing S2 program (in PTAN and PTN); (b) the enhancement of
competency of the MI school principals and supervisors in elementary and secondary
education, (c) improving the quality of religions teachers.
The expected output from these activities included: (l) providing S2 scholarship for 1,200
high school teachers; (2) enhancing the competency of MI school principals. Meanwhile, in
non-formal education programs, the budget allocation would be used to finance activities
and internship of MA students of Islamic boarding school students. The output expected
from these activities was the availability of internship for 5,000 MA students and 1,000
students of Islamic boarding school.
Meanwhile, the management program of educational services, the budget allocation would
be used to finance activities that included: (a) the additional income allowance of PNS
teachers; (b) improvement of BOS management system. The expected output from the various
activities included: (1) availability of additional income for the 133,000 PNS teachers;
(2) the realization of teacher profession allowance for 257,000 PNS teachers.
Based on the above various programs and activities, the expected outcome were as follows:
(1) the realization of empowerment and improvement of quality of the role of social institutions
and religious institutions in supporting social change in the society; and (2) increment of
access and even distribution of educational services that was of quality and affordable, through
either formal or non formal education that covered the entire levels of religious education.

Ministry of Forestry
Budget allocation for Ministry of Forestry was directed to further improve the quality of
forestry production and improve the quality of sustainable forest management for the most
of people’s welfare and economy. In APBN-P 2010, Ministry of Forestry’s budget allocation
was set to reach Rp4,023.4 billion, which increased by Rp675.0 billion (20.2 percent) from
budget allocation in APBN 2010 that amounted to Rp3,348.4 billion. Budget allocations for
Ministry of Forestry in APBN-P 2010 was higher than the budget ceiling in the APBN 2010
because there were additional budget that included: (1) rehabilitation and recovery program
for natural resource reserve Rp510.0 billion; (2) natural resources protection and conservation
program Rp90.4 billion; and (3) consolidation of domestic security programs Rp74.6 billion.
In rehabilitation and recovery program for natural resources, the additional budget allocations
would be used to finance rehabilitation of critical watershed areas (DAS). The output expected
from these activities was a rehabilitation of 100,000 hectares of forest area. In the program
of protection and conservation of natural resources, the additional budget allocations would
be used to finance the activities of forest fire control and management of national parks, and
the output expected from these activities was the capability to control forest fires on the
islands of Kalimantan, Sumatra, and Sulawesi. On the consolidation of domestic security
programs, the additional budget would be utilized for forest protection and security as well
as the development / procurement / upgrading of facilities and infrastructure. The expected
outcome of these activities were the implementation of land rehabilitation, the declining
number of hotspots by 20 percent per year, and the improved capability of disaster
management in central and regional governments effectively and efficiently.

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Revisions in Expenditure Chapter III

Ministry of Public Works


The Ministry of Public Works’ budget was directed to support the efforts to realize the
availability of reliable, beneficial and sustainable infrastructure to encourage higher economic
growth. In the APBN-P 2010, the budget allocations for the Ministry of Public Works was
set to reach Rp36,102.1 billion, or an increase of Rp1,305.6 billion (3.8 percent) from the
budget allocation in the APBN 2010 that amounted to Rp34,796.5 billion. The increment of
budget allocations for the Ministry of Public Works in the APBN-P 2010, if compared with
the ceiling in the APBN 2010 was mainly associated with the additional budget, which were:
(1) improvement / construction program for roads and bridges amounting to Rp938.6 billion;
(2) rehabilitation / maintenance of roads and bridges Rp174.4 billion, (3) development
program for drinking water and liquid waste management performance Rp62.4 billion; and
(4) development, management, and conservation program for rivers, lakes and other water
sources.
In the improvement / construction program for roads and bridges, the budget allocation
would be used to finance various activities, which were: (1) improvement / construction of
roads and bridges, cross and non-cross; (2) the Surabaya-Madura (Suramadu) bridge
construction; (3) construction of Java Southern coast cross. Meanwhile in the rehabilitation
/ maintenance program of roads and bridges, the additional budget would be used to finance
the rehabilitation / maintenance of national roads and bridges. In development, management,
and conservation program for rivers, lakes and other water sources, the additional budget
would be used to finance the development of dams, water reservoirs, lake reservoirs and
other water reservoir constructions.
Ministry of Youth and Sports
The main task of the Ministry of Youth and Sport is to support the efforts in improving the
quality of youth and sports in order to improve the quality of Indonesians who have the
insights of nationality, independence, health, intelligence, skill, achievement and
competitiveness. In the APBN-P 2010, the budget allocations for the Ministry of Youth and
Sports was set to reach Rp2,503.9 billion, which increased by Rp950.0 billion (61.1 percent)
if compared with the budget ceiling allocation in APBN 2010 that amounted to Rp1,553.9
billion. The increment of budget allocation for the Ministry of Youth and Sports in APBN-P
2010 if compared with the ceiling in APBN 2010 was mainly related to need of an additional
budget for national and international sport management as well as for the development/
procurement/improvement of facilities and infrastructures.
The additional budget was not only used for education and but also for the preparation of
SEA Games in relation to the appointment of Indonesia as the host of SEA Games 2011. The
Sea Games would be attended by the entire countries in Southeast Asia, and would bring
about 35 sports into the event. The outcome expected from these activities would be successful
SEA Games 2011 and improvement of Indonesia rank in SEA Games 2011.

3.3 Principles of Allocation Revision of Transfer to Region in


2010
The policy of financial balance between central government and regional governments was
implemented in the budget allocation for transfer to region in the APBN, as an integrated
part of national fiscal policy. In line with the above, the allocation of transfer to region in

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Chapter III Revisions in Expenditure

2010 remained focused on supporting programs/activities of national priorities, while


maintaining consistency and sustainability of fiscal decentralization in order to support the
implementation of regional autonomy, which was broad, real, and responsible.
In regard to various laws and regulations and based on the evaluation results during the
implementation in 2006-2009, and with reference to the results of discussions between DPR
and the Government in Preliminary Discussion of APBN 2010 preparation, the transfer to
region policy in 2010 would be intensified to: (1) reduce fiscal gap between central and regional
government (vertical fiscal imbalance) and interregional (horizontal fiscal imbalance);
(2) improve the quality of regional public services and reduce horizontal public service
imbalance; (3) support the national fiscal sustainability in macro economic policy;
(4) enhance regional capacity in regional economy potential; (5) improve the efficiency of
national resources usage; and (6) improve the synchronization between the national
development plans and regional development plans.
To support the policy direction of transfer to region, the budget allocation in the APBN-P
2010 was estimated to Rp334,612.9 billion or 5.5 percent to GDP. In nominal terms, this
amount had increased by Rp22,189.9 billion or 6.9 percent higher than the budget ceiling in
APBN 2010 that amounted to Rp322,423.0 billion. If compared with the realization in 2009
that amounted to Rp308,585.2 billion, the budget allocation of transfer to region in the APBN-
P 2010 had increased by Rp36,027.7 billion or 11.7 percent. The transfer to region in APBN-
P 2010 had increased if compared with the ceiling in APBN 2010, due to the increase in the
estimation of balanced fund realization and adjustment fund realization. The allocation of
transfer to region in APBN-P 2010 consisted of 91.2 percent of the balanced funds, and
special autonomy and adjustment fund 8.8 percent.

3.3.1 Revisions in Balanced Fund


Balanced Fund is the largest component in transfer to region allocation, therefore it has a
very important role in supporting the implementation of fiscal decentralization and regional
autonomy. Balanced fund is a transfer of fund that derived from the APBN to regions, in the
form of DBH, DAU, and DAK. The allocation of balanced fund is aimed to reduce the vertical
and horizontal fiscal imbalance. Therefore, the balanced fund is one of the main pillars of
fiscal decentralization in the context of transfer of funds from central Government to regional
government.
In the APBN-P 2010, the allocation of balanced fund was estimated to Rp314,363.3 billion
or 5.0 percent to GDP. If compared with the budget ceiling in APBN 2010 that amounted to
Rp306,023.4 billion, this amount had increased by Rp8,339.9 billion or 2.7 percent. Also
when compared with the realization of balanced fund in 2009 that amounted to Rp287,251.5
billion, the estimated realization of the balanced fund in the APBN-P 2010 had increased by
Rp27,111.9 billion or 9.4 percent. The increment of balanced funds in APBN-P 2010 compared
to the budget ceiling in APBN 2010 was caused by the increase in estimated realization of
DBH, DAU, and DAK. The estimation of balanced fund budget in APBN-P 2010 consisted of
28.5 percent of DBH, 64.8 percent of DAU and 6.7 percent of DAK.

3.3.1.1 Revision in Revenue Sharing Fund (DBH)


The revenue sharing fund (DBH) is a fund that derived from the APBN revenues, which is
allocated to regions based on a certain percentage to fund regional needs in order to implement

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Revisions in Expenditure Chapter III

decentralization. DBH allocation policy in 2010 referred to the provisions stipulated in Law
Number 33 of 2004 regarding Financial Balance between the Central and Regional
Government, Law Number 11 Year 2006 regarding Aceh Government, Law Number 35
Year 2008 regarding Stipulation of Government Regulation Number 1 Year 2008 regarding
the Amendment on Law Number 21 Year 2001 regarding Special Autonomy for Papua
Province to become a law, and Law Number 39 Year 2007 regarding Amendment on Law
Number 11 Year 1995 regarding Excise, and Government Regulation Number 55 Year 2005
regarding Balanced Fund.
The sources of revenue that derived from the regions were divided between the central
Government and regional governments based on “by origin” principle, with a larger proportion
for the productive regions and considering the even-distribution portion in the related province.
The DBH consisted of Tax DBH and Natural Resources (SDA) DBH. The mechanism DBH
arrangement and distribution to each region eligible to receive the fund was administered in
the Minister of Finance Regulations. In 2010, the direction of policy in DBH sector was
aimed to support the efforts in improving the calculation mechanism of allocation and
distribution to regions. This was done through improved coordination, both horizontally and
vertically, therefore the demands of data accuracy and validation could be met.
In the APBN-P 2010, the realization of DBH was expected to reach Rp89,618.4 billion, or 1.4
percent to GDP. This amount indicated an increase of Rp8,213.6 billion or 10.1 percent of the
DBH ceiling in the APBN 2010 that amounted to Rp81,404.8 billion. If compared with the
realization in 2009 that amounted to Rp76,129.9 billion, the DBH budget allocation in the
APBN-P 2010 had increased by Rp13,488.5 billion or 17.7 percent. The increase of DBH in
APBN-P 2010 was primarily caused by an increase in oil and gas SDA DBH that was related
to the elevated revenue target of oil and gas that would be distributed in 2010. In addition,
the allocations of DBH in 2010 also accommodated DBH less paid from the previous years. The
estimation of DBH realization in APBN-P 2010, consisted of tax DBH of 49.7 percent and
SDA DBH of 50.3 percent.

Revision in Tax DBH


The Tax DBH included DBH of PPh Article 21 and Article 25/29 WPOPDN, PBB, BPHTB,
and Tobacco Excise. There were two factors that influenced the allocation of tax DBH and
Tobacco Excise DBH in the APBN-P In 2010: (1) the estimated revenue based on potential
sources of taxation and tobacco excise, and (2) regulations concerning the distribution of tax
DBH and tobacco excise DBH.
Under the provisions of Article 13 of Law Number 33 Year 2004, as well as Article 8 of
Government Regulation Number 55 Year 2005, the regional share of DBH of PPh Article 21
and Article 25/29 WPOPDN is 20 percent. The DBH that derived from PPh Article 21 and
Article 25/29 WPOPDN revenue that was distributed to the regions was divided with the
following proportion: 60 percent for district/city and 40 percent for the province. The
allocation of DBH of PPh Article 21 and Article 25/29 WPOPDN for each region consisted of:
(a) the temporary allocation, which was based on the estimated revenue of PPh Article 21
and Article 25/29 WPOPDN and was set no later than 2 (two) months before the related
budget year commenced; and (b) definitive allocation, which was based on the prognosis of
revenue realization of PPh Article 21 and Article 25/29 WPOPDN and was set no later than
the first month of the fourth quarter of the current fiscal year.

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Chapter III Revisions in Expenditure

The distribution of DBH of PPh Article 21 and Article 25/29 WPOPDN was carried out based
on the prognosis of the realization of revenue from PPh Article 21 and Article 25/29 WPOPDN
of the current budget year in a quarterly basis, with details as follows: (a) distribution in the
first quarter to the third quarter each amounting to 20 percent of temporary allocations; and
(b) distribution of the fourth quarter was based on the difference between the definitive
allocation and the amount of funds that had been disbursed during the first quarter to the
third quarter. Further, if the amount of distribution in the first quarter to the third quarter
that was based on the temporary allocation were larger than the definitive allocation, then
the excess would be calculated in the next fiscal year’s distribution.
Meanwhile, under the provisions of Article 12 Verse (1), (2), and (3) of the Law Number 33
Year 2004 and Article 5 and Article 6 of Government Regulation Number 55 Year 2005, the
regional share of Land and Building Tax (PBB) is set to be 90 percent of PBB revenue
(including 9 percent cost of collection), while the remaining 10 percent is central Government’s
share, which all of this 10 percent portion will be returned to regions. The process of PBB
DBH setting for each region is carried out in accordance with the Minister of Finance
Regulation based on the estimated annual revenue in the related budget.
The distribution of PBB DBH is implemented based on the realization of PBB revenue in the
current budget year. In general, the PBB DBH distribution is conducted in three mechanisms,
which are as follows: (1) the regional share including cost of collection; (2) central
Government’s share that is distributed evenly to districts/cities; and (3) central Government’s
share that is distributed to districts/cities as incentive. The distribution of regional share
including the cost of collection is carried out by way of weekly transfer from the Government
General Cash Account to the Regional General Cash Account via Bank Operational III
(Bank appointed by the Government), whereas the central Government’s share that is evenly
distributed to districts/cities is carried out in 3 (three) phases; in April, August and November
of the current budget year.
Meanwhile, the distribution of central Government’s share of PBB distributed as an incentive
is carried out in November of the current budget year. Furthermore, under the provisions of
Article 12 Verse (4) and (5) of Law Number 33 Year 2004 and Article 7 of Government
Regulation Number 55 Year 2005, the regional share of BPHTB is set to be 80 percent from
BPHTB revenue, whereas the remaining 20 percent is Government’s share of which will be
returned to regional governments. The process of BPHTB DBH setting for each region is
conducted in accordance with the Minister of Finance Regulation based on the estimated
BPHTB revenue in the related budget year, whereas the distribution of BPHTB DBH is carried
out based on the realization of BPHTB revenue in the current budget year.
Further, the distribution of BPHTB DBH is carried out in two mechanisms, namely: (1) the
regional share, and (2) the government’s share distributed evenly to districts/cities. The regional
share distribution is carried out in a weekly basis, while the central Government’s share
distribution is carried out in 3 (three) phases; in April, August, and November of the current
budget year.
In terms of responsibility for the distribution of regional share of PBB DBH including the
collection fee and regional share of BPHTB DBH, a reconciliation of data of PBB and BPHTB
revenue is carried out in provincial level between the Provincial Government with the Regional
Office of Directorate General of Taxation and the Regional Office of the Directorate General

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Revisions in Expenditure Chapter III

of Treasury in the related province; for the release of Payment Request (SPM) authorized by
the Budget User Order (KPA).
According to the provisions of Article 66A of Law Number 39 Year 2007, 2 (two) percent of
the revenue from tobacco excise is distributed to the tobacco excise producing provinces that
will be used to finance: (1) improvement of raw materials quality; (2) industrial development;
(3) development of social environment; (4) socialization of excise regulations; and/or
(5) eradication of illegal excisable goods. Unlike the tax DBH that has a block grant
characteristic, the Tobacco Excise DBH is more of a specific grant, because the use of funds
has previously determined.
The process of setting the Tobacco Excise DBH for each region is carried out through Minister
of Finance Regulation in accordance with the Governor Decree of the tobacco excise of
productive province, and is based on the estimated revenue of tobacco excise in the related
budget year. Further, the distribution of Tobacco Excise distribution is carried out in a quarterly
basis, with the following details: (a) the first quarter is amounted to 20 percent of temporary
allocation; (b) the second quarter is amounted to 30 percent of temporary allocation; (c) the
third quarter is amounted to 30 percent of the temporary allocation; and (d) the fourth
quarter is calculated from the difference between the definitive allocation and the amount of
funds that has been disbursed during the first quarter to the third quarter, which should be
distributed after the regional government, as Tobacco Excise DBH receiver, reports the
realization of Tobacco Excise DBH in semester I to Minister of Finance.
Based on the Decision of the Constitutional Court of the Republic of Indonesia Number 54/
PUU-VI/2008 dated April 14, 2009 regarding the assessment of Law Number 39 Year 2007
regarding the amendment on Law Number 11 Year 1995 regarding Excise, it is decided that
commencing in 2010 at the latest, the Tobacco Excise DBH allocation will also accommodate
the tobacco-producing areas as Tobacco Excise DBH receivers.
Two factors that influenced the budget allocation of tax DBH in 2010 were a budget allocation
of revenue that derived from potential tax sources that could be collected and the regulations
concerning the tax DBH distribution. In APBN-P 2010, the realization of tax DBH was
estimated to Rp44,513.5 billion, or 0.7 percent to GDP. This amount, had decreased by
Rp2,407.9 billion (5.1 percent) if compared to ceiling of tax DBH in APBN 2010 that amounted
to Rp46,921.4 billion. If compared to the realization in 2009 that amounted to Rp40,334.2
billion, the estimation of realization of tax DBH in APBN-P 2010 had increased by Rp4,179.3
billion (10.4 percent). The above estimation of tax DBH realization in APBN-P 2010 had
accommodated tax DBH less paid in the previous years, with the following details: PPh DBH
less paid amounted to Rp3.4 billion, and PBB DBH amounted to Rp2.3 billion.
From the above estimation in APBN-P 2010, the realization of PPh DBH was estimated to
reach Rp13,177.3 billion or an increase of Rp3.4 billion from the ceiling of PPh DBH in
APBN 2010 that amounted to Rp13,173.8 billion, and the realization of PBB DBH was
estimated to Rp23,063.4 billion or Rp2,172.8 billion (8.6 percent) lower from the ceiling of
PBB DBH in APBN 2010 that amounted to Rp25,236.2 billion. Meanwhile, the budget
realization of BPHTB DBH in APBN-P 2010 was estimated to Rp7,155.5 billion or Rp237.4
billion (3.2 percent) lower from the ceiling of BPHTB DBH in APBN 2010 that amounted to
Rp7,392.9 billion. On the other hand, the realization of tobacco excise DBH in APBN-P 2010
was estimated to Rp1,117.3 billion or Rp1.2 billion (0.1 percent) lower from the ceiling in
APBN 2010.

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Chapter III Revisions in Expenditure

The Revision in Natural Resources (SDA) DBH


The budget allocation for SDA DBH in 2010 was influenced by the budget allocation of SDA
potential revenue sources that could be collected and the regulations concerning the
distribution of SDA DBH set in legislative law. In 2010, the realization of SDA DBH was
expected to reach Rp45,104.9 billion, or Rp10,621.6 billion (30.8 percent) higher if compared
to the budget ceiling of SDA DBH in APBN 2010 that amounted to Rp34,483.4 billion. The
increase of the estimation of SDA DBH realization in 2010 was primarily due to ICP increment,
which was originally amounted to US$ 65/barrel in APBN 2010 to US$ 80/barrel. The
estimated SDA DBH realization in APBN 2010, had accommodated SDA DBH less paid in
the previous years. The detailed budget realization estimation is as follows:
a. The budget allocation of DBH for natural oil and gas Rp35.196,4 billion, including:
1. The budget allocation for natural oil SDA DBH was Rp17,143.1 billion, which
increased by Rp3,064.6 billion from the ceiling in APBN 2010;
2. The budget allocation for natural gas SDA DBH Rp11,925.2 billion, which
increased by Rp1,988.0 billion from the budget ceiling in APBN 2010;
3. The oil and gas SDA DBH less paid Rp6,128.1 billion.
b. The budget allocation of non-oil/gas DBH amounting to Rp8,703.5 billion, included:
1. The budget allocation for general mining SDA DBH Rp7,790.4 billion, which
increased by Rpl,205.1 billion from the budget ceiling in APBN 2010;
2. The budget allocation for forestry SDA DBH Rp1,802.6 billion, which increased
by Rp235,8 billion from the budget ceiling in the APBN 2010 that was an less
paid of forestry SDA DBH in reforestation fund during the fiscal year 2004 –
2005;
3. The budget allocation for fishery SDA DBH Rp120.0 billion, or the same as the
budget ceiling in APBN 2010;
4. The budget allocation for geothermal SDA DBH amounting to Rp195.5 billion, or
the same as the budget ceiling in APBN 2010.

3.3.1.2 The Revision in General Allocation Fund (DAU)


In accordance with the mandate of Article 27 of Law Number 33 Year 2004, the total amount
of DAU in 2010 is set at 26 percent of Net Domestic Revenue (PDN) defined in APBN. The
Net PDN is the sum of tax and non-tax revenues deducted by the revenue distributed to
regions, and other DAU reduction factors.
In order to increase the even distribution of interregional fund allocation and to overcome
horizontal financial imbalance, the central Government continues to carry out actions to
improve the data accuracy as the basis for calculating DAU, which included fiscal needs and
fiscal capacity variables, as well as the basic allocation data. Williamson Index (WI) and
Coefficient of Variation (CV) are used as standard parameters to measure the level of
horizontal financial balance, relatively towards the total population.
In the APBN-P 2010, the DAU allocation was estimated at Rp203,606.5 billion (3.3 percent
to GDP), which increased by Rp121.3 billion from the budget ceiling in APBN 2010. If

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Revisions in Expenditure Chapter III

compared to DAU realization in 2009 that amounted to Rp186,414.1 billion, which had
increased by Rp17,192.4 billion or 9.2 percent. The increase of DAU allocation in APBN-P
2010 if compared ot the realization in 2009 was associated with the increment of net PDN
estimation in 2010 and the correction of DAU allocation for Indramayu District. The increase
in DAU allocation in APBN-P 2010 if compared with the allocation in APBN 2010 was due
to the correction of DAU for Indramayu District.
The DAU allocation in APBN-P 2010 consisted of the allocation of pure DAU formula and
additional DAU for teacher profession allowance, and correction of DAU allocation for
Indramayu District. In line with the implementation of PP Number 41 Year 2009 regarding
teacher and lecturer profession allowances, starting from 2010 the DAU in APBN structure
includes not only pure DAU formula, but also additional DAU allocation for teacher profession
allowance. The allowance is given to teacher and lecturer with educator certificate in
recognition of their professionalism, within their authority. The profession allowance allocated
as additional DAU is intended for PNSD teachers. In APBN-P 2010, additional DAU for
teacher profession allowance was expected to reach Rp10,994.9 billion, which was the same
amount as the budget ceiling in APBN 2010. Meanwhile, the correction of DAU for Indramayu
District was an additional DAU allocation on the correction of fiscal capacity calculation of
Indramayu District’s share of PBB and BPHTB DBH in fiscal year 2008. DAU allocation
correction for fiscal year 2010 for other districts/cities would be calculated in the DAU
distribution for fiscal year 2011. The DAU allocation correction for Indramayu District was
Rp121.3 billion.

3.3.1.3 Revision in Specific Allocation Fund (DAK)


In general, DAK policies in 2010 were as follows:
1. Prioritized to assist regions with a relatively low financial capacity, in order to encourage
the community to achieve SPM, through the availability of physical infrastructure
and facility of basic public services.
2. To support the prioritized acceleration of poverty alleviation, as well as institutional
management and implementation of social security systems, especially in order to
expand the access basic services for the poor.
3. To support the prioritized improvement of human resources quality, especially in
order to improve access and quality of health services; acceleration of birth mortality
rate reduction, improvement of community nutrition and disease control,
improvement of service insurance for the poor and people in disadvantaged, remote,
and border areas, as well as in islands; consolidation family planning program
revitalization, and an evenly distributed improvement of the quality of nine-year
compulsory education.
4. To support prioritized consolidation of bureaucratic and judicial reform, as well as
consolidation of democracy and national security, especially in order to enhance
regional governance capacity and to improve public service quality.
5. To support the prioritized enhancement of competitive domestic economy, supported
by agricultural, infrastructure and energy developments, especially in order to improve
the stability of price and supply of primary foodstuff; to improve food stability; to
revitalize agriculture, fisheries and forestry; to expand access to basic services for the

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Chapter III Revisions in Expenditure

poor; to increase infrastructure services in accordance with SPM; and to provide


infrastructure support for the improvement of real sector competitiveness.
6. To support the prioritized improvement of management of natural resources and
environment, especially in order to improve water resources management; to increase
rehabilitation and conservation of natural resources, and to improve the quality of
spatial planning and land management.
In the APBN-P 2010, DAK allocation was expected to reach Rp21,138.4 billion or Rp5.0
billion higher from the budget ceiling in APBN 2010. The increase was caused by the correction,
among others, in Indramayu District’s DAK in 2010 that amounted to Rp5.0 billion, due to
a calculation correction in financial capability of PBB and BPHTB DBH component for
Indramayu District in 2008. DAK in APBN 2010, also included the transfer of deconcentration
funds and assistance fund that had become regional affairs, which derived from the budget
of the Ministry of Agriculture, Ministry of Maritime Affairs and Fisheries, and Ministry of
Underdeveloped Areas Development.
The Prioritized DAK usage in 2010 was directed for activities in the following sectors:
1. The Education sector, directed to support the implementation of an evenly
distributed and of qualify Nine-Year Compulsory Education Program. The scope of
activities, were as follows: the construction of New Classrooms (RKB) for SMP;
development of library or learning resource center with its equipment for SD and
SMP.
2. The Health sector, aimed to improve access and quality of basic and referral
services, especially in the acceleration of birth mortality reduction, improvement of
community nutrition and disease control. Health services for the poor and people in
disadvantaged areas, remote areas, border areas and islands. The scope of activities
in health sector, were as follows: (1) increment of construction and improvement of
Puskemas and its network; (2) construction of village health posts; (3) procurement
of medical equipment for primary health services in Puskesmas and its network;
(4) availability of vaccine/drug storage supporting facilities in pharmaceutical
institutions; (5) improvement of hospital facilities in provinces and districts/cities;
and (6) procurement of generic drugs in order to meet generic drugs requirement in
health centers.
3. The Road sector, directed to maintain and improve the province/district/city
road infrastructure services, in order to improve the distribution of passengers, goods
services, and production results that were prioritized to support agriculture, industry,
and tourism sectors to facilitate regional economic growth, and to support the
accelerated development of road structure and infrastructure. The scopes of the
activities were periodic maintenance, improvement and construction of provincial
roads and district roads that became regional affairs.
4. The Irrigation sector, directed to maintain service, optimize functions, and build
irrigation systems infrastructure, including swamp reclamation network and village
irrigation districts that became the authorization of the province, particularly the
national food storage regions in order to support food stability programs. The scope
of the activities was the improvement, rehabilitation, and construction of irrigation
networks.

