The Republic of Indonesia

1. The Republic of Indonesia Accelerating Momentum January 2008

2. Disclaimer The presentation is being made to you on the basis that you have confirmed your representation to each of Barclays Capital, HSBC and Lehman Brothers (the “Joint Bookrunners”) that (i) you are not resident in the United States nor a U.S. Person, as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), nor acting on behalf of a U.S. Person and, to the extent you purchase the securities described herein you will be doing so pursuant to Regulation S under the Securities Act OR (ii) you are acting on behalf of, or you are, a qualified institutional buyer, as defined in Rule 144A under the Securities Act. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE OR LOCAL SECURITIES LAWS. ANY INVESTMENT DECISION SHOULD BE MADE ON THE BASIS OF THE FINAL TERMS AND CONDITIONS OF THE SECURITIES AND THE INFORMATION CONTAINED IN AN OFFERING MEMORANDUM AND/OR OTHER MATERIALS THAT WILL BE DISTRIBUTED TO YOU PRIOR TO THE CLOSING DATE AND NOT ON THE BASIS OF THIS PRESENTATION. This presentation is confidential and has been prepared by the Republic of Indonesia (“RoI”) for information purposes only. Neither the Joint Bookrunners, their respective affiliates, nor their respective officers, employees or representatives make any representation or warranty, express or implied, as to the completeness or accuracy of the information contained herein, nor have they independently verified such information. Opinions and estimates contained herein constitute the sole judgment of the RoI as of the date of this material and are subject to change without notice. The Joint Bookrunners, their respective affiliates and their respective officers, employees and representatives expressly disclaim any and all liability (whether direct or indirect, in contract, tort or otherwise) relating to or resulting from the use of the information contained herein by a prospective investor or any of its affiliates or representatives. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, estimates or statements about the future prospect or performance of RoI. Past performance is not indicative of future results. Any securities, financial instruments or strategies mentioned herein may not be suitable for all investors. A prospective investor must make its own independent decision regarding any securities of financial instruments. The Joint Bookrunners may act as market maker or trade on a principal basis, or have undertaken or may undertake to trade for their own account, transactions in the financial instruments or related instruments of any issuer discussed herein and may act as underwriter, placement agent, advisor or lender to such issuer. The Joint Bookrunners and/or their employees may hold a position in any securities or financial instruments mentioned herein.

3. Summary Terms of the Offering Issuer Ratings Format Offering Size Instrument Maturity Use of Proceeds Listing Governing Law Bookrunners 1

4. Table of Contents Section 1 Section 2 Section 3 Section 4

5. Section 1 Economic Performance

6. Accelerating Economic Growth Economic growth is powered by non-oil & gas sectors and is expected to exceed growth projections for ASEAN-4 (1), newly industrialized Asia (2), and the world average Indonesia: Real GDP Growth ASEAN-4: 5.6% World: 5.2% Newly Industrialized Asia: 4.9% (4) (5) 2005 FY: 5.68% 9 Months 2007 (3): 6.3% 2006 FY: 5.48% • Source: Ministry of Finance, IMF World Outlook Oct 2007 • Newly Industrialized Asian Economies is composed of 4 areas: Hong Kong SAR, Korea, Singapore, Taiwan Province of China • ASEAN-4 consists of Indonesia, Malaysia, Philippines and Thailand • Real GDP growth for the first nine months of 2007 compared to the first nine months of 2006 • Ministry of Finance estimates • Assumed GDP growth based on Revised 2007 Budget 2

7. Solid Growth Supported by Strength in Consumption, Exports and Investment Private consumption growth has exceeded pre-crisis levels while investment growth is supported by favorable climate Sources of Economic Growth (1) (2) (1) • Investment climate has been enhanced by the New Investment Law, which key features are: • Equal treatment for both domestic and foreign investors • Abolishment of requirement for gradual divestment by foreign investors • Extension of validity of land titles • Right to appoint foreign management • Prohibition of nationalization without indemnification at market value • Unrestricted repatriation of profits and capital • Source: Ministry of Finance • Preliminary • Real growth for the first nine months of 2007 compared to the first nine months of 2006 3

