To:

1. The Board of Directors of Venture Capital Companies; and
2. The Board of Directors of Sharia Venture Capital Companies,
   At your place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 7 /SEOJK.05/2018 CONCERNING FINANCIAL HEALTH LEVEL OF VENTURE CAPITAL COMPANIES

In accordance with the mandate of Article 28 paragraph (3), Article 29 paragraph (3), Article 30 paragraph (2), and Article 32 paragraph (4) of the Financial Services Authority Regulation Number 35/POJK.05/2015 concerning the Conduct of Business by Venture Capital Companies (State Gazette of the Republic of Indonesia Year 2015 Number 317, Supplement to the State Gazette of the Republic of Indonesia 5787), it is necessary to regulate implementation provisions regarding the financial health level for venture capital companies in this Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS
In this Circular Letter of the Financial Services Authority, the following terms are defined:

1. Venture Capital Business is a financing business through capital participation and/or financing for a certain period in the context of developing the business of partner businesses or debtors.

2. Venture Capital Company, hereinafter abbreviated as PMV, is a business entity that conducts Venture Capital Business, venture fund management, fee-based service activities, and other business activities with the approval of the Financial Services Authority.

3. Sharia Venture Capital Business is a financing business through investment activities and/or service services conducted for a certain period in the context of developing partner businesses, implemented based on Sharia principles.

4. Sharia Venture Capital Company, hereinafter abbreviated as PMVS, is a business entity that conducts Sharia Venture Capital Business, venture fund management, and other business activities with the approval of the Financial Services Authority, all of which are implemented based on Sharia principles.

5. Sharia Principles are Islamic legal provisions based on fatwas and/or Sharia conformity statements from the National Sharia Board of the Indonesian Ulema Council.

6. Sharia Business Unit, hereinafter abbreviated as UUS, is a work unit of the PMV headquarters that functions as the parent office of offices conducting Sharia Venture Capital Business activities.

7. Partner Business is an individual or company, including micro, small, medium, and cooperative enterprises, that receives capital participation and/or investment based on profit-sharing principles from PMV, PMVS, or UUS.

8. Debtor is an individual or company, including micro, small, medium, and cooperative enterprises, that receives productive business financing from PMV.

9. Financial Health Level is the result of the assessment of PMV and PMVS conditions regarding the quality of productive assets and profitability.

10. Productive Assets are all assets owned by PMV, PMVS, or UUS to obtain income in the form of equity participation, quasi-equity participation through the purchase of convertible bonds, financing through the purchase of debt instruments issued by Partner Businesses at the early start-up and/or business development stage, and/or productive business financing, including those conducted based on Sharia Principles.

11. Profitability is a measure to determine the ability of PMV or PMVS to generate profit over a certain period and to measure the effectiveness level of management in operating the company.

II. MEASUREMENT OF FINANCIAL HEALTH LEVEL

1. PMV and PMVS must at all times meet the Financial Health Level requirements with a minimum healthy condition.

2. The measurement of the Financial Health Level as referred to in item 1 includes:
   a. the quality of Productive Assets; and b. Profitability.

III. QUALITY OF PRODUCTIVE ASSETS

A. GENERAL

1. In order to measure the quality of Productive Assets as referred to in Roman II item 2 letter a, PMV must assess, monitor, and take necessary steps to maintain the quality of participation and financing receivables.

2. In order to measure the quality of Productive Assets as referred to in Roman II item 2 letter a, PMVS or UUS must assess, monitor, and take necessary steps to maintain the quality of investments.

3. The assessment of the quality of Productive Assets for PMV is determined based on its business activities, namely:
   a. equity participation; b. quasi-equity participation through the purchase of convertible bonds;
   c. financing through the purchase of debt instruments issued by Partner Businesses at the early start-up and/or business development stage; and/or
   d. productive business financing.

4. The assessment of the quality of Productive Assets for PMVS or UUS is determined based on its business activities, namely:
   a. equity participation; b. the purchase of sukuk or convertible Sharia bonds;
   c. the purchase of sukuk or Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage; and/or
   d. financing based on profit-sharing principles.

B. QUALITY OF PRODUCTIVE ASSETS IN THE FORM OF EQUITY PARTICIPATION

1. The assessment of the quality of Productive Assets in the form of equity participation on PMV as referred to in letter A item 3 letter a and equity participation on PMVS or UUS as referred to in letter A item 4 letter a is determined based on factors:
   a. the business prospects of Partner Businesses; and b. the financial performance of Partner Businesses.

2. The assessment of the factor regarding the business prospects of Partner Businesses as referred to in item 1 letter a includes the assessment of the following components:
   a. business growth potential; b. market conditions and the position of Partner Businesses in competition;
   c. management quality and labor issues;
   d. support from groups or affiliates; and e. efforts made by Partner Businesses in maintaining the environment.

3. The assessment of the factor regarding the financial performance of Partner Businesses as referred to in item 1 letter b includes the assessment of the following components:
   a. fair value of investments in Partner Businesses; b. profit acquisition;
   c. capital structure;
   d. cash flow; and e. sensitivity to market risks.

4. The determination of the quality of Productive Assets in the form of equity participation on PMV, PMVS, or UUS is conducted by analyzing the factors as referred to in item 1 while considering the components as referred to in items 2 and 3.

5. The determination of the quality of Productive Assets in the form of equity participation on PMV, PMVS, or UUS as referred to in item 4 is conducted by noting:
   a. the significance and materiality of each assessment factor and component; and b. the relevance of assessment factors and components to the respective Partner Business.

6. The assessment of the quality of Productive Assets in the form of equity participation as referred to in item 1 is classified into:
   a. good; b. special attention;
   c. substandard;
   d. doubtful; or e. loss.

7. PMV, PMVS, or UUS conducts the assessment of the quality of Productive Assets in the form of equity participation by considering the assessment guidelines for the quality of Productive Assets in the form of equity participation as contained in Appendix I, which is an integral part of this Circular Letter of the Financial Services Authority.

8. To conduct the assessment of the quality of Productive Assets in the form of equity participation, PMV, PMVS, or UUS must have internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets.

9. PMV, PMVS, or UUS must implement the internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets as referred to in item 8 consistently.

10. PMV, PMVS, or UUS prepares assessment worksheets for the quality of Productive Assets in the form of equity participation using the assessment format for the quality of Productive Assets in the form of equity participation as contained in Appendix II, which is an integral part of this Circular Letter of the Financial Services Authority.

11. PMV, PMVS, or UUS must complete the assessment worksheets for the quality of Productive Assets in the form of equity participation as referred to in item 10 with supporting documents for the assessment of the quality of Productive Assets, at least consisting of:
    a. financial reports of Partner Businesses; b. analysis of the financial performance of Partner Businesses;
    c. analysis of the business prospects of Partner Businesses; and
    d. monitoring/mentoring results reports of Partner Businesses.

12. The value of Productive Assets in the form of equity participation on PMV as referred to in letter A item 3 letter a and equity participation on PMVS or UUS as referred to in letter A item 4 letter a is calculated based on fair value according to applicable financial accounting standards.

13. Problematic Productive Assets in the form of equity participation (Non-Performing Investment and Financing/NPIF) consist of Productive Assets in the form of equity participation categorized as:
    a. substandard; b. doubtful; and
    c. loss.

14. The ratio of Problematic Productive Assets in the form of equity participation (NPIF ratio) is calculated based on the comparison between Problematic Productive Assets in the form of equity participation (NPIF) as referred to in item 13 with the total value of Productive Assets in the form of equity participation.