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Revisions in Expenditure Chapter III

5. The Water Supply sector, aimed to increase the coverage and reliability of
drinking water services to improve the quality of public health. The scope of activities
included, (1) the improvement of the existing Drinking Water Supply System (SPAM),
(2) development of new SPAM, and (3) network expansion and improvement of house
connection for the poor.
6. The Sanitation sector, directed to increase the coverage and reliability of
sanitation services (waste liquid, garbage disposal, and drainage) to improve the
quality of public health. The scope of activities included improving existing systems
and services (waste liquid, garbage disposal, and drainage); development of service
systems and new services (waste liquid, garbage disposal, and drainage); network
expansion and improvement of waste liquid service connections for the poor and/or
people in vile areas through the development of communal waste liquid system; and
to support the 3R activities (reduce, reuse, recycle).
7. The Government Infrastructure sector, aimed to improve the performance
of regional governments in carrying out regional public services in the expansion
areas and the expansion affected areas until 2009 and other regional government
with inadequate infrastructures. The priority was given to regional expansion in 2008
and 2009. The scope of activities included the development/expansion/rehabilitation
of Regional Head office building, DPRD, institutions, agencies, and other SKPD
buildings.
8. The Maritime and Fisheries sector, directed to improve facility and
infrastructure for production, manufacturing, quality improvement, marketing, and
supervision and the availability of facility and infrastructure for the empowerment
coastal areas and small islands, which was associated with the increment of fishery
production and improvement of welfare of fishermen, fish farmers, manufacturers,
fish distributors, and other coastal communities, supported by counseling efforts. The
scope of activities included the availability and rehabilitation of infrastructure and
facility of capture fishery production; availability and rehabilitation of facility and
infrastructure of aquaculture production; availability and rehabilitation of
manufacturing facility and infrastructure, improvement of quality and distribution
of fishery products; availability and rehabilitation of facility and infrastructure of
economy empowerment in the coastal community and small islands that was related
to fishery conservation and development; availability of facility and infrastructure
for supervision; availability and procurement of facility and infrastructure for fishery
counseling.
9. The Agricultural sector, aimed to improve agricultural facility and infrastructure
in people’s and village farming in order to increase domestic food production to support
national food stability. The scope of activities included the availability of physical
infrastructure for counseling that was only used for the construction/rehabilitation
of Agricultural Counsel Center (BPP) in sub-district level; availability of physical
facility and infrastructure of land management that consisted of: construction/
rehabilitation of farm roads (JUT); production road, optimization of land, improving
soil fertility, facility/equipment for compost processing, land conservation, and
reclamation of tidal swamp and lowland swamp areas; availability of physical facility
and infrastructure for water management, including construction/rehabilitation of

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Chapter III Revisions in Expenditure

people’s farming irrigation system (JITUT), village irrigation network (JIDES), micro
water management (TAM), surface water irrigation, shallow well irrigation, deep
well irrigation, pumps, waterway dam, water reservoir; area expansion including
opening new fields, dry land opening/expansion for food crops area, horticulture,
plantation and animal husbandry; as well as the availability of food storage in order
to support the institutional community food distribution, which was one of the efforts
in increasing national food stability.
10. The Environment sector, directed to encourage the implementation of SPM
in Environment sector and to encourage the enhancement of regional institutional
capacity, with a priority to improve the environment facility and infrastructure that
was focused on water pollution prevention, air pollution prevention, and information
of soil damage status. The scope of activities included the construction of laboratory;
availability of facility and infrastructure of water quality monitoring; availability of
mobile environmental laboratories; construction of waste processing units (3R),
development of biogas technology; construction of communal IPAL, tree-planting
around water sources outside the forest area, construction of absorptive wells/bio-
porous, green park development, to provide information boards, and procurement of
weed-chopper equipment, development of environmental information system to
monitor water quality, air quality monitoring equipment procurement, liquid smoke
maker, and charcoal briquette maker; and procurement of soil quality monitoring
equipment.
11. The Family Planning sector, aimed to improve access and quality of family
planning, by improving: (1) the affordability and quality of education, mobilization,
and training of family planning field personnel; (2) physical facility and infrastructure
of family planning services; (3) physical facility and infrastructure of communication,
information, and education (KIE) services of family planning program; and (4) facility
and infrastructure of child’s growth and development. The scope of activities included
the procurement of motorcycles for PKB/PLKB andPPLKB, mobile family planning
services, service facilities in Family Planning Clinic, Family Planning socialization
vehicle (MUPEN) unit, procurement of public address and KIE Kit; and procurement
of BKB kit (training for family with toddler), development alokon warehouse.
12. The Forestry sector, directed to improve watershed (DAS) functions, especially
in the upstream area, in order to maintain and increase its supporting capacity. The
policy was achieved by implementing rehabilitation of forest reservation and protection
of critical land, mangrove area and to improve the management of city forest and
community forest (Tahura), which became the responsibility of regional government
(district/city). The scope of activities included the rehabilitation of forest reservation
and critical land outside forest area, mangrove area, Tahura, and city forest, and
management of city forest and Tahura including forest protection, maintenance of
result of the previous year’s rehabilitation, development and maintenance of technical
civil construction (Soil and Water Conservation building/KTA), which consisted of
barrier dam, control dam, gully plug, absorptive wells, water reservoir and other
KTA buildings; improvement of technical counsel facility on Forest and Land
Rehabilitation (RHL), rehabilitation of critical land in the forest reservation area,
botanical garden, mangroves and coastal forests.

III-32 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

13. The Rural Facility and Infrastructure sector, aimed to improve the
accessibility and availability of facility and basic infrastructure; to facilitate the flow
of people transportation, primary material transportation, and other agricultural
products transportation from regional production centers in rural area to distribution
areas; and to encourage the increase of productivity, quality, and economic
diversification, especially in rural areas through infrastructure development activities
that were focused on the coastal areas and small islands, border areas, underdeveloped/
isolated regions. The scope of activities included the availability of pioneer land
transportation, marine transportation and river/swamp transportation.
14. The Trade sector, directed to improve the availability of adequate trading facility
as an effort to smoothen the interregional flow of goods and to increase the availability
and price stability of primary foodstuff, especially in rural, disadvantaged, remote,
border, outermost and small islands areas, as well as post-disaster areas and regional
expansion areas. The scope of activities included construction and development of
traditional markets and supporting markets.

3.3.2 Revision in The Special Autonomy and Adjustment Fund

3.3.2.1 Revision in Special Autonomy Fund


In addition to balanced fund, special autonomy fund was also allocated to certain regions,
namely to: (a) Papua Province, in order to carry out the mandate of Law Number 21 Year
2001 regarding Special Autonomy for Papua Province, as amended in the Government
Regulation in Lieu of Law Number 1 Year 2008 regarding Amendment on Law Number 21
Year 2001 regarding Special Autonomy for Papua Province and (b) the Province of Nanggroe
Aceh Darussalam (NAD) in order to carry out the mandate of Law Number 11 Year 2006
concerning Aceh Government.
The realization of a special autonomy fund budget in APBN-P in 2010 was estimated at
Rp9,099.6 billion, which was the same amount as the budget ceiling in APBN 2010. If
compared t0 the realization of special autonomy fund in 2009 that amounted to Rp9,526.6
billion, this amount was Rp427.0 billion (4.5 percent) lower.
The detailed estimation of special autonomy fund in APBN-P 2010 were as follows:
a. For Papua and West Papua amounting to Rp3,849.8 billion, or the same amount as
the budget ceiling in APBN 2010. The amount was equivalent to 2 (two) percent of
the budget ceiling of the national General Allocation Fund (DAU).
The utilization of the Special Autonomy Fund was prioritized for funding education
and health in accordance with Law Number 35 Year 2008 regarding Stipulation of
Government Regulation in Lieu of Law Number 1 Year 2008. Special Autonomy Fund
was distributed to the Province of Papua amounting to Rp2,694.9 billion and to West
Papua Province Rp1,154.9 billion. The Special Autonomy Fund allocated to provinces,
districts, and cities in Papua and West Papua Province use proportional calculation
basis. The Special Autonomy Fund Management for Papua and West Papua refered
to the applicable legislative regulations.

Financial Note and Indonesian Revised Budget 2010 III-33


Chapter III Revisions in Expenditure

b. For NAD Province amounting to Rp3,849.8 billion, or the same amount as the budget
ceiling in APBN 2010.
The utilization of Aceh Special Autonomy Fund is directed to fund the construction
and maintenance of infrastructure, people’s economic empowerment, poverty
alleviation, as well as funding in educational, social, and health sectors, in accordance
with Law Number 11 Year 2006 and is valid for the period of 20 (twenty) years since
2008. The Aceh special autonomy fund was planned, implemented, and accounted
for by the Provincial Government of NAD and was an integral part of the Aceh Revenue
and Expenditure Budget (APBA). The planning of the most part of special autonomy
fund was planned jointly by the Provincial Government of NAD and the respective
district governments in Aceh Provincial Government and was included in the
attachment of APBA.
c. The Additional Infrastructure Fund in special autonomy was set for Rp1,400.0 billion,
or the same amount as the budget ceiling in APBN 2010.
The Provinces of Papua and West Papua received Additional Infrastructure Fund that
amounted to Rp800.0 billion and Rp600.0 billion, which were intended to finance
infrastructure development in accordance with the provisions of Law Number 35
Year 2008.

3.3.2.2 Revision in Adjustment Fund


Realization of adjustment fund in APBN-P 2010 was estimated to Rp21,150.0 billion, which
increased by Rp13,850.0 billion from the budget ceiling in APBN 2010 that amounted to
Rp7,300.0 billion. The increase was caused by the additional of 3 (three) components in the
adjustment fund, which were the enhancement fund of fiscal decentralization and regional
development acceleration (DPDF-PPD), the enhancement fund of regional facility and
infrastructure (DPIPD), and acceleration fund of education infrastructure development
(DPPIP); the realization estimation is detailed as follows:
I. Funds with the same amount as the budget ceiling in APBN 2010:
a. Additional fund for PNSD teacher allowances Rp5,800.0 billion.
b. Regional incentive fund Rp1,387.8 billion.
c. DAK less paid in 2008 amounted to Rp80.2 billion.
d. Infrastructure fund for facility and infrastructure (DISP) less paid in 2008
amounted to Rp32.0 billion.
II. New funds in APBN-P 2010:
a. DPDF-PPD amounting to Rp7,100.0 billion that was allocated to support the
acceleration of regional development through the availability and development
of infrastructure and other non-infrastructure supporting facilities, which
became regional affairs.
b. DPDF-PPD amounting to Rp5,500.0 billion that was allocated for improving
public services through the availability of facility and infrastructure in areas
that were designated to accelerate regional development.

III-34 Financial Note and Indonesian Revised Budget 2010


Revisions in Expenditure Chapter III

c. DPDF-PPD amounting to Rp1,250.00 billion that was allocated to support


the acceleration of educational infrastructure development in district/city.

The summary of transfer to region in the APBN and APBN-P 2010 is detailed in Table
III.4.
`
TABLE III.4
TRANSFER TO REGIONS, 2010
(billion rupiah)
2010
% of REVISED % of
BUDGET
GDP BUDGET GDP
I. BALANCED FUND 306,023.4 5.1 314,363.3 5.0
A. REVENUE SHARING FUND 81,404.8 1.3 89,618.4 1.5
1. Taxation 46,921.4 0.8 44,513.5 0.7
a. Income Tax 13,173.8 0.2 13,177.3 0.2
i. Article 21 12,314.7 0.2 12,314.7 0.2
ii. Article 25/29 individual 859.2 0.0 859.2 0.0
iii. Income Tax Less Paid - - 3.4 0.0
b. Building and Land Tax 25,236.2 0.4 23,063.4 0.4
i Revenue Sharing Fund - Land and Building Tax (DBH PBB) 25,236.2 0.4 23,061.0 0.4
ii. Less Paid of DBH PBB - - 2.3 0.0
c. Duties on Land and Building Transfer 7,392.9 0.1 7,155.5 0.1
d. Excise 1,118.5 0.0 1,117.3 0.0
2. Natural Resources 34,483.4 0.6 45,104.9 0.7
a. Oil and Gas 26,015.7 0.4 35,196.4 0.6
i. Oil 14,078.5 0.2 17,143.1 0.3
ii. Gas 9,937.2 0.2 11,925.2 0.2
iii. Less Paid Oil and Gas 2008 2,000.0 0.0 6,128.1 0.1
b. General Mining 6,585.3 0.1 7,790.4 0.1
i. Landrent 94.1 0.0 124.4 0.0
ii. Royalty 6,491.2 0.1 7,666.0 0.1
c. Forestry 1,566.9 0.0 1,802.6 0.0
i. Forest Provision Fee 898.4 0.0 898.4 0.0
ii. Forest Exploitation Licence Fee 15.8 0.0 15.8 0.0
iii. Reforestation Fund 652.7 0.0 652.7 0.0
iv. Less Paid Forestry Natural Resource - - 235.8 0.0
d. Fishery 120.0 0.0 120.0 0.0
e. Geothermal 195.5 0.0 195.5 0.0
B. GENERAL ALLOCATION FUND (DAU) 203,485.2 3.4 203,606.5 3.3
1. Pure DAU 192,490.3 3.2 192,490.3 3.1
2. Additional DAU for teacher profession allowance 10,994.9 0.2 10,994.9 0.2
3. Correction of Allocation on DAU of Kab. Indramayu (Regency) 121.3
C. SPECIFIC ALLOCATION FUND (DAK) 21,133.4 0.4 21,138.4 0.3
II SPECIAL AUTONOMY AND ADJUSTMENT FUND 16,399.6 0.3 30,249.6 0.5

A. SPECIAL AUTONOMY FUND 9,099.6 0.2 9,099.6 0.1


1. Special Autonomy Fund (percentage of DAU) 7,699.6 0.1 7,699.6 0.1
a. For Papua Province 3,849.8 0.1 3,849.8 0.1
- Papua Province 2,694.9 0.0 2,694.9 0.0
- West Papua Province 1,154.9 0.0 1,154.9 0.0
b. For Aceh Province 3,849.8 0.1 3,849.8 0.1
2. Additional Spec. Auto. Fund for Papua Infrastructure 1,400.0 0.0 1,400.0 0.0
a. Papua 800.0 0.0 800.0 0.0
b. West Papua 600.0 0.0 600.0 0.0

B. ADJUSTMENT FUND 7,300.0 0.1 21,150.0 0.3


1. Additional DAU fund for PNSD teacher 5,800.0 0.1 5,800.0 0.1
2. Regional Incentive Fund 1,387.8 0.0 1,387.8 0.0
3. Less Paid DAK 2008 80.2 0.0 80.2 0.0
4. Less Paid DISP 2008 32.0 0.0 32.0 0.0
5. Enhancement Fund for fiscal decentralization and regional - -
7,100.0 0.1
development acceleration
6. Enhancement Fund for Infrastructure and Regional Infrastructure (DPIPD) - - 5,500.0 0.1
7. Enhancement Fund for acceleration of educationial infrastructure development (DPPIP) - - 1,250.0 0.0

T O T A L 322,423.0 5.4 344,612.9 5.5

Source : Ministry of Finance

Financial Note and Indonesian Revised Budget 2010 III-35


Principal Changes in Budget Deficit and Budget Financing Chapter IV

CHAPTER IV
PRINCIPAL CHANGES IN BUDGET DEFICIT AND
BUDGET FINANCING

4.1 INTRODUCTION
In the 2010 APBN set forth by Law Number 47 Year 2009, revenues and grants were set at
Rp949,656.1 billion or 15.9 percent to GDP, while government expenditure was set at
Rp1,047,666.0 billion or 17.5 percent to GDP. Therefore, the budget deficit was set at
Rp98,009.9 billion or 1.6 percent to GDP.
The budget deficit will be met through non-debt and debt sources of financing. To determine
the financing type and amount, the Government had taken into consideration the potential
of each financing source by calculating the risk level and burden of costs to be borne. The
budget deficit in 2010 APBN would be covered from non-loan financing amounting to
Rp2,462.4 billion and loan financing Rp95,547.6 billion.
APBN 2010 were prepared on the assumption of economic events that occurred until the
third quarter of 2009 and the projected changes that would happen until the end of 2010.
Meanwhile, entering the year 2010, the global economic condition showed an improving
trend; therefore it was necessary to revise the macroeconomic assumptions that would impact
the APBN posture. In addition, the APBN 2010 was prepared during the government transition
period; therefore accommodating more government’s basic policies. After the national election,
necessary adjustments were required to accommodate new policies of the new Government
that was elected through the National Election in 2009. Meanwhile, by the end of fiscal year
2009, there was still a budget surplus (SAL) that has source from among others financing
surplus (SILPA) that could be used to support financing development.
In the Law Number 47 Year 2009 article 27 verse (1) provided that: 2010 budget adjustments
would be made in the event of: (a) macro economic developments were inconsistent with the
assumptions used in APBN 2010; (2) there were changes in fiscal policy fundamentals, and
(3) there were circumstances that required the use of budget surplus of the previous year for
2010 budget financing.
Under these conditions, the Government proposed a Revised Indonesian Budget Draft
(RAPBN-P) 2010 that included changes in the amount of macro-economic assumptions,
revenues and grants, government expenditure, and budget financing. In the APBN-P 2010,
inflation was expected to rise from 5.0 percent to 5.3 percent, oil prices were expected to
increase from USD65.0 per barrel to USD80.0 per barrel, economic growth increased from
5.5 percent to 5.8 percent, and the rupiah would be appreciated from Rp10,000 per USD to
Rp9,200 per USD. Meanwhile, the SBI rate was not expected to change and was fixed at 6.5
percent.
Revenues and grants budget in the APBN-P 2010 was estimated to reach Rp992,398.8 billion.
This amount had increased by Rp42,742.7 billion or 4.5 percent higher than the allocation in
APBN 2010. Meanwhile, the expenditure budget was estimated to Rp1,126,146.5 billion. This
amount had increased by Rp78,480.5 billion, or 7.5 percent higher than the allocation in
APBN 2010. Changes in revenues, grants, and expenditure, had in turn changed the amount

Financial Note and Indonesian Revised Budget 2010 IV-1


Chapter IV Principal Changes in Budget Deficit and Budget Financing

of budget deficit from Rp98,009.9 billion (1.6 percent to GDP) in APBN 2010, to an estimated
amount of Rp133,747.7 billion (2.1 percent to GDP) in APBN-P 2010.
The increasing amount of deficit had led to financing increment that should be covered from
various available sources by maximizing achievements. Each financing source selection would
bring consequences on cost and risk. If the Government chooses a non-debt financing source
to cover the deficit; the amount of government’s assets would reduce. The government assets
might consist of cash funds in government accounts, government ownership of State Owned
Enterprises (BUMN) shares, as well as other assets managed by the Asset Management
Company PT Perusahaan Pengelola Aset (Persero) and the Directorate General of Asset
Management, Ministry of Finance. Meanwhile, if deficit budget were covered from debt
financing, then consequently the government’s debt obligations would increase, either in the
form of interest payment or amortization, for the present time or in the future. The choices of
financing sources compelled the Government to choose a combination of available deficit
financing sources and the costs and risks, in order to optimize target achievement.

4.2 BUDGET DEFICIT FINANCING


Budget Deficit Financing in the
APBN-P 2010 was estimated to GRAPH IV.1
BUDGET DEFICIT FINANCING
amount to Rp133,747.7 billion. This
amount had increased by 160 APBN 2010 AND APBN-P 2010 2,5
Rp35,737.8 billion, or 36.5 percent 140 133.7 2.1
trillion rupiah

120 2,0
higher than budget financing target 98.0 104.4 107.5

% of GDP
100
in the APBN 2010 that amounted 80 1.6 1,5

to Rp98,009.9 billion. The increase 60 1,0


40 25.4
of Budget Deficit Financing in the 20 2.5 0.8 0,5
APBN-P 2010 was planned to be 0
-20 -8.9 0,0
financed from non-debt financing APBN 2010 APBN-P 2010
sources amounting to Rp25,402.8
billion and debt financing for Deficit (surplus) APBN Net SBN
Domestic and Foreign Loans - net Non-Debt -net
Rp108,344.8 billion. The increase of APBN deficit,% to GDP (RHS)
Source : Ministry of Finance
Budget Deficit Financing is shown
in Graph IV.1.

4.2.1 NON-DEBT FINANCING


In APBN-P 2010, non-debt financing derived from domestic banking and domestic non-
banking. Sources of non-debt financing from domestic banking derived from Investment
Fund Account (RDI), Forest Development Account (RPH), as well as Cumulated Budget
Surplus (SAL). Meanwhile, non-debt financing sources from domestic non-banking derived
from asset management and privatization. Total non-loan financing in 2010 is shown in
Table IV.l.

Domestic Banking
Non-debt financing from domestic banking in the APBN-P 2010 was calculated to reach
Rp45,477.1 billion, which increased by Rp38,347.9 billion (537.9 percent) higher than the

IV-2 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

TABLE IV.1
NON-DEBT FINANCING IN APBN 2010 AND APBN-P 2010
(in billion rupiah)
APBN APBN-P CHANGES
I. Domestic Banking 7,129.2 45,477.1 38,347.9
1. Investment Fund Account 5,504.2 5,504.2 -
2. Forest Development Account 625.0 625.0 -
3. SAL and Silpa 2009 1,000.0 39,347.9 38,347.9

II. Domestic Non-Banking (4,666.8) (20,074.2) (15,407.4)


1. Privatization 1,200.0 1,200.0
2. Asset Management Results 1,200.0 1,200.0 -
3. Investment Fund and PMN (3,902.5) (12,924.2) (9,021.7)
a Government Investment (927.5) (3,610.5) (2,683.0)
b Government Capital Participation (2,000.0) (6,038.7) (4,038.7)
c Revolving Fund (975.0) (3,275.0) (2,300.0)
4. National Education Development
Fund (1,000.0) (1,000.0)
5. The loan for PT PLN (7,500.0) (7,500.0)
6. Contingency Fund (1,050.0) (1,050.0) -
7. Reserve Funding (914.3) 914.3

Total 2,462.4 25,402.9 22,940.5


Source : Ministry of Finance

target in the APBN 2010 that amounted to Rp7,129.2 billion. Both the Government and the
House of Representatives would have to discuss the use of domestic banking financing revenue,
especially the use of Cumulated Budget Surplus (SAL) in covering the budget deficit. The
main components of domestic banking financing was the government’s cash balance account,
which was a cumulated government’s savings in cash from the budget surplus in the APBN
realization in the previous years. Cash balance sources might derive from the General Treasury
Account (RKUN) and/or other Government accounts managed/controlled by the Ministry
of Finance as the General Treasurer (BUN). The use of SAL in APBN-P 2010 was calculated
to reach Rp39,347.9 billion, which had increased by Rp38,347.9 billion from the allocation in
APBN 2010 that amounted to Rp1,000.0 billion.
Aside from SAL usage, the non-debt financing from domestic banking in the APBN-P 2010
also derived from RDI deposit that amounted to Rp5,504.2 billion and from RPH amounting
to Rp625.0 billion. Such amounts were the same with the allocation of RDI and RPH deposits
in the APBN 2010. RDI deposit for budget financing derived from revenue from principal
repayment of: (1) subsidiary loan agreement (SLA), (2) RDI loan, and (3) regional development
account loan (RPD). Meanwhile, RPH deposits derived from reforestation funds that were
deposited into RKUN and was subsequently distributed to RPH to finance forestry revolving
fund.

Domestic Non-Banking
In APBN-P 2010, non-debt financing from domestic non-banking was estimated to be
Rp20,074.2 billion, that consisted of: (a) financing revenue amounting to Rp2,400.0 billion
that consisted of privatization Rp1,200.0 billion and asset management result Rp1,200.0
billion; and (2) financing expenditures that amounted to Rp22,474.2 billion, consisting of
government investment funds and Government Capital Participation (PMN) amounting to

Financial Note and Indonesian Revised Budget 2010 IV-3


Chapter IV Principal Changes in Budget Deficit and Budget Financing

Rp12,924.2 billion, the national education development fund Rp1,000.0 billion, Contingency
Fund Rp1,050.0 billion, and loan to PT PLN (Persero) amounting to Rp7,500.0 billion. Such
amounts had increased by Rp15,407.4 billion (330.2 percent) from the estimation in the
APBN in 2010 that amounted to Rp4,666.8 billion, which was mainly caused by the increase
of the government’s investment funds and PMN.

Privatization
Privatization deposit in the APBN-P 2010 was allocated to Rp1,200.0 billion, which was
projected to derive from the sale of Bank BNI shares. Privatization of Bank BNI was based
on Government Regulation Number 44 Year 2007 regarding The Sale of PT Bank Negara
Indonesia Tbk Shares. The privatization was set maximum to 30 percent, which consisted of
15 percent divestment of government’s shares revenue that would be deposited in the general
treasury and 15 percent of new shares revenue that would be paid to the company’s cash
balance.
The implementation of privatization (secondary offering) had already been done on August
13, 2007 by releasing 26.9 percent shares comprising of 15 percent new shares and 11.9 percent
government’s shares. The remaining unsold government’s shares amounting to 3.1 percent,
equivalent to 473,895,270 shares of stock known as greenshoe shares was intended to stabilize
stock prices in the secondary market after the implementation of privatization. However,
because of the capital market conditions that were less conducive and BNI stock prices that
fell below the price of secondary offering, in 2008 and 2009 the selling of 3.1 percent of the
greenshoe shares could not be executed. Bank BNI stock price began moving up and surpassed
the secondary offering price at the end of March 2010. Thus, sales of 3.1 percent of government’s
shares in Bank BNI were expected to be carried out in 2010.

Asset Management Result


Financing sources that derived from asset management result in the APBN-P 2010 was
calculated to reach Rp1,200.0 billion, equal to the allocation in the Budget 2010. Such amount
derived from profit of asset management conducted by PT PPA (Persero) that amounted to
Rp850.0 billion, and the Directorate General of Asset Management (DJKN) in the Ministry
of Finance that amounted to Rp350.0 billion.