8. Growth Driven by Non-oil & Gas Sectors Growth is broad based but highlighted by strengths in infrastructure and telecom Economic Growth by Major Sectors • Manufacturing is the single largest sector and growth outlook is supported by • Infrastructure spending • Pro-industry policies • Double-digit growth in transportation and telecommunication supported by infrastructure development and consumption (1) (1) (2) Sector as a % of GDP (3) 14.5% 8.8% 27.3% 17.0% 7.0% 9.3% • Source: Ministry of Finance • Preliminary • Real growth for the first nine months of 2007 compared to the first nine months of 2006 • Sector composition of GDP (at constant market prices) for the first nine months of 2007 4

9. Continued Growth in Investment Recovery in imported capital goods and steady increase in investment credit reflect increasing investment Quarterly Imports of Capital Goods % Growth US$ mn Investment and Working Capital Credit Growth Realized Government Capital Expenditure Growth (y-o-y) % Realization (1) • Source: Ministry of Finance, Bank Indonesia • Preliminary 5

10. Increasing Foreign Investment Significant foreign portfolio inflows demonstrate resilience against the subprime mortgage crisis Foreign Portfolio Investment Foreign Direct Investment (1) (2) (1) (2) • 19% growth in net FDI inflow in the first nine months of 2007 supported by: • Increase in reinvested earnings • Establishment of the Batam, Bintan and Karimun SEZs • Increase in approvals for foreign investment applications • Creation of tax incentives • Significant growth of over 160% in foreign portfolio investment • Key components of FPI include purchases of government bonds and Bank Indonesia certificates • Inflows dropped substantially in the 3rd quarter following the subprime crisis but inflows in September recovered to levels consistent with the early part of the year • Source: Bank Indonesia • Preliminary • For the first nine months of 2007 6

11. Improving External Position Improving Balance of Payments position with record high current account surplus, contributing to a significant increase in foreign currency reserves Foreign Currency Reserves Balance of Payments (1) US$ bn Months (2) (3) • Source: Bank Indonesia • Balance of Payments from 2004 onwards are based on the revised BOP reporting system • For the first nine months of 2007 • Preliminary 7

12. Record High Exports Strong growth in non-oil & gas exports following solid global demand and price increases in international commodities Composition of Exports by Major Groups Indonesian Export Price Index (2002 = 100) (1) (2) • Source: Bank Indonesia, Bloomberg • Preliminary • Exports for the first nine months of 2007 8

13. Section 2 Monetary Policy

14. Monetary Policy Designed to Achieve Macroeconomic Stability Consistent implementation of inflation targeting Maintain a prudent, measured course in monetary policy by careful monitoring of dynamics changes in the economy and coordination with the MOF Foster macroeconomic stability by intervening to avoid excessive volatility in the exchange rate to support sustainable growth Improve banking supervision and prudent regulation Building macroeconomic stability through inflation targeting Monetary Policy Strategy Inflation 2007 Target: 6% ± 1% 2008 Target: 5% ± 1% 2006 2007 Exchange Rate (USD/IDR) BI Rate 2007 Avg. Rate: Rp 9,139 2006 Avg. Rate: Rp 9,164 2007 2007 2006 2006 Source: Bank Indonesia 9

15. Prudent Regulations Bolster the Banking Sector Performance Prudent Regulations Bolster the Banking Sector Performance Main Banking Indicators (%) Commercial Bank Earning Assets US$ bn Source: Bank Indonesia 10