15. Example calculation of the ratio of Problematic Productive Assets in the form of equity participation (NPIF ratio):
    PT ABC Ventura has the following equity participation portfolio:

No.	Equity Participation	Fair Value of Investment	Asset Quality
1.	Investment in PT D	Rp20 billion	Substandard
2.	Investment in PT E	Rp5 billion	Loss
3.	Investment in PT F	Rp100 billion	Good
4.	Investment in PT G	Rp50 billion	Good
5.	Investment in PT H	Rp25 billion	Special Attention
Total		Rp200 billion

Thus, the ratio of Problematic Productive Assets in the form of equity participation (NPIF ratio) of PT ABC Ventura is calculated as follows:
NPIF Ratio = (Investment in PT D + Investment in PT E) / Total Investment NPIF Ratio = (Rp20 billion + Rp5 billion) / Rp200 billion NPIF Ratio = 12.5%

C. QUALITY OF PRODUCTIVE ASSETS IN THE FORM OF CONVERTIBLE BONDS, SUKUK/SHARIA BONDS, DEBT INSTRUMENTS, AND SUKUK/SHARIA BONDS

1. The assessment of the quality of Productive Assets in the form of:
   a. quasi-equity participation through the purchase of convertible bonds as referred to in letter A item 3 letter b; b. financing through the purchase of debt instruments issued by Partner Businesses at the early start-up and/or business development stage as referred to in letter A item 3 letter c;
   c. the purchase of sukuk or convertible Sharia bonds as referred to in letter A item 4 letter b; and
   d. the purchase of sukuk or Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage, as referred to in letter A item 4 letter c, is determined based on factors:

1. the ability of Partner Businesses to pay;
2. the financial performance of Partner Businesses; and
3. the business prospects of Partner Businesses.

2. The assessment of the ability of Partner Businesses to pay as referred to in item 1 item 1) includes the assessment of the following components:
   a. the accuracy of the payment of principal, interest, profit-sharing, and/or margin by Partner Businesses; b. the availability and accuracy of financial information of Partner Businesses;
   c. the completeness of financing documentation;
   d. compliance with financing agreements; e. the appropriateness of fund usage; and f. the fairness of the source of payment obligations.

3. The assessment of the financial performance of Partner Businesses as referred to in item 1 item 2) includes the assessment of the following components:
   a. profit acquisition; b. capital structure;
   c. cash flow; and
   d. sensitivity to market risks.

4. The assessment of the business prospects of Partner Businesses as referred to in item 1 item 3) includes the assessment of the following components:
   a. business growth potential; b. market conditions and the position of Partner Businesses in competition;
   c. management quality and labor issues;
   d. support from groups or affiliates; and e. efforts made by Partner Businesses in maintaining the environment.

5. The determination of the quality of Productive Assets in the form as referred to in item 1 letter a to letter d on PMV, PMVS, or UUS is conducted by analyzing the factors as referred to in item 1 item 1) to item 3) while considering the components as referred to in items 2 to 4.

6. The determination of the quality of Productive Assets on PMV, PMVS, or UUS as referred to in item 5 is conducted by noting:
   a. the significance and materiality of each assessment factor and component; and b. the relevance of assessment factors and components to the respective Partner Business.

7. The assessment of the quality of Productive Assets in the form of assets as referred to in item 1 is classified into:
   a. good; b. special attention;
   c. substandard;
   d. doubtful; or e. loss.

8. PMV, PMVS, or UUS conducts the assessment of the quality of Productive Assets in the form of assets as referred to in item 1 by considering the assessment guidelines for the quality of Productive Assets in forms other than equity participation as contained in Appendix III, which is an integral part of this Circular Letter of the Financial Services Authority.

9. To conduct the assessment of the quality of Productive Assets in the form as referred to in item 1 letter a to letter d, PMV, PMVS, or UUS must have internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets.

10. PMV, PMVS, or UUS must implement the internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets as referred to in item 9 consistently.

11. PMV, PMVS, or UUS prepares assessment worksheets for the quality of Productive Assets in the form as referred to in item 1 letter a to letter d using the assessment format for the quality of Productive Assets in forms other than equity participation as contained in Appendix IV, which is an integral part of this Circular Letter of the Financial Services Authority.

12. PMV, PMVS, or UUS must complete the assessment worksheets for the quality of Productive Assets as referred to in item 11 with supporting documents for the assessment of the quality of Productive Assets, at least consisting of:
    a. financial reports of Partner Businesses; b. analysis of the financial performance of Partner Businesses;
    c. analysis of the business prospects of Partner Businesses; and
    d. monitoring/mentoring results reports of Partner Businesses.

13. The value of Productive Assets in the form as referred to in item 1 is calculated based on the outstanding value of convertible bonds (quasi-equity participation), sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage.

14. Problematic Productive Assets in the form of quasi-equity participation through the purchase of convertible bonds, sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage (Gross NPIF) are calculated based on the sum of Productive Assets in the form of such assets categorized as:
    a. substandard; b. doubtful; and
    c. loss.

15. Problematic Productive Assets in the form of quasi-equity participation through the purchase of convertible bonds, sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage (Net NPIF) are calculated based on the value of Gross Problematic Productive Assets as referred to in item 14 minus the provision for write-down of Productive Assets.

16. The ratio of Problematic Productive Assets in the form of quasi-equity participation through the purchase of convertible bonds, sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage (Net NPIF ratio) is calculated based on the comparison between Net Problematic Productive Assets as referred to in item 15 with the total value of Productive Assets in such forms.

17. Example calculation of the ratio of Problematic Productive Assets in the form of quasi-equity participation through the purchase of convertible bonds, sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage (Net NPIF ratio):
    PT ABC Ventura has the following convertible bond and debt instrument participation portfolio:

No.	Convertible Bond/Debt Instrument Participation	Fair Value of Investment	Asset Quality	Provision	Participation after Deducting Provision
1.	Partner Business PT I	Rp3 billion	Loss	Rp1.5 billion	Rp1.5 billion
2.	Partner Business PT J	Rp5 billion	Good	Rp12.5 million	Rp4.98 billion
3.	Partner Business PT K	Rp500 million	Special Attention	Rp25 million	Rp475 million
4.	Partner Business PT L	Rp1.5 billion	Good	Rp3.75 million	Rp1.49 billion
Total		Rp10 billion

Thus, the ratio of Problematic Productive Assets in the form of quasi-equity participation through the purchase of convertible bonds, sukuk or convertible Sharia bonds, debt instruments/sukuk/Sharia bonds issued by Partner Businesses at the early start-up and/or business development stage (Net NPIF ratio) of PT ABC Ventura is calculated as follows:
Net NPIF Ratio = Investment in convertible bonds PT I after deducting provision / Total Investment in convertible bonds Net NPIF Ratio = Rp1.5 billion / Rp10 billion Net NPIF Ratio = 15%

D. QUALITY OF PRODUCTIVE ASSETS IN THE FORM OF PRODUCTIVE BUSINESS FINANCING AND PROFIT-SHARING FINANCING

1. The assessment of the quality of Productive Assets in the form of productive business financing for PMV as referred to in letter A item 3 letter d and profit-sharing financing for PMVS or UUS as referred to in letter A item 4 letter d is determined based on the financing value at the time of signing the agreement, namely:
   a. financing with a financing value of less than Rp1,000,000,000.00 (one billion rupiah); and b. financing with a financing value of Rp1,000,000,000.00 (one billion rupiah) or more.

2. The assessment of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing activities for PMVS or UUS as referred to in item 1 is classified into:
   a. good; b. special attention;
   c. substandard;
   d. doubtful; or e. loss.

3. The assessment of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing activities for PMVS or UUS with a financing value at the time of signing the agreement of less than Rp1,000,000,000.00 (one billion rupiah) as referred to in item 1 letter a is determined based on the criteria of the accuracy of the payment of principal and/or interest for PMV and the accuracy of the payment of principal, profit-sharing, and/or margin for PMVS or UUS.

4. The assessment of the quality of Productive Assets as referred to in item 3 is categorized as follows:
   a. good if there is no delay or there is a delay in the payment of principal, interest, profit-sharing, and/or margin up to 30 (thirty) calendar days; b. special attention if there is a delay in the payment of principal, interest, profit-sharing, and/or margin that has exceeded 30 (thirty) calendar days up to 90 (ninety) calendar days;
   c. substandard if there is a delay in the payment of principal, interest, profit-sharing, and/or margin that has exceeded 90 (ninety) calendar days up to 120 (one hundred twenty) calendar days;
   d. doubtful if there is a delay in the payment of principal, interest, profit-sharing, and/or margin that has exceeded 120 (one hundred twenty) calendar days up to 180 (one hundred eighty) calendar days; e. loss if there is a delay in the payment of principal, interest, profit-sharing, and/or margin that has exceeded 180 (one hundred eighty) calendar days.

