1. MSMEs Credit in Indonesia PT. BANK RAKYAT INDONESIA (Persero), Tbk. The International Guarantee Seminar - 2015 Irianto Senior Executive Vice President

2. OUTLINE 1.Huge Domestic Market …………………………………………………….....1 Indonesia GDP …………………………………………………….……………………………. 2 Banking Penetration …………………………………………………….…………………… 3 Financial Literacy & Inclusion …………………………………………………….……… 4-5 MSMEs Profile ………….………………………………………………….…………………… 6 2.Key Success Factor in Serving MSMEs …………………………………..7 Outreach ……………………………………………….…………………………………………...8 Sustainability ……………………………………………….……………………………………. 9 Social Impact ……………………………………………….……………………………………. 10 3.Bank BRI......................…………………………………………………………11 BRI Networks ……………………………………………………………………………………… 12 The Leader of MSMEs Bank ……………………………………………….………………. 13 BRI Innovation ……………………………………………….…………………………………...14-17 Kredit Usaha Rakyat ……………………………………………….………………………….. 18

3. HUGE DOMESTIC MARKET

4. 2 Purchasing Power Parity (PPP), Billions of international dollars, 2013 Gross Domestic Product (GDP) Billion USD, 2012 Source: World Bank (World Development Indicators), CIA World Fact Book The largest economy in ASEAN, one of the largest in the world 9 1 HUGE DOMESTIC MARKET – Indonesia GDP

5. 3 HUGE DOMESTIC MARKET – Bank Penetration Loan to GDP Ratio (%) -2014 Source: CEIC Deposit to GDP Ratio (%) -2014 Indonesia banking penetration is lower compared to other ASEAN-5, giving opportunity for Bank to grow

6. 4 HUGE DOMESTIC MARKET – Financial Literacy & Inclusion 81,93% Capital Market Pension Funds Finance Companies Mortgages Insurance Banking Source: Indonesia Financial Services Authority, 2014 Literacy and financial inclusion levels of Indonesian society in various financial industry is still relatively low Inclusion Well literate

7. 5 Source: Indonesia Financial Services Authority, 2014 Inclusion Literacy Literacy low-income people is dominated by the banking sector. This is also reflected in financial inclusion while access to non banking sector is still relatively low HUGE DOMESTIC MARKET – Financial Literacy & Inclusion

8. 6 Micro, small and medium enterprises in Indonesia reached 56.53 million units, which is currently 99.99% market share of all business activities in Indonesia From 56.53 million units of micro, small and medium enterprises, 55.86 million units or 98.81% are micro business unit which absorb 90.12% of the workforce in Indonesia 99,99% 4,09% 2,95% 2,84% 0,01% 90,12% Although, total Micro Business is very large, but only 3.74% of them have access to the financial services 81,93% 3,74% 5,44% 8,90% Source: Indonesia Financial Services Authority (OJK), 2014 MSMEs Commercial Micro Small Medium Commercial Non MSMEs Micro Small Medium MSMEs Share of Total Businesses Employment on The Activities of MSMEs The Portion of Bank Lending (Sept’14) HUGE DOMESTIC MARKET – MSMEs Profile

9. Key Success Factor in Serving MSMEs

10. Key Success Factor in Serving MSMEs – Outreach Outreach related to bank’s ability to deliver financial service to micro, small, and medium enterprises (MSMEs). MSMEs are spreading all over Indonesia that consist of 17,000 islands and most of the MSMEs are located in rural and remote area. It needs financial services to support its business activities. Sometimes infrastructure and geographical location are obstacles for the bank to reach the MSMEs. However, Bank should present close to the MSMEs community which tends to be in rural and remote areas. 8 Spreading all over 17,000 islands Most of MSMEs are located in rural & remote area Limited infrastructure Outreach / Accessibility

11. Key Success Factor in Serving MSMEs - Sustainability A bank needs to be able to finance itself ( self sufficient ) by generating sustainable profit so that the bank can maintain its commitment to continue serving MSMEs. Moreover, the profit can support the bank to do innovative product development to increase service quality or even offer an innovative product to help MSMEs boost their performance 9 1960’s 2011’s 2014’s

