The Republic of Indonesia

1. The Republic of Indonesia Recent Economic Update June 2008

2. Disclaimer The presentation is being made to you on the basis that you have confirmed your representation to each of Credit Suisse, Deutsche Bank 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 Use of Proceeds Listing Governing Law Bookrunners

4. Presentation Outline 1 2 3 4

5. Indonesia 2008: Economic Backdrop • Surging oil prices resulting in widening budget deficit • Pre-emptive move in reducing fuel subsidies • Inflation rose to 10.4% y-o-y in May 2008 • Bank Indonesia raised rates to 8.5% in June 2008 • Risks remain from further rise in oil prices • Substantial improvement in economic fundamentals • Sustained GDP growth of over 6% • Declining debt-to-GDP ratio • Strong balance of payments position Economic Fundamentals Remain Solid 1

6. Fundamental Economic Strengths

7. Sustained Economic Growth Indonesia has been growing at a rate above 6% since 4Q06 supported by private consumption and investment Real GDP Growth 2006 FY: 5.48% 2007 FY: 6.32% 2005 FY: 5.68% Source: Ministry of Finance 2

8. Strengthening Private Consumption Consumption credit growth is strong. Car and motorcycle sales, as a proxy of demand, have recently experienced significant growth Indonesia Car and Motorcycle Sales Consumption Credit Growth Y-o-Y Growth Y-o-Y Growth 2005 2006 2007 2008 Source: Bank Indonesia, CEIC 3

9. Improving Investment Climate New Investment Law passed in April 2007 aims to facilitate foreign investment. Continuous taxation reform expected to spur further investment Significant Improvements in Investment Climate Imported Capital Goods vs. Investments • Equal treatment for domestic and foreign investment (1) • Extends the validity of land titles • Rights to appoint foreign management • Unrestricted repatriation of profits and capital • Accelerated reform in tax administration • Simplified VAT audits and improved taxpayer services quality • 5% reduction in corporate income tax rate for listed companies which meet certain conditions • Reduction in the tax rate on dividend payments to non-residents from 20% to 10% • Significant increase in budget allocation for capital expenditure • Provides better clarity in business activities that are conditionally open to foreign investors Y-o-Y Growth Y-o-Y Growth Source: BKPM, CEIC 1. Subject to limits for foreign participation in certain sectors of the economy. 4

10. Healthy BOP Position and Stable Rupiah Indonesia’s international reserves of US$59 bn as of 1Q08 reinforced external balances and stability in the Rupiah Balance of Payments Stable Rupiah Exchange Rate Rp/US$ (US$bn) (% GDP) % Source: Bank Indonesia Note: 5-day moving averages, except for Average Volatility 5

11. Solid Banking Performance Banking system is well capitalized with strong credit growth and gross NPL ratio below 5% Credit Growth Major Banking Indicators 2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008 Source: Bank Indonesia 6

12. Impact of Oil Prices and Food Staples on the Economy and 2008 Budget

13. Soaring Oil Prices Cause Fuel Subsidies to Escalate The ICP rose by 44% since the beginning of the year to average US$105/Bbl as of May International Oil Price US$/Bbl Source: Bloomberg 7

14. Direct Cash Distribution Program Food Assistance Educational and Social Assistance Successfully Raised Fuel Prices to Manage Deficit The government raised fuel prices by an average of 28.7% on May 24, 2008 and has implemented cash and food assistance programs to mitigate impact on the poor Schedule of Fuel Price Adjustment Reduction in subsidy payments and contingency fund provision will be allocated to the following: Ensuring Fiscal Sustainability Source: Ministry of Finance 8

15. Fuel Price Hike Lowers Price Gap and Consumption Rise in fuel prices have reduced the price disparity and is expected to curtail over-consumption Domestic vs. International Price Disparity Subsidized Oil Consumption & Price Gap Trend (Rp / Liter) Reduction in price disparity Source: Ministry of Finance 9

16. Investor Confidence after Subsidy Cut Investors reacted favorably to the subsidy cut Stock Market Yield of Government Debt Securities Index (%) Source: Bloomberg 10

17. Monetary Policy Response to Inflation Bank Indonesia most recently raised rates by 25 bps on June 5th in an effort to curb inflation CPI Components Bank Indonesia Policy Rate (%) 8.5% 2006 2007 2008 Source: Bank Indonesia, Badan Pusat Statistik 11