5. In addition to the criteria of the accuracy of the payment of principal, interest, profit-sharing, and/or margin as referred to in item 3, the assessment of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing activities for PMVS or UUS with a financing value at the time of signing the agreement of Rp1,000,000,000.00 (one billion rupiah) or more can be determined by considering factors:
   a. the ability of the Debtor to pay; b. the financial performance of the Debtor; and
   c. the business prospects of the Debtor.

6. The assessment of the ability of the Debtor to pay as referred to in item 5 letter a includes the assessment of the following components:
   a. the availability and accuracy of financial information of the Debtor; b. the completeness of financing documentation;
   c. compliance with financing agreements;
   d. the appropriateness of fund usage; and e. the fairness of the source of payment obligations.

7. The assessment of the financial performance of the Debtor as referred to in item 5 letter b includes the assessment of the following components:
   a. profit acquisition; b. capital structure;
   c. cash flow; and
   d. sensitivity to market risks.

8. The assessment of the business prospects of the Debtor as referred to in item 5 letter c includes the following components:
   a. business growth potential; b. market conditions and the position of the Debtor in competition;
   c. management quality and labor issues;

d. support from the group or affiliate; and

e. efforts made by the Debtor to maintain the environment.

9. The determination of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing for PMVS or UUS with financing values at the time of contract signing of Rp1,000,000,000.00 (one billion rupiah) or more is conducted by analyzing the factors referred to in number 5, considering the components referred to in numbers 6 through 8.

10. The determination of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing for PMVS or UUS with financing values at the time of contract signing of Rp1,000,000,000.00 (one billion rupiah) or more as referred to in number 9 is conducted by considering:

a. the significance and materiality of each assessment factor and component; and

b. the relevance of the assessment factors and components to the respective Debtor.

11. PMV, PMVS, or UUS conducts an assessment of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing activities for PMVS or UUS with financing values of Rp1,000,000,000.00 (one billion rupiah) or more as referred to in number 1 letter b, by considering the guidelines for assessing the quality of Productive Assets in forms other than equity participation as contained in Appendix III, which is an integral part of this Financial Services Authority Circular.

12. To conduct the assessment of the quality of productive assets in the form of productive business financing or profit-sharing financing activities, PMV, PMVS, or UUS must have internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets.

13. PMV, PMVS, or UUS must consistently implement internal guidelines regarding the determination of the basis for assessing the quality of Productive Assets as referred to in number 12.

14. PMV, PMVS, or UUS prepares work papers for the assessment of the quality of Productive Assets in the form of productive business financing for PMV or profit-sharing financing activities for PMVS or UUS with financing values of Rp1,000,000,000.00 (one billion rupiah) or more as referred to in number 1 letter b, using the assessment format for the quality of Productive Assets in forms other than equity participation as contained in Appendix IV, which is an integral part of this Financial Services Authority Circular.

15. PMV, PMVS, or UUS must complete the work papers for the assessment of the quality of Productive Assets in the form of productive business financing or profit-sharing financing activities with financing values of Rp1,000,000,000.00 (one billion rupiah) or more as referred to in number 14, with supporting documents for the assessment of the quality of Productive Assets, at minimum consisting of:

a. the Debtor's financial statements;

b. the Debtor's financial condition (financial performance) analysis;

c. the Debtor's business prospect analysis; and

d. the monitoring/assistance results report for the Debtor.

16. The value of Productive Assets in the form of productive business financing for PMV is calculated based on the outstanding principal (outstanding principal), which is the total receivables minus:

a. unearned interest income; and

b. other income and expenses related to financing transactions that are amortized.

17. The value of Productive Assets in the form of profit-sharing financing for PMVS or UUS is calculated based on the outstanding principal (outstanding principal), which is the total receivables minus:

a. unearned revenue; and

b. other income and expenses related to financing transactions that are amortized.

18. Productive Assets in the form of productive business financing or profit-sharing financing that are problematic (Gross NPIF) are calculated based on the sum of Productive Assets in the form of such Productive Assets categorized as:

a. substandard;

b. doubtful; and

c. loss.

19. Productive Assets in the form of productive business financing or profit-sharing financing that are problematic (Net NPIF) are calculated based on the value of Gross NPIF as referred to in number 18, minus the provisions for write-off of Productive Assets.

20. The ratio of Productive Assets in the form of productive business financing and/or profit-sharing financing that are problematic (Net NPIF ratio) is calculated based on the comparison between Net NPIF as referred to in number 19 with the total value of Productive Assets in the form of such assets.

21. Example calculation of the ratio of Productive Assets in the form of productive business financing and/or profit-sharing financing that are problematic (Net NPIF ratio):

PT ABC Ventura has the following productive business financing portfolio:

No	Financing	Productive Business	Outstanding Financing	Asset Quality	Provisions	Outstanding Financing Minus Provisions
1.	Debtor M	Rp500 million	Standard	Rp1.25 million	Rp498.75 million
2.	Debtor N	Rp300 million	Standard	Rp750 thousand	Rp299.25 million
3.	Debtor O	Rp200 million	Loss	Rp200 million	Rp0
4.	Debtor P	Rp5 billion	Standard	Rp7.5 billion	Rp4.99 billion
5.	Debtor Q	Rp3 billion	Standard	Rp20 million	Rp2.98 billion
6.	Debtor R	Rp400 million	Special Attention	Rp20 million	Rp380 million
7.	Debtor S	Rp600 million	Substandard	Rp60 million	Rp540 million
Total		Rp10 billion

Thus, the ratio of Productive Assets in the form of productive business financing and/or profit-sharing financing that are problematic (Net NPIF ratio) for PT ABC Ventura is calculated as follows:

Net NPIF Ratio = (Sum of financing receivables from Debtor O and Debtor S after deducting provisions) / Total Investment

Net NPIF Ratio = (Rp0 million + Rp540 million) / Rp10 billion

Net NPIF Ratio = 5.40%

E. PROVISIONS FOR WRITE-OFF OF PRODUCTIVE ASSETS

1. For PMVs conducting financing activities based on:

a. participation through the purchase of convertible bonds (quasi equity participation);

b. financing through the purchase of debt instruments issued by Business Partners in the early start-up (start-up) and/or business development stage; and/or

c. productive business financing,

it is mandatory to calculate and establish provisions for the write-off of Productive Assets.

2. For PMVSs and UUSs conducting financing activities based on:

a. the purchase of sukuk or convertible Sharia bonds;

b. the purchase of sukuk or Sharia bonds issued by Business Partners in the early start-up (start-up) and/or business development stage; and/or

c. financing based on profit-sharing principles,

it is mandatory to calculate and establish provisions for the write-off of Productive Assets.

3. The calculation of provisions for the write-off of Productive Assets as referred to in numbers 1 and 2 is set at a minimum of:

a. 0.5% (zero point five percent) of the outstanding value of each Productive Asset with standard quality after deducting collateral;

b. 5% (five percent) of the outstanding value of each Productive Asset with special attention quality after deducting collateral;

c. 10% (ten percent) of the outstanding value of each Productive Asset with substandard quality after deducting collateral;

d. 50% (fifty percent) of the outstanding value of each Productive Asset with doubtful quality after deducting collateral;

e. 100% (one hundred percent) of the outstanding value of each Productive Asset with loss quality after deducting collateral.

4. The calculation of provisions for the write-off of Productive Assets for Business Partners in priority economic sectors is exempt from the provisions as referred to in number 3 and is set at a minimum of:

a. 0.25% (zero point two five percent) of the outstanding value of each Productive Asset with standard quality after deducting collateral;

b. 2.5% (two point five percent) of the outstanding value of each Productive Asset with special attention quality after deducting collateral;

c. 5% (five percent) of the outstanding value of each Productive Asset with substandard quality after deducting collateral;

d. 25% (twenty five percent) of the outstanding value of each Productive Asset with doubtful quality after deducting collateral;

e. 50% (fifty percent) of the outstanding value of each Productive Asset with loss quality after deducting collateral.