Government Investment Fund and Government Capital Participation


In the budget financing, the government investment fund and government capital participation
(PMN) were not taken into account as sources of budget financing revenue, however, they
functioned as expense reduction factors in budget financing. Government investment fund
was an investment made by the government to obtain economic and social profit, other
long-term profits. Meanwhile, the financing expenditure in the form of PMN was expected to
add to the net Government’s assets in the present and future.
In APBN-P 2010, the Government had allocated government investment fund and PMN to
amount to Rp12,924.2 billion. Such amount had increased by Rp9,021.7 billion (231.2 percent)
higher than the allocation in the APBN 2010 that amounted to Rp3,902.5 billion. The increase
was partly due to the increase in the allocation of government investment fund, PMN, as well
as the revolving fund. Details of the government investment fund and PMN in the APBN
2010 and APBN-P 2010 are shown in Graph IV.2.

IV-4 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

Government Investment GRAPH IV.2


GOVERNMENT INVESTMENT FUND AND PMN
In APBN-P 2010, the IN APBN 2010 AND APBN-P 2010
Government allocated the 6.0
government investment fund
that amounted to Rp3,610.5 6.0

trillion rupiah
billion, which had increased by 5.0 3.6
3.3
Rp2,683.0 billion (289.3 4.0
2.0
percent) from the allocation in 3.0
0.9 1.0
the APBN 2010 that amounted 2.0

to Rp927.5 billion. The 1.0

-
additional Government APBN 2010 APBN-P 2010
investment fund derived from Government Investment Government Capital Participation Revolving Fund
the reallocation of subsidy in
Source : Ministry of Finance
simple healthy housing
ownership credit (KPRSh) that was planned to implement the policy for housing financing
liquidity facility. This was related to the changes in scheme from KPRSh subsidy to housing
financing liquidity facility policy that provided a long-term affordable funding accompanied
by KPRSh creditor banking fund.

Government Capital Participation (PMN)


The government had allocated a PMN to BUMN associated with the Government policy
amounting to Rp6,038.7 billion or an increase by Rp4,038.7 billion (201.9 percent) if compared
with the allocation in the APBN 2010 that amounted to Rp2,000.0 billion. PMN allocation in
the APBN and APBN-P 2010 is shown in Graph IV.3.

GRAPH IV.3
GOVERNMENT CAPITAL PARTICIPATION IN APBN 2010 AND APBN-P 2010
2,000.0
1,800.0 APBN 2010
2,000.0  2,000.0
1,800.0 
billion rupiah

1,600.0  APBN-P 2010


1,400.0 
1,000.0 1,000.0
1,200.0 
1,000.0 
800.0 
600.0 
400.0  - - 220.0
- - 0.1
200.0  - 0.1 - - 18.5

LPEI PT PII PT SMI PT Askrindo SBSN SBSN PT Askrindo PT BPUI
dan Perum Indonesia II Indonesia III (Share Grant (Share Grant
Jamkrindo Issuer Issuer from BI) from BI)
Company Company
Source : Ministry of Finance

In APBN-P 2010, the Government Capital Participation (PMN) for The Indonesian Export
Financing Institution (Lembaga Pembiayaan Ekspor Indonesia/LPEI) was planned for
Rp2,000.0 billion, or equal to the allocation in APBN 2010. Such PMN was aimed to improve
LPEI export financing capacity to develop national exports, particularly superior export
products as well as products with development potential.
In APBN-P 2010, the Government had allocated an additional PMN to PT Sarana Multi
Infrastrutur (PT SMI) of Rp1,000.0 billion and to PT Penjaminan Infrastruktur Indonesia

Financial Note and Indonesian Revised Budget 2010 IV-5


Chapter IV Principal Changes in Budget Deficit and Budget Financing

(PT PII) of Rp1,000.0 billion. The additional PMN to PT SMI was intended to optimize funding
sources of PT SMI through fund raising activities, as well as increasing the capital of PT SMI
as a state-owned enterprise (BUMN) that engaged in infrastructure financing business for
infrastructure development to overcome the financing gap faced by the government in
infrastructure development. Meanwhile, the additional PMN for PT PII would be used to
enhance the guarantee credibility, to give a positive perception to investors, as well as to
reduce direct exposure of APBN towards any claim.
Meanwhile, the additional guarantee fund in the form of PMN for Rp1,800.0 billion to PT
Asuransi Kredit Indonesia (Askrindo) and Perum Jaminan Kredit Indonesia (Jamkrindo) as
the guarantor companies was allocated to revitalize people’s business credit programs (KUR).
The additional PMN above was budgeted to increase the capacity of the guarantor companies,
and thereby would increase the level of KUR distribution to debtors of micro, small and
medium enterprises (UMKM).
KUR program revitalization was important, considering the UMKM contribution in the
national economy. In 2009, the UMKM contribution to GDP was 55.6 percent with a total of
51.3 million business-persons. Meanwhile, the main obstacle in the development of UMKM
was the access to capital and marketing. With revitalization program through KUR distribution
expansion, it was expected that UMKM access to capital would improve; therefore would
significantly increase the number of KUR recipients that currently only listed for as many as
2.3 million people.
With 10 times gearing ratio, the additional PMN would improve the ability of PT Askrindo
and Perum Jamkrindo to endorse KUR from Rp19,500.0 billion in 2009 to Rp37,500.0 billion
in 2010. The improvement in endorsement capability was expected to support government’s
program for KUR expansion for the period of 2010 - 2014.
In order to increase endorsement capacity to meet the Government’s expectation, there were
several policies carried out to improve public access to KUR, namely: (l) to decrease interest
rate of micro KUR (below Rp5 million) from 24.0 percent to 22.0 percent; (2) to decrease
interest rate of KUR worth Rp5 million to Rp500 million from 16.0 percent to 14.0 percent,
and (3) to extend KUR installment period from three years to six years.
Meanwhile, the PMN for the Issuer Companies of Islamic Based Government Securities (PT
Perusahaan Penerbit SBSN Indonesia II and III) for Rp0,2 billion was allocated in order to
support SBSN in foreign currencies in international primary markets in 2010 and 2011,
therefore the process would commence at the end of year 2010; and to maintain the
momentum of the market condition during SBSN issuance. SBSN Issuer Company is a legal
entity established under the provisions of Law Number 19 Year 2008 about Islamic based
government securities, to carry out SBSN issuance activities.
To meet the requirements of legal entity establishment, the Issuer Companies were required
to have capital. In accordance with the rules and regulations, the establishment capital should
derive from the APBN and should be a separated asset. The amount of capital for government’s
SBSN issuer company establishment was Rp100 million for each issuer company.
PMN to PT Askrindo amounting to Rp220.0 billion and to PT BPUI amounting to Rp18.5
billion came from the grant for transfer of shares of both companies, from Bank Indonesia to
Government. It was in accordance to the provisions of article 77 of Law Number 23 Year
1999 regarding Bank Indonesia as amended by Law Number 6 Year 2009 jo. Law Number 2

IV-6 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

Year 2008 regarding Second Amendment on Law Number 23 Year 1999, which stipulates
that Bank Indonesia shall have disposed of all its shares in the corporation or other entity no
later than the date of January 15, 2009.

Revolving Fund
Revolving fund in the APBN-P 2010 was set for Rp3,275.0 billion, which increased by
Rp2,300.0 billion (235.9 percent) from the allocation in the APBN 2010 that amounted to
Rp975.0 billion. The allocation of revolving fund in the APBN 2010 and the APBN-P is shown
in Graph IV.4.
GRAPH IV.4
The allocation of forestry revolving fund REVOLVING FUND
in APBN-P 2010 was planned to remain IN APBN 2010 AND APBN-P 2010
unchanged as the allocations in the
APBN 2010 that amounted to Rp625.0 trillion rupiah 2.5
billion. The forestry revolving fund would 2.0 2.3
be used for: (1) the development of 1.5 0.6
0.4
0.6
0.4
1.0
people plantation (HTR) amount to -
0.5
Rp375.0 billion; and (2) the development -
of industrial timber plantation (HTI) APBN 2010 APBN-P 2010
amount to Rp250.0 billion.
Revolving Fund for Fore stry Revolving Fund for LPDB KUKM

Similarly, the allocation of revolving fund Revolving fund for Land Acquisition
Source : Ministry of Finance
for the Revolving Fund Management
Agency for Micro, Small and Medium Cooperative Enterprise (LPDB KUKM) in APBN-P
2010, was planned for Rp350.0 billion, or equal to the allocation in APBN 2010. The budget
allocation plan would be used to finance the program for small and medium enterprise
empowerment through the development of microfinance industry by providing debt support
or financing KUKM revolving fund .
Meanwhile, the allocation of revolving fund for land acquisition of toll roads through the
General Services Agency for Toll Road Management Bureau (BLU BPJT) in APBN-P 2010
was planned for Rp2,300.0 billion. In APBN 2010, the revolving fund for highway land
acquisition had not been allocated. The allocation of these funds came from reallocation of
financing reserves that had been budgeted in the 2010 APBN that amounted to Rp914.3
billion, and a new additional budget amounting to Rp1,385.7 billion. Land Revolving Fund
(LRF) was intended as a bailout fund to expedite the process of land acquisition for highway
construction, which was intended to provide land for 22 toll roads in accordance with the
Government program and was targeted to finish in 2013 at the latest.

National Education Development Fund


In APBN-P 2010, the Government allocated a budget for national education development
fund amounting to Rp1,000.0 billion, as part of the education budget, which was planned for
the establishment of endowment funds, which aimed to ensure the sustainability of educational
programs for the next generations as a form of intergenerational equity, which was managed
using a revolving fund mechanism and conducted by BLU in education, and education buffer
funds in anticipation of rehabilitation of educational facilities damaged by natural disasters.

Financial Note and Indonesian Revised Budget 2010 IV-7


Chapter IV Principal Changes in Budget Deficit and Budget Financing

Contingency Fund
In APBN-P 2010, the Government allocated funds for Contingency Fund amounting
Rp1,000.0 billion for National Electricity Company/PT PLN (Persero), and for the Regional
Water Company (PDAM) of Rp50.0 billion. The allocation of the Contingency Fund remained
unchanged compared with the allocation in APBN 2010.
Contingency Fund for PT PLN (Persero) and PDAM was intended to provide assurance on
the probability of default due to failure in fulfilling payment obligations of principal and
overdue interest earned from the creditors in the previous years. Government guarantee for
PT PLN (Persero) was expected to speed up the completion of the development acceleration
project of 10,000 MW power plant in order to cope with nationwide power shortage.
Meanwhile, the Contingency Fund for the PDAM was allocated in order to accelerate the
supply of drinking water as one of the basic needs which availability should be guaranteed in
an evenly distributed amount and of good quality, in order to achieve the Millennium
Development Goals (MDG’s); therefore it was necessary to provide financing access for PDAM
to obtain investment credit from national banks.

Loan to PT PLN (Persero)


In order to increase the electrification ratio and to accelerate the construction of power plants
with low production cost, the Government assigned PT PLN (Persero) to execute the
acceleration project of construction of coal power plants through the Presidential Decree
Number 71 Year 2006 regarding Assignment to PT PLN (Persero) to Conduct Accelerated
Development of Coal Power Plant. In addition, the interruption in transmission and
distribution system caused by the burning of several voltage regulators, had encouraged PT
PLN (Persero) to strive for recovery and to improve electrical system reliability to prevent
interference in the national electricity network.
To finance the equity portion of 10,000 MW project funding, the restoration and improvement
of electrical systems, and investment to cover natural burden, the amount of funding required
by PT PLN (Persero) in 2010 had exceeded the corporate funding capacity. From the
investment financing that amounted to Rp45.8 trillion, the amount of internally generated
fund and other fund owned by PT PLN (Persero) only amounted to Rp9.4 trillion; therefore
there was a financing gap about
Rp36.4 trillion. With the marginal T ABLE IV.2
measure of 5.0 percent in the APBN FINANCING GAP OF PT PLN (PERSERO)
in 2010, PT PLN (Persero) only had (trillion rupiah)
an external financing capacity of Inv estm ent Financing Requirem ents -45.8
about Rp14.0 trillion. Internal Funding Sources (Operations and other) 9.4
Financing Gap -36.4
To increase the external financing Internal funds from 3% additional margin 4.3
capacity of PT PLN (Persero), in Financing Requirem ent after m argin increm en -32.1
APBN-P 2010 the Government Corporate Actions
provided an additional electricity Corporate Loan / Bonds 23.6
Internal Efficiency 1
subsidy margin that amounted to 3.0
Remaining Financing Requirement -7 .5
percent, to reach the total of 8.0 APBN-P 2010
percent. With such additional margin, The loan for PT PLN (Persero) 7 .5
PT PLN (Persero) was expected to Source: Ministry of Finance
increase the internal fund by Rp4.3

IV-8 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

trillion, therefore reducing the financing gap to Rp32.1 trillion, which would be covered from
additional loan capacity of PT PLN (Persero) to reach Rp23.6 trillion and the internal efficiency
of amounting to Rp1.0 trillion. Therefore, the remaining financing gap that did not have
financing source had amounted to Rp7.5 trillion.
To meet the remaining financing gap, the Government allocated fund of Rp7.5 trillion to
provide a loan to PT PLN (Persero) in APBN-P 2010.

Financing Reserves
In APBN 2010, the financing reserves was allocated to amount to Rp914.3 billion that would
be used to support infrastructure investment. In APBN-P 2010, the financing reserve was
not allocated, because it had been reallocated to the revolving fund for land acquisition.

4.2.2 DEBT FINANCING (NET)


In APBN 2010 the debt financing was set at Rp95,547.6 billion that derived from the net
Government Securities (SBN) amounted to Rp104,429.1 billion, net foreign financing
amounted to negative Rp9,881.5 billion, and domestic debt amounted Rp1,000.0 billion.
In line with the financing increment plan resulting from the increase of deficit, and considering
changes in macroeconomic assumptions, the latest drawing plan, the most recent financial
market condition, as well as other policies to be implemented; the debt financing in APBN-P
2010 was planned to increase by Rp12,797.3 billion (13.4 percent) to reach Rp108,344.8
billion. The increase in debt financing was planned to derive from drawings and net SBN
revenue.
Accordingly, referring to the provisions of article 26, verse (4) of Law Number 47 Year 2009
regarding APBN 2010, the Government had the flexibility of cash debt financing in making
changes to the composition of cash debt financing that derived from program loan and net
SBN revenue. Such flexibility allowed the Government to select the more advantageous source
of loan financing in terms of costs and/or risk level, in accordance with the progress of financial
market conditions. In addition, the government also had other sources of debt financing
through utilization of the remaining standby loan in the form of back-stop facility that could
be drawn under creditor’s approval after the financial market crisis was over, therefore the
Government would not be able to issue SBN or in other words the SBN issuance expense
became too expensive.
Overall, debt financing in the APBN-P 2010 were as follows: (a) net SBN issuance increased
to Rp107,500.4 billion; (2) net foreign financing to reach negative Rp155.5 billion, and
(3) domestic loans remained at Rp1,000.0 billion. Details of revisions in debt financing are
shown in Table IV.3.
To meet the target loan financing in 2010, the general policy of loan management that would
be carried out were as follows:
1. Optimizing the potential of debt financing from domestic market through Rupiah SBN
issuance;
2. Continuing diversification of loan instruments in order to obtain flexibility in choosing the
instruments that were more cost-efficient and had lower risks;

Financial Note and Indonesian Revised Budget 2010 IV-9


Chapter IV Principal Changes in Budget Deficit and Budget Financing

TABLE IV. 3
DEBT FINANCING IN APBN 2010 AND APBN-P 2010
(billion rupiah)
I. SBN net 104,429.1 107,500.4 3,071.3

II. Foreign Financing (net) (9,881.5) (155.5) 9,726.0

1. Foreign Loan Drawings (gross) 57,605.8 70,777.1 13,171.3

a. Program Loan 24,443.0 29,421.8 4,978.8

b. Project Loan 33,162.8 41,355.3 8,192.5

- Central Government Project Loan 24,519.0 24,558.7 39.7

- Subsidiary Loan Revenue 8,643.8 16,796.6 8,152.8

2. Subsidiary Loan Agreement (SLA) (8,643.8) (16,796.6) (8,152.8)

3. Payment of amortization (58,843.5) (54,136.0) 4,707.5

III. Domestic Loans 1,000.0 1,000.0 -

Total 95,547.6 108,344.9 12,797.3

Source: Ministry of Finance

3. Foreign loan/credit was obtained only to meet the priority requirements, to provide terms
and conditions favorable to the Government, and without creditor’s political agenda;
4. To maintain the foreign loan gradual reduction policy;
5. To improve coordination with the monetary authorities and capital market authorities,
especially in order to encourage financial deepening efforts; and
6. To improve coordination and communication with various parties in order to improve the
sovereign credit rating.

Government Securities (net)


The budgeted financing target through the net SBN in the APBN 2010 was amounted to
Rp104,429.1 billion, which was calculated based on the estimated absorption of SBN market
and the overall financing needs by considering the outstanding SBN in the mid-year 2009,
SBN projections and estimates of the issuance of loan transaction switch /buyback until the
end of 2009, and the assumption of the rupiah exchange rate of Rp10,000 per US dollar.
In APBN-P 2010, net SBN was targeted to increase to Rp107,500.4 billion. Based on the
target net issuance amounted Rp107,500.4 billion, and the amount of SBN that would mature
in 2010 amounting to Rp67,540.4 billion, the gross SBN issuance in 2010 was estimated to
reach around Rp175,040.8 billion and would increase if calculating the buyback plan in
managing debt portfolio. Gross SBN issuance was the highest gross issuance in comparison
with the previous years. Therefore, additional debt financing through net SBN issuance became
the last alternative.
Loan financing through SBN issuance was still focused on the domestic market demand,
although limited issuance in the international markets would still be needed. Issuance in
international markets would be pursued at a measured amount, both derived from the issuance
of Conventional Based Government Securities (SUN) and the Islamic Based Government
Securities (SBSN).

IV-10 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

The operational strategy that would be taken by the Government in meeting the target of net
SBN issuance until the end of 2010, were as follows: (1) focusing the issuance on the domestic
market on a regular basis to avoid the occurrence of crowding-out effect, and take a controlled
risk limits, (2) preparing SBSN (Sukuk) with underlying project to enrich alternative financing
instruments; (3) Performing buybacks and debt switching to manage the risk and stabilize
the market; (4) Implementing measurable front-loading strategy, and (5) implementing a
crisis management protocol in order to maintain stability in the market. Front-loading strategy
was a strategy of issuing SBN in a relatively larger amount at the beginning of the fiscal year,
which was conducted flexibly following the dynamics of the financial markets. This strategy
was aimed to exploit the huge liquidity in the beginning of the year and to anticipate uncertain
financial market conditions in the second half of the current budget year. The above strategy
was chosen to encourage the establishment of conducive domestic SBN market situation by
providing assurance for market participants that the government would be able to achieve
the SBN issuance targets.
For this purpose, throughout the year 2010 SBN instruments to be issued include: (1) domestic
SUN consisting of government securities (both regular and retail), and Government Treasury
Bills (SPN), (2) domestic SBSN, both regular as well as retail, short-term and long-term, and
(3) forex SBN including forex SUN and forex SBSN. As a reference for domestic bond issuance
in 2010, on January 4, 2010 Government has issued 5 (five) types of SUN benchmark series
which were the series FR0027 with a 5-year tenure, FR0031 series with a 10-year tenure,
FR0040 series with a 15-year tenure, FR0052 series with a 20-year tenure, and the FR0050
series with a 28-year tenure. The number of SUN benchmark series that were lower than in
2009 was meant to simplify SBN portfolio and to support liquidity increment in accordance
with the variation of the investment horizon.
SBN issuance until May 7, 2010 consisted of forex SUN securities issuance in international
markets for USD2.0 billion and rupiah SBN in the domestic market amounted to Rp62,563.9
billion. Forex SUN issuance in international markets was conducted by the Global Medium
Term Note (GMTN) as a continuation of the previous year GMTN program. The forex SUN
that had been issued was of 10-year tenure and would mature in March 2020 with a rate of
6.0 percent and a coupon yield 5.875 percent. Yield of forex SUN were much lower than the
yield on forex SUN in 2009, where the amount of yield spread over US Treasury only reached
227.9 bps, much lower than the yield spread over US Treasury of forex SUN issuance in 2009
that reached more than 840 bps. This indicated an improvement of global financial market
conditions aside from the availability of liquidity at the beginning of the year. The investors
who bought government securities with foreign currency denomination in 2010 came from
Asia (24 percent), Europe (27 percent), and America (49 percent), that consisted of asset
managers of 69 percent, bank amounted to 14 percent, insurance at 11 percent, and retail
investors amounted to 6 percent.
Meanwhile, the realization of dollar SBN issuance in the domestic market until May 7, 2010
amounted to Rp67,640.0 billion, consisting of NESS issuance of Rp18,450.0 billion, the
issuance of regular ON re-opening fixed rate Rp34,130 billion, issuance of SBSN at Rp7,040.0
billion, and retail SBSN amounting to Rp8,033.9 billion.

External Loan Financing (net)


Financing from foreign loan (net) in the APBN 2010 was set at negative Rp9,881.5 billion,
which meant the amount of foreign loans drawn was smaller than the amortization. With

Financial Note and Indonesian Revised Budget 2010 IV-11


Chapter IV Principal Changes in Budget Deficit and Budget Financing

the assumption of the rupiah to U.S. dollar that amounted to Rp10,000.0 per USD, the net
foreign loan financing consisted of:
1. Drawing for Rp57,605.8 billion, which consisted of the program loan drawings amounting
to Rp24,443.0 billion, the Central Government project loan drawings amounting to
Rp24,519.0 billion and project loans drawings for subsidiary loan agreement of Rp8,643.8
billion;
2. Subsidiary Loan Agreement Rp8,643.8 billion; and
3. Amortization of Rp58,843.5 billion.
Financing through foreign loan were calculated based on net outstanding position of foreign
loan by mid-year 2009, which had considered the additional drawings until the end of 2009,
with exchange rate assumption of Rp10,000.0 per USD, the program loan drawings derived
from the World Bank, Asian Development Bank (ADB), Japan International Cooperation
Agency (JICA), Agence Francaise de Développement (AFD), France, and project loan drawings
plans based on the on-going loan and the new loan that would be signed and was expected to
be partially drawn in 2010.
In APBN-P 2010, the net foreign loan financing had been revised to a negative Rp155.5
billion due to the increase of program loan and project loan drawing target, and the decrease
of amortization, due to revision in exchange rate assumption from Rp10,000 per USD to
Rp9,200 per USD. Meanwhile, the on-lending project loan drawings had increased, but it
brought no effect to the targeted net financing through foreign loans, due to an increase in
net subsidiary loan that reached the same amount.
Program loan drawings in the APBN-P 2010 was revised to Rp29,421.8 billion, increased by
Rp4,978.8 billion or about 20.4 percent higher than APBN 2010 target. These changes were
caused by the increase in loan programs that were agreed by the creditors. Additional program
loan drawings would derive from the World Bank, ADB, JICA, and AFD. Potential additional
program loan from the World Bank, JICA and the AFD was primarily associated with climate
change program, while the potential additional loan program from the ADB was especially
related to the Countercyclical Support Facility (CSF).
Selection of additional loan program resources would consider the risk portfolio targets that
would be achieved, mainly the exchange rate risk and costs to be borne by the Government
in the future. On the other hand, program loan drawings that had been set could be revised in
case there was a revision in SBN issuance as an impact of flexibility in cash loan financing.
In APBN-P 2010, the central government’s project loan drawings had increased by Rp39.7
billion, from Rp24,519.0 billion in APBN 2010 to Rp24,558.7 billion. Meanwhile, the on-
lending project loan drawings had increased by Rp8,152.8 billion, or 94.3 percent of Rp8,643.8
billion in APBN 2010 to Rp16,796.6 billion in APBN-P 2010. The increase of subsidiary loan
was due to the increase in loans that were already in the pipeline and were expected to be
drawn in 2010 amounting to Rp4,042.0 billion and roll-over of subsidiary loans in 2009
amounting to Rp4,266.4 billion. Details of revision on foreign loan drawings in the APBN
2010 and APBN-P 2010 can be seen in Table IV.4.
Meanwhile, the amortization in APBN 2010 was reduced by Rp4,707.5 billion, from
Rp58,843.5 billion in the 2010 budget to Rp54,136.0 billion in APBN-P 2010. The decrease
was primarily due to revisions in exchange rate assumptions. Estimated amortization had

IV-12 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

TABLE IV.4
SUBSIDIARY LOAN IN APBN-P 2010
(billion rupiah)
Revised
Description Budget
Budget
A. On Going 8,114.8 7,959.2
1. PT PLN 7,724.4 7,568.8
2. PT PGN 76.1 76.1

3. PT KAI 36.6 36.6


4. PT Pelindo 60.0 60.0

5. Pemkab Palopo 15.3 15.3


6. Pemkot Palangkaraya 13.2 13.2

7. Pemkot Pare-Pare 26.3 26.3


8. Pemkab Barru (Sulsel) 47.4 47.4
9. Pemkab Bogor 25.6 25.6

10. Pemkab Muara Enim 48.6 48.6


11. Pemkab Kuala Kapuas 41.2 41.2
B. Pipeline 529.0 4,571.0
1. APBN proposal 529.0 604.3
a. PT PLN 141.0 216.3
b. Indonesia Infrastructure Financing Facility Project (IIFF/PT SM 388.0 388.0

2. APBN-P Budget - 3,966.7

a. Pemda DKI - 130.4

b. PT Merpati Nusantara Airlines (Persero) - 2,138.1


c. LPEI - 920.0
d. PT PLN - 778.2
C. SLA Sliding 2009 - 4,266.4
1. PT PLN - 3,610.3
2. PT PGN - 521.0
3. PT BEI - 39.7
4. Pemkot Pare-Pare - 12.2
5. Pemkot Palopo - 28.8
6. Pemkab Aceh Timur - 43.1
7. Pemkab Sidenreng Rappang - 2.5
8. Pemkot Palangkaraya - 8.8

Total 8,643.8 16,796.6


Source: Ministry of Finance

also considered the latest projections on debt payment obligations and projected revisions in
the exchange rate of the world’s major currencies, mainly related to the calculation of
outstanding loans denominated in non-USD currencies such as Yen, Euro, Poundsterling,
and other foreign exchange.
The operational strategy of procurement and management of foreign loans that would be
carried out in 2010 included: (1) selecting creditor that provided loans with favorable terms
and conditions, (2) prioritizing foreign loan with fixed interest rates or spread/margin in a
currency with less/low volatility, (3) choosing loans with annuity amortization and of a
longer tenure, and (4) coordinating and improving efforts to increase the absorption of the
loan. Revisions in the foreign loan drawings in the APBN 2010 and APBN-P 2010 are shown
in Graph IV.5.