12. Key Success Factor in Serving MSMEs – Social Impact The latest research conducted by independent research institution (University of Indonesia) in 2012 on micro credit showed that the presence of micro credit has a significant impact in terms of rising turnover (2.2x) and assets (20.4x) 10 (IDR Million) The existence of microfinance program should give a positive an effect of significantly, both on financial and social aspects Micro Credit Impact 2.2x 20.4x

13. BANK BRI

14. BANK BRI – BRI Networks 12 LOW HIGH Cost per Transaction E-ChannelMoving/Automobile Channel Conventional Channel Branch Offices Hybrid Lounge Sub Branch Cash Offices E-Buzz Teras Keliling BRI BRI Unit CDM ATM EDC (Merchant EDC, Brilink Agent EDC, Office EDC) Teras BRI Teras Kapal BRI Internet Banking Mobile Banking 3,904,644 users 153,786 21,215 426 2 1 610 55 463 586 5,306 980 2,531 10,519,36 users Phone Banking 414,050 Calls/month

15. 13 Description20102011201220132014Sept. 2015 Total Assets398.4456.5535.2606.4778.0775.8 - Loans247.0283.6348.2430.6490.4519.0 Total Costumer Deposits328.6372.2436.1486.4600.4611.3 - Demand Deposits77.175.678.878.089.1109.6 - Saving Deposits125.2152.5182.6210.0232.4233.7 - Time and Certificate Deposits126.3144.1174.7198.4278.9268.0 Tier I Capital*27,838,251,666,082,186,7 Net Profit11,515,118,521,224,218,3 Sustainable performance to support sustainable business BANK BRI – The Leader of MSMEs Bank (IDR Trillion) Loan Outstanding (IDR Trilion) 82.2% 17.8% 19.8% 80.2% 25.2% 74.8% 74.4% 25.6% 73.2% 26.8% 26.9% 73.1% MSMEs’ Credit Domination Note: numbers state in this presentation are bank only

16. “ Teras BRI” was invented by Bank BRI to embrace financial inclusion by reaching out deeper community in rural and remote areas across Indonesia. Today, BRI operates 3.155 “Teras BRI” throughout Indonesia. “Teras BRI” boosts bank’s performance especially on microbanking segment. 14 BANK BRI – BRI Innovation

17. 15 “Banking Services in Archipelago” Archipelago of Kepulauan Seribu (Thousands Island) Area: ± 10,8 km2 land dan ± 7000 km2 waters Population : ± 21.554 people (BPS, 2011) Main industry: fishing & tourism Coverage Areas of Teras BRI Kapal: Untung Jawa island, Tidung island, Pramuka island, Panggang island, Kelapa island, and Harapan island BBC NEWS http://www.bbc.com /news/business- 34079633 Coverage Areas of Teras BRI Kapal SERVING FISHERMEN AND COASTAL COMMUNITY BANK BRI – BRI Innovation

18. 16 source: BRI’s publication Number of BRILink Agents BRILink Agents Location Number of BRILink transactions (million) is utilization of BRI’s e-banking infrastructure by third parties (BRILink Agent) through fee sharing scheme (agent) Sumatra Agen: 22.5% Trx: 29.8% Java Agen:57,1% Trx: 47% Mid & East Indonesia Agen:20,4% Trx:23,2% BANK BRI – BRI Innovation

19. 17 Specification: Weight: +/- 3.500 kg Number of transponder : 45 Coverage : Indonesia, ASEAN, Asia Timur Laut, part of Pacific and West Australia Increasing service quality (service level agreement). Increasing technology reliability. To reach the unreacheable. BANK BRI – BRI Innovation

20. Number of BRLink transactions BANK BRI – Kredit Usaha Rakyat (KUR) KUR Realization CostumerPlafond (year)(million)(IDR trillion) 2007 0.002 0.3 2008 1.65 9.31 2009 0.67 4.00 2010 1.35 9.13 2011 1.71 16.80 2012 1.76 19.78 2013 2.14 27.70 2014 2.27 30.00 KUR (2007-2014) KUR (2015)* – New KUR Realization CostumerPlafond (year)(thousand)(IDR trillion) - Mikro (< IDR 25 Million)4406.40 - Ritel (> IDR 25 – 500 Million) 50.87 November 4 th 20154457.27 18 TOTAL 11.55 117.00 *launced since August 18 th 2015 KUR (70% Guaranteed Scheme)

21. Thank You