5. Priority economic sectors as referred to in number 4 include the following economic sectors:

a. creative economy, including fashion, culinary, crafts, film, applications, music, electronic-based trade (e-commerce);

b. food security;

c. provision of simple houses and/or simple apartment buildings;

d. new and renewable energy;

e. environmentally conscious tourism;

f. water management;

g. electricity;

h. supporting infrastructure for land, sea, and air transportation consisting of the construction of roads, bridges, railway tracks, ports, and airports; and

i. goods and/or services for financing the maritime sector.

6. PMV, PMVS, or UUS must establish provisions for the write-off of Productive Assets at a minimum in accordance with the provisions as referred to in number 3 or number 4, in monthly reports submitted to the Financial Services Authority.

7. The value of collateral as referred to in number 3 or number 4 that can be calculated as a reduction of the Productive Asset balance is set at a maximum equal to the balance of its receivables.

8. Types of collateral that can be calculated in the calculation of provisions for the write-off of Productive Assets are as follows:

a. bank deposits and security deposits;

b. gold;

c. government debt instruments, sukuk, and/or other securities issued by the government or Bank Indonesia;

d. government and foreign government guarantees that fall into the investment grade category;

e. securities listed on the stock exchange or securities that fall into the investment grade category from securities rating agencies licensed by the Financial Services Authority;

f. Business Partner shares, for collateral related to participation activities in the form of the purchase of convertible bonds or sukuk or convertible Sharia bonds;

g. mutual fund participation units;

h. land, houses, apartment buildings, commercial houses, and office buildings; and

i. aircraft, sea vessels, motor vehicles, heavy equipment, inventory, warehouse receipts, and/or machinery.

9. Collateral in the form of bank deposits and security deposits (security deposit) as referred to in number 8 letter a and in the form of government debt instruments, sukuk, and/or other securities issued by the government or Bank Indonesia as referred to in number 8 letter c must meet the following requirements:

a. can only be liquidated with the approval of PMV and PMVS (blocked and accompanied by a power of attorney);

b. the blocking period is at least equal to the term of the Productive Asset; and

c. has strong legal ties and is legally enforceable.

10. Collateral in the form of government and foreign government guarantees that fall into the investment grade category as referred to in number 8 letter d must meet the following requirements:

a. unconditional and irrevocable;

b. must be liquidable within a maximum of 5 (five) working days since the claim is submitted, including partial liquidation to pay installments of principal, interest, profit sharing, and/or margin; and

c. has a term at least equal to the financing term.

11. Collateral as referred to in number 8 is accompanied by valid legal documents.

12. Collateral as referred to in number 8 letters e through i must:

a. be bound in accordance with applicable laws and regulations to provide preferential rights for PMV, PMVS, or UUS, including land rights, mortgages, fiduciary rights, or pledges; and

b. be insured with clauses that give PMV, PMVS, or UUS the right to receive insurance payments in the event of a claim payment and have an insurance coverage term at least equal to the financing term.

13. Insurance companies providing insurance protection for collateral as referred to in number 12 letter b must meet the following requirements:

a. have a business license from the Financial Services Authority; and

b. are not subject to sanctions restricting business activities or freezing business activities from the Financial Services Authority.

14. The method for calculating the value of collateral as a reduction of provisions for the write-off of Productive Assets is established as follows:

a. bank deposits and security deposits are set at nominal value;

b. gold is set at fair value;

c. government debt instruments, sukuk, and/or other securities issued by the government or Bank Indonesia are set at fair value;

d. government and foreign government guarantees that fall into the investment grade category are set at a maximum equal to the guarantee value;

e. securities listed on the stock exchange or securities that fall into the investment grade category from securities rating agencies licensed by the Financial Services Authority are set at a maximum of 80% (eighty percent) of the fair value of the securities;

f. Business Partner shares, for collateral related to participation activities in the form of the purchase of convertible bonds or sukuk or convertible Sharia bonds, are set at a maximum of 80% (eighty percent) of the fair value of the shares;

g. mutual fund participation units are set at a maximum of 80% (eighty percent) of the net asset value;

h. land, houses, apartment buildings, commercial houses, and office buildings are set at a maximum equal to independent appraisal value, internal appraisal value, sales transaction value, or tax object sale value;

i. aircraft, sea vessels, motor vehicles, heavy equipment, inventory, warehouse receipts, and/or machinery are set at:

1. 100% (one hundred percent) of the independent appraisal value or internal appraisal value, if:

a) independent appraisal was conducted within the last 12 (twelve) months; or

b) internal appraisal was conducted within the last 12 (twelve) months;

2. 80% (eighty percent) of the independent appraisal value or internal appraisal value if:

a) independent appraisal was conducted more than 12 (twelve) months but not exceeding 24 (twenty four) months; or

b) internal appraisal was conducted more than 12 (twelve) months but not exceeding 18 (eighteen) months;

3. 60% (sixty percent) of the independent appraisal value or internal appraisal value, if:

a) independent appraisal was conducted more than 24 (twenty four) months but not exceeding 36 (thirty six) months; or

b) internal appraisal was conducted more than 18 (eighteen) months but not exceeding 24 (twenty four) months;

4. 40% (forty percent) of the independent appraisal value or internal appraisal value, if:

a) independent appraisal was conducted more than 36 (thirty six) months but not exceeding 48 (forty eight) months; or

b) internal appraisal was conducted more than 24 (twenty four) months but not exceeding 30 (thirty) months;

5. 20% (twenty percent) of the independent appraisal value or internal appraisal value, if:

a) independent appraisal was conducted more than 48 (forty eight) months but not exceeding 60 (sixty) months; or

b) internal appraisal was conducted more than 30 (thirty) months but not exceeding 36 (thirty six) months;

6. 0% (zero percent) of the independent appraisal value or internal appraisal value, if:

a) independent appraisal was conducted more than 60 (sixty) months; or

b) internal appraisal was conducted more than 36 (thirty six) months.

15. In calculating collateral, PMV, PMVS, or UUS must have and implement guidelines for determining the basis for collateral valuation.

16. PMV, PMVS, or UUS must re-evaluate the calculation of provisions for the write-off of Productive Assets at least every 6 (six) months for the positions in June and December.

17. The Financial Services Authority has the authority to recalculate the value of collateral that has been deducted or matters that can reduce the provision in the calculation of provisions for the write-off of Productive Assets.

18. PMV, PMVS, or UUS must adjust the calculation of provisions for the write-off of Productive Assets in accordance with the calculations established by the Financial Services Authority.

19. PMV, PMVS, or UUS must notify Business Partners or Debtors regarding the return of collateral or documents related to collateral no later than 1 (one) month from the date of settlement of Productive Assets.

20. The method for calculating provisions is done by calculating the difference between the Productive Asset balance and the value of collateral, considering the percentage of provision calculation according to the quality of Productive Assets, with calculation examples as follows:

Example 1:

At the beginning of January 2018, Debtor A received productive business financing from PT ABC Ventura with a nominal value of Rp70,000,000.00 with collateral in the form of a motor vehicle with a price based on independent appraisal valued at Rp100,000,000.00.

At the end of June 2021, the remaining balance of receivables for Debtor A was Rp50,000,000.00 and Debtor A did not make payments for 9 months (loss quality). PT ABC Ventura has never re-evaluated the value of the aforementioned collateral.

Based on the regulations, the basis for collateral valuation used in the provision calculation is 40% of the independent appraisal value because the calculation date was 42 months from the date of independent appraisal. The value of collateral that can be recognized as a reduction in provisions is Rp100,000,000.00 x 40% = Rp40,000,000.00.

Thus, the provision for financing receivables write-off is 100% x (receivable balance - collateral that can be considered) = 100% x (Rp50,000,000.00 - Rp40,000,000.00) = Rp10,000,000.00.

Example 2:

At the beginning of January 2018, Debtor A received multi-purpose financing from PT ABC Ventura with a nominal value of Rp70,000,000.00 with collateral in the form of a motor vehicle with a price based on internal appraisal valued at Rp100,000,000.00.