Financial Note and Indonesian Revised Budget 2010 IV-13


Chapter IV Principal Changes in Budget Deficit and Budget Financing

Domestic Loan GRAPH IV.5


FOREIGN LOAN
IN APBN 2010 AND APBN-P 2010
Sources of financing from domestic 29.4
loan in APBN 2010 were allocated for 30
24.4 24.5 24.6

(trillion rupiah)
Rp1,000.0 billion. This amount 16.8

represented the first step in using 20


8.6

domestic financing in the form of a 10

budgeted loan that be completely 0


absorbed within one year. Because it Program Loans Projects Loans of Subsidiary Loan
Central Agreement (SLA)
was a first step, the amount of Government
domestic loans did not include the Source : Ministry of Finance APBN 2010 APBN-P 2010
requirement and availability of funds,
nor its association with the management of debt portfolio.
In APBN-P 2010, the domestic loan drawings was fixed at Rp1,000.0 billion and would be
used to finance the activities of the Ministry of Defense/Indonesian Army (TNI) that amounted
to Rp800.0 billion and the Indonesian Police (Polri) of Rp200.0 billion. Considering that the
domestic loans had started to be used as a source of financing in the 2010 budget with single
year liquidation horizon and projects, it required efficiency in several processes as follows:
1. Bundling loan sources on several activities with a relatively small number of contracts,
which could be done by the state ministries/institutions or by type of activity;
2. Procurement of club deal and syndicated domestic loan that required a more comprehensive
and integrated approach, which mainly focused on banking creditors of entitled BUMNs
and the Regional Development Banks;
3. The selection process of creditors by upholding the principles of transparency, accountability
and good governance.

4.2.3 STANDBY LOAN (PUBLIC EXPENDITURE FINANCING


FACILITY / CONTINGENCY LOAN)
Financial market conditions in 2010 showed a better indication, although it had not fully
recovered from the global financial crisis. Considering this and taking into account the
fulfillment of APBN deficit target through net SBN issuance that had been set high enough to
cause doubt that the target could not be met optimally, the availability of standby loans was
still needed.
In 2009, the standby loan or Public Expenditure Financing Facility / Contingency Loan was
a budget support, which supported the Indonesian Government’s financing programs to
overcome the crisis, which could be drawn in case the Government had problems in issuing
SBN (back stop facility). Difficulties in issuing SBN could occur when there was no sufficient
demand for SBN, or even if there was a demand, the yield desired by investors could be very
expensive.
The forms of support for standby loan were as follows: (1) loan that could only be drawn in
case of loan financing through the issuance of securities, could not be met in accordance with
the agreed quarterly plan; and (2) in the form of guarantee for securities issuance in
international markets, especially the Japanese market. The Government would discuss with
Development Partners about the amount of drawings by the end of each quarter.
IV-14 Financial Note and Indonesian Revised Budget 2010
Principal Changes in Budget Deficit and Budget Financing Chapter IV

In the progress, the SBN issuance was set in quarterly target that was expected to be achieved
through the issuance of several SBN instruments, both in rupiah and in foreign currency
denominations. In the event of a shortage (shortfall) of the realization of 3-month issuance
in comparison with the target, the standby loan would be drawn in the sum of the above
shortage, by considering the interest rate limitation set forth in the standby loan scheme.
The form of standby loans was generally divided into 2 groups, namely:
1. Contingent budget support
Standby loan in this form required the fulfillment of the volume limits and interest rates.
This new standby loan could be drawn in the event of a shortage (shortfall) in SBN issuance
volume, by considering the interest rate specified limits. Standby loan in this form would
be withdrawn from creditor in cash.
2. Direct market support.
Standby loan in this form was a support in the form of guarantee against the issuance of
SBN by the Indonesian Government. Such support was specifically granted by the Japanese
Government, in the form of guarantee by the JBIC on the issuance of yen-denominated
SBN in the Japanese market (Samurai Bonds). With the assurance from JBIC, the
Indonesian Government credit rating would go up near the level of JBIC credit rating
(close to investment grade) therefore it was expected to be accepted by the highly
conservative and risk averting Japanese investors.
During the year 2009, the standby loan agreement between the Government and development
partners that had been signed in order to support the APBN financing in 2009 and 2010 is
shown in Table IV.5 below.

T ABLE IV. 5
ST ANDBY LOANS T HAT HAVE BEEN SIGNED
Com m i t m en t Date of
Nu m ber Development Partners Loa n T a r get
V alue A greement
1 W or ld Ba n k USD 2 billion 0 4 -Ma r -0 9 Co ntingent budget - s uppo rt
2 JBIC JPY 1 9 5 billion 0 7 -A pr -0 9 Direct m ark et - s uppo rt
3 A sia n Dev elopm en t Ba n k USD 1 billion 0 2 -Ok t -0 9 Co ntingent budget - s uppo rt
4 A u st r a lia USD 1 billion 0 5 -Nop-0 9 Co ntingent budget - s uppo rt

Sou r ce : Min ist r y of Fin a n ce

Until the end of year 2009, stand by loan which has been drawn only amont JPY35 billion
for guarantee from JBIC of Samurai Bonds (Shibosai). In line with that availability of residual
stand by loan and can be utilize in 2010 is USD 4.0 billion and JPY160.0 billion.
Utilization and exploitation of the standby loan in 2010 were arranged through the mandate
of Article 26 verse (5) of Law Number 47 Year 2009 about APBN 2010 that regulated the
trigger of standby loan drawings. Such condition was the deceleration of financial market
that caused significant increase of costs, particularly SBN yield. The magnitude of this indicator
would be determined by agreement between the Government and the Development Partners.
Currently, the Government had a discussion with the development partners on the threshold
of the basis of contingent budget support of standby loan drawings in 2010. Until April 2010
there was no standby loan drawing, due to financial market conditions that was still conducive;

Financial Note and Indonesian Revised Budget 2010 IV-15


Chapter IV Principal Changes in Budget Deficit and Budget Financing

however, in the first half of 2010, the Government planned to utilize the standby loan from
JBIC through the guarantee of Samurai bonds issuance in Japan’s financial markets.

4.3 FISCAL RISK

4.3.1 SENSITIVITY ANALYSIS


4.3.1.1 SENSITIVITY OF MACROECONOMIC ASSUMPTIONS
In preparing the APBN-P, the macroeconomic indicators used as the basis in calculation
were: economic growth, inflation, interest rates, 3-month Bank Indonesia Certificates (SBI),
the rupiah exchange rate, Indonesia Crude Oil Price / ICP, and oil lifting. These indicators
were the basic assumption referred in calculating the quantities of revenue, expenditure, and
financing in the APBN-P. If the realizations of these variables were inconsistent with the
assumptions, then the measures of income, expenditure and financing in the APBN would
also change. Therefore, uncertain variations of the macroeconomic indicators were risk factors
that could affect the APBN-P.
The following Table IV.6 shows the difference between initial estimation of macro
assumptions used in the preparation of APBN-P and its realization in 2006-2009. The
differences produced a discrepancy between the target deficit and its realization. If the actual
deficit exceeded the deficit target set in the APBN-P then the Government had to find fiscal
risk financing sources.

TABLE IV.6
DISCREPANCY BETWEEN MACROECONOMY ASSUMPTION AND
REALIZATION*
Description 2006 2007 2008 2009**
Economic growth (%) -0,32 0,00 -0,20 0.20
Inflation (%) -1,40 0,60 4,90 -1.70
3-month SBI interest rate (%) -0,30 0,00 1,80 0,1
Exchange rate (IDR / USD) -237,00 90,00 591,10 -92.00
ICP (USD / barrel) -0,20 9,70 1,80 0,6
Oil production (million barrels per day) -0,04 -0,05 0,00 -0,08
* Positiv e v alu e indicates the realization was higher than budget assum ption. For foreign exchange,
positiv e
** Discrepancy between m acro econom y assum ption and its realization.
Source : Ministr y of Finance

Fiscal risks caused by variations of macroeconomic assumptions, could be described in terms


of partial sensitivity analysis of the baseline figures in the national budget deficit. Partial
sensitivity analysis was used to determine the impact of one variable change in macro-
economic assumptions, assuming the variables of other macroeconomic assumptions were
unchanged (ceteris paribus).
Economic growth affected the amount of APBN-P, both on the revenue and expenditure.
The revenue side affected the economic growth in tax revenues, particularly income tax and
Value Added Tax (VAT). On the expenditure side, the economic growth affected the value of

IV-16 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

the balanced fund in transfer to region budget allocation as a consequence of changes in tax
revenue. In fiscal year 2010, if the attainment of economic growth was 1 percent lower than
the assumption, the additional deficit in APBN in 2010 was estimated to be in the range of
Rp4.1 trillion to Rp4.5 trillion.
Depreciation of the rupiah to the U.S. dollar had an impact on all facets of APBN-P, both in
revenue and expenditure, and financing. On the revenue side, the depreciation of the rupiah
would affect oil and gas revenues in the United States dollar-denominated oil and gas, as well
as income tax and VAT. On the expenditure side, the components affected by depreciation of
rupiah were as follows: (1) expenditure in foreign currencies, (2) foreign interest payments,
(3) subsidies for fuel and electricity, and (4) transfer to region in the form of oil/gas revenue
sharing. Meanwhile, on the financing side, the components that would be affected were as
follows (1) foreign loans in the form of both program loans and project loans, (2) amortization,
and (3) the privatization and sale of assets of the banking restructuring program undertaken
in the foreign currency. In 2010, if the average rupiah exchange rate was depreciated by
Rp100 per annum from the assumed rate, then the additional deficit in APBN-P 2010 was
expected to reach in the range of Rp0.44 trillion up to the Rp0.56 trillion.
The interest rate assumptions used as the basis of APBN-P 2010 calculation was the
3-month SBI interest rate. Changes in levels of 3-month SBI interest rate were estimated to
have an impact on the expenditure side only. In this case, an increased level of 3-month SBI
interest rate would result in increment of interest payments on domestic debt. In 2010, average
3-month SBI interest rate was estimated to reach 0.25 percent higher than the assumed rate,
therefore the additional deficit in the APBN in 2010 was expected to be in the range of Rp0.3
trillion to Rp0.5 trillion.
Indonesian Crude Oil Price (ICP) affected the APBN-P on revenue and expenditure sides. On
the revenue side, an increase in ICP, would result in revenue increment from oil/gas production
sharing contract (KPS) in the form of non-tax revenues. The increase in world oil prices
would also increase the oil/gas tax revenues and other oil/gas revenues. On the expenditure
side, the increased ICP, among others, would increase fuel subsidy spending and revenue
sharing to region. In 2010, if the average ICP was USD1 per barrel higher than the assumed
rate, the deficit in APBN in 2010 was expected to decrease in the range of Rp0.3 trillion to
Rp0.0 trillion. Decrease in deficit due to high oil lifting (in revenue side), and the proportion
of fuel used in fuel power plant were quite low, resulting in the sensitivity of ICP increase on
small electric subsidy (from the expenditure side).
Decrement in domestic oil lifting would also affect the APBN-P on revenue and expenditure
sides. On the revenue side, the decline in domestic oil lifting would reduce oil and gas income
tax and non-oil and gas income tax. Meanwhile, the decline in expenditure side of the realization
of domestic oil lifting would reduce revenue sharing to regions. In 2010, if the realization of
domestic oil lifting was decreased by 10,000 barrels per day from that assumed amount, then
the additional deficit in APBN in 2010 was expected to be in the range of Rp3.0 trillion to
Rp3.3 trillion.
Other variable that influenced the amount of deficit was the volume of domestic fuel
consumption. An increase of domestic fuel consumption by 0.5 million kiloliters would
potentially increase the budget deficit in APBN-P 2010 in the range of Rp1.3 to Rp1.5 trillion.

Financial Note and Indonesian Revised Budget 2010 IV-17


Chapter IV Principal Changes in Budget Deficit and Budget Financing

Based on the sensitivity analysis above, the magnitude of fiscal risks in the form of additional
deficit that would arise from variations in the assumptions of macroeconomic variables used
to compile the APBN in 2010 is detailed in Table IV.7.

TABLE IV.7
MACROECONOMIC ASSUMPTION SENSITIVITY TO APBN-P DEFICIT 2010

*
2010
Assumption
Number Description
Variable Unit Potential Deficit
Assumption
(trillion Rp)
1 Economic growth (%) -1 5.8 4.1 to 4.5
2 Inflation rate (%) + 0.1 5.3 Indirect

3 Rupiah Exchange Rate (IDR / USD) + 100 9,200 0.44 to 0.56


4 3-month SBI interest rate (%) + 0.25 6.5 0.3 to o.5
5 ICP (USD / barrel) +1 77 -0.3 to 0.0
6 Lifting of oil (thousand barrels / day) - 10 965 3.00 to 3.34

7 Domestic fuel consumption (million kl) + 0.5 36.5 1.33 to 1.46


* Deficit in APBN-P 2010 was Rp133.747,7 billion.
Source : Ministry of Finance

4.3.1.2 SENSITIVITY OF MACROECONOMIC VARIABLES ON


BUMN FISCAL RISKS
BUMN had contributed to the APBN, either directly or indirectly. The contribution of BUMN
in the form of direct revenues derived from tax revenue, dividend payments and privatization,
as well as compensation in the form of government expense through public service obligation
(PSO) subsidy. The indirect contributions of BUMN were in the form of multiplier effects to
the development of national economy.
Direct contribution BUMN from 2004 to 2009 showed a significant effect on the APBN as
shown in Graph IV.6.
GRAPH IV.6
Changes in oil prices, exchange BUMN CONTRIBUTION TO APBN
rate, economic growth, and 250
interest rates might have an
200
impact on the financial
trillion rupiah

performance of BUMNs, which 150

in turn would affect the 100


contribution of BUMNs to the 50
APBN. The decrease of this
0
contribution was part of the fiscal 2004 2005 2006 2007 2008 APBN-P
risks originating from the 2009
Tax Dividend Privatization PSO
BUMN. To determine the impact
of changes in macroeconomic Source : Ministry of Finance
variables on BUMN fiscal risks,
the Government conduct sensitivity tests or stress test macros BUMN fiscal risk by using
several indicators of fiscal risks, namely (1) the net contribution of BUMNs to the APBN,
(2) net debt of BUMNs, and (3) gross financing needs of BUMNs.

IV-18 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

Sensitivity testing would provide a snapshot of (1) magnitude of risk that affect the APBN,
(2) early information on fiscal risks, and (3) projection of sectoral risk so that early action
and anticipation of symptoms could be taken. Simulation of macro stress test this year was
performed to 22 BUMNs, which was an increment in comparison with the previous year that
only covered 7 State-Owned Enterprises, with the following criteria: (1) BUMN with the
largest income-products, (2) BUMN with biggest loss, (3) BUMN that received the biggest
amount of subsidy /PSO, and (4) BUMN that represented the sector in the Indonesian
economy. The changes in the above 22 BUMN were expected to reflect changes in other
BUMN that amounted to a total of 139 BUMN. This test was carried out partially and
aggregately based on the financial performance of 22 BUMN during the period of four years
(2005 to 2008) and the financial projections for the next four years (2009 to 2012).
Stress test for several key of macroeconomic variables on BUMN fiscal risk aggregate was
carried out partially, by measuring the impact caused by changes of one macro economy
variable to BUMN fiscal risk indicators, assuming other macro-economic variables did not
change (ceteris paribus). In this way, the macro-economic variables that had the greatest
effect and significant impact on BUMN fiscal risks could be determined.
In Table IV.8, the depreciation of the rupiah against the U.S. dollar by 20 percent have a
significant impact on the amount of PSO subsidy, operating performance, and financial balance
of the aggregate BUMN. This enormous vulnerability was caused by the calculation formula
of PSO subsidy using foreign currencies and the composition of operating expenses and foreign
currency loan were very large (for example, PLN’s foreign currency loan in 2008 reached
about 70 percent of total loan). This was reflected in the increase in net BUMN loan that
reached up to Rp31.9 trillion in 2010 and continued to grow in the following year. This meant
that the ability of state-owned assets in bearing total liability had decreased. This condition
might cause the possibility of default and failure in loan payment.
In addition, the depreciation of the rupiah against the U.S. dollar would also increase BUMN’s
gross financing needs, as shown in 2010; BUMN needed an increase of Rp12.0 trillion in
gross financing to maintain growth. In relation to this, there were state owned enterprises
that faced difficulties in finding financing sources without Government support. The impact
was the dramatic reduction of BUMN’s net contribution to APBN, as indicated in the decline
of BUMN’s contribution that amounted to Rp52.2 trillion in 2010.
The increase in world oil prices by US$25 per barrel would significantly propel production
costs, especially for BUMN in the energy sector, transportation, and fertilizer, and would also
increase the amount of subsidies from the Government in order to have a negative increment
of BUMN’s net contribution to the APBN. The impact of this stress test had caused the net
BUMN contribution to the APBN in 2010 to grow more negatively to reach Rp72 billions,
resulting in a heavier fiscal pressure. The increase in PSO subsidy was mainly caused by
increasing oil and electricity subsidies provided by PT Pertamina and PT PLN.
The decline of economic growth by 1 percent and an increase in interest rate by 3 percent also
had an impact on fiscal, although not as big as the impact of the depreciation of the rupiah
against the US dollar and the increasing global oil price. The increase in interest rate resulted
in the increment of costs borne by BUMN that would reduce BUMN’s net contribution. The
increase of interest rate in 2010 would add to BUMN’s negative net contribution that amounted
to Rp2.6 trillion, and would also impacted the amount in the following year should the similar
increment remained.

Financial Note and Indonesian Revised Budget 2010 IV-19


Chapter IV Principal Changes in Budget Deficit and Budget Financing

TABLE IV.8
STRESS TEST OF ECONOMI C GROWTH CHANGES, EXCHANGE RATE, OI L PRICE,
AND INTEREST RATE TO BUMN FISCAL RISK
(billion rupiah)

Stress test of the rupiah depreciation to US dollar by 20 percent, from Rp1 1 ,040/USD to Rp9,200/USD
I m pact
Num ber Variable Shock
2009 2010 2011 2012
1 Net contribution to A PBN (43,642) (52,1 56) (46,045) (48,1 04)
2 BUMN net debt v alue 28,459 31 ,925 47 ,207 59,366
3 Gross financing requirement 5,5 1 7 1 2,042 1 3,5 67 1 2,81 4
4 Subsidy 49,057 5 8,656 52,464 55 ,21 8

Stress test of the increasing of oil price by USD25 per barrel from USD80 per barrel to USD1 05 per barrel
I m pact
Num ber Variable Shock
2009 2010 2011 2012
1 Net contribution to A PBN (95,5 83) (7 2,81 3) (7 8,87 7 ) (7 8,922)
2 BUMN net debt v alue 2,5 58 (456) (5,466) (5,968)
3 Gross financing requirement 3,083 (363) (46) 51 2
4 Subsidy 1 1 4,205 85,1 08 94,304 95,266

Stress test of interest rate increased by 3 percent from 6.5 percent to 9.5 percent
I m pact
Num ber Variable Shock
2009 2010 2011 2012
1 Net contribution to A PBN (6,1 55) (2,645) (4,61 8) (5,695)
2 BUMN net debt v alue 97 7 (1 1 ,87 2) (6,37 2) (3,422)
3 Gross financing requirement 1 86 (9) 1 ,1 38 1 56
4 Subsidy 2,042 2,446 3,623 4,654

Stress test of economic growth decreased by 1 percent from 5.8 percent to 4.8 percent
I m pact
Num ber Variable Shock
2009 2010 2011 2012
1 Net contribution to A PBN 1 3,1 40 9,636 8,445 1 1 ,404
2 BUMN net debt v alue 2,634 823 81 8 1 ,327
3 Gross financing requirement 113 0 6 3
4 Subsidy (1 4,1 01 ) (1 0,661 ) (9,531 ) (1 2,695)

Sou rce : Ministry of Finance

4.3.2 CENTRAL GOVERNMENT CONTINGENT LIABILITIES:


INFRASTRUCTURE DEVELOPMENT PROJECT
Fiscal risks that were associated with the infrastructure development projects derived from
the support/guarantee by the Government to several projects, namely the acceleration of
development projects of 10,000 MW power plant, construction of trans-Java highway, toll
road construction project in Jakarta Outer Ring Road II (JORR II), Jakarta monorail project,
accelerating the provision of drinking water, and government support for the model of IPP
steam power plant in Central Java, as well as the establishment of guarantee funds for
infrastructure. In APBN-P 2010 the Government had allocated an additional capital for
infrastructure guarantee fund.
As mandated in Presidential Instruction Number 5 Year 2008 about The Focus of Economic
Policy in 2008-2009, the establishment and operation of agency of infrastructure guarantee

IV-20 Financial Note and Indonesian Revised Budget 2010


Principal Changes in Budget Deficit and Budget Financing Chapter IV

(guarantee fund) that was required to encourage private sector involvement in infrastructure
development. The main purpose of the establishment of guarantee funds was to provide
facilities for financing infrastructure projects in achieving (financial close) and obtaining the
best cost of capital by increasing the feasibility of obtaining credit (creditworthiness) of the
infrastructure project. Guarantee fund was expected to improve the quality assurance
management of risks that became Government’s responsibility on infrastructure projects as
stipulated in Presidential Regulation Number 67 Year 2005 as amended in Presidential
Regulation Number 13 Year 2010 regarding Amendment of Presidential Decree Number 67
Year 2005 regarding Cooperation of the Government with Business Entity in Providing
Infrastructure. The involvement of government funding in the establishment of such
institutions was realized in the form of government capital participation (PMN) as initial
capital for the establishment that amounted to Rp1.0 trillion in the APBN 2009.
Such Agency was established in the end of 2009 under the name of PT Penjaminan
Infrastruktur Indonesia (PT PII) in the form of 100 percent state owned enterprise. PT PII
was expected to operate immediately so it could provide assurance on infrastructure projects
prepared by the Government and Public Private Partnership (PPP).
In the APBN-P 2010, the Government allocated funds amounting to Rp1.0 trillion for
additional capital. This was based on the estimation of infrastructure financing needs of
Rp1,429 trillion in 2010-2014,0. Based on the above amount, the government’s ability to
provide funding through the APBN only reached 35.75 percent, whereas the shortage was
expected to be covered by private parties, using PPP schemes. Additional capital was needed
to increase collateral capacity and as an effort to increase the confidence level of investors
and creditors towards this institution in its capacity as a guarantor.

Financial Note and Indonesian Revised Budget 2010 IV-21


LAW OF REPUBLIC OF INDONESIA
NUMBER 2 YEAR 2010
REGARDING
AMENDMENTS OF LAW NUMBER 47 YEAR 2009
ON THE INDONESIAN BUDGET (APBN)
BUDGET YEAR 2010
BY THE BLESSING OF GOD ALMIGHTY
THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considers : a. that APBN for the year 2010 is prepared in accordance with
the needs and capabilities of state governance in collecting
Revenue in order to create a national economy based on
economic democracy with the principle of solidarity, fairness,
efficiency, sustainability, environment, and independence, in
order to achieve a safe and peaceful Indonesia, fair and
democratic, improve the welfare of the people and by
balancing economic progress and national unity;
b. that since the enactment of Law Number 47 Year 2009
regarding the APBN fiscal year 2010, there have been many
developments and fundamental changes in circumstances
that has significant impact on various economic indicators
that affect the fiscal policy fundamentals and implementation
of APBN in year 2010 and in line with basis of macro-
economic assumption changes which are accompanied by
changes in fiscal policy that required a change in the budget
year 2010 budget;
c. that in order to secure the implementation of APBN fiscal year
2010, needed to make adjustments for various targets of
revenue, Government expenditure, budget deficits, as well as
the needs and sources of budget financing, to be more
realistic and able to support the achievement of economic

development goals …
-2-

development goals by 2010 and medium term, both in order to


support national economic activity in spurring growth,
creating and expanding job opportunities, and improve the
quality of service to the community and reduce poverty, in
addition to maintaining national stability in accordance with
national development programs;
d. that discussion of Draft Law on amendments to the Law
Number 47 Year 2009 regarding the APBN year 2010 is
conducted by House of Representatives (DPR) together with
the Government with regard to the opinion of the Regional
Representatives Board (DPD) as stated in Decree Number
22/DPD/III/2009-2010 on 19 April 2010;
e. that based on the considerations referred to in verses a, b, c,
and d , it is necessary to establish the Law on amendments to
the Law on APBN in 2010 budget year;

In view of : 1. Article 5 verse (1), Article 20 verse (2), and verse (4), article 23
verse (1), and verse (2), article 31 verse (4), and article 33
verse (1), verse (2), verse (3) and verse (4) of the Constitution
of the Republic of Indonesia Year 1945;
2. Law Number 17 Year 2003 regarding the State Finance (State
Gazette of Republic Indonesia in 2003 Number 47,
Supplement to State Gazette of Republic of Indonesia Number
4286);
3. Law Number 27 Year 2009 regarding People’s Consultative
Assembly (MPR), House of Representatives (DPR), Regional
House of Representatives (DPRD), Regional Representative
Board (DPD) (State Gazette of the Republic of Indonesia, in
2009 the Number 123, Gazette of the Republic of Indonesia
Number 5043);
4. Law Number 47 Year 2009 regarding APBN fiscal year 2009
(State Gazette number 156 of Indonesia in 2009, an additional
sheet of Republic of Indonesia Number 5075);

By the …
-3-

By the Joint Approval of


THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA
AND
THE PRESIDENT OF THE REPUBLIC OF INDONESIA

HAS DECIDED

To establish :LAWS OF AMANDEMENT TO THE LAW NUMBER 47 YEAR 2009


ON THE INDONESIAN BUDGET (APBN) FISCAL YEAR 2010.

Article I

Several provisions in the Act Number 47 Year 2009 regarding


APBN fiscal year 2010 (State Gazette of the Republic of Indonesia
in 2009 Number 156, Supplement to State Gazette of the Republic
of Indonesia Number 5075) modified as follows:

1. Provisions in Article 1 number 12, number 18, number 30,


number 35, number 39, number 41, and the number 42
modified, between numbers 27 and number 28 is inserted 3
(three) numbers, ie numbers 27a, numbers 27b, and numbers
27c, between numbers 28 and number 29 inserted 1 (one) of
numbers, ie numbers 28a, between numbers 34 and number
35 is inserted 1 (one) number ie, 34a, between numbers 35
and number 36 is inserted 2 (two) numbers namely 35a and
35b, between numbers 41 and number 42 is inserted 1 (one)
number that is 41A, and the number 31 and number 36 had
been removed so that Article 1 reads as follows:

Article 1
In this Act, referred to as:
1. Revenues and grants are all state revenue derived from tax
revenues, non tax revenues, and grants received from
domestic and foreign.