16. Fiscal Policy Section 3

17. Resilience Against Higher Oil Prices No significant impact on 2007 budget, an additional US$0.9 bn deficit was incurred Historical and Futures Brent Oil Price Index Effect of Oil Price on Budget, 2007 US$/Bbl Assuming US$72/Bbl; compared to 2007 Budget assumption of US$60/Bbl Brent futures contracts Close as of Dec 31, 2007 Negative Oil Imports and Exports, 2007 Oil & Gas Imports and Exports, 2007 Surplus Source: Ministry of Finance, Bloomberg 11

18. Government Fuel Subsidies Remain an Issue Electricity and Fuel Subsidies (1) • Domestic fuel subsidies • 2007 fuel subsidy has grown 31% over 2006 due to: • Higher oil prices • Higher domestic oil consumption • Electricity subsidies • 2007 electricity subsidy has grown 21% due to: • Higher sales (↑6.8%), energy losses (↑9.75% – 10.14%), and increased use of fuel to generate electricity (↑32%) • Higher fuel consumption and fuel price • Source: Ministry of Finance • Preliminary 12

19. Fiscal Policy – 2007 State Budget Fiscal prudence whilst maintaining strong growth and resilience to external factors Key Assumptions Highlights • Targeted deficit at 1.5% of GDP, current realization of 1.1% of GDP • Tax ratio declined slightly from 13.1% to 13.0% of GDP • Spending on energy subsidies increased from 2.8% to 3.18% of GDP • Budget financing to rely more on domestic sources, primarily government debt State Budget 2007 – Outcome Source: Ministry of Finance 13

20. 2008 State Budget Infrastructure investment for job creation and acceleration of growth Key Assumptions Budget Highlights • Targets of 2008 Budget: • To expand economic growth by increasing infrastructure expenditure • To lower Indonesia’s total debt to 33% of GDP • Projected total Government revenue (including grants) of US$85.9 bn • Deficit of US$8.1 bn expected to be financed mainly from domestic sources, primarily through issuance of domestic bonds Official State Budget 2008 Source: Ministry of Finance 14

21. Impact of Oil Price, Production & Consumption on the 2008 State Budget Government is prepared to ensure fiscal prudence in the face of rising oil prices Sensitivity of Budget Deficit to Oil Prices 9 Fiscal Policy Measures Usage of contingent fund in the Budget Usage of unrealized expenditure in the Budget Bond issuance to the oil producing (windfall) region Prioritization of Government expenditures Energy policy with regards to production and subsidy of oil and gas and power Improvement in Pertamina and PLN efficiency Tax revenue increase and dividends from SOEs Additional bonds / Government securities issuance Counter cyclical fiscal policy measures (US$/Bbl) Source: Ministry of Finance 15

22. Central Government Revenue Central Government Sources of Revenue Historical and Projected Tax Ratio (2) (1) Tax and Customs Reform • Apply the new tax administration law • Improve tax and custom administration through modernization of tax offices • Improve tax compliance, tax audit and speed up VAT refund process • Provide tax and import duty incentives • Free Trade Agreements (FTA), Economic Partnership Agreements (EPA) and National Single Window (NSW) (1) (2) • Source: Ministry of Finance • Preliminary • Assumed based on state Budget 2008 16

23. Central Government Expenditure Reallocation of Government Expenditure Central Government Expenditure by Function (1) (3) (2) Realization of Transfer to Regions (3) (2) (3) (2) • Source: Ministry of Finance Budget 2007 • Beginning 2005, certain categories in Government expenditure have been reclassified. Current expenditures and development expenditures have been merged. • Preliminary • Assumed based on state Budget 2008 17

24. Commitment Towards Privatization Privatization is one of the main themes in the roadmap for Indonesian SOEs Privatization Proceeds (2) (1) • Up till 2005, privatization proceeds were wholly used as a source of budget deficit financing • Now, privatization is not just a source of budget deficit financing, but a means for improving corporate governance and is instrumental in disciplining the SOEs and improving their performance • From 2008, the government will no longer inject capital into SOEs in order to encourage SOEs to rely on independent financial resources and increase equity participation from the private sector • Source: Ministry of Finance, State Budget 2004 to 2008 • Preliminary • Assumed based on state Budget 2008 18