At the end of March 2020, the remaining balance of receivables for Debtor A was Rp30,000,000.00 and Debtor A did not make payments for 9 months (loss quality). PT ABC Ventura has never re-evaluated the value of the aforementioned collateral.

Based on the regulations, the basis for collateral valuation used in the provision calculation is 40% of the internal appraisal value because the calculation date was 27 months from the date of the internal appraisal transaction. The value of collateral that can be recognized as a reduction in provisions is Rp100,000,000.00 x 40% = Rp40,000,000.00.

However, because the financing receivable balance is smaller than the collateral value, the collateral value that can be considered is at most equal to the financing receivable balance, namely Rp30,000,000.00.

Thus, the provision for financing receivables write-off is 100% x (receivable balance - collateral that can be considered) = 100% x (Rp30,000,000.00 - Rp30,000,000.00) = Rp0.00.

IV. ASSESSMENT PROCEDURES FOR PROFITABILITY FACTORS

1. Assessment of the ability of PMV and PMVS to generate profit consists of several ratios, namely:

a. Return on Asset Ratio

The ratio used to measure the ability of PMV and PMVS to generate profit from assets used to support the operations and capital of PMV and PMVS.

b. Return on Equity Ratio

The ratio used to measure the ability of PMV and PMVS to generate profit from equity.

c. Ratio of operational expenses to operational income

The ratio used to measure the ability of PMV and PMVS to measure the level of efficiency and the ability of PMV and PMVS to carry out its operational activities.

2. The calculation of the Profitability Ratio is established as follows:

a. Return on Asset Ratio:

1. The Return on Asset Ratio is calculated from the comparison between profit or loss before tax to total assets.

2. For the calculation of profit or loss before tax, an annualized calculation is used. As an example, for the March report position, the calculation method is as follows:

(profit or loss before tax per March position / 3) x 12.

3. Profit or loss before tax per the reporting month is calculated based on the total income minus total expenses before deducting estimated income tax.

4. For the calculation of total assets, the average assets throughout the year are used. As an example, for the March report position, the calculation method is as follows:

(Sum of total assets from January to March) / 3.

5. Example calculation of the Return on Asset ratio:

Financial data for PT ABC Ventura as of May 2018:

Profit before tax to May 2018 = Rp12.5 billion

Average assets to May 2018 = Rp1,600 billion

Thus, the Return on Asset ratio value for PT ABC Ventura as of May 2018 is:

Annualized profit before tax = (Rp12.5 billion / 5) x 12 = Rp30 billion

Return on Asset Ratio = Rp30 billion / Rp1,600 billion = 1.88%.

b. Return on Equity Ratio:

1. The Return on Equity Ratio is calculated from the comparison between net profit to equity.

2. For the calculation of net profit or loss, an annualized calculation is used. As an example, for the March report position, the calculation method is as follows:

(net profit or loss per March position / 3) x 12.

3. Net profit or loss per the reporting month is calculated based on the total income minus total expenses after deducting estimated income tax.

4. For the calculation of total equity, the average equity throughout the year is used. As an example, for the March report position, the calculation method is as follows:

(sum of total equity from January to March) / 3.

5. Example calculation of the Return on Equity ratio:

Financial data for PT ABC Ventura as of May 2018:

Net profit to May 2018 = Rp10 billion

Average equity to May 2018 = Rp800 billion

Thus, the Return on Equity ratio value for PT ABC Ventura as of May 2018 is:

Annualized net profit = (Rp10 billion / 5) x 12 = Rp24 billion

Return on Equity Ratio = Rp24 billion / Rp800 billion = 3%

c. Ratio of operational expenses to operational income:

1. The ratio of operational expenses to operational income is calculated from the comparison between operational expenses to the operational income of PMV, PMVS, or UUS.

2. The details of operational income and operational expense accounts in the calculation of the ratio of operational expenses to operational income refer to the Financial Services Authority circular regarding monthly reports for PMV, PMVS, or UUS.

3. Example calculation of the ratio of operational expenses to operational income:

Financial data for PT ABC Ventura as of May 2018:

Operational expenses = Rp100 billion

Operational Income = Rp130 billion
Thus, the ratio of operational expenses to operational income for PT ABC Ventura as of May 2018 is:
Ratio of operational expenses to operational income = Rp100 billion/Rp130 billion = 76.92%

V. PROCEDURES FOR MEASURING FINANCIAL HEALTH LEVEL

1. The measurement of the Financial Health Level of Venture Capital Companies (PMV) and Venture Capital Business Entities (PMVS) is conducted through the following stages:
   a. calculation of the value of each ratio for Productive Asset Quality and Profitability; b. determination of value criteria for each ratio related to the Productive Asset Quality factor and the Profitability factor;
   c. determination of composite value criteria for the Productive Asset Quality factor and the Profitability factor; and
   d. determination of the composite rating of the Financial Health Level of PMV and PMVS.

2. The stage of calculating the value of each ratio for Productive Asset Quality and Profitability as referred to in paragraph 1 letter a is conducted with reference to the following provisions:
   a. Productive Asset Quality factor:

1. calculation of the ratio of Productive Assets in the form of problematic equity participation (NPIF ratio) as referred to in Roman III letter B number 14;
2. calculation of the ratio of Productive Assets in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or problematic business development stage (net NPIF ratio) as referred to in Roman III letter C number 16;
3. calculation of the ratio of Productive Assets in the form of productive business financing and/or problematic net profit-sharing principle-based financing (net NPIF ratio) as referred to in Roman III letter D number 20;

b. Profitability factor:

1. calculation of the Return on Asset ratio as referred to in Roman IV number 2 letter a;
2. calculation of the Return on Equity ratio as referred to in Roman IV number 2 letter b; and
3. calculation of the ratio of operational expenses to operational income as referred to in Roman IV number 2 letter c.

3. The stage of determining value criteria for each ratio related to the Productive Asset Quality factor and the Profitability factor as referred to in paragraph 1 letter b is established based on the following provisions:
   a. determination of Productive Asset Quality value criteria is established based on the following provisions:

1. determination of Productive Asset Quality value criteria in the form of equity participation is as follows:
   a) Value 1 if PMV and PMVS have a ratio of Productive Assets in the form of problematic equity participation (NPIF ratio) of less than 5% (five percent); b) Value 2 if PMV and PMVS have a ratio of Productive Assets in the form of problematic equity participation (NPIF ratio) from 5% (five percent) to less than 10% (ten percent); c) Value 3 if PMV and PMVS have a ratio of Productive Assets in the form of problematic equity participation (NPIF ratio) from 10% (ten percent) to less than 25% (twenty-five percent); d) Value 4 if PMV and PMVS have a ratio of Productive Assets in the form of problematic equity participation (NPIF ratio) of 25% (twenty-five percent) or more;

2. determination of Productive Asset Quality value criteria in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, and/or debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or business development stage is as follows:
   a) Value 1 if PMV and PMVS have a ratio of Productive Assets in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or problematic business development stage (net NPIF ratio) of less than 5% (five percent); b) Value 2 if PMV and PMVS have a ratio of Productive Assets in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or problematic business development stage (net NPIF ratio) from 5% (five percent) to less than 10% (ten percent); c) Value 3 if PMV and PMVS have a ratio of Productive Assets in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or problematic business development stage (net NPIF ratio) from 10% (ten percent) to less than 25% (twenty-five percent); d) Value 4 if PMV and PMVS have a ratio of Productive Assets in the form of participation through the purchase of convertible bonds (quasi equity participation), sukuk or convertible Islamic bonds, debt instruments/sukuk/Islamic bonds issued by Business Partners at the early start-up (start-up) and/or problematic business development stage (net NPIF ratio) of 25% (twenty-five percent) or more;

