Regulation of the Minister of Finance No. 117/PMK.06/2006 on Credit for Development of Bio Energy and Revitalization of Plantation (KPEN-RP)

Article 4 Farmer based on evaluation into fitness and properness Type of plants and target of expansion, rejuve- of Candidate Participating Farmer and plantation devel- nation, and rehabilitation of plantations for each loca- opment business proposed by the Candidate Participat- tion of development of plants through Program of De- ing Farmer based on healthy credit principles, in accor- velopment of Plants for Raw Materials of Bio Fuel and dance with the laws in force. Plantation Revitalization Program are stipulated by the Minister of Agriculture or his authorized party in consid-

Article 9 eration of proposal or recommendation of Regent/Mayor. (l)The Minister of Agriculture files proposal of Annual Program and Budget for Development of Plants as

Article 5 Raw Materials for Bio Fuel and Plantation Revitaliza- KPEN-RP is given directly to Participating Farm- tion Program ror the following year in March of the ers and/or via Business Partner. current year to the Minister of Finance, with copies submitted to the Coordinating Minister for Economy CHAPTER IV and the State Minister for National Development Plan- SOURCES OF FUNDING ning/Head of National Development Planning Board.

Article 6 (1)Operating Bank supplies funds for KPEN-RP. (2)The Minister of Finance gives approval to the pro- posal of Annual Program and Budget for Develop- (2)Operating Bank channels and administers KPEN-RP. ment of Plants as Raw Materials for Bio Fuel and CHAPTER V Plantation Revitalization Program to the Minister of FUNDING MECHANISM Agriculture after considering the opinion of the Policy

Article 7 Committee regarding result of analysis of the Tech- (l)The Minister of Finance c.q, the Director General of nical Committee. Treasury appoints Operating Bank based on applica- tion of the Bank concerned. (3)Based on Minister of Finance's approval as meant in paragraph (2), the Minister of Agriculture stipulates (2)Operating Bank shall at least meet the following re- Annual Program and Budget for Development of quirements: . Plants for Raw Materials of Bio Fuel and Plantation a. Submitting a written commitment for providing Revitalization Program and submits it to the Operat- of funds in certain amount for KPEN-RPi ing Bank and Business Partner. b. Submitting a written commitment regarding prom- ise that the Operating Bank will take the neces- Article 10 sary actions to guarantee supply and channeling (l)The Operating Bank arranges plan for channeling of Business News 7488/21-3-2007 KPEN .•... 9A KPEN-RP based on the program and budget as meant irlg Minister for Economy, the Minister of AgriCUlture, in Article 9 paragraph (3) and Unit of Cost. ana the State.Minister for National Development Plan- ning/Head of National Development Planning Board, (2)Plan for channeling of KPEN-RP as meant in para- and carbon copy of the letter of notification, after it graph (1) is conveyed by the Operating Bank to the is signed by the Operating Bank indicating approval, Minister of Agriculture and the Minister of Finance. is re-submitted to the Minister of Finance c.q, the Director General of Treasury.

Article 11 (l)ln case that plantation is self constructed by Partici- (S}The Minister of Finance, any time, may propose re- pating Farmer; withdrawn I of KPEN-RP is implemented view/adjustment of KPEN-RP rate, in consideration directly by the Participating Farmer. of opinion of the Policy Committee. (2)ln case that plantation is constructed by Participat- (6)Provlslons regarding stipulation of KPEN-RP rate in ing Farmer in partnership with BusinessPartner, with- this Article are only applicable during development drawal of KPEN-RP is implemented by the Business period. Partner based on agreement between Business Port- ner and Participating Farmer or his authorized party.

Article 13 Risk of KPEN-RP is fully borne by the Operating CHAPTER VI Bank, and/or jointly with Business Partner, and/or jointly CREDIT REQUIREMENTS with credit guarantee institution, based on agreement.

Article 12 (1) KPEN-RP rate is equal to market rate for similar credit

Article 14 . provided that it shalt not exceed deposit guarantee Conditions and procedure of funding, channel- rate in Commercial Bank as stipulated by Deposit ing, use, administration, reporting, end monitoring of Guarantee Institution plus five percent (5%). KPEN-RP are further stipulated in a separate agreement. (2}KPEN-RP rate as meant in paragraph (1) is reviewed CHAPTER VB and re-stipulated once in every six (6) months, namely INTEREST SUBSIDY on April 1 and October 1, based on agreement be- tween the Government and Operating Bank after con- Article 15 sidering the opinion of the Policy Committee regard- (1) Part of KPEN-RP rate imposed on Participating Farmer ing result of analysis of the Technical Committee. is stipulated by the Minister of Finance based on: a. Proposal of the Minister of Agriculture; and (3)KPEN-RP rate for the first' time is equal to market b. Opinion of Policy Committee regarding result of rate for similar credit upon stipulation of this Regu- analysis of the Technical Committee. lation proViding that it shall not exceed depcsit guar antee rate in Commercial Bank as stipulated by De- (2)Stipulatioo of part of interest as meant in paragraph posit Guarantee Institution plus five percent (5%), (1) is notified, in writing, by the Minister of Finance and set forth in Funding partnership Agreement. to the Operating Bank with copies submitted to: a. The Coordinating Minister for Economy; (4)The Minister of Finance c.q. the Director General of b. The Minister of Agriculture; and Treasury notifies, in writing, about stipulation of c. The State Minister for National Development Plan- KPEN~RP rate every time it is changed to the Oper- ning/Head of National Development Planning ating Bank with copies submitted to the Coordinat- Board. Business News 7488/21-3-2007 Article 16 lOA