25. Section 4 Government Debt Profile

26. Effective Debt Management Strategy Indonesia practices a disciplined approach to sovereign debt management Objective To minimize cost of debt within manageable risk Prudent Rules Domestic Bond Market Development External Loan Financing Portfolio Management • Prioritise debt securities issuance in domestic market for deficit financing & debt refinancing • Diversify debt instruments to widen investor base • Develop market infrastructure to support efficient price discovery mechanism • Meet Millennium Development Goals (MDGs), (E.g. poverty reduction) • Finance cost recovery projects • Enhance project readiness criteria • Issue benchmark bonds on regular basis (E.g. 5, 7, 10, 15 and 20 years) • Aggressively conduct debt switching to extend duration • Buyback bonds to reduce outstanding debt and stabilize market • Diversify funding sources (e.g., Sukuk) Effective Coordination amongst Fiscal, Monetary and Capital Market Authorities Source: Ministry of Finance 19

27. Issuance of Government Securities to Fund the Deficit Government securities are the major source of financing for the budget deficit, debt refinancing and infrastructure support Budget Deficit Financing % of GDP (1) (2) • Source: Ministry of Finance • Preliminary • Assumed based on Proposed State Budget 2008 20

28. Effective Debt Management Indonesia’s debt-to-GDP and debt service ratio is improving Central Government Debt to GDP Ratio (1) (1) (2) Central Government Debt Service Ratio % of Revenue (1) (1) (1) • Source: Ministry of Finance • Preliminary • Ratio of external debt as at September 30, 2006 over GDP for the period September 30, 2007 to September 30, 2007 21

29. Composition of Debt Debt is balanced between domestic and external sources with a majority of debt being either Rp denominated or long-dated Debt Composition, Sep 2007 By Currency, Sep 2007 By Maturity and Interest Rate, Sep 2007 Source: Ministry of Finance 22

30. Holders of Government Securities Composition of Foreign Holders of Government Securities by Maturity Holders of Domestic Government Securities US$ bn Total: US$8.3 bn As of December 28, 2007 Source: Ministry of Finance 23

31. Maturity Profile of Tradable Domestic Government Securities Maturity profile has been improving over time towards a more balanced structure Unbalanced maturity profile at the end of 2001 had been restructured with re-profiling programs in Q4 2002 and Q1 2003 Yield Source: Ministry of Finance 24

32. Indonesia’s Credit Rating History BBB+ Baa1 BBB Baa2 BBB- Baa3 Ba1 BB+ Ba2 BB Ba3 BB- B1 B+ B2 B B3 B- Caa1 CCC+ Caa2 CCC Caa3 CCC- Ca CC C R/C SD/DDD Prudent government debt securities management helped the improvement of Indonesia’s sovereign credit rating Credit Rating History Economic Crisis in 1998 Banks Recapitalization Continuous fiscal adjustment, improving liquidity and structural improvements in real economy Sound record of fiscal management on the success of Government efforts to improve the investment climate Gradually improving external liquidity, macroeconomic stability and improved political conditions Diminished likelihood that the Government will seek additional debt rescheduling Oct’07 upgrade to Ba3 (stable) by Moody’s Source: Ministry of Finance 25

33. Final Remarks Demonstrated resilience against the recent external shocks due to the sub-prime crisis and the escalating oil price 2007 budget deficit was 1.1% of GDP; lower than target of 1.5% of GDP Higher macroeconomic growth expected by government based on continued strong household demand, an increase in exports and acceleration of investment in infrastructure projects On track to achieve 6.3% GDP growth in 2007 Assumed GDP growth of 6.8% in Budget 2008 In order to minimize the impact that higher oil prices have had on the fiscal deficit, the Government expects to maintain a prudent approach to fiscal policy 26