18. Fiscal Policy Response to Soaring Oil Prices Use of Contingency Fund Diversified Financing Alternatives Reduction in Government Spending Fuel Price Hike & Compensation Packages for the Poor Fiscal Policy Measures Energy Savings Initiatives Optimizing Taxation in Nat Res & Commodities Optimizing Oil & Gas Production The Government has implemented a number of measures to ensure fiscal sustainability in the face of soaring oil prices With these fiscal policy measures, deficit is expected to fall from 2.1% to 1.8% 12

19. Impact of Fiscal Policy Adjustments on Budget Impact of Revised ICP Assumption on 2008 Revised Budget Outlook Revised 2008 Budget Without Fiscal Policy Measures Revised 2008 Budget With Fiscal Policy Measures US$ bn 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,100 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,600 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,000 2H08 ICP up to US$135 / Bbl Rp/US$ 9,300 2H08 ICP up to US$150 / Bbl Rp/US$ 9,300 $10.1 bn (2.1%) $13.0 bn (2.6%) $9.1 bn (1.8%) $9.7 bn (1.9%) $10.0 bn (2.0%) Fiscal Deficit % of GDP Source: Ministry of Finance 13

20. Financing Strategy

21. Impact of Fiscal Policy Adjustments on Financing Impact of Revised ICP Assumption on 2008 Revised Budget Outlook Revised 2008 Budget Without Fiscal Policy Measures Revised 2008 Budget With Fiscal Policy Measures US$ bn 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,100 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,600 2008 ICP Avg. US$110 / Bbl Rp/US$ 9,000 2H08 ICP up to US$135 / Bbl Rp/US$ 9,300 2H08 ICP up to US$150 / Bbl Rp/US$ 9,300 Source: Ministry of Finance 14

22. Effective Debt Management Indonesia’s debt-to-GDP and debt service ratio is improving Central Government Debt to GDP Ratio (1) Central Government Debt Service Ratio (1) • Source: Ministry of Finance • Preliminary 15

23. 2008 Funding Strategy on Track The Government’s funding plans are well on-track with realized net financing at 45% of net financing required in the Revised 2008 Budget as of May 2008 Net Issuance Realization as at May 30, 2008 • Issuance in the domestic market will be prioritized • Issuance of a variety of domestic government securities • Fixed-rate • Variable rate • T-Bills • Zero coupon • Retail bonds • Syariah securities – Sukuk (3) • International bonds • Source: Ministry of Finance • Redemption and buyback amount subject to change • GDS stands for Government Debt Securities (SUN) • New Syariah instruments expected to be launched in 2008 in the form of Sukuk 16

24. Composition of Debt Balanced debt profile with a majority of debt being either Rp denominated or medium to long-dated By Maturity and Interest Rate, Dec 2007 Composition of Central Government Debt By Currency, Dec 2007 Source: Ministry of Finance Note: Exchange rate of Rp.9,034 per US$ used for period end 2007 17

25. Holders of Tradable Government Securities There is an increasing proportion of foreign and non-bank holders of Indonesian Government securities Foreign Holdings by Maturity, May 30, 2008 Holders of Tradable Domestic Gov’t Securities (US$ bn) Developments in Domestic Market • Yearly issuance schedule publicly available • Established primary dealership infrastructure • Benchmark series • Active communication with market participants • Variety of domestic securities available • T-Bills, fixed rate, floating rate, variable rate, zero coupon, retail bonds and Sukuk (1) • Source: Ministry of Finance • New Syariah instruments expected to be launched in 2008 in the form of Sukuk 18

26. Maturity Profile of Tradable Government Securities Maturity profile has been improving over time towards a more balanced structure. External bonds are longer dated, with the shortest ones coming due in 2014 Unbalanced maturity profile at the end of 2001 had been restructured with re-profiling programs in 4Q02 and 1Q03 Source: Ministry of Finance Note: Period end of average middle exchange rates used 19

27. Challenges for 2008

28. Challenges for 2008 • Downward revision of GDP growth target from 6.4% to a range of 6.0% to 6.4% due to lower U.S. and global economic growth and economic effects of fuel subsidy reduction and cash transfer and food assistance programs • Inflationary pressures from persistent high commodity prices (oil and food) • With 28.7% domestic fuel price increase, the 2008 and 2009 state budget is sustainable even if oil prices remain high • Savings from the reduction in subsidy payments will be allocated to provide direct cash transfers and other direct subsidies to the poor households • Maintain a sound banking sector and effective intermediary function • Monetary policy will be consistently aimed at addressing external inflationary pressures through preserving exchange rate stability and optimizing open market operation of the central bank • Continuous improvement in investment climate to sustain robust economic growth 20