2. Tax …
-4-

2. Tax revenues are all revenue consisting of domestic taxes


and taxes on international trade.
3. Domestic taxes are all revenue derived from income tax,
value added tax (PPN) and sales tax on luxury
goods(PPnBM), land and building tax (PBB), duties on land
and building transfer (BPHTB), excise and other taxes.
4. Taxes on international trade are all revenue derived from
import duties and export duties.
5. Non tax Revenue (PNBP) are all revenues received by the
Central Government in the form of revenues from natural
resources, Dividens from BUMN, other revenue taxes, and
revenue of public service agencies (BLU).
6. Cost recovery is the return on the costs that have been
issued within the framework of petroleum operations by the
Contractor Cooperation Contract (KKKS) using oil produced
and/or natural gas in accordance with the provisions of
legislation.
7. Grants are that all revenue derived from contributions by
the private sector in the country and local governments as
well as donations by private parties overseas and foreign
governments that do not need to be paid back, are not
mandatory and are not binding, and not continuous, is
allocated for funding certain activities.
8. Government Expenditures are all expenditures used to
finance central government spending and transfers to the
regions.
9. Central Government Expenditures by organization is the
Central Government expenditure allocated to Line
ministries/agencies (K/L), in accordance with programs of
the Government Work Plan (RKP) that will be executed.
10. Central Government Expenditures by function, is Central
Government spending which is used to run a public service
function, the function of defense, public order and security
functions, economic functions, environmental functions,

the function,…
-5-

the function of housing and public facilities, health


functions, tourism and cultural functions, religious
functions, education function, and social protection
function.
11. Central Government Expenditures by economic
classification is Central Government expenditure which is
used to finance personnel expenditure, material
expenditure, debt interest payments, subsidies, grants
spending, social assistance, and other expenditures.
12. Personnel expenditure is expenditure which the Central
Government uses to finance compensation in the form of
money or goods given to Central Government employees,
retirees, members of the Indonesian National Army and
Police of the Republic of Indonesia, and state officials, who
had served in both domestic and abroad, as a reward for
work already carried out, except for work related to capital
formation.
13. Material expenditure is Central Government expenditure
which is used to finance the purchase of goods and services
to produce consumable goods and services, whether
marketed or not marketed, and the procurement of goods
which are intended to be given or sold to the public, as well
as travel expenditures.
14. Capital expenditure is Central Government expenditure
made in conjunction with capital formation in the form of
land, equipment and machinery, building, network, as well
as in other physical forms.
15. Debt interest payments is Central Government expenditure
which is used to pay liability for the use of the principal
outstanding debts both domestically and abroad, which is
calculated based on the terms and conditions of existing
debt and new debt, including for the costs associated with
debt management.
16. Subsidy is budget allocation that is granted to
companies/institutions that produce, sell, export or import

of goods …
-6-

of goods and services, which meet the lives of many people


in such a way that the sale price is affordable by public.
17. Energy Subsidy is budget allocation that is given to
companies or institutions that produce and/or sell fuel
(BBM), biofuels (BBN), Liquefied Petroleum Gas (LPG) and
electricity so that the selling price is affordable by the
people.
18. Grant expenditure is central government expenditure that
is voluntary to the transfer of rights in the form of money,
goods, or services from the Government to State Owned
Enterprises (BUMN), the government of another country,
international institution/organization, particularly local
government loans and/or foreign grants to on-granting
areas, which do not need to be paid back, are not
mandatory and not binding, and are not continuous, and
the manuscript was done by agreement between the grantor
and the grantee.
19. Social assistance is all state expenditures in the form of
transfer of money or goods given to the public in order to
protect the public from the possibility of occurrence of
various social risks.
20. Others expenditures are all Central Government
expenditure or expenditures that can not be classified into
the types of expenditures as stipulated in point 12 (twelve)
up to number 19 (nineteen), and the general reserve fund.
21. Transfer to region is Government expenditure within the
framework of the implementation of decentralization in the
form of balanced fund, special autonomy fund and
adjustment fund.
22. Balanced fund is sourced from the APBN revenues allocated
to regions to fund local needs in the context of
decentralization which consists of revenue sharing fund,
general allocation fund, and specific allocation fund, as
referred to Law Number 33 Year 2004 regarding Financial
Balance between Central and Local Government.

23. Revenue …
-7-

23. Revenue sharing fund, hereinafter abbreviated as DBH, is a


fund sourced from APBN revenues, which is allocated to
regions based on certain percentage to fund local needs in
the context of decentralization, as stipulated in the Law
Number 33 Year 2004 regarding the Financial Balance
between the Central Government and Local Governments.
24. General Allocation Fund, hereinafter referred to DAU, which
is sourced from APBN revenues, and is allocated to regions
with the objective of equal inter-regional distribution of
financial ability to fund local needs in the context of
decentralization, as stipulated in the Law Number 33 Year
2004 on Financial Balance between the Central
Government and Local Governments.
25. Specific Allocation Fund, hereinafter referred to DAK, is
sourced from the APBN revenues, and is allocated to
specific areas in order to help in funding special activities
that are local affairs and in accordance with national
priorities, as stipulated in the Law Number 33 Year 2004 on
Financial Balance between the Central Government and
Local Government.
26. Special Autonomy Fund is a fund allocated to finance the
implementation of special autonomy of a region, as
stipulated in the Law Number 35 Year 2008 regarding the
establishment of Exemption Number 1 Year 2008 regarding
amendment of the Law Number 21 Year 2001 regarding
Special Autonomy for Papua province into Law and the Law
Number 11 Year 2006 regarding the Aceh Government.
27. Adjustment Fund is a fund allocated to assist regions in
order to implement Central Government policy and help
supporting the acceleration of development in the area.
27a. Strengthening fiscal decentralization and regional
development acceleration (DPDF-PPD) fund is a fund
allocated to regions to help supporting the acceleration of
regional development through the provision and
development of infrastructure and non-infrastructure as
well as other supporting facilities to regional government.

27b. Infrastructure...
-8-

27b. Infrastructure and regional infrastructure enhancement


fund (DPIPD) is a fund sourced from the APBN and
allocated to regions in order to improve public services
through the provision of infrastructure facilities and
infrastructure in areas that are designated to accelerate
regional development.
27c. Acceleration of education infrastructure development fund
(DPPIP) is a fund sourced from the APBN and allocated to
regions in order to support the acceleration of education
infrastructure development in district/city level.
28. The rest of the financing budget, hereinafter referred to
SILPA, is the excess of the actual realization of deficit
budget that occurred.
28a. Cumulated budget surplus, hereinafter abbreviated as SAL,
is the accumulation of surplus financing budget over the
previous years.
29. Deficit revenue budget financing is any kind of financing
used to cover the deficit budget in APBN and also in
financing expenditure.
30. Domestic financing is all financing revenues sourced from
domestic banking and non-banking consisting of the
management of assets, net issuance of state bonds,
domestic loans, minus all expenditure financing expenses
consisting of government investment funds, revolving
funds, national education development funds, occuring
obligations derived from government guarantee, the
government capital participation , loans to PT PLN (Persero),
and reserve funding.
31. Removed.
32. Government securities, hereinafter abbreviated as SBN,
consisting of conventional based government securities and
Islamic based government securities.
33. Conventional based government securities, hereinafter
abbreviated as SUN, is bonds in the form of letter of
acknoledgement of debt denominated in rupiah and foreign
currency in which interest and principal payments are

secured primarily…
-9-

secured primarily by state of Republic of Indonesia, in


accordance with the validity period, as referred to in the
Law Number 24 Year 2002 on government bonds.
34. Islamic based government securities, hereinafter
abbreviated as SBSN, or obligations bonds, is bonds issued
based on sharia principles, as evidence for inclusion of
SBSN assets, both in rupiah and foreign currency, as
stipulated in the Law Number 19 Year 2008 regarding
Islamic based government securities.
34a. Government assistance in which the status has not
defined, hereinafter referred as BPYBDS is government
assistance in the form of state property from the APBN,
which has been operated and/or used by the State owned
Enterprises (BUMN) based on the handover of official report
and so far recorded in the financial statements of line
ministries/agencies (K/L) or in the State Owned
Enterprises.
35. Government investment fund is government support in the
form of financial compensation and/or other compensation
granted by the government to the business agency and
public service agencies.
35a. Revolving funds are funds on loan to be managed and
rolled out to the community by the Budget User or Budget
power holder aims to increase the people’s economic and
other purposes.
35b. National education development funds are education
budget allocated for the establishment of endowment fund
which aims to ensure the sustainability of educational
programs for the next generation as a form of responsibility
between generations (intergenerational equity) and are
managed using the revolving fund mechanism and
conducted by the Public Service Agency (BLU) in education,
and education reserve fund in anticipation of the purposes
of rehabilitation educational facilities damaged by natural
disasters.
36. Removed.

37. Domestic …
- 10 -

37. Domestic loans are all Government loans which are sourced
from domestic lenders to be paid back under certain
conditions, in accordance with the validity period.
38. Guarantee liabilities are obligations which is government
burden due to provision of government guarantees to State
Owned Enterprises (BUMN) and/or Province Owned
Enterprises (BUMD) in the case of state-owned enterprises
(BUMN) and/or Province owned enterprises (BUMD) is
unable to pay its obligations to creditors according to loan
agreements.
39. Net foreign financing is all the funding comes from the
withdrawal of foreign loans consisting of program loans and
project loans reduced by subsidiary loan and amortization.
40. Program loan is a loan program received in the form of cash
financing in which the withdrawal requires fulfillment of
certain conditions agreed upon both parties as the policy
matrix or the execution of certain activities.
41. Project loan is foreign loan used to finance certain activities
of line ministries/agencies and/or local governments and
State Owned Enterprises (BUMN) through a subsidiary
loan.
41a. Channeling loan is foreign loan or domestic loan received
from Central Government and loan forwarded to local
government or State Owned Enterprises (BUMN) which has
to be paid back with certain terms and conditions
42. Education budget is budget allocation on education
functions which are budgeted through the state ministries
and agencies, the allocation of education budget through
transfers to the regions and the budget allocation for
education through financing of expenditure, including
salaries of educators, but not including education service
budget, to finance the education that is the responsibility of
government
43. Percentage of education budget is the allocation ratio of
education budget to Government expenditure

44. Fiscal …
- 11 -

44. Fiscal year 2010 is 1 (one) year period starting from


January 1 until the date of December 31, 2010

2. The provisions of Article 2 verse (2), verse (3), verse (4), and
verse (5) are modified, so that Article 2 reads as follows:

Article 2
(1) Budget of revenue and grant of fiscal year 2010 are
obtained from the following sources:
a. tax revenue;
b. non-tax revenue; and
c. grants.
(2) Tax revenues as referred to verse (1) letter a are estimated
to reach Rp743,325,906,000,000.00 (seven hundred forty
three trillion three hundred twenty five billion nine
hundred six million rupiah).
(3) Non-tax revenue referred to verse (1) letter b are estimated
to reach Rp247,176,367,998,000.00 (two hundred forty
seven trillion one hundred seventy six billion three
hundred sixty seven million nine hundred ninety eight
thousands rupiah).
(4) Grants as referred to verse (1) letter c are estimated to
reach Rp1,896,516,000,000.00 (one trillion eight hundred
ninety six billion five hundred sixteen million rupiah).
(5) Total budget of revenues and grants of fiscal year 2010 as
referred to verse (2), verse (3) and verse (4) are estimated
to reach Rp992,398,789,998,000.00 (nine hundred ninety
two trillion, three hundred ninety eight billion seven
hundred eighty nine million nine hundred ninety eight
thousand rupiah).

3. The provisions of Article 3 verse (2) and verse (3) amended,


verse (4) fixed and an explanation verse (4) are amended, thus
Article 3 reads as follows:

Article 3…
- 12 -

Article 3
(1) Tax revenues as referred to in Article 2 verse (2),
consisting of:
a. domestic taxes; and
b. International trade taxes.
(2) Domestic taxes revenues as referred to verse (1) letter a
are estimated at Rp720,764,533,000,000.00 (seven
hundred twenty trillion seven hundred sixty four billion
five hundred thirty three million rupiah), consist of:
a. Income tax at Rp362,219,020,000,000.00 (three
hundred sixty two trillion two hundred nineteen billion
twenty million rupiah), including income tax borne by
the Government (PPh DTP) for:
1) Geothermal commodity amounted to
Rp624,250,000,000.00 (six hundred twenty four
billion two hundred fifty million rupiah);
2) Interest and revenue sharing on Goverment
Security issued in international market amounted
to Rp2,000,000,000,000.00 (two trillion rupiah);
3) Grants and international financing from multi-
lateral finance institutions amounted to
Rp1,000,000,000,000.00 (one trillion rupiah);
4) Transfer of land rights transactions and/or building
Sidoarjo mud victims of Rp205,000,000,000.00 (two
hundred five billion rupiah);
5) Biofuel (BBN) amounted to Rp100,000,000,000.00
(one hundred billion rupiah); and
6) Receivable tax from ex-Bank Restructuring Agency
(BPPN) and Televisi Republik Indonesia (TVRI)
amounted to Rp495,330,195,959.00 (four hundred
ninety five billion three hundred thirty million one
hundred ninety five thousand nine hundred fifty
nine rupiah);
which in its implementation, each of income tax borne
by the Government is regulated by Regulation of
Finance Ministry.
b. Value added tax and sales tax on luxury goods
amounted to Rp262,962,992,000,000.00 (two hundred

sixty two …
- 13 -

sixty two trillion nine hundred sixty two billion nine


hundred ninety two million rupiah), including value
added tax borne by Government (PPN DTP) on:
1) Fuel, bio-fuel, and 3 (three) kilograms of subsidized
LPG amounted to Rp5,897,545,000,000.00 (five
trillion eight hundred ninety seven billion five
hundred forty five million rupiah);
2) Import taxes (PDRI) in order to explore the
upstream oil and gas and geothermal amounted to
Rp2,500,000,000,000.00 (two trillion five hundred
billion rupiah);
3) Cooking oil and wheat/flour import amounted to
Rp1,091,800,000,000.00 (one trillion ninety one
billion eight hundred million rupiah);
4) Climate change adaptation and mitigation
amounted to Rp900,000,000,000.00 (nine hundred
billion rupiah);
5) Murabahah islamic shariah banking transaction
amounted to Rp328,454,138,718.00 (three hundred
twenty eight billion four hundred fifty four million
one hundred thirty eight thousand seven hundred
eighteen rupiah); and
6) Receivable tax from ex-Bank Restructuring Agency
(BPPN) and Televisi Republik Indonesia (TVRI), and
PT Kereta Api Indonesia (Indonesian Train
Company PT.KAI) amounted to
Rp1,292,028,466,101.00 (one trillion two hundred
ninety two billion twenty eight million four hundred
sixty six thousand one hundred one rupiah);
which in its implementation, each of value added tax
borne by the Government is regulated by Regulation of
Finance Ministry.
c. Land and building tax amounted to
Rp25,319,148,000,000.00 (twenty five trillion three
hundred nineteen billion one hundred forty eight
million rupiah).
d. Duties on land and building transfer amounted to
Rp7,155,525,000,000.00 (seven trillion one hundred
fifty five billion five hundred twenty five million rupiah).

e. Excises …
- 14 -

e. Excises amounted to Rp59,265,922,000,000.00 (fifty


nine trillion two hundred sixty five billion nine
hundred twenty two million rupiah).
f. Other taxes amounted to Rp3,841,926,000,000.00
(three trillion eight hundred forty one billion nine
hundred twenty six million rupiah).
(3) International trade taxes revenue as referred to verse (1)
letter b are estimated at Rp22,561,373,000,000.00
(twenty two trillion five hundred sixty one billion three
hundred seventy three million rupiah), consisting of:
a. Import duties amounted to Rp17,106,813,000,000.00
(seventeen trillion-one hundred six billion eight
hundred thirteen million rupiah), including import
duties borne by the Government for certain sectors
amounted to Rp2,000,000.000,000.00 (two trillion
rupiah), which in its implementation is regulated by
Regulation of Finance Minstry.
b. Export duties amounted to Rp5,454,560,000,000.00
(five trillion four hundred fifty four billion five hundred
sixty million rupiah).
(4) Details of tax revenues of the fiscal year 2010 as referred
to verse (2) and verse (3) are as stated in this verse
explanation.

4. Provisions of Article 4 verse (2), verse (4), verse (7), verse (9),
verse (10), verse (11) and verse (12) amended, between verse
(2) and verse (3) inserted 1 (one) verse, namely verse (2a),
verse (8) Removed, verse (13) fixed and an explanation verse
(13) are amended, thus Article 4 reads as follows:

Article 4
(1) Non tax revenue as referred to Article 2 verse (3) consist
of:
a. natural resources revenue;
b. Dividens from BUMN;
c. other non-tax revenue; and

d. BLU …
- 15 -

d. BLU revenues.
(2) Natural resources revenue as referred to verse (1) letter a
are estimated at Rp164,726,732,000,000.00 (one hundred
sixty four trillion seven hundred twenty six billion seven
hundred thirty two million rupiah).
(2a) Natural resources revenue referred to verse (2), including
revenue derived from oil and gas settlement by PT
Pertamina (Persero) amounting to
Rp5,000,000,000,000.00 (five trillion rupiah), which are
all used for payments to PT Pertamina (Persero) for the
use of oil and lubricants (BMP) by Indonesian National
Army (TNI).
(3) Reserved funds for the abandoned petroleum site
restoration activities by the Contractor of Cooperation
Contract (KKKS) must be placed on national banks.
(4) Dividens from BUMN as referred to verse (1) letter b are
estimated at Rp29,500,000,000,000.00 (twenty nine
trillion five hundred billion rupiah).
(5) In order to optimize revenues from dividens of BUMN in
the banking business, settlement of non performing
receivables accounts in BUMN in the banking business
conducted in accordance with Law Number 40 Year 2007
regarding Limited Company (PT) and the Law Number 19
Year 2003 regarding the State Owned Enterprises and
their implementing regulations.
(6) Further provisions on the settlement of non performing
receivables accounts in BUMN in the banking business as
referred to in verse (5) regulated by Regulation of Finance
Minister.
(7) Dividens from on BUMN as referred to verse (4) including
Dividens on National Electricity Limited (PT PLN Persero)
in fiscal year 2009 amounted to Rp4,000,000,000,000.00
(four trillion rupiah) as result of granting operating margin
amounted of 5% (five percents) to PT PLN Persero.

(8) Removed …
- 16 -

(8) Removed.
(9) Other non-tax revenues as referred to verse (1) letter c are
estimated at Rp43,462,758,949,000.00 (fourty three
trillion four hundred sixty two billion seven hundred fifty
eight million nine hundred forty nine thousand rupiah).
(10) PNBP target from Directorate General of Civil Aviation,
Ministry of Transportation in the year 2010 is estimated
Rp450,026,112,000.00 (four hundred fifty billion twenty
six million one hundred twelve thousand rupiah), based
on a spin off policy of revenue from Air Traffic Services
(ATS) of PT Angkasa Pura I and PT Angkasa Pura II to be a
Public Corporation (Perum).
(11) PNBP target from Directorate General of Post and
Telecommunication, Ministry of Communication and
Informatics in fiscal year 2010 estimated at
Rp10,255,607,931,000.00 (ten trillion two hundred fifty
five billion six hundred seven million nine hundred thirty
one thousand rupiah), some of which are obtained from
admission of usage rights fees (BHP) the frequency being
considered because of changes in regulatory/BHP
frequency policy from the frequency calculation–canal
based frequency (TRX) into a bandwith based-frequency
BHP for the implementation of mobile cellular
telecommunications.
(12) BLU revenues as referred to verse (1) letter d are
estimated at Rp9,486,877,049,000.00 (nine trillion four
hundred eighty six billion eight hundred seventy seven
million forty nine thousand rupiah).
(13) Details of non tax revenues for fiscal year 2010 as referred
to in verse (2) and verse (4), verse (9) and verse (12) are as
stated in this verse explanation.

5. Provisions of article 5 verse (2), verse (3), and verse (4) are
amended, thus Article 5 reads as follows:

Article 5 …
- 17 -

Article 5
(1) Government expenditure fiscal year 2010 consists of:
a. Central Government Expenditure; and
b. Transfer to Region.
(2) Central government expenditure budget as referred to
verse (1) letter a is estimated at
Rp781,533,546,832,000.00 (seven hundred eighty one
trillion five hundred thirty three billion five hundred forty
six million eight hundred thirty two thousand rupiah).
(3) Transfer to Region as referred to verse (1) letter b
estimated at Rp344,612,929,480,000.00 (three hundred
forty four trillion six hundred twelve billion nine hundred
twenty nine million four hundred eighty thousand
rupiah).
(4) Amount of Expenditure Budget fiscal year 2010 as
referred to verse (2) and verse (3) estimated at
Rp1,126,146,476,312,000.00 (one quadrillion one
hundred twenty six trillion one hundred forty six billion
four hundred seventy six million three hundred twelve
thousand rupiah).

6. Provisions of Article 6 verse (2), verse (3), and verse (4) and
verse (6) are amended, and verse (5) is Removed, thus Article
6 reads as follows:

Article 6
(1) Central Government Expenditure Budget as referred to in
Article 5 verse (1) letter a is grouped based on:
a. Central Government Expenditure by organization;
b. Central Government Expenditure by function; and
c. Central Government Expenditure by economic
classification.
(2) Central Government Expenditure by organization as
referred to in verse (1) letter a estimated at
Rp781,533,546,832,000.00 (seven hundred eighty one
trillion five hundred thirty three billion five hundred forty
six million eight hundred thirty two thousand rupiah).

(3) Central …
- 18 -

(3) Central Government Expenditure by function as referred


to in verse (1) letter b estimated at
Rp781,533,546,832,000.00 (seven hundred eighty one
trillion five hundred thirty three billion five hundred forty
six million eight hundred thirty two thousand rupiah).
(4) Central Government Expenditure by economic
classification as referred to in verse (1) letter c estimated
at Rp781,533,546,832,000.00 (seven hundred eighty one
trillion five hundred thirty three billion five hundred forty
six million eight hundred thirty two thousand rupiah).
(5) Removed.
(6) Amandement of Central Government Expenditure budget
fiscal year 2010, as referred to in verse (2), verse (3), and
verse (4), will be further detailed in Budget Unit per Work
Unit (Satuan Anggaran Per Satuan Kerja/SAPSK).

7. Provisions of Article 7 verse (1), verse (3), are amended, thus


Article 7 reads as follows:

Article 7
(1) Fuel Subsidies (BBM), Bio-Fuel (BBN) and 3 (three)
kilograms LPG cylinder fiscal year 2010 estimated at
Rp88,890,776,000,000.00 (eighty eight trillion eight
hundred ninety billion seven hundred seventy six million
rupiah).
(2) Fuel subsidy budget control in fiscal year 2010 is being
done by having efficiency in the cost of distribution and
business margins (alpha), and by conducting policy in
subsidized fuel consumption savings.
(3) In case of the estimated average of Indonesian crude oil
price in 1 (one) year has increased more than 10% (ten
percent) of the price assumed in APBN-P 2010, the
Government granted the authority to make adjustments in
subsidized fuel prices.

8. Provisions of article 8 verse (1), verse (2), are amended, thus


Article 8 reads as follows:

Article 8 …
- 19 -

Article 8
(1) Electricity subsidy in fiscal year 2010 estimated at
Rp55,106,300,000,000.00 (fifty five trillion one hundred
six billion three hundred million rupiah).
(2) Electricity subsidy budget control in fiscal year 2010 is
conducted through:
a. Giving margin to PT PLN (Persero) in order to fulfill
the financing requirements of PT PLN's investments is
set at 8% (eight percents) in year 2010;
b. Application of basic electricity tariff (TDL) based on
the economical price automatically for energy
consumption above 30% (thirty percent) the national
average consumption in 2009 for household
customers (R), Business (B), and public (P), with
power from 6600 VA and above;
c. Implementation of tariff policy that aims to encourage
electricity savings and special services, which so far
has been implemented, remain valid; and
d. Adjustment of basic electricity tariff (TDL) is set by
Government after obtaining approval from House of
Representatives of The Republic of Indonesia.

9. Provisions of article 9 verse (1) is amended, thus Article 9


reads as follows:

Article 9
(1) Fertilizer subsidy in fiscal year 2010 estimated at
Rp18,411,462,000,000.00 (eighteen trillion four hundred
eleven billion four hundred sixty two million rupiah),
consisting of:
a. price subsidy amounted to Rp14,750,662,000,000.00
(fourteen trillion seven hundred fifty billion six
hundred sixty two million rupiah);
b. Direct asisstance for fertilizers amounted to
Rp2,160,800,000,000.00 (two trillion one hundred
sixty billion eight hundred million rupiah);

c. Underpayment …
- 20 -

c. Underpayment of the year 2008 amounted to


Rp1,500,000,000,000.00 (one trillion five hundred
billion rupiah).
(2) Government prioritize sufficient supply of required gas for
domestic fertilizer manufacturers in order to maintain
food security, while optimizing revenue from gas sales.
(3) In order to reduce the burden of agricultural subsidies,
especially fertilizer in the future, the Government
guarantees the price of gas to meet the needs of the
domestic fertilizer manufacturer with domestic prices.
(4) Local Governments are given the authority overseeing the
distribution of subsidized fertilizer through the
mechanism of the definitive plan of group needs (RDKK).

10. Between article 9 and article 10 inserted 5 (five) articles,


namely Article 9A, 9B article, Article 9C, Article 9D, and
article 9E, thus it reads as follows:

Article 9A
Food subsidy in fiscal year 2010 estimated at
Rp13,925,123,000,000.00 (thirteen trillion nine hundred
twenty five billion one hundred twenty three million rupiah).

Article 9B
Interest subsidy on credit program in fiscal year 2010
estimated at Rp2,856,389,530,000.00 (two trillion eight
hundred fifty six billion three hundred eighty nine million five
hundred thirty thousand rupiah).

Article 9C
Tax subsidy borne by government (DTP) in fiscal year 2010
estimated at Rp18,434,407,800,778.00 (eighteen trillion four
hundred thirty four billion four hundred seven million eight
hundred thousand seven hundred and seventy eight rupiah).