Article 16 performed jointly by the Ministry of Finance c.q. the (l)The government gives Interest Subsidy during de- Directorate General of Treasury and the Ministry of velopment period. Agriculture c.q, the Directorate General of Planta- tion, periodically or incidentally. (2)Development period as meant in paragraph (1) is stipulated by the Minister of Agriculture. CHAPTER VIII DEVELOPMENT, CONTROL, AND EVALUATION

Article 17 Article 19 (I)The Minister of Finance allocates Interest Subsidy in (1)Development and control of operation of KPEN-RP Draft of State Revenue and Expenditure Budget are carried out by the Minister of Finance, the Minis~ (RAPBN) with reference to the program and budget ter of Agriculture, and the Governor/Regent/Mayor as meant in Article 9 paragraph (2). in accordance with their respective duties and au~ thortties. (2)Based on allocation of Interest Subsidy available in State Revenue and Expenditure Budget (APBN), the (2)Meeting for evaluation of operation of KPEN-RP is Minister of Finance issues Letter of Stipulation of held periodically or incidentally at the initiative of Budget Unit per Work Unit (SP-SAPSK) and List of the Minister of Finance and/or the Minister of Agri~ Budget Operations Form (DIPA) for Interest Subsidy. culture, or his authorized party, with the involvement of related parties.

Article 18 (1)KPEN-RPInterest Subsidy is paid once in every three CHAPTER IX (3) months. AUDIT

Article 20 (2) Request for payment of KPEN-RP Interest Subsidy is (l)The Minister of Finance and/or the Minister of Agri- conveyed by the Operating Bank to the Minister of culture, any time, may perform audit into realization Finance for attention to the Director General of Trea- of channeling and use of KPEN-RP by Business Part- sury, along With: ner and Operating Bank. a. Description of calculation of payment of KPEN-RP Interest Subsidy; (2)In performing audit as meant in paragraph (1), the b. Description of rnutatlon or credit account of each Minister of Finance and/or the Minister of Agricul- KPEN-RP recipient; ture may ask for assistance of internal or external c. Receipt of payment of KPEN-RP Interest Subsidy auditor, signed by Director of the Operating Bank or his authorized officer. (3) Obligations of Operating Bank and/or Business Part- ner: (3) Payment of KPEN-RP Interest Subsidy is made based a. To convey related records and documents; on records on channeling of KPEN-RP conveyed by b. To give response or answer to matters questioned the Operating Bank. or needing clarification; c. To have a cooperative attitude in relation to per- (4)In the framework of evaluation of compliance with formance of audit. regulations on channeling of KPEN-RP and inspec- tion into verity of calculation of Interest Subsidy al- CHAPTER X ready paid as meant in paragraph (3), verification is REPORTS Business News 7488/21-3-2007 Article 21 ., ... llA

Article 21 as Raw Materials for Bio Fuel is implemented by the (l)The Operating Bankshall arrangeand conveyMonthly folloWing scheme: Report on Channeling and "Repayment of KPEN-RP a. Development of sugarcane plants and cassava is to the Minister of Finance c.q, the Director General funded by Food Security Credit scheme; of Treasury and the Minister of Agriculture c.q, the b. Development of castorplants is ruled by anotherfund- Director General of Plantations and Head of Finan- ing scheme. cial centre with COP\es subm\tted to the Coordinat- Ing Minister for Economy, the State Minister for Na~ Article 24 tlonal Development Planning/Head of National De- As long as part of Interest imposed on Partici- velopment Planning Board, and Governor/Regent/ pating' Farmer is not yet stipulated by the Minister of Mayor concerned Within not later than date 25 of the Finance, RegUlation of the Minister of Agriculture No. following month. 33/Permentan/OT.140/2006 is declared applicable for part of Interest. (2)The Business Partner shall arrange and convey MonthlyReporton Realization of Withdrawal and Use CHAPTER XIII of KPEN-RP to the Minister of Finance c.q, the Direc- CLOSING PROVISIONS tor General of Treasury and the Minister of Agricul- Article 2S ture c.q, the DirectorGeneral of Plantations and Head Further prOViSions regarding funding, Channel- of Financial Centre with copies submitted to the Co- ing, and administration of KPEN-RP by Operating Bank ordinating Minister for Economy, the State Minister and mechanism and procedure of calculation, collection, for National DevelopmentPlanning/Head of National payment, administration, and reconciliation/verification DevelopmentPlanning Board, and the Governor/Re- of Interest Subsidy, and other matters deemed neces- gent/Mayor concerned within not later than date 2S sary, are set forth in Funding Partnership Agreement. of the following month.

Article 26 (3)The Operating Bank and Business Partner shall con- Further provisions necessary in the framework vey other reports necessary or which are specifically of implementation of this regulation are stipulated by requested in relation to operation of KPEN-RP. the Director General of Treasury. CHAPTER XI Article 27 SANCT10NS This regulation comes into effect as from the Artide 22 date it is stipulated. In case the Operating Bank commits Violation against the provisionsof this regufation, it is subjected For public cognizance, this regulation is pub- to sencuons that include; lished by pladng it in the State Gazette of the Republic a. Administrative sanction in form of written reminder; of Indonesia. b. Deferred payment of Interest Subsidy; and c. Cease of payment of Interest Subsidy. Stipulated in Jakarta On November 3D, 2006 CHAPTER XII THE MINISTER OF fINANCE TRANSITORY PROVISIONS Sgd

Article 23 SRI MULYANI INDRAWATI Funding for development of other commodities in the framework of Program of Development of Plants -====(E)==:;;;;- Business News 7488/21-3-2007