3. determination of Productive Asset Quality value criteria in the form of productive business financing and profit-sharing principle-based financing is as follows:
   a) Value 1 if PMV and PMVS have a ratio of Productive Assets in the form of problematic productive business financing and/or profit-sharing principle-based financing (net NPIF ratio) of less than 5% (five percent); b) Value 2 if PMV and PMVS have a ratio of Productive Assets in the form of problematic productive business financing and/or profit-sharing principle-based financing (net NPIF ratio) from 5% (five percent) to less than 10% (ten percent); c) Value 3 if PMV and PMVS have a ratio of Productive Assets in the form of problematic productive business financing and/or profit-sharing principle-based financing (net NPIF ratio) from 10% (ten percent) to less than 15% (fifteen percent); d) Value 4 if PMV and PMVS have a ratio of Productive Assets in the form of problematic productive business financing and/or profit-sharing principle-based financing (net NPIF ratio) of 15% (fifteen percent) or more;

4. Example of determining Productive Asset Quality value criteria:
   Regarding the data on the ratio of problematic Productive Assets of PT ABC Ventura as referred to in Roman III letter B number 15, Roman III letter C number 17, Roman III letter D number 21, the calculation of the value determination criteria for Productive Asset Quality is presented in the table as follows:

No.	Type of Asset	NPIF Net Value	Criteria Value
1.	Equity Participation	Rp200 billion	12.5%	3
2.	Convertible Bonds	Rp10 billion	15%	3
3.	Productive Business Financing	Rp10 billion	5.4%	2
Total		Rp220 billion	2.95

b. determination of Profitability value criteria is established based on the following provisions:

1. determination of value criteria for the Return on Asset ratio is as follows:
   a) Value 1 if PMV and PMVS have a Return on Asset ratio of 2% (two percent) or more; b) Value 2 if PMV and PMVS have a Return on Asset ratio from 1% (one percent) to less than 2% (two percent); c) Value 3 if PMV and PMVS have a Return on Asset ratio from 0% (zero percent) to less than 1% (one percent); d) Value 4 if PMV and PMVS have a Return on Asset ratio of less than 0% (zero percent);

2. determination of value criteria for the Return on Equity ratio is as follows:
   a) Value 1 if PMV and PMVS have a Return on Equity ratio of 4% (four percent) or more; b) Value 2 if PMV and PMVS have a Return on Equity ratio from 2% (two percent) to less than 4% (four percent); c) Value 3 if PMV and PMVS have a Return on Equity ratio from 0% (zero percent) to less than 2% (two percent); d) Value 4 if PMV and PMVS have a Return on Equity ratio of less than 0% (zero percent);

3. determination of value criteria for the ratio of operational expenses to operational income is as follows:
   a) Value 1 if PMV and PMVS have a ratio of operational expenses to operational income of less than 80% (eighty percent); b) Value 2 if PMV and PMVS have a ratio of operational expenses to operational income from 80% (eighty percent) to less than 90% (ninety percent); c) Value 3 if PMV and PMVS have a ratio of operational expenses to operational income from 90% (ninety percent) to less than 100% (one hundred percent); d) Value 4 if PMV and PMVS have a ratio of operational expenses to operational income of 100% (one hundred percent) or more;

4. Example of determining Profitability factor value criteria:
   Regarding the data on the Profitability ratios of PT ABC Ventura as referred to in Roman IV number 2 letter a item 5), Roman IV number 2 letter b item 5), Roman IV number 2 letter c item 3), the calculation of the value determination criteria for Productive Asset Quality is presented in the table as follows:

No.	Profitability Ratio	NPIF Net	Criteria Value
1.	Return on Asset Ratio	1.88%	2
2.	Return on Equity Ratio	3%	2
3.	Ratio of operational expenses to operational income	76.92%	1

4. The stage of determining composite value criteria for the Productive Asset Quality factor and Profitability factor as referred to in paragraph 1 letter c is established based on the following provisions:
   a. Productive Asset Quality factor:

1. To determine the composite value criteria for the Productive Asset Quality factor, a weighted average method of the value criteria for each Productive Asset category is used, with weights for each Productive Asset category corresponding to the nominal amount of each Productive Asset;

2. Determination of composite value criteria for the Productive Asset Quality factor is as follows:
   a) Value 1 if PMV and PMVS have a composite value of the Productive Asset Quality factor from 1 (one) to less than 1.75 (one point seven five); b) Value 2 if PMV and PMVS have a composite value of the Productive Asset Quality factor from 1.75 (one point seven five) to less than 2.5 (two point five); c) Value 3 if PMV and PMVS have a composite value of the Productive Asset Quality factor from 2.5 (two point five) to less than 3.25 (three point two five); d) Value 4 if PMV and PMVS have a composite value of the Productive Asset Quality factor from 3.25 (three point two five) to 4 (four);

3. Example of determining composite value criteria for Productive Asset Quality:
   Regarding the data on the determination of Productive Asset Quality value criteria for PT ABC Ventura as referred to in paragraph 3 letter b item 4), the determination of composite value criteria for Productive Asset Quality is presented in the table as follows:

Composite value of Productive Asset Quality factor = [(Rp200 billion/Rp220 billion)*3]+[(Rp10 billion/Rp220 billion)*3]+[(Rp10 billion/Rp220 billion)*2] = 2.95 The composite value criteria for the Productive Asset Quality factor with a composite value of 2.95 is 3;

b. Profitability factor:

1. To determine the composite value criteria for the Profitability factor, a weighted average method of the value criteria for each Profitability ratio is used, with the weight for each ratio being 33.33% (thirty-three point three three percent);

2. Determination of composite value criteria for the Profitability factor is as follows:
   a) Value 1 if PMV and PMVS have a composite value of the Profitability factor from 1 (one) to less than 1.75 (one point seven five); b) Value 2 if PMV and PMVS have a composite value of the Profitability factor from 1.75 (one point seven five) to less than 2.5 (two point five); c) Value 3 if PMV and PMVS have a composite value of the Profitability factor from 2.5 (two point five) to less than 3.25 (three point two five); d) Value 4 if PMV and PMVS have a composite value of the Profitability factor from 3.25 (three point two five) to 4 (four);

3. Example of determining composite value criteria for Profitability:
   Regarding the data on the determination of Productive Asset Quality value criteria for PT ABC Ventura as referred to in paragraph 3 letter a item 4), the determination of composite value criteria for the Profitability factor is presented in the table as follows:

Composite value of Profitability factor = (33.33%*2)+ (33.33%*2]+ (33.33%)*1 = 1.67 The composite value criteria for the Profitability factor with a composite value of 1.67 is 1.

5. The stage of determining the composite rating of the Financial Health Level of PMV and PMVS as referred to in paragraph 1 letter d is conducted with reference to the following provisions:
   a. Based on the value of each composite value of the Productive Asset Quality factor and Profitability factor as referred to in paragraph 4, the composite value of the Financial Health Level is subsequently established through weighting as follows:

1. For PMV and PMVS that have a proportion of equity participation activities compared to total business activities of less than 100% (one hundred percent), it is established as:
   (a) a weight of 60% (sixty percent) for the value criteria of the Productive Asset Quality factor; and (b) a weight of 40% (forty percent) for the value criteria of the Profitability factor;
2. For PMV and PMVS that have a proportion of equity participation activities compared to total business activities of 100% (one hundred percent), it is established as:
   (a) a weight of 80% (eighty percent) for the value criteria of the Productive Asset Quality factor; and (b) a weight of 20% (twenty percent) for the value criteria of the Profitability factor; b. Based on the composite value of the Financial Health Level as referred to in paragraph 4, the Financial Health Level is established as follows:
3. very healthy if PMV and PMVS have a Financial Health Level value from 1 (one) to less than 1.75 (one point seven five);
4. healthy if PMV and PMVS have a Financial Health Level value from 1.75 (one point seven five) to less than 2.5 (two point five);
5. less healthy if PMV and PMVS have a Financial Health Level value from 2.5 (two point five) to less than 3.25 (three point two five);
6. unhealthy if PMV and PMVS have a Financial Health Level value from 3.25 (three point two five) to 4 (four);
   c. Example of determining Financial Health Level:
   Regarding the data on the determination of composite value criteria for the Productive Asset Quality factor of PT ABC Ventura as referred to in paragraph 4 letter a item 3) and the data on the determination of value criteria for the Profitability factor of PT ABC Ventura as referred to in paragraph 4 letter b item 3), the determination of the composite value criteria for the Financial Health Level of PT ABC Ventura is:

Composite value of Financial Health Level = (60%*3)+ (40%*1) = 2.2 => healthy Thus, PT ABC Ventura has a Financial Health Level categorized as healthy.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

VI. VERIFICATION AND VALIDATION BY THE FINANCIAL SERVICES AUTHORITY

1. The Financial Services Authority may conduct verification and validation of the truthfulness and fairness of the data serving as the basis for the calculation of the Financial Health Level compiled by PMV, PMVS, or UUS.
2. In the event of a difference between the Financial Health Level compiled by PMV, PMVS, or UUS and the Financial Health Level resulting from the verification and validation by the Financial Services Authority, the Financial Health Level established by the Financial Services Authority shall apply.