Article 9D …
- 21 -

Article 9D
Seeds subsidy in fiscal year 2010 estimated at
Rp2,263,523,000,000.00 (two trillion two hundred sixty three
billion five hundred twenty three million rupiah).
Article 9E
Subsidy expenditure referred to in Article 7, Article 8, and
Article 9C can be adjusted with the needs of the realization in
the current budget year to anticipate realization deviations of
macroeconomic assumptions, and Government obligation on
the tax subsidies borne by the government, including
underpayment of tax subsidies borne by the government in the
previous years, based on the ability of state finances.

11. Between Article 14 and Article 15 inserted 1 (one) Article,


namely Article 14A, thus it reads as follows:

Article 14A

(1) As a followup of cutting or reducing the expenditure


budget ceiling and allocation of transfer to region of
budget year 2010 for the line ministries/agencies that
did not fully implement the stimulus activities in fiscal
year 2009; the maximum expenditure budget to be cut
and reduced for ministries in budget year 2010 are as
follows:

a. Ministry of Transportation amounted to


Rp11,150,862,000.00 (eleven billion one hundred
fifty million eight hundred sixty two thousand
rupiah);
b. Ministry of Man Power and Transmigration
amounted to Rp916,100,000.00 (nine hundred
sixteen million one hundred thousand rupiah).

(2) Revised DIPA on cutting spending ceiling referred to in


verse (1) conducted under conditions:

a. National…
- 22 -

a. National priority targets that were able to carry out


responsibilities and guarantee sustainability of
governance;

b. Does not reduce the budget allocation for salaries,


honorarium, allowances, operational implementation
and office maintenance, arrears payments, and
activities originating in PHLN, non-bank financing,
and PNBP.

(3) DIPA revised procedures referred to in verse (2)


conducted in accordance with the laws and regulations
and the revision of the DIPA is made no later than June
30, 2010.

(4) Budget allocation of Transfer to Region of which receive


Fiscal Stimulus 2009 through technical and funding
assistance in order to support the implementation of
regional government affairs/task is not subject to
reduction/alleviation.

12. Provisions of Article 16 verse (1) and verse (3) are amended,
thus Article 16 reads as follows:

Article 16
(1) Further details of the changes from the central
government expenditure budget are in the form:
a. expenditure budget shifting:
1) from budget department 999.08 (Other Expenditure)
to line ministry/agencies (K/L);
2) inter-organizational unit under one K/L budget;
3) inter-activities are under one program with condition
that the shifting is the result of optimization and
does not reduce the volume of output that have been
planned, and/or
4) inter-expenditures under one activity.
b. changes in the budget that comes from the surplus
realization of the above non-tax revenue target;

c. changes …
- 23 -

c. changes in foreign loans and grants (PHLN) and


domestic loans and grants (PHDN) as a result of the
carry over and accelerate the withdrawal of PHLN and
PHDN, including foreign grants/grants in the country
after the APBN Law has been established; and
d. changes in foreign loans as a result of reduction in the
allocation of foreign loans (drop loan);
are all imposed by Government.
(2) Use of expenditure budget derived from state non-tax
revenues above the limit of the APBN for higher education
which are not State Owned Legal Entity (BHMN) and BLU
set by the government.
(3) Changes in the details of central government expenditure
as referred to in verse (1) can be carried along in the same
province/district/city for the activities carried out within
the framework of assistance and joint affairs (UB) or in
one province to the activities carried out within the
decentralization framework.
(4) Changes in details of central government expenditure as
referred to in verse (1) can be carried out inter-
province/district/city for the operational activities
conducted by organizational unit in central level and by
vertical institutions in regional level.
(5) Changes referred to in verse (1), verse (2), verse (3), and
verse (4), the reported by government to the House of
Representatives in the Amandement of APBN and/or the
Central Government Financial Reports (LKPP).

13. Between Article 16 and Article 17 inserted 3 (three) verses,


namley verse 16A, verse 16B, verse 16C so it reads as follows:

Article 16A
(1) Optimization results referred to in Article 16 verse (1)
point a.3) can only be used in fiscal year 2011 for
activities and programs of the same or a new activity (new
initiative), except for things that are a priority, urgent,

emergency or …
- 24 -

emergency or that can not be postponed, which stipulated


by the government.
(2) Changes in the details of the procedure of the central
government expenditure budget, including use of
optimization, shall be further regulated by the
government.

Article 16B
Activities financed by domestic loans can be implemented in
multiyears.

Article 16C
(1) Spending allocations details K/L is completed by all
commissions in House of Representatives until the
deadline date of May 15, 2010.
(2) In terms of the details referred to in verse (1) can not be
resolved by the related Commission then Budget Board
has the right to finish it within a week after the time limit.
(3) All the details of transfers to other regions and to local
education fund stipulated by the Budget Board no later
than the date of May 15, 2010.

14. Provisions of article 17 verse (1), verse (2), and verse (3) are
amended, so that Article 17 reads as follows:

Article17
(1) Budgetary transfer to region referred to Article 5 verse (1)
letter b consists of :
a. Balanced fund;
b. Special autonomy and adjustment fund;
(2) Balanced fund as referred to verse (1) letter a is estimated
at Rp314,363,315,800,000.00 (three hundred fourteen
trillion three hundred sixty three billion three hundred
fifteen million eight hundred thousand rupiah).
(3) Special autonomy and adjustment fund as referred to
verse (1) letter b is estimated at Rp30,249,613,680,000,00

(thirty trillion…
- 25 -

(thirty trillion two hundred forty nine billion six hundred


thirteen million six hundred eighty thousand rupiah).

15. Provisions of article 18 verse (2), verse (3), verse (4), verse (5),
and verse (7) are amended, between verse (4) and verse (5)
inserted 1 (one) verse, namely verse (4a), and between verse
(5) and verse (6) inserted 6 (six) verses, namely verse (5a),
verse (5b), verse (5c), verse (5d), verse (5e), and verse (5f) so
Article 18 reads as follows:

Article 18
(1) Balanced fund as referred to Article 17 verse (1) letter a
consists of:
a. Revenue sharing fund;
b. General allocation fund; and
c. Specific allocation fund.
(2) Revenue sharing fund as referred to verse (1) letter a is
estimated at Rp89,618,446,100,000,00 (eighty nine
trillion six hundred eighteen billion four hundred fourty
six million one hundred thousand rupiah)
(3) Revenue sharing fund as referred to verse (2) includes
funds for the oil and gas resources less paid and funds
for the income tax, land and building tax, forestry and
natural resources less paid
(4) General allocation fund as referred to verse (1) letter b is
estimated at Rp.203,606,484,500,000,00 (two hundred
three trillion six hundred six billion four hundred eighty
four million five hundred thousand rupiah), including
additional DAU for teacher’s profession allowances
amounted to Rp10,994,892,500,000.00 (ten trillion nine
hundred ninety four billion eight hundred ninety two
million five hundred thousand rupiah), and DAU
allocation correction for Indramayu District amounted to
Rp 121,250,000,000.00 (one hundred twenty one billion
two hundred fifty million rupiah)
(4a) DAU allocation correction in the fiscal year of 2010 for
another districts/cities will be accounted in DAU fiscal
year 2011.

(5) Specific…
- 26 -

(5) Specific allocation fund as referred to verse (1) letter c is


estimated at Rp21,138,385,200,000.00 (twenty one
trillion one hundred thirty eight billion three hundred
eighty five million two hundred thousand rupiah),
including DAK allocation correction for Indramayu
District amounted to Rp5,002,700,000,00 (five billion two
million seven hundred thousand rupiah)
(5a) DAK allocation correction fiscal year 2010 for another
districts/ cities will be accounted in DAK fiscal year 2011.
(5b) Technical guidance of DAK implementation of education
previously must be consulted/approved by the House of
Representatives Commissioner in charge of education as
stipulated in article 15 verse (5) law Number 17 Year
2003 regarding the financial state. To ensure
effectiveness, efficiency, and accountability, the
implementation of DAK education have to use the
procurement method refers to the mechanism in
accordance with legislation and not in the form of block
grants to beneficiaries or school.
(5c) In the case of the approximate maximum DBH allocation
set in the budget year 2010 is not sufficient for
distribution demand or over exceeding realization of a
maximum limit in the fiscal year 2010, the government
distributes DBH allocation based on actual revenues in
accordance with statutory regulations based on.
(5d) In the case of remaining actual revenues that have not
been distributed due to not-yet-identified-producing
regions, Minister of Finance put the rest of the receipts
referred to earlier as a reserve fund in government
accounts.
(5e) Reserve fund as referred to verse (5c) is allocated based
on limit difference in a budget year with DBH distribution
of the first quarter until the fourth quarter fiscal year
2010.
(5f) Procedures for the management of reserve fund in
government accounts as referred to verse (5c) is regulated
by the Finance Minister Regulation.

(6) Calcuation …
- 27 -

(6) Calculation and distribution of more balanced fund would


be accordance with the provisions in the Act number 33
in 2004 on the financial balance between central and
local government.
(7) Details of balanced fund for fiscal year 2010 as referred to
verse (2), verse (3), verse (4), and verse(5) are as stated in
this verse explanation.

16. Provision of Article 20 verse (1) is amended, between verse (3)


and verse (4) inserted 1 (one) verse, namely verse (3a),
between verse (4) and verse (5) inserted 2 (two) verses, namely
verse (4a) and verse (4b), and added 5 (five) verses, namely
verse (6), verse (7), verse (8), verse (9), and verse (10), thus
Article 20 reads as follows:

Article 20
(1) Special autonomy and adjustment fund as referred to
Article 17 verse (1) letter b consists of:
a. special autonomy fund; and
b. adjustment fund, which consists of:
1. additional allowances funds of civil servants teachers
in the regions area (PNSD);
2. regional incentive fund;
3. DAK less paid in 2008;
4. fund of infrastructure facilities (DISP) less paid in
2008;
5. fiscal decentralization strengthening fund and
regional development acceleration fund (DPDF-PPD);
6. infrastructure strengthening and regional
infrastructure funds (DPIPD); and
7. education infrastructure development acceleration
funds (DPPIP).
(2) Special autonomy fund as referred to verse (1) letter a is
estimated at Rp9,099,613,680,000.00 (nine trillion ninety
nine billion six hundred thirteen million six hundred eighty
thousand rupiah).

(3) Adjustment …
- 28 -

(3) Adjustment fund as referred to verse (1) letter b is


estimated at Rp21,150,000,000,000.00 (twenty one trillion
one hundred fifty billion rupiah).
(3a) Additional allowance fund of civil servant teachers in the
regions (PNSD) as referred to in verse (1) letter b point 1 is
estimated at Rp5,800,000,000,000.00 (five trillion eight
hundred billion rupiah).
(4) Regional incentive fund as referred to verse (1) letter b point
2 is estimated at Rp1,387,800,000,000.00 (one trillion
three hundred eighty seven billion eight hundred million
rupiah).
(4a) DAK less paid in 2008 as referrred to verse (1) letter b point
3 is estimated at Rp80,200,000,000.00 (eighty billion two
hundred million rupiah).
(4b) DISP less paid in 2008 as referred to verse (1) letter b point
4 is estimated at Rp32,000,000,000.00 (thirty two billion
rupiah).
(5) Regional incentive fund as referred to verse (4) are used
within the framework of the implementation of educational
functions allocated to specific regions by taking into
account certain criterias.
(6) Fiscal decentralization strengthening funds and regional
development acceleration funds referred to verse (1) letter
b.5 is estimated at Rp7,100,000,000,000.00 (seven trillion
one hundred billion rupiah).
(7) Infrastructure strengthening and regional infrastructure
fund (DPIPD)as referred to verse (1) letter b.6 is estimated
at Rp5,500,000,000,000.00 (five trillion five hundred billion
rupiah).
(8) Education infrastructure development acceleration fund
(DPPIP) as referred to verse (1) letter b.7 is estimated at
Rp1,250,000,000,000.00 (one trillion two hundred fifty
billion rupiah).

(9) General…
- 29 -

(9) General guidelines for determining the allocation and use of


DPDF-PPD, DPIPD, and DPPIP fiscal year 2010 is stipulated
by Finance Minister Regulation.
(10) Transfer to region to provinces, districts, and cities which
its allocations determined after the local regulations on
specified Regional Revenue and Expenditure Budget (APBD)
is stipulated, so while waiting for amandements in local
regulations on Regional Revenue and Expenditure Budget
(APBD), local governments may implement programs and
activities under condition that regional chief to make
amandements on Regional Chief regulation regarding the
translation of Regional Revenue and Expenditure Budget
(APBD) by first informing the Chief of Regional House of
Representatives. In the case of the programs and activities
that will be funded from the funds transfer to the regions
allocated after the local regulations on Regional Revenue
and Expenditure Budget (APBD) amandement is stipulated,
thus the regional government is to make that writing in the
budget realization report (LRA).

17. Provisions of Article 21 verse (1) and verse (2) are amended,
and added 1 (one) verse namely verse (3), thus Article 21
reads as follows:

Article 21
(1) Education budget is amounted to
Rp225,229,295,262,400.00 (two hundred twenty five
trillion two hundred twenty nine billion two hundred
ninety five million two hundred sixty two thousand four
hundred rupiah).
(2) Percentage of budget for education amounted to 20%
(twenty point zero percent), which is the ratio of budget
allocation for education as referred to in verse (1) of the
total Government expenditure budget amounted to
Rp1,126,146,476,312,000.00 (One quadrillion one

hundred twenty …
- 30 -

hundred twenty six trillion one hundred forty six billion


four hundred seventy six million-three hundred twelve
thousand rupiah).
(3) Within the education budget allocations referred to in
verse (1) including a national education development fund
amounting to Rp1,000,000,000,000.00 (one trillion
rupiah) which the use is regulated in accordance with
prevailing regulations.

18. Provisions of Article 22 verse (1) and verse (2) are amended,
while verse (3) remains the same and explanation of verse (3)
is amended, thus Article 22 reads as follows:

Article 22
(1) Total amount of Revenue and Grants in fiscal year 2010 is
amounted to Rp992,398,789,998,000.00 (nine hundred
ninety two trillion three hundred ninety eight billion seven
hundred eighty nine million nine hundred ninety eight
thousand rupiah), as referred to in Article 2 verse (5), is
lower than total amount of Government Expenditure
Budget amounted to Rp1,126,146,476,312,000.00 (one
quadrillion one hundred twenty six trillion one hundred
forty six billion four hundred seventy six million three
hundred twelve thousand rupiah), as referred to in Article
5 verse (4), thus it causes budget deficit fiscal year 2010
amounted to Rp133,747,686,314,000.00 (one hundred
thirty three trillion seven hundred forty seven billion six
hundred eighty six million three hundred fourteen
thousand rupiah) which will be funded from budget deficit
financing.
(2) Budget Deficit Financing fiscal year 2010 as referred to in
Verse (1) is sourced from:
a. Domestic financing amounted to
Rp133,903,232,818,000.00 (one hundred thirty three
trillion nine hundred three billion two hundred thirty

two million…
- 31 -

two million eight hundred eighteen thousands rupiah);


and
b. Net foreign financing amounted negative
Rp155,546,504,000.00 (one hundred fifty five billion
five hundred forty six million five hundred four
thousand rupiah).
(3) Details of budget deficit financing fiscal year 2010 as
referred to in verse (2) is as stated in this verse
explanation.

19. Between Article 22 and Article 23 inserted 5 (five) Articles,


namely Article 22A, Article 22B, Article 22C, Article 22D,
Article 22E, thus it reads as follows:

Article 22A
(1) Government gives soft loan to National Electricity Limited
(PT PLN) (Persero).
(2) Government gives the assignment to the General Services
Agency -Government Investment Center (BLU PIP) to carry
out the lending, as referred to verse (1) through the
issuance of Presidential Regulation.
(3) The lending as referred to verse (1) is to follow the
provisions on government regulation Number 1 Year 2008
on Government Investment.

Article 22B
(1) State Property (BMN) derived from DIK/DIP/DIPA line
ministry/agencies used and/or operated by the State
Owned Enterprises (BUMN) and were listed on the balance
sheet of State Owned Enterprises as a Not Defined Status
Governmental Aid (BPYBDS) or similar accounts, set to be
State Capital on these State Owned Enterprises

(2) DIPA Approval of line ministry/agencies fiscal year 2010


for procurement of BMN to be used and/or operated by

the BUMN...
- 32 -

the BUMN, as well as a consent to the transfer of BMN as


the government capital participation in BUMN that
use/operate the BMN

(3) Further provisions concerning the implementation of the


government capital participation in State Owned
enterprises (BUMN) as referred to in verse (1) stipulated
by the Government.

Article 22C
Further changes details of the budget deficit financing like
changes in maximum limit of subsidiary loan agreement due
to issuance and acceleration of withdrawal of subsidiary loan
agreement, stipulated by the Government and reported in the
central government financial report (LKPP).

Article 22D
(1) In the case of the sustainability of the implementation of
the activities that where the funds are sourced from
subsidiary loan agreement and have been allocated in the
budget execution index list (DIPA) fiscal year 2010, the
rest of the budget that is not absorbed until the end of
fiscal year 2010 to be launched in fiscal year 2011
(2) Issuance proposal referred to in verse (1) submitted to the
Minister of Finance in the form of draft DIPA-Issuance
(DIPA-L) at the latest on January 31, 2011
(3) Further implementation regulation of DIPA-L as referred
to in verse (1) and verse (2), stipulated by the government.

Article 22E
(1) Cumulated budget surplus (SAL) is used to cover the
budget deficit fiscal year 2010 amounted to
Rp39,347,946,818,000.00 (thirty nine trillion three
hundred forty seven billion nine hundred forty six million
eight hundred eighteen thousand rupiah)
(2) State Audit Agency conducts a special audit of the use of
SAL as referred to in verse (1) and SAL/SILPA from year
to year.

20. Provision…
- 33 -

20. Provision of Article 25 verse (1) is amended, thus Article 25


reads as follows:

Article 25
(1) Minister of Finance is authorized to settle receivables
accounts of Government agencies that
administered/managed by a committee affairs of state
receivables/Directorate General of State Assets, especially
receivables of micro, small and medium enterprises
(M/SMEs), and receivables in the form of credit for
ownership of simple house/very simple house (KPR
RS/RSS), including but not limited to the restructuring
and haircut of principal receivables up to 100% (hundred
percent).
(2) Further provisions on procedures for settlement referred
to in verse (1) regulated by the Regulation of Finance
Minister.

21. Provisions of Article 26 verse (1) and verse (2) are amended,
thus Article 26 reads as follows:

Article 26
(1) In terms of actual Revenue are not sufficient to meet the
needs of state spending at a given time, shortcomings can
be met from Surplus Balance Budget funds (SAL),
Issuance of Government Securities (SBN) or adjustment of
state spending.
(2) After the fulfillment of needs through debt financing for
the current budget year, the Government may issue
Government Securities (SBN) to finance the
implementation of APBN for next fiscal year (pre-
financing).
(3) Government may buy the SBN for market stabilization
purposes with due regard to the amount of net SBN

issuance needs …
- 34 -

issuance needs to meet the financing needs which has


been stipulated.
(4) In the event that there is an alternative source of debt
financing that is more profitable, the government may
make changes to the composition of debt financing
instruments without causing a change in total cash debt
financing.
(5) In the case that the financial market conditions
deteriorate, causing increased cost of debt, particulary in
yield Government Securities significantly, the government
may do good standby loan withdrawal of bilateral and
multilateral creditors.

(6) Implementation of the provisions referred to in verse (1) to


verse (5) specified in the APBN Amendment of 2010
and/or the Central Government Financial Report (LKPP)
in 2010.

Article II
This law shall come into force on the date of promulgation.
So that everyone knows it, order the enactment of this law by
publishing it in the State Gazette of the Republic of Indonesia.

Legalized in Jakarta
On May 25, 2010
THE PRESIDENT OF THE REPUBLIC OF INDONESIA

DR. H. SUSILO BAMBANG YUDHOYONO

Enacted in…
- 35 -

Enacted in Jakarta
On May 25, 2010
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

PATRIALIS AKBAR

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 69 OF 2010


ELUCIDATION
OF
LAW OF REPUBLIC OF INDONESIA
NUMBER 2 YEAR 2010
ON
AMENDMENTS OF LAW NUMBER 47 YEAR 2009
ON THE INDONESIAN BUDGET (APBN)
YEAR 2010

I. GENERAL
APBN fiscal year 2010 as stipulated in law Number 47 Year 2009 is carried out
based on the provisions contained in the Law Number 17 Year 2003 regarding
state finances, based on government work plan (RKP) in 2010, and the
macroeconomic framework and key points of policy fiscal year 2010. In
addition, the APBN fiscal year 2010 also consider the economic, social, and
political conditions which evolved in recent months, as well as various policy
measures are expected to be completed in year 2010.
Since the enactment of Law Number 47 Year 2009 regarding APBN fiscal year
2010, there have been changes and developments in internal and external
factors. Measurement that serves as the basis for calculating the APBN 2010
budget are as follows: economic growth is estimated at approximately 5.5% (five
point five percent), the rupiah exchange rate is expected to be in the range of
Rp10,000 (ten thousand rupiah) per one US dollar, estimated inflation rate of
5.0% (five point zero percent), the average interest rate of SBI (three) months is
expected to reach 6.5% (six point five percent), the average of Indonesian Crude
Oil Price (ICP) in the International market in the 2010 is expected to be in the
range of US$ 65.0 (sixty-five point zero U.S. dollars) per barrel, and the lifting of
crude oil estimated at 965 (nine hundred sixty five) thousand barrels per day.
By looking at and considering the progress of macro-economic indicators
during 2009, particularly since mid-2009 and the first month of 2010, the
Government deems it necessary to update the basic macroeconomic
assumptions used as the basis for preparing the 2010 APBN budget. Amidst
the global economic situation that has not fully recovered from the financial

and economic …
-2-

and economic crisis, the Indonesian economy year 2009 grew 4.5% (four point
five percent). The Indonesian economy in 2010 is estimated to be better than in
2009, so that economic growth in 2010 is estimated at 5.8% (five point eight
percent) higher than the assumptions in the APBN fiscal year 2010.
The rate of inflation in the year 2010 is expected to reach 5.3% (five point three
percent), higher than the inflation rate set out in Budget 2010. Increase in the
inflation rate was mainly affected by rising international prices for some
commodities and demand along with increased domestic economic activity.
Meanwhile, the rupiah in the year 2010 is estimated at Rp9,200.00 per one U.S
dollar, stronger than the assumption in the APBN fiscal year 2010 budget. This
reinforcement is encouraged by reincreasing capital inflows, improved economic
performance and the presence of positive sentiment in global and domestic
market in recent months. The strengthening rupiah also influenced by the
increase of foreign exchange reserves in line with the support of the cooperation
among central banks through Bilateral Currency Swap Arrangement (BCSA). To
continue to promote the performance of the real sector, interest rate of SBI-3
months in the year 2010 is maintained at the level of 6.5% (six point five
percent) or the same assumptions in the APBN fiscal year 2010.
Then, international oil prices in early 2010 has increased along with increasing
world demand for crude oil. This also occurs in ICP, which tends to increase,
when compared with the average price during 2009. This development is
expected to continue in the year 2010 so that the assumption of an average
price of Indonesian crude oil during 2010 is estimated to reach U.S.$80.0
(eighty point zero US Dollar) per barrel.
Changes in the magnitudes of basic macroeconomic assumptions, which is in
turn also affect the magnitudes of APBN, will be followed by changes in fiscal
policy in an effort to nourish the APBN by controlling the budget deficit at a
safe level.
Tax revenue in the year 2010 is projected to amount to Rp743,325.9 billion,
with a tax ratio of 11.9 percent. Figures 11.9 percent tax ratio is the percentage
ratio of tax revenue to nominal GDP of Indonesia. In this case, the tax revenue
covers only the central tax revenue consists of revenue from income tax (PPh),
VAT (PPN) and sales tax on luxury goods (PPnBM), land and building tax (PBB),
duties on land and building transfer (BPHTB), other taxes, excises, import
duties, and export duties. The local tax revenue and natural resource revenues
(SDA) are not counted as tax revenue as those are used in several other
countries in calculating the tax ratio. If it incorporates local tax revenues and
natural resources revenues in the calculation of tax ratio, the figures of
Indonesian possible tax ratio will be much higher than 11.9 percent.

In accordance …
-3-

In accordance with the provisions of Article 27 of Law Number 17 Year 2003


regarding Public Finance juncto Article 27 of law Number 47 Year 2009 on The
Indonesian Budget Fiscal Year 2010, amendments of The Indonesian Budget
fiscal year 2010 needs to be regulated by law.

II. ARTICLE BY ARTICLE


Article I
Number 1
Article 1
Self explanatory.
Number 2
Article 2
Verse (1)
Self explanatory.
Verse (2)
Originally planned tax revenues
Rp742,738,045,000,000.00 (seven hundred forty two
trillion seven hundred thirty eight billion forty five
million rupiah).
Verse (3)
Originally planned non-tax revenues
Rp205,411,304,114,000.00 (two hundred five trillion
four hundred eleven billion three hundred four million
one hundred fourteen thousand rupiah).
Verse (4)
Originally planned grants Rp1,506,766,000,000.00 (one
trillion five hundred six billion seven hundred sixty six
million rupiah).
Verse (5)
Originally planned total Budget fiscal year 2010
Rp949,656,115,114,000.00 (nine hundred forty nine
trillion six hundred fifty six billion one hundred fifteen
million one hundred fourteen thousand rupiah).