VII. TRANSITIONAL PROVISIONS

Collateral obtained by PMV, PMVS, or UUS before the issuance of this Financial Services Authority Circular is exempt from the provisions as referred to in Roman III letter E number 9 to number 13.

VIII. CLOSING

The provisions in this Financial Services Authority Circular shall take effect on the date of issuance.

Issued in Jakarta on 7 March 2018
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICES INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

APPENDIX I
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 7 /SEOJK.05/2018
REGARDING
FINANCIAL HEALTH LEVEL OF VENTURE CAPITAL COMPANIES

GUIDELINES FOR ASSESSING PRODUCTIVE ASSET QUALITY IN THE FORM OF EQUITY PARTICIPATION

	Special Mention	Substandard	Doubtful	Loss
1. Business Prospects of Business Partner
Growth Potential of Business	Business activities have good growth potential compared to the average of similar industries.	Business activities have limited growth potential compared to the average of similar industries.	Business activities show very limited or no growth potential compared to the average of similar industries.	Business activities, compared to the average of similar industries.
Market Conditions and Business Partner's Position in Competition	• Stable market and not affected by changes in economic conditions.<br>• Limited competition, including strong position in the market.<br>• Good market position, not much affected by changes in economic conditions.<br>• Market share comparable to competitors.	• Market affected by changes in economic conditions.<br>• Market position is quite good but has many competitors, yet can recover.<br>• Operates at optimum capacity.	• Market very affected by changes in economic conditions.<br>• Business competition is very tight and company operations.<br>• Loss of market share in line with declining economic conditions.<br>• Operations are not continuous.	• Business operations are very uncertain and difficult to recover.<br>• High probability that business activities will cease.
Management Quality and Labor Issues	• Company planning is mature, supported by good systems.<br>• Company pays great attention to human resources.<br>• Adequate workforce and never recorded labor disputes or strikes, or has experienced minor disputes/strikes that were resolved well.	• Company planning is mature but supported by limited systems.<br>• Company pays attention to human resources.<br>• Workforce is generally adequate, has experienced labor disputes/strikes that were resolved well but there is still a possibility of recurrence.	• Company planning is quite mature but supported by limited systems.<br>• Company pays sufficient attention to human resources.<br>• Excess workforce and labor disputes/strikes with fairly material impact on Business Partner's activities.	• Company planning is immature with poor or non-existent systems.<br>• Company does not pay attention to human resources.<br>• Excess workforce in large numbers causing unrest and labor disputes/strikes with material impact on Business Partner's activities.
Support from Group or Affiliates	Affiliate or group company is stable and supports the business.	Affiliate or group company is stable and has no burdensome impact on the Business Partner.	Relationship with affiliate or group company begins to have a burdensome impact on the Business Partner.	Affiliate or group company has provided a burdensome impact on the Business Partner.	Affiliate or group company is very detrimental to the Business Partner.
Business Partner's Efforts to Maintain the Environment	Environmental management efforts are good and achieve at least the minimum requirements as regulated in laws and regulations.	Environmental management efforts are poor and have not reached the minimum requirements as regulated in laws and regulations.	Environmental management efforts are poor and have not reached the minimum requirements as regulated in laws and regulations, with fairly material deviations.	Company has not implemented meaningful environmental management efforts or has implemented efforts but has not reached the requirements as regulated in laws and regulations with material deviations.	Company has not implemented meaningful environmental management efforts or has implemented efforts but has not reached the minimum requirements as regulated in laws and regulations, and has the possibility of being sued in court.
2. Financial Condition (Financial Performance)
Fair Value of Investment in Business Partner	Fair value of investment in Business Partner is higher than its acquisition cost.	Fair value of investment in Business Partner is equal to or greater than 75% (seventy-five percent) of its acquisition cost but less than the initial acquisition cost value.	Fair value of investment in Business Partner is equal to or greater than 50% (fifty percent) of its acquisition cost but less than 75% (seventy-five percent) of the initial acquisition cost value.	Fair value of investment in Business Partner is equal to or greater than 25% (twenty-five percent) of its acquisition cost but less than 50% (fifty percent) of the initial acquisition cost value.	Fair value of investment in Business Partner is equal to or less than 25% (twenty-five percent) of its acquisition cost but less than the initial acquisition cost value.
Profit Generation	• High and stable profit generation.<br>• Profits are used to finance operations and expand business, and can even pay dividends to investors.<br>• Company can...	• Profit generation is quite good but has potential to decline.<br>• Profits are sufficient to finance operations and expand business but cannot yet pay dividends to investors.<br>• Profit generation is low.	• Profits are still sufficient to finance business operations.<br>• Company cannot expand because profit generation is insufficient to expand.<br>• Very small or negative profits.<br>• Operational losses are financed by asset sales.<br>• Company cannot expand.<br>• Experiencing large losses.<br>• Business Partner is unable to meet all obligations and business activities cannot be maintained.	• Company cannot...

Appendix II

Circular Letter of the Financial Services Authority

Number 7/SEOJK.05/2018
Regarding
Financial Health Level of Venture Capital Companies

WORK PAPER FOR ASSESSING THE QUALITY OF PRODUCTIVE ASSETS IN THE FORM OF EQUITY PARTICIPATION

No.	Assessment Component	Condition*	Quality
I.	Business Prospect Factors of the Counterparty
1.	Business growth potential
2.	Market conditions and Counterparty's position in competition
3.	Management quality and labor issues
4.	Support from group or affiliate
5.	Efforts made by Counterparty to maintain environmental sustainability
II.	Financial Performance Factors of the Counterparty
1.	Fair value of investment in Counterparty
2.	Profit generation
3.	Capital structure
4.	Cash flow
5.	Sensitivity to market risks

QUALITY OF ASSETS IN THE FORM OF EQUITY PARTICIPATION*

*) Condition is filled with the Counterparty's condition based on the assessment of the quality components of Productive Assets in Appendix I, which is an integral part of this Financial Services Authority Circular Letter.

*) Productive Asset Quality is filled with the Counterparty's Productive Asset Quality (Performing/Special Mention/Substandard/Doubtful/Loss) considering the Counterparty's condition with reference to Appendix I, which is an integral part of this Financial Services Authority Circular Letter.