Number 3…
-4-

Number 3
Article 3
Verse (1)
Self explanatory.
Verse (2)
Originally planned domestic tax revenue
Rp715,534,543,000,000.00 (seven hundred fifteen
trillion five hundred thirty four billion five hundred forty
three million rupiah).
DTP PPh ex the National Bank Restructuring Agency
(IBRA) and Televisi Republik Indonesia (TVRI)
Rp495,330,195,959.00 (four hundred ninety five billion
three hundred thirty million one hundred ninety five
thousand nine hundred fifty nine rupiah) consist of:
1. Tax receivables of ex-National Bank Restructuring
Agency (IBRA) amounting to Rp382,790,746,915.00
(three hundred eighty two billion seven hundred
ninety million seven hundred forty six thousand nine
hundred fifteen rupiah).
2. Tax receivables of ex-Televisi Republik Indonesia
(TVRI) amounting to Rp112,539,449,044.00 (one
hundred twelve billion five hundred thirty nine
million four hundred forty nine thousand forty four
rupiah).
DTP PPN for murabahah transaction on sharia banking
amounting to Rp328,454,138,718.00 (three hundred
twenty eight billion four hundred fifty four million one
hundred thirty eight thousand seven hundred eighteen
rupiah) is given to:
1. Muamalat Bank amounted to Rp76,414,071,500.00
(seventy six billion four hundred fourteen million
seventy one thousand five hundred rupiah),
2. Bank Negara Indonesia amounted to
Rp150,083,563,896.00 (one hundred fifty billion
eighty three million five hundred sixty three
thousand eight hundred ninety six rupiah),

3. Bank…
-5-

3. Bank Syariah Mandiri amounted to


Rp25,542,431,822.00 (twenty five billion five
hundred forty two million four hundred thirty one
thousand eight hundred twenty two rupiah), and
Bank Syariah Mandiri amounted to Rp
25,542,431,822.00 (twenty five billion five hundred
forty two million four hundred thirty one thousand
eight hundred twenty two rupiah), and
4. Bank Bukopin amounted to Rp76,414,071,500.00
(seventy six billion four hundred fourteen million
seventy one thousand five hundred rupiah).
DTP PPN for tax receivables of ex-National Bank
Restructuring Agency (BPPN), Televisi Republik
Indonesia (TVRI) and PT Kereta Api Indonesia (KAI)
amounted to Rp1,292,028,466,101.00 (one trillion two
hundred ninety two billion twenty eight million four
hundred sixty six thousand one hundred one rupiah) is
given to:
1. Tax receivables of ex-National Bank Restructuring
Agency (BPPN) amounted to Rp1,086,026,613,632.00
(one trillion eighty six billion twenty six million six
hundred thirteen thousand six hundred thirty two
rupiah),
2. Tax receivables of ex-Televisi Republik Indonesia
(TVRI) amounted to Rp82,595,602,885.00 (eighty two
billion five hundred ninety five million six hundred
two thousand eight hundred eighty five rupiah),and
3. Tax receivables of ex-PT Kereta Api Indonesia (KAI)
amounted to Rp123,406,249,584.00 (one hundred
twenty three billion four hundred six million two
hundred fourty nine thousand five hundred eighty
four rupiah)

Verse (3)…
-6-

Verse (3)
Originally planned international trade tax revenue
Rp27,203,502,000,000.00 (twenty seven trillion two
hundred three billion five hundred two million rupiah).

Verse (4)
Originally planned tax revenue
Rp742,738,045,000,000.00 (seven hundred forty two
trillion seven hundred thirty eight billion forty five
million rupiah).
Details of tax revenue fiscal year 2010 are as follow:

(in Rupiah)
Original After
411 Domestic tax revenue 715,534,543,000,000.00 720,764,533.000,000.00
4111 Income tax (PPh) 350,957,982,000,000.00 362,219,020,000,000.00
41111 Oil and gas income tax 47,023,410,000,000.00 55,382,380,000,000.00
411111 Oil income tax 18,138,110,000,000.00 22,557,780,000,000.00
411112 Gas income tax 28,885,300,000,000.00 32,824,600,000,000.00
41112 Non Oil and gas income tax 303,934,572,000,000.00 306,836,640,000,000.00
411121 Income tax Article 21 61,573,357,000,000.00 61,573,360,000,000.00
411122 Income tax Article 22 5,893,812,000,000.00 5,433,280,000,000.00
411123 Income tax Article 22
on import 29,834,213,000,000.00 23,913,640,000,000.00
411124 Income tax Article 23 21,517,191,000,000.00 19,961,450,000,000.00
411125 Personal income tax
Article 25/29 4,295,864,000,000.00 4,295,860,000,000.00
411126 Corporate income tax
Article 25/29 132,383,494,000,000.00 126,655,400,000,000.00
411127 Income tax Article 26 17,715,756,000,000.00 22,865,390,000,000.00
411128 Final income tax 29,957,162,000,000.00 42,098,690,000,000.00
41113 Intenational fiscal income tax 763,723,000,000.00 39,570,000,000.00
411131 International fiscal
income tax 763,723,000,000.00 39,570,000,000.00
4112 Value added tax and sales tax
on luxury goods 269,537,049,000,000.00 262,962,992,000,000.00
4113 Land and building tax 26,506,421,000,000.00 25,319,148,000,000.00
4114 Duties on land and building transfer
Revenue 7,392,899,000,000.00 7,155,525,000,000.00
4115 Excises 57,289,169,000,000.00 59,265,922,000,000.00
41151 Excises 57,289,169,000,000.00 59,265,922,000,000.00

411511 Excises …
-7-

411511 Excises from


tobbaco production 55,926,553,000,000.00 55,865,922,000,000.00
411512 Excises from
ethyl alcohol 520,196,000,000.00 419,237,000,000.00
411513 Excises from ethyl
alcohol beverage contained 842,420,000,000.00 2,980,763,000,000.00
4116 Other Taxes 3,851,023,000,000.00 3,841,926,000,000.00
412 International Trade Taxes 27,203,502,000,000.00 22,561,373,000,000.00
4121 Import duties 19,569,865,000,000.00 17,106,813,000,000.00
4122 Export duties 7,633,637,000,000.00 5,454,560,000,000.00

Number 4
Article 4
Verse (1)
Self explanatory.
Verse (2)
Originally planned natural resources revenue
Rp132,030,206,894,000.00 (one hundred thirty two
trillion thirty billion two hundred six million eight
hundred ninety four thousand rupiah).
Verse (2a)
Self explanatory.
Verse (3)
Self explanatory.
Verse (4)
Originally planned dividens from BUMN
Rp24,000,000,000,000.00 (twenty four trillion rupiah).

Verse (5)
In the wait of pending legislation amendment Number 49
Prp. Year 1960 regarding committee of State Receivables
Affairs, and in order to accelerate the settlement of
receivables in the troubled state-owned enterprises
(BUMN) in banking, claims processing can be done

through the …
-8-

through the management mechanisms under the


provisions of legislation in the field of limited liability.
Related to the granting of authority to the RUPS, the
settlement of unsettled receivables in the State Owned
Enterprises (BUMN) in the banking business is based on
the provisions of legislation in the field of state-owned
enterprises.
Verse (6)
Self explanatory.
Verse (7)
Provision of margin to PT PLN (Limited) for fiscal year
2009 set at 5% (five percent).
Verse (8)
Removed.
Verse (9)
Originally planned other non-tax revenues
Rp39,894,220,171,000.00 (thirty nine trillion eight
hundred ninety four billion two hundred twenty million
one hundred seventy one thousand rupiah).
Verse (10)
Originally planned PNBP target of Directorate General of
Aviation, Ministry of Transportation
Rp450,026,111,697.00 (four hundred fifty billion twenty
six million one hundred eleven thousand six hundred
ninety seven rupiah).
Verse (11)
Originally planned PNBP target of Directorate General
Post and Telecommunication Ministry of Communication
and Informatics Rp9,032,607,931,050.00 (nine trillion
thirty two billion six hundred seven million nine
hundred thirty one thousand fifty rupiah).

Verse (12) …
-9-

Verse (12)
Originally planned BLU Revenues
Rp9,486,877,049,000.00 (nine trillion four hundred
eighty six billion eight hundred seventy seven million
forty nine rupiah).
Verse (13)
Originally planned non-tax revenue
Rp205,411,304,114,000.00 (two hundred five trillion
four hundred eleven billion three hundred four million
one hundred fourteen thousand rupiah.
Details of Non Tax Revenue fiscal year 2010 are as
follow:

(in Rupiah)

Type of Revenues Original After

421 Natural resources revenue 132,030,206,894,000.00 164,726,732,000,000.00


4211 Oil revenue 89,226,510,000,000.00 112,515,090,000,000.00
42111 Oil revenue 89,226,510,000,000.00 112,515,090,000,000.00

4212 Gas revenue 31,303,240,000,000.00 39,204,780,000,000.00


42121 Gas revenue 31,303,240,000,000.00 39,204,780,000,000.00

4213 General mining revenue 8,231,620,894,000.00 9,738,026,000,000.00


421311 Land rent revenue 117,583,611,000.00 155,317,000,000.00
421312 Royalty revenue 8,114,037,283,000.00 9,582,509,000,000.00

4214 Forestry revenue 2,874,416,000,000.00 2,874,416,000,000.00


42141 Reforestery fund revenue 1,631,650,000,000.00 1,631,650,000,000.00
42142 Forest provision revenue 1,123,025,000,000.00 1,123,025,000,000.00
42143 IIUPH revenue 19,741,000,000.00 19,741,000,000.00
421431 Industrial plants
IIUPH revenue 741,000,000.00 741,000,000.00
421434 Natural forest
IIUPH revenue 19,000,000,000.00 19,000,000,000.00
42144 Forest area use revenue 100,000,000,000.00 100,000,000,000.00
421441 Revenue from forest area
use for development interest
beyond forestry activity 100,000,000,000.00 100,000,000,000.00

4215 Fishery…
- 10 -

4215 Fishery revenue 150,000,000,000.00 150,000,000,000.00


421511 Fishery revenue 150,000,000,000.00 150,000,000,000.00

4216 Geothermal mining revenue 244,420,000,000.00 244,420,000,000.00


421611 Geothermal mining revenue 244,420,000,000.00 244,420,000,000.00

422 Dividens from BUMN 24,000,000,000,000.00 29,500,000,000,000.00


4221 Dividens from BUMN 24,000,000,000,000.00 29,500,000,000,000.00

423 Other non-tax Government revenues 39,894,220,171,000.00 43,462,758,949,000.00


4231 Sales and rental revenue 13,949,497,483,000.00 13,628,121,128,000.00
42311 Sales revenue from Production
/confiscated proceeds 6,971,514,760,000.00 5,572,998,385,000.00
423111 Sales revenue from
agricultural Forestry
and plantation product 4,789,531,000.00 4,789,531,000.00
423112 Sales revenue from animal
farming and fishery product 19,301,289,000.00 19,301,289,000.00
423113 Sales revenue from
mining product 6,861,420,375,000.00 5,462,904,000,000.00
423114 Sales revenue from confiscated
item and bequethad 22,620,558,000.00 22,620,558,000.00
423115 Sales of medicines/drugs,
and other pharmacies
product revenue 12,428,725,000.00 12,428,725,000.00
423116 Sales revenue from
information,publication,
film, survey,mapping and
other printed production 47,330,848,000.00 47,330,848,000.00
423117 Sales revenue from
auction documents 422,755,000.00 422,755,000.00
423119 Other sales revenue 3,200,679,000.00 3,200,679,000.00

42312 Asset sales revenue 44,195,477,000.00 44,195,477,000.00


423121 Sales revenue from Houses,
buildings, offices and land 323,813,000.00 323,813,000.00
423122 Sales revenue from vehicle 1,288,763,000.00 1,288,763,000.00
423123 Sales revenue from leasing 40,628,701,000.00 40,628,701,000.00
423124 Other sales revenue from surplus/
damaged/removed assets 1,954,200,000.00 1,954,200,000.00

42313 Sales revenue from oil


and gas upstream 6,840,930,000,000.00 7,918,070,000,000.00

423132 Revenue…
- 11 -

423132 Revenue from Domestic


Market Obligation (DMO)
on oil and gas 6,840,930,000,000.00 7,918,070,000,000.00

42314 Rental Revenue 92,857,246,000.00 92,857,246,000.00


423141 rental revenue from public
houses/official houses 33,919,110,000.00 33,919,110,000.00
423142 rental revenue from building,
offices, and warehouse 44,457,438,000.00 44,457,438,000.00
423143 Rental revenue from
tangible assets 4,385,814,000.00 4,385,814,000.00
423149 Rental revenue from
intangible assets 10,094,884,000.00 10,094,904,000.00

4232 Service Revenue 19,501,461,817,000.00 20,719,691,836,000.00


42321 Service I Revenue 13,303,063,042,000.00 14,526,063,042,000.00
423111 Revenue from Hospital
and other 75,603,726,000.00 75,603,726,000.00
423212 Revenue from tourism parks/
museums and natural tourism
business levies (DUDA) 14,431,240,000.00 14,431,240,000.00
423213 Revenue from notification reference
letter, visa, passport, driving license
(SIM),vehicle registration
(STNK),and BPKB 1,281,211,064,000.00 1,281,211,064,000.00
423214 Revenue from rights
and licenses 8,636,457,549,000.00 9,846,457,549,000.00
423215 Revenue from censorship,
quarantined,
supervision/inspection 90,661,422,000.00 90,661,422,000.00
423216 Revenue from manpower
service, jobs,information,
training,technology, BPN
income, and DJBC income
(work service from excises) 2,400,098,424,000.00 2,413,098,424,000.00
423217 Service revenue from Religius
affairs Officers 80,365,500,000.00 80,365,500,000.00
423218 Service revenue from Airport,
port, and navigation 724,234,117,000.00 724,234,117,000.00

42322 Service II Revenue 780,122,266,000.00 775,352,285,000.00


423221 Service revenue from
financial Institution
(current account service) 76,130,052,000.00 76,130,052,000.00

423222 telecommunication…
- 12 -

423222 Telecommunication service


revenue 580,963,233,000.00 576,193,252,000.00

423225 Revenue from tax invoice


costs through warrants 4,026,275,000.00 4,026,275,000.00
423226 Revenue from citizenship fees 3,500,000,000.00 3,500,000,000.00

423227 Revenue from Auction


incentives 44,047,706,000.00 44,047,706,000.00
423228 Arevenue from debt and
auction management 67,705,000,000.00 67,705,000,000.00
423229 Revenue from Doctor and
Dentist registration 3,750,000,000.00 3,750,000,000.00

42323 International Service Revenue 399,007,610,000.00 399,007,610,000.00


423231 Revenue from travel licenses
distribution of the
Republic of Indonesia 103,245,960,000.00 103,245,960,000.00
423232 Revenue from Consular
document Management
service 289,750,400,000.00 289,750,400,000.00
423239 Other routine foreign revenue 6,011,250,000.00 6,011,250,000.00

42324 Banking Service Revenue 770,000.00 770,000.00


423241 Banking service revenue 770,000.00 770,000.00

42325 Revenue from Treasury Single


Account Goverment money
and/or placement 3,008,103,524,000.00 3,008,103,524,000.00
423251 Revenue SP2D Issuance in
the framework of TSA 8,103,524,000.00 8,103,524,000.00
423252 Revenue from Government
Money Placement in Public Banks - 1,110,000,000,000.00
423253 Revenue from Treasury National
polling Implementation - 60,000,000,000.00
423254 Revenue from State
money investment at
Bank of Indonesia 3,000,000,000,000.00 1,830,000,000,000.00

42326 Police service revenue 1,988,623,375,000.00 1,988,623,375,000.00


423261 driver's license (SIM)
revenue 754,875,000,000.00 754,875,000,000.00
423262 Revenue vehicle
registration card (STNK) 425,000,000,000.00 425,000,000,000.00
423263 Revenue vehicle
trial card (STCK) 367,500,000.00 367,500,000.00

423264 Revenue…
- 13 -

423264 Revenue of motor


vehicle owner book (BPKB) 567,700,000,000.00 567,700,000,000.00
423265 Revenue of vehicle
identification number (TNKB) 214,000,000,000.00 214,000,000,000.00
423266 Driver's clinical test
(klipeng) revenue 25,000,000,000.00 25,000,000,000.00
423267 revenue of grant permit
of firearm 1,680,875,000.00 1,680,875,000.00

42329 Other service Revenue 22,541,230,000.00 22,541,230,000.00


423291 Other service revenue 22,541,230,000.00 22,541,230,000.00

4233 Interest revenue 1,674,741,000,000.00 3,174,741,000,000.00


42331 Interest revenue 1,674,741,000,000.00 3,174,741,000,000.00
423313 Interest revenue from
receivables and subsidiary
loan 1,674,740,000,000.00 3,174,740,000,000.00
423319 Other interest revenue 1,000,000.00 1,000,000.00

4234 Revenue from attorney and court system 27,645,342,000.00 27,645,342,000.00


42341 Revenue from attorney and
court system 27,645,342,000.00 27,645,342,000.00
423411 Revenue from
signature legalization 450,000,000.00 450,000,000.00
423412 Revenue from private letter
ratification 150,000,000.00 150,000,000.00
423413 Revenue from wage and
incentive and court officials 150,000,000.00 150,000,000.00
423414 Revenue from fine/traffic
tickets and so on 19,012,000,000.00 19,012,000,000.00
423415 Revenue from case incentives 7,635,842,000.00 7,635,842,000.00
423419 other Revenue of attorney
and court 247,500,000.00 247,500,000.00

4235 Educational Revenue 4,150,842,462,000.00 4,150,842,462,000.00


42351 Educational Revenue 4,150,842,462,000.00 4,150,842,462,000.00
423511 education fee revenue 3,292,090,864,000.00 3,292,090,864,000.00
423512 Revenue of admission
examination fee, promotion
and education end 79,682,052, 000.00 79,682,052, 000.00
423513 Revenue of examination fee
to conduct practice 32,712,544,000.00 32,712,544,000.00
423519 Other educational revenue 746,357,002,000.00 746,357,002,000.00

4236 Revenue from gratification and corruption


confiscated money 49,020,000,000.00 49,020,000,000.00

42361 Revenue…
- 14 -

42361 Revenue from gratification


and corruption confiscated money 49,020,000,000.00 49,020,000,000.00
423611 Revenue of corruption
confiscated generates money
by the courts 8,224,800,000.00 8,224,800,000.00
423612 Revenue of gratification that
has been stipulated by the
KPK to Goverment’s property 2,000,000,000.00 2,000,000,000.00
423614 Revenue from corruption
criminal act repayment
regulated by the courts 38,795,200,000.00 38,795,200,000.00

4237 Dues and Fines Revenue 526,796,886,000.00 526,796,886,000.00


42371 Revenue of business Entity’s
contribution 473,300,830,000.00 473,300,830,000.00
423711 Revenue of business
entity’s from the activity
fuel (BBM) provision and
distribution activity 345,385,414,000.00 345,385,414,000.00
423712 Revenue of business
entity’s contribution from
gas transportation 87,915,416,000.00 87,915,416,000.00
423713 Business Entity’s
contribution in the field
of capital market 40,000,000,000.00 40,000,000,000.00
42372 Revenue from the forest protection
Fund 16,638,431,000.00 16,638,431,000.00
423721 Revenue from the forest
protection fund 16,638,431,000.00 16,638,431,000.00
42373 Revenue from the forest protection
and natural conservation 34,524,511,000.00 34,524,511,000.00
423731 Revenue from catching/
taking/transporting wild
animal/taking/transporting
natural plants dead or alive 7,150,000,000.00 7,150,000,000.00
423732 Natural tourism exploitation
permit fee (PIPPA) 1,056,374,000.00 1,056,374,000.00
423735 Natural tourism attraction
entrance fee 25,680,137,000.00 25,680,137,000.00
423736 Natural tourism exploitation
business fee (IHUPA) 638,000,000.00 638,000,000.00
42375 Fine Revenue 2,333,114,000.00 2,333,114,000.00
423752 Revenue from fine
of government completion delay 2,333,114,000.00 2,333,114,000.00

4239 Other Revenues 14,215,181,000.00 1,185,900,295,000.00

42391 Revenue…
- 15 -

42391 Revenue of expenditure change of


fiscal year (TAYL) 8,355,130,000.00 1,180,040,244,000.00
423911 Central personnel expenditure
change of previous fiscal year 2,414,521,000.00 2,414,521,000.00

423912 Refund of pension expenditure


from previous fiscal year 6,167,000.00 6,167,000.00
423913 Other pure Rupiah expenditure
change of previous fiscal year 3,664,416,000.00 3,664,416,000.00
423914 Other international loan
expenditure change of previous
fiscal year 3,000,000.00 3,000,000.00
423915 Other grant expenditure change
of previous fiscal year 2,000,000.00 2,000,000.00
423919 Other expenditure change
of previous fiscal year 2,265,026,000.00 1,173,950,140,000.00

42392 Revenue from debt amortization 2,917,202,000.00 2,917,202,000.00


423921 Revenue from non treasure
debt amortization 45,590,000.00 45,590,000.00
423922 Revenue from full payment of
compensation for state losses
suffered by the state
(including TP/TGR) 2,871,612,000.00 2,871,612,000.00

42399 Other Revenues 2,942,849,000.00 2,942,849,000.00


423991 Revenue from salary
down payment 1,630,133,000.00 1,630,133,000.00
423999 Other budget revenue 1,312,716,000.00 1,312,716,000.00

424 Public Service Agency Revenue (BLU) 9,486,877,049,000,00 9,486,877,049,000.00


4241 Revenue from general service 8,734,592,860,000.00 8,734,592,860,000.00
42411 Revenue of Goods
and service provision to the public 8,215,786,529,000.00 8,215,786,529,000.00
424111 Revenue of hospital service 3,613,150,998,000.00 3,613,150,998,000.00
424112 Revenue of education
service 2,932,996,003,000.00 2,932,996,003,000.00
424113 Revenue of service of
personel, employment,
information, training and
technology 45,404,497,000.00 45,404,497,000.00
424114 Revenue of printing service 2,845,790,000.00 2,845,790,000.00
424116 Revenue of telecommunication
business service 1,433,103,837,000.00 1,433,103,837,000.00
424117 Revenue of marketing service 3,500,000,000.00 3,500,000,000.00
424119 other revenue of goods and
service provision 184,785,404,000,00 184,785,404,000.00

42412 Revenue…
- 16 -

42412 Revenue from management of


certain territory/area 158,482,305,000.00 158,482,305,000.00
424123 Revenue from the management
of Government ownes public
facility 27,600,000.00 27,600,000.00
424129 Revenue from Management of
other area 158,454,705,000.00 158,454,705,000.00

42413 Special fund management


for the public 360,324,026,000.00 360,324,026,000.00
424133 Revenue from Venture
capital program 3,437,496,000.00 3,437,496,000.00
424134 Revenue from Sectoral
revolving fund program 47,030,126,000.00 47,030,126,000.00
424135 Revenue from Shariah
revolving fund program 2,501,353,000.00 2,501,353,000.00
424136 Revenue from Investment 304,942,751,000.00 304,942,751,000.00
424139 Other revenue from
management of other special
fund 2,412,300,000.00 2,412,300,000.00

4242 Revenue from grant of Public Service Agency 102,868,085,000.00 102,868,085,000.00


42421 Revenue from binding grant 101,768,085,000.00 101,768,085,000.00
424211 Revenue from binding
individual domestic grant 351,750,000.00 351,750,000.00
424212 Revenue from binding
institution/business entity
domestic grant 19,296,335,000.00 19,296,335,000.00
424213 Revenue from binding
regional government
domestic grant 4,000,000,000.00 4,000,000,000.00
424216 Revenue from binding
foreign country grant 78,120,000,000.00 78,120,000,000.00

42422 Revenue from non binding grant 1,100,000,000.00 1,100,000,000.00


424221 Revenue from non binding
individual domestic grant 75,000,000.00 75,000,000.00
424229 Revenue from other non
binding grant 1,025,000,000.00 1,025,000,000.00

4243 Revenue from cooperation


Proceed of Service Agency (BLU) 520,282,927,000.00 520,282,927,000.00
42431 Revenue from cooperation
Proceed of Service Agency (BLU) 520,282,927,000.00 520,282,927,000.00
424311 Revenue from Individual
cooperation proceeds 4,782,600,000.00 4,782,600,000.00

424312 Institution…
- 17 -

424312 Institution/business entities


cooperation revenue 513,000,327,000.00 513,000,327,000.00
424313 Revenue from regional
government proceed with
cooperation 2,500,000,000.00 2,500,000,000.00

4249 Other revenue from Public Service


Agency (BLU) 129,133,177,000.00 129,133,177,000.00
42491 Other revenue from Public Service
Agency (BLU) 129,133,177,000.00 129,133,177,000.00
424911 Revenue from BLU
banking service 129,133,177,000.00 129,133,177,000.00

Number 5
Article 5
Verse (1)
Self explanatory.
Verse (2)
Central Government Expenditure budget estimated at
Rp781,533,546,832,000.00 (seven hundred eighty one
trillion five hundred thirty three billion five hundred
forty six million eight hundred thirty two thousand
rupiah), including Banking comission on Japan’s grants
amounted to Rp 1,000,000,000.00 (one billion rupiah) in
payment obligations/debt expenditure account, and
subsidiary loan agreement and/or foreign grants which
are granted to the regions, covering:
1. Mass Rapid Transit (MRT) project amounted to
Rp34,386,000,000.00 (thirty four billion three
hundred eighty six million rupiah);
2. Local basic education capacity program (L-BEC)
amounted to Rp80,080,000,000.00 (eighty billion
eighty million rupiah);
3. Drinking water grant program amounted to
Rp106,150,000,000.00 (one hundred six billion one
hundred fifty million rupiah);
4. Centralised Waste water grant program amounted to
Rp10,000,000,000.00 (ten billion rupiah);

5. Water…
- 18 -

5. Water and sanitation program-sub program D


(WASAP-D) amounted to Rp12,602,000,000.00
(twelve billion six hundred two million rupiah).

Originally planned central government expenditure


budget Rp725,243,010,910,000.00 (seven hundred
twenty five trillion two hundred forty three billion ten
million nine hundred and ten thousand rupiah).
Verse (3)
Originally planned transfer to region
Rp322,423,032,080,000.00 (three hundred twenty two
trillion four hundred twenty three billion thirty two
million eighty thousand rupiah).
Verse (4)
Originally planned total amount of Government
Expenditure Budget fiscal year 2010 at
Rp1,047,666,042,990,000.00 (One quadrillion forty
seven trillion six hundred sixty six billion forty two
million nine hundred ninety thousand rupiah).
Number 6
Article 6
Verse (1)
Self explanatory.
Verse (2)
Central government expenditure by organization is
originally planned at Rp725,243,010,910,000.00 (seven
hundred twenty five trillion two hundred forty three
billion ten million nine hundred and ten thousand
rupiah).
Verse (3)
Central government expenditure by function is originally
planned at Rp725,243,010,910,000.00 (seven hundred

twenty five…
- 19 -

twenty five trillion two hundred forty three billion ten


million nine hundred and ten thousand rupiah).
Verse (4)
Central government expenditure by economic
classification is originally planned at
Rp725,243,010,910.00 (seven hundred twenty five
trillion two hundred forty three billion ten million nine
hundred and ten thousand rupiah).
Verse (5)
Removed
Verse (6)
Self explanatory.
Number 7
Article 7
Verse (1)
Originally stipulated fuel, Biofuel and 3 (three) kilogram
LPG cylinder subsidies fiscal year 2010 amounted to
Rp68,726,700,000,000.00 (sixty eight trillion seven
hundred twenty six billion seven hundred million
rupiah).
Verse (2)
Saving policies of subsidized petrol are through:
(a) phased implementation of subsidized fuel
distribution system with a closed pattern;
(b) continue the diversion program of kerosene to 3
(three) kilogram LPG cylinders; and
(c) increase subsidized fuel distribution controls.
Verse (3)
Self explanatory.

Number 8…
- 20 -

Number 8
Article 8
Verse (1)
Originally stipulated electricity subsidies in fiscal year
2010 amounted to Rp37,800,000,000,000.00 (thirty
seven trillion eight hundred billion rupiah).
Verse (2)
Letter a
In order to fulfill the financing requirements for
investments in National Electricity Company /PT
PLN (Limited), the provision of margin to National
Electricy Company (PT PLN) (Limited) is estimated at
8% (eight percent) in the year 2011 and amounted to
3% (three percent) in 2012.
Letter b
Self explanatory.
Letter c
Tariffs aimed at encouraging saving electric power,
among others, plus max power. While the special
services is a particular service level agreement
between National Electricity Company/PT PLN
(Limited) with the consumers.
Letter d
The government referred to in this verse is Minister
whose responsibility area are in energy affairs, while
in House of Representative Republic of Indonesia are
comission who handles energy.

Number 9
Article 9
Verse (1)
Originally stipulated Fertilizer subsidies in fiscal year
2010 amounted to Rp14,757,259,000,000.00 (fourteen
trillion seven hundred fifty seven billion two hundred
fifty nine million rupiah).

Verse (2)…
- 21 -

Verse (2)
Self explanatory.
Verse (3)
Self explanatory.

Verse (4)
Self explanatory.

Number 10
Article 9A
Originally planned agriculture subsidies in fiscal year 2010
amounted to Rp11,387,322,035,700.00 (eleven trillion three
hundred eighty seven billion three hundred twenty two million
thirty five thousand seven hundred rupiah).

Article 9B
Originally planned mortgage interest subsidy program in fiscal
year 2010 amounted to Rp5,337,723,030,000.00 (five trillion
three hundred thirty seven billion seven hundred twenty three
million thirty thousand rupiah).

Article 9C
Originally planned Tax borne by government (DTP) subsidy in
fiscal year 2010 amounted to Rp16,872,800,000,000.00
(sixteen trillion eight hundred seventy two billion eight
hundred million rupiah).

Article 9D
Originally planned Seeds subsidy in fiscal year 2010
amounted to Rp1,563,523,000,000.00 (one trillion five
hundred sixty three billion five hundred twenty three million
rupiah).

Article 9E

Subsidy payments based on the realization of the current year


is reported on the Central Government Financial Reports.

Number 11…
- 22 -

Number 11
Article 14A
Verse (1)
Self explanatory.
Verse (2)
Self explanatory.
Verse (3)
Self explanatory.
Verse (4)
Self explanatory.

Number 12
Article 16
Verse (1)
Letter a
The term of “the result of optimization” refers to the
result of excess or the fund surplus acquired after
the execution and / or signing a contract of an
activity which target has been achieved. The surplus
or remaining funds can then be used to increase the
target or designated to other activities within the
same program.
Letter b
The term of “Expenditure Budget Amendment
sourced from Non Tax Revenue (PNBP) refers to
excess of actual revenues from the planned targets in
the APBN. That increased revenue, then, can be used
by government ministries and agencies in
accordance with the provisions of a valid license
usage.

Letter c…
- 23 -

Letter c
The term “change of credit loan limit and foreign
grants (PHLN/domestic loans and grants (PHDN)”
refers to Increased limit of PHLN/PHDN as a result of
foreign project loans and grants launch/domestic
loans and grants that are multi years and/or
acceleration of the loans withdrawal which were
already approved in order to optimize the utilization
of foreign loans/domestic loans.
That credit loans limit change of PHLN/PHDN
consists of (a) foreign/domestic grants and grants
that subsidiary grants that is received after APBN
2010 is stipulated and (b) subsidiary grants.
Nonetheless, the credit loans limit does not cover
new projects credit loans that are not yet allocated in
APBN 2010 and foreign loans/domestic loans
sourced from commercial loan and export credit
facilities, which are not continuity of multi years
project.
Verse (2)
Self explanatory.
Verse (3)
Self explanatory.
Verse (4)
Self explanatory.
Verse (5)
The term “reported implementation in Amandment of
APBN” refers to reporting all changes of details/shifting
of Central Government Expenditure Budget that is
reported before APBN Amendment 2010 to house of
Representative. And the term of “reported
implementation in State Financial Reports” refers to
reporting all changes of details/shifting in Central
Government expenditure budget that had been running

in 2010…
- 24 -

in 2010 after APBN Amendment 2010 to House of


Representative.

Number 13

Article 16A
Verse (1)
Self explanatory.
Verse (2)

Self explanatory.

Article 16B
Self explanatory.

Article 16C
Verse (1)
Self explanatory.
Verse (2)
Self explanatory.

Verse (3)
Self explanatory.

Number 14

Article 17
Verse (1)
Self explanatory.
Verse (2)
Originally planned balanced fund amounted to
Rp306,023,418,400,000.00 (three hundred six trillion
twenty three billion four hundred eighteen million four
hundred thousand rupiah).

Verse (3)…
- 25 -

Verse (3)
Self explanatory.

Number 15
Article 18
Verse (1)
Self explanatory.
Verse (2)
Originally planned revenue sharing fund amounted to
Rp81,404,801,400,000.00 (eighty one trillion four
hundred four billion eight hundred one million four
hundred thousand rupiah).
Verse (3)
Self explanatory.
Verse (4)
In the framework of DAU calculation in fiscal year 2010,
Net Domestic Revenue (PDN) refers to calculation from
domestic revenue which is the sum of tax revenue and
state non tax revenues, minus state revenue that has
been distributed to the regions, which is revenue sharing
fund (DBH), also is directed budget (earmarked) in the
form of non-tax revenues spending of line
ministries/agencies tax subsidies and, as well as a
portion of several other subsidies which consists of fuel
subsidies, electricity subsidies, fertilizer subsidies, food
subsidies, and seed subsidies.
Verse (4a)
Self explanatory.
Verse (5)
Self explanatory.
Verse (5a)
Self explanatory.

Verse (5b)…
- 26 -

Verse (5b)
Self explanatory.
Verse (5c)
Self explanatory.
Verse (5d)
Self explanatory.

Verse (5e)
Self explanatory.
Verse (5f)
Self explanatory.
Verse (6)
Self explanatory.
Verse (7)
Balanced fund amounted to Rp314,363,315,800,000.00
(three hundred fourteen trillion three hundred sixty
three billion three hundred fifteen million eight hundred
thousand rupiah), consists of:

(in rupiah)
Original After
1. Revenue Sharing Fund (DBH) 81,404,801,400,000.00 89,618,446,100,000.00
a. Tax DBH 46,921,445,900,000.00 44,513,496,852,000.00
(1) Income Tax (PPh) DBH 13.173.844.200.000,00 13.177.283.527.000,00
- Income Tax Article 21 12,314,671,400,000.00 12,314,672,000,000.00
- Income Tax Article 25/29 of
Individual person 859,172,800,000.00 859,172,000,000.00
- Less Paid DBH PPh - 3,439,527,000.00
(2) Land and Building Tax (PBB) 25,236,171,600,000.00 23,063,369,885,000.00
DBH
- DBH PBB 25,236,171,600,000.00 23,061,043,984,000.00
- Less Paid DBH PBB - 2,325,901,000.00
(3) Dutible on Land and Building
Transfer DBH 7,392,899,000,000.00 7,155,525,000,000.00
(4) Tobacco Excises DBH 1,118,531,100,000.00 1,117,318,440,000.00
b. DBH of Natural Resources (SDA) 34,483,355,500,000.00 45,104,949,248,000.00
(1) DBH of Oil and Gas SDA 26,015,650,000,000.00 35,196,362,157,000.00
- DBH of petroleum 14,078,470,000,000.00 17,143,110,000,000.00
- DBH of Natural Gas 9,937,180,000,000.00 11,925,190,000,000.00

- Less paid …
- 27 -

- Less Paid of DBH migas


Year 2008 2,000,000,000,000.00 6,128,062,157,000.00
(2) DBH of General Mining 6,585,296,700,000.00 7,790,420,800,000.00
- Fixed dues 94,066,900,000.00 124,413,600,000.00
- Royalty 6,491,229,800,000.00 7,666,007,200,000.00
(3) DBH of Forestry 1,566,872,800,000.00 1,802,630,291,000.00
- Forest Resource Provision 898,420,000,000.00 898,420,000,000.00
- Forest Concession Right Contribution 15,792,800,000.00 15,792,800,000.00
- Reforestation Fund 652,660,000,000.00 652,660,000,000.00
- Less Paid Forestry - 235,757,491,000.00
(4) DBH of Fishery 120,000,000,000.00 120,000,000,000.00
(5) DBH of Geothermal Mining 195,536,000,000.00 195,536,000,000.00
2. General Allocation Fund (DAU) 203,485,234,500,000.00 203,606,484,500,000.00
a. Pure General Allocation Fund (DAU) 192,490,342,000,000.00 192,490,342,000,000.00
b. Additional DAU for Teacher’s
Profession Allowances 10,994,892,500,000.00 10,994,892,500,000.00
c. Allocation Correction
for Indramayu District - 121,250,000,000.00
3. Specific Allocation Fund (DAK) 21,133,382,500,000.00 21,138,385,200,000.00
a. DAK 21,133,382,500,000.00 21,133,382,500,000.00
b. Allocation Correction
for Indramayu District - 5,002,700,000.00

Number 16
Article 20
Verse (1)
Self explanatory.
Verse (2)
Originally planned special autonomy fund amounted to
Rp9,099,613,680,000.00 (nine trillion ninety nine billion
six hundred thirteen million six hundred eighty
thousand rupiah).
Verse (3)
Originally planned adjustmend fund amounted to
Rp7,300,000,000,000.00 (seven trillion three hundred
billion rupiah).
Verse (3a)
Originally planned additional allowance fund for regional
civil servant teachers (PNSD) amounted to
Rp5,800,000,000,000.00 (five trillion eight hundred
billion rupiah).

Verse (4)…
- 28 -

Verse (4)
Originally planned regional incentive fund amounted to
Rp1,387,800,000,000.00 (one trillion three hundred
eighty seven billion eight hundred million rupiah).

Verse (4a)
Originally planned DAK less paid 2008 amounted to
Rp80,200,000,000.00 (eighty billion two hundred million
rupiah).
Verse (4b)
Originally planned DISP less paid 2008 amounted to
Rp32,000,000,000.00 (thirty two billion rupiah).
Verse (5)
Certain criteria is as follow :
Regional achievers, which:
ƒ have performed the community service function to
receive fair without exception (WTP) or fair with
exception of (WDP) from Supreme Audit Agency (BPK)
to the local authorities financial reports.
ƒ Local Regulation of Regional Government Budget
(Perda APBD) was delivered in timely manner.
Verse (6)
Self explanatory.
Verse (7)
Self explanatory.
Verse (8)
Self explanatory.
Verse (9)
Self explanatory.
Verse (10)
Self explanatory.

Article 21…
- 29 -

Article 21
Verse (1)
Education budget amounted to
Rp225,229,295,262,400.00 (two hundred twenty five
trillion two hundred twenty nine billion two hundred
ninety five million two hundred sixty two thousand four
hundred rupiah), consists of :
(in rupiah)

Original After
1. Educational Budget through Central
Government Expenditure 83,170,009,475,000.00 96,480,267,862,400.00
(1) Ministry of National Education 54,704,324,253,000.00 62,955,224,253,000.00
(2) Ministry of Religious Affairs 23,663,565,732,000.00 26,524,524,119,400.00
(3) Ministry of State Owned Enterprises 4,802,119,490,000.00 7,000,519,490,000.00

2. Educational Budget through Transfer


to Region 126,367,577,800,000.00 127,749,027,400,000.00
(1) DBH portion 617,048,800,000.00 748,498,400,000.00
(2) DAK portion 9,334,882,000,000.00 9,334,882,000,000.00
(3) DAU portion 95,923,070,400,000.00 95,923,070,400,000.00
(4) Additional allowance for PNSD Teachers 5,800,000,000,000.00 5,800,000,000,000.00
(5) Additional DAU for Teaching
Proffesion Allowance 10,994,892,500,000.00 10,994,892,500,000.00
(6) Regional Incentive Fund 1,387,800,000,000.00 1,387,800,000,000.00
(7) Special Autonomy Fund portion 2,309,884,100,000.00 2,309,884,100,000.00
(8) Regional Incentive Fund - 1,387,800,000,000.00
(9) Education Infrastructure Development
Acceleration Fund (DPPIP) - 1,250,000,000,000.00
3. Educational Budget through
Expenditure Financing - 1,000,000,000,000.00
- National Education Development Fund - 1,000,000,000,000.00

Verse (2)
Self explanatory.
Verse (3)
Self explanatory.
Number 17
Article 22
Verse (1)
Original total amount of Revenue and Grants Budget
fiscal year 2010 amounted Rp949,656,115,114,000.00
(nine hundred forty nine trillion six hundred fifty six

billion one…
- 30 -

billion one hundred fifteen million one hundred fourteen


thousand rupiah), while original total amount of
Government Expenditure budget fiscal year 2010
amounted to Rp1,047,666,042,990,000.00 (one
quadrillion forty seven trillion six hundred sixty six
billion forty two million nine hundred ninety thousand
rupiah), so there is budget deficit in fiscal year 2010
amounted to Rp98,009,927,876,000.00 (ninety eight
trillion nine billion nine hundred twenty seven million
eight hundred seventy six thousand rupiah).
Budget deficit fiscal year 2010 changes from original at
Rp98,009,927,876,000.00 (ninety eight trillion nine
billion nine hundred twenty seven million eight hundred
seventy six thousand rupiah) to
Rp133,747,686,314,000.00 (one hundred thirty three
trillion seven hundred forty seven billion six hundred
eighty six million three hundred fourteen thousand
rupiah).
Verse (2)
a. Original domestic financing amounted to
Rp107,891,435,453,000.00 (one hundred seven
trillion eight hundred ninety one billion four hundred
thirty five million four hundred fifty three thousand
rupiah).
b. Originial net foreign financing amounted to
Rp9,881,507,577,000.00 (nine trillion eight hundred
eighty one billion five hundred seven million five
hundred seventy seven thousand rupiah).
Verse (3)
Budget deficit financing amounted to
Rp133,747,686,314,000.00 (one hundred thirty three
trillion seven hundred forty seven billion six hundred
eighty six million three hundred fourteen thousand
rupiah), consists of :
1. Domestic finance amounted to
Rp133,903,232,818,000.00 (one hundred thirty

three trillion…
- 31 -

three trillion nine hundred three billion two hundred


thirty two million eight hundred eighteen thousand
rupiah), consisting of :

(in rupiah)

Original After
a. Domestic Banking 7,129,150,000,000.00 45,477,096,818,000.00
(1) Investment Fund Account 5,504,150,000,000.00 5,504,150,000,000.00
(2) Forestry Development
Account 625,000,000,000.00 625,000,000,000.00
(3) Cumulative Budget Surplus 1,000,000,000,000.00 39,347,946,818,000.00
b. Domestic Non Banking 100,762,285,453,000.00 88,426,136,000,00.00

(1) Privatization - 1,200,000,000,000.00


(2) Asset Management Result 1,200,000,000,000.00 1,200,000,000,000.00
(3) Government Security
(net) 104,429,085,453,000.00 107,500,385,000,000.00
(4) Domestic Loans 1,000,000,000,000.00 1,000,000,000,000.00
(5) Government Investment
Fund and Capital -3,902,500,000,000.00 -12,924,249,000,000.00
a. Government Investment -927,500,000,000.00 -3,610,549,000,000.00
b. Government Capital -2,000,000,000,000.00 -6,038,700,000,000.00
- Indonesia’s Export
Financing Agency -2,000,000,000,000.00 -2,000,000,000,000.00
- PT Penjaminan
Infrastruktur Indonesia - -1,000,000,000,000.00
- PT Askrindo dan Perum
Jamkrindo (People Business Credit) - -1,800,000,000,000.00
- Indonesia SBSN 2
Issuance Company - -100,000,000.00
- Indonesia SBSN 3
Issuance Company - -100,000,000.00
- PT Sarana Multi
Infrastruktur - -1,000,000,000,000.00
- PT Askrindo (bond grants
from Bank Indonesia) - -220,000,000,000.00
- PT BPUI (bond grants
from Bank Indonesia) - -18,500,000,000.00
c. Revolving funds -975,000,000,000.00 -3,275,000,000,000.00
- Forestry revolving fund -625,000,000,000.00 -625,000,000,000.00
- LPDB KUKM revolving
fund -350,000,000,000.00 -350,000,000,000.00
- Land procurement
revolving fund (BPJT) - -2,300,000,000,000.00
(6) National Education
development fund - -1,000,000,000,000.00
(7) Loans to National Electricity
Company (Limited)/ PT PLN - -7,500,000,000,000.00
(8) Guarantee Obligation -1,050,000,000,000.00 -1,050,000,000,000.00
a. Guarantee Obligation
for PT. PLN (Persero) -1,000,000,000,000.00 -1,000,000,000,000.00
b. Guarantee Obligation
for PDAM -50,000,000,000.00 -50,000,000,000.00
(9) Reserve Fund -914,300,000,000.00 -

Government Securities (SBN) is the excess of amount


of issuance with principal payments due and
redemption. SBN is not issuded only in the rupiah

currency in…
- 32 -

currency in the domestic market, but also includes


the issuance of SBN in foreign currencies in
international markets, whether conventional or
SBSN (sukuk/bonds).
Composition of the number and type of SBN
instrument to be issued, payment of principal, and
redemption of SBN, will be further stipulated by the
Government by taking account the situation that
developed in the market, to achieve the target net
SBN payment.
SBN issuance will be backed up by the rest of the
standby credit facility which may not be
feasible/withdrawn in the year 2009 in anticipation
of the issuance of SBN, which can not be done
optimally due to market conditions.
Domestic loans (PDN) is a debt that originated from
State Owned Enterprises (BUMN), local governments
and local companies. Domestic loans are used to
finance sevderal activities.
Additional revenue through debt financing conducted
under conditions which show high level of urgency
and without non-debt sources of financing available.
In order to support the development of infrastructure
and other areas, the government provides the
allocation of investment funds amounting to
Rp927,500,000,000.00 (nine hundred twenty seven
billion five hundred million rupiah), whereas to
support aid programs fasilitras liquidity for housing
finance to lower and middle income (MBM), including
low income people (MBR), the Government provides
investment fund allocation amounting to
Rp2,683,049,000,000.00 (two trillion Six Hundred
Eighty three billion forty nine million rupiah), derived
from the reallocation of credit interest subsidy
programs for credit for simple healthy housing
ownership (KPRSh).

PMN additional…
- 33 -

PMN additional funds for Indonesia infrastructure


Guarantee (PT Penjaminan Infrastruktur
Indonesia/PT PII) amounted to
Rp1,000,000,000,000.00 (one trillion rupiah), will be
used to enhance the credibility of the guarantee, to
give a positive perception for investors, and to reduce
direct exposure to the claim of APBN. Additional
discussion of PMN additional funds to PT PII will be
settled before the date of June 15, 2010 between the
government and House of Representatives Republic
of Indonesia Commission XI.
PMN additional funds for PT Multi Sarana
Infrastruktur (PT SMI) amounted to
Rp1,000,000,000,000.00 (one trillion rupiah) was
intended to optimize funding sources of PT SMI
through fund raising activities, as well as raising
capital for PT SMI as a state-owned enterprises
(BUMN) specializing in the field of infrastructure
financing for overcome the financing gap faced by the
government's infrastructure development. Additional
funds discussion of PMN to PT SMI fund will be
settled before the date of June 15, 2010 between the
government and the House of Representatives
Republic of Indonesia Commission XI.
Allocation of revolving fund for land acquisition of
toll roads through the Public Service Agency Toll
Road Regulatory Agency (BLU BPJT) amounted to
Rp2,300,000,000,000.00 (two trillion three hundred
billion rupiah), intended as a bailout fund to expedite
the process of land acquisition for construction of
highways/toll roads, which is planned for the
procurement of land for 22 toll roads in accordance
with governmental programs and scheduled for
completion in 2013 at the latest. Discussion of
additional revolving fund will be settled before the
date of 15 June 2010 between the government, and
House of Representative Republic of Indonesia
commissions V and Commission XI.

National education…
- 34 -

National education development fund amounted to


Rp1,000,000,000,000.00 (one trillion rupiah) is part
of the education budget allocated for the
establishment of endowment fund which aims to
ensure the sustainability of educational programs for
the next generation as a form of intergenerational
equity, where the management is using the revolving
fund mechanism and conducted by Public Service
Agency (BLU) in education, and education reserve
fund in anticipation of the purposes of rehabilitation
of educational facilities damaged by natural
disasters.
Loan to National Electricity Company (Limited)/PT
PLN (Persero) amounted to Rp7,500,000,000,000.00
(seven trillion five hundred billion rupiah) are given
to cover the financing of PT PLN (Persero) due to
procurement and replacement of transformers, and
strengthening the transmission and distribution
installations, as well as other investments.
Discussion of the additional loan to PT PLN (Persero)
will be completed before the date of July 30, 2010
between the government and the Budget Board in
House of Representative Republic of Indonesia.
In order to support the accelerated development of
10,000 MW (ten thousand mega watt) power plant of
coal-fueled by National Electricity Company
(Limited)/PT PLN (Persero), the Government gave
assurance of the obligation to repay the loan of
National Electricity Company (Limited)/ PT PLN
(Persero) to creditor banks. The government
guarantee is given on the risk/possibility of PT PLN
(Persero) was not able to meet their financial
obligations to creditors (payment default). Security
deposits will be treated as a government loan given
to PT PLN (Persero) if realized.

Management and…
- 35 -

Management and disbursement of the loan


guarantee of PT PLN (Persero) as mentioned above
will be further regulated by government according to
the provisions of applicable legislation.
In order to accelerate the procurement of drinking
water which is one of the basic necessities to the
population by PDAM (Regional Water Company), the
Government guarantees 70% (seventy percent) of the
loan repayment obligations to creditor banks.
Government guarantees fund is given on the
risk/possibility of PDAM are unable to meet payment
obligations to the creditor (payment default). Security
deposits will be treated as government loan.
Management and disbursement of the loan
guarantee fund mentioned above shall be further
stipulated by government according to the provisions
of applicable legislation.
2. Net foreign financing amounted to negative
Rp155,546,504,000.00 (one hundred fifty five billion
five hundred forty six million five hundred four
thousand rupiah) consisting of:
(in rupiah)
Original after
a. Gross Foreign
Loan Withdrawal 57,605,758,608,000.00 70,777,081,102,000.00
(1) Project loan 24,443,000,000,000.00 29,421,800,000,000.00
(2) Project loan 33,162,758,608,000.00 41,355,281,102,000.00
- Central Government
Project loan 24,518,985,423,000.00 24,558,667,056,000.00
- Subsidiary loan
revenue 8,643,773,185,000.00 16,796,614,046,000.00
b. Subsidiary loan -8,643,773,185,000.00 -16,796,614,046,000.00
c. Amortization -58,843,493,000,000.00 -54,136,013,560,000.00

Foreign financing includes the financing of foreign debt


but not including the issuance of state bonds in
international markets.

Central government's project loans amounted to


Rp24,558,667,056,000.00 (twenty four trillion-five
hundred fifty eight billion-six hundred sixty seven
million-fifty six thousand rupiah) including the

additional project…
- 36 -

additional project loans for improvement of tv


transmitting station from Spain to the Ministry of
Communications and Informatics amounted to
Rp36,709,660,000.00 (thirty six billion-seven hundred
nine million-six hundred sixty thousand rupiah) and
project loans of Integrated Citarum Water Resources
Management Investment Program-Project I (ICWRMIP)
from ADB for Ministry of Environment amounted to
Rp2,971,956,000.00 (two billion-nine hundred seventy
one million-nine hundred fifty six thousand rupiah).

Number 18
Article 22A
Verse (1)
The term Soft Loan with conditions refers to a loan with
repayment period of 10-15 years with a maximum five-
year grace period, if paid in amortization, and interest
rates low in order to consider the fulfillment of
covenants of the debts of PT PLN (Persero).
Verse (2)
Self explanatory.
Verse (3)
Self explanatory.
Article 22B
Self explanatory.
Article 22C
The term Change of credit limit of subsidiary loan agreement
refers to an increase in overseas loan limit of channeling
foreign loan due to multiyears foreign loans carry over and/or
acceleration of the withdrawal subsidiary loans which have
been already approved in order to optimize the use of
subsidiary loan agreement. Changes in credit limit of
subsidiary loan agreement shall not include subsidiary loan
agreement that has not been allocated in APBN-P 2010.

Further discussion…
- 37 -

Further discussion on Subsidiary Loan Agreement will be


settled latest by July 30 2010 between Government and
Budget Board in House of Representative.

Article 22D
Verse (1)
Self explanatory.
Verse (2)
Self explanatory.

Verse (3)
Self explanatory.
Article 22E
Verse (1)
Self explanatory.
Verse (2)
Self explanatory.
Number 19
Article 25
Verse (1)
Self explanatory.
Verse (2)
Including on procedures and criteria of the former
settlement of receivables from Indonesia Bank
Restructuring Agency (BPPN).
Number 20
Article 26
Verse (1)
Self explanatory.

Verse (2)…
- 38 -

Verse (2)
SBN issuance that will be used for pre-financing of
APBN in next fiscal year will be calculated as part of the
fulfillment of the next SBN issuance target in next fiscal
year.
Verse (3)
Self explanatory.
Verse (4)
Composition of debt financing instrument includes
Government Bonds, Domestic Loans, Foreign Loans.
Cash includes Government Securities (net), and Program
Loans.

Verse (5)
Increment of yield of Government Securities resulting in
additional cost of SBN issuance significantly reflected in:
a. absence of yield offering won in a government
benchmark within 2 (two) times in a row of
auctions; and / or
b. there is tendency of increment in its yield at least
300 (three hundred) basis points (bps) within 1
(one) month.
Verse (6)
Self explanatory.

Article II
Self explanatory.

SUPPLEMENT TO THE STATE GAZETTE NUMBER