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This copy matches the original
Legal Director 1
Legal Department signed
Yuliana

Established in Jakarta on 7 March 2018
EXECUTIVE HEAD OF SUPERVISOR OF
INSURANCE, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

Appendix III

Circular Letter of the Financial Services Authority

Number 7/SEOJK.05/2018
Regarding
Financial Health Level of Venture Capital Companies

GUIDELINES FOR ASSESSING THE QUALITY OF PRODUCTIVE ASSETS IN FORMS OTHER THAN EQUITY PARTICIPATION

Quality Category	Special Mention	Substandard	Doubtful	Loss
1. Debtor/Counterparty's Repayment Ability
Availability and accuracy of financial information of Debtor/Counterparty	• Relationship between Debtor/Counterparty and VC, VCS, or UUS is good.<br>• Debtor/Counterparty always submits financial information regularly and accurately.<br>• There is recent financial reporting and analysis results from VC, VCS, or UUS on the submitted financial reports/information.	• Relationship between Debtor/Counterparty and VC, VCS, or UUS is quite good.<br>• Debtor/Counterparty always submits financial information regularly, but the information is less accurate.<br>• There is recent financial reporting and analysis results from VC, VCS, or UUS on the submitted financial reports/information.	• Relationship between Debtor/Counterparty and VC, VCS, or UUS has deteriorated.<br>• Financial information cannot be trusted or there are no analysis results from VC, VCS, or UUS on the submitted financial reports/information.	• Relationship between Debtor/Counterparty and VC, VCS, or UUS has further deteriorated.<br>• Financial information is unavailable or cannot be trusted.
				• Relationship between Debtor/Counterparty and VC, VCS, or UUS is very poor.<br>• Financial information is unavailable or cannot be trusted.
Completeness of financing documentation	Financing documentation is complete.	Financing documentation is complete.	Financing documentation is less complete.	Financing documentation is incomplete.
				No financing documentation exists.
Compliance with financing agreements	No violations of financing agreements.	Minor violations of financing agreements.	Violations of core financing requirements that are quite fundamental.	Fundamental violations of core requirements in financing agreements.
				Very fundamental violations of core requirements in financing agreements.
Appropriateness of fund usage	• Fund usage aligns with financing submission.<br>• Quantity and type of facilities provided match needs.<br>• Financing extension aligns with Debtor/Counterparty's needs analysis.	• Fund usage is less aligned with financing submission, but the amount is not material.<br>• Quantity and type of facilities provided exceed needs, but the amount is not material.<br>• Financing extension is less aligned with Debtor/Counterparty's needs analysis.	• Fund usage is less aligned with financing submission, with a quite material amount.<br>• Quantity and type of facilities provided exceed needs by a quite material amount.<br>• Financing extension does not align with Debtor/Counterparty's needs analysis (extension used to conceal financial difficulties).	• Fund usage is less aligned with financing submission, with a material amount.<br>• Quantity and type of facilities provided exceed needs by a material amount.<br>• Financing extension does not align with Debtor/Counterparty's needs analysis (extension used to conceal financial difficulties), with quite material deviations.
				• Most fund usage does not align with financing submission.<br>• Quantity and type of facilities provided exceed needs by a very material amount.<br>• Financing extension without needs analysis of Debtor/Counterparty.
Fairness of liability payment sources	• Payment sources can be clearly identified and agreed upon by VC, VCS, or UUS and Debtor/Counterparty.<br>• Payment sources align with financing structure/type.<br>• Repayment scheme is reasonable (including grace period).<br>• Foreign exchange income is sufficient to support foreign exchange financing repayment.	• Payment sources can be identified and agreed upon by VC, VCS, or UUS and Debtor/Counterparty.<br>• Payment sources are less aligned with financing structure/type.<br>• Repayment scheme is quite reasonable (including grace period).<br>• Foreign exchange income is less sufficient to support foreign exchange financing repayment.	• Payments originate from sources other than those agreed upon.<br>• Payment sources are less aligned with financing structure/type by a quite material amount.<br>• Repayment scheme is less reasonable and includes grace periods not aligned with financing type.<br>• Foreign exchange income is insufficient to support foreign exchange financing repayment, by a quite material amount.	• Payment sources are unknown, while agreed sources are no longer feasible.<br>• Payment sources are less aligned with financing structure/type by a material amount.<br>• Repayment scheme is less reasonable and includes grace periods not aligned with financing type for a quite long duration.<br>• Foreign exchange income is insufficient to support foreign exchange financing repayment by a material amount.
				• No feasible payment sources exist.<br>• Payment sources do not align with financing structure/type.<br>• Repayment scheme is unreasonable and includes grace periods not aligned with financing type for a quite long duration.<br>• No foreign exchange receipts exist to support foreign exchange financing repayment.
2. Financial Performance of Debtor/Counterparty
Profit Generation	• High and stable profit generation.<br>• Profits are used to finance operations and business expansion, and can even pay dividends to investors.<br>• Company can expand freely and generate additional income without requiring additional debt funds.	• Profit generation is quite good but has potential to decline.<br>• Profits are sufficient to finance operations and business expansion but cannot yet pay dividends to investors.<br>• Company can still expand freely with assistance from additional debt funds.	• Low profit generation.<br>• Profits are still sufficient to finance business operations.<br>• Company cannot expand because profit generation is insufficient for expansion.<br>• Profits are very small or negative.<br>• Operational losses are financed by asset sales.<br>• Company cannot expand.<br>• Incurred significant losses.<br>• Debtor/Counterparty is unable to meet all obligations and business activities cannot be maintained.	• Profits are very small or negative.<br>• Operational losses are financed by asset sales.<br>• Company cannot expand.<br>• Incurred significant losses.<br>• Debtor/Counterparty is unable to meet all obligations and business activities cannot be maintained.
Capital Structure	Strong capitalization and owners have good ability to provide additional capital.	Capitalization is quite strong and owners have the ability to provide additional capital if needed.	Debt-to-equity ratio is quite high and owners provide limited additional capital.	Debt-to-equity ratio is high and owners provide limited additional capital.
				Debt-to-equity ratio is very high and owners do not have the ability to provide additional capital.
Cash Flow	• Strong liquidity and working capital.<br>• Cash flow analysis shows that Debtor/Counterparty can meet principal and interest payment obligations without additional funding support.	• Liquidity and working capital are generally good.<br>• Cash flow analysis shows that although Debtor/Counterparty can meet principal and interest payment obligations, there are indications of certain issues that, if not addressed, will affect future payments.	• Weak liquidity and limited working capital.<br>• Cash flow analysis shows that Debtor/Counterparty can only pay interest and part of the principal.<br>• New loans are used to meet maturing obligations.	• Very low liquidity.<br>• Cash flow analysis shows inability to pay principal and interest.<br>• New loans are used to meet maturing obligations materially.<br>• Liquidity difficulties.<br>• Cash flow analysis shows that Counterparty is unable to cover production costs.<br>• New loans are used to meet maturing obligations materially.
Sensitivity to Market Risks	Number of portfolios sensitive to foreign exchange rate and interest rate changes is relatively small or has been well hedged.	Some portfolios are sensitive to foreign exchange rate and interest rate changes but remain controllable.	Business activities are affected by foreign exchange rate and interest rate changes.	Business activities are threatened due to foreign exchange rate and interest rate changes.
				Business activities are threatened due to foreign exchange rate and interest rate fluctuations.
3. Business Prospects of Debtor/Counterparty
Business Growth Potential	Business activities have good growth potential compared to the average of similar industries.	Business activities have limited growth potential compared to the average of similar industries.	Business activities show very limited growth potential or no growth compared to the average of similar industries.	Business activities decline compared to the average of similar industries.<br>• Business sustainability is highly doubtful and difficult to recover.<br>• Business activities are likely to cease.
Market Conditions and Counterparty's Position in Competition	• Stable market not influenced by economic condition changes.<br>• Limited competition, including strong market position.<br>• Operating at optimum capacity.<br>• Good market position, not much influenced by economic condition changes.<br>• Market share comparable to competitors.<br>• Operating at nearly optimum capacity.	• Market influenced by economic condition changes.<br>• Market position is quite good but has many competitors, yet can recover if new business strategies are implemented.<br>• Not operating at optimum capacity.	• Market is highly influenced by economic condition changes.<br>• Business competition is very intense and company operations face serious problems.<br>• Capacity is not at a level supporting operations.<br>• Loss of market share in line with deteriorating economic conditions.<br>• Operations are discontinuous.
Management Quality and Labor Issues	• Company planning is well-thought-out, supported by labor systems.<br>• Company pays great attention to human resources.<br>• Adequate workforce, never recorded to have labor disputes or strikes, or experienced minor disputes/strikes that were well resolved.	• Company planning is well-thought-out but supported by limited systems.<br>• Company pays attention to human resources.<br>• Workforce is generally adequate, experienced labor disputes/strikes that were well resolved, but there is a possibility of recurrence.	• Company planning is quite well-thought-out but supported by limited systems.<br>• Company pays attention to human resources.<br>• Overstaffed and there are labor disputes/strikes with quite material impact on Debtor/Counterparty's business activities.	• Company planning is less well-thought-out, supported by limited systems.<br>• Company pays less attention to human resources.<br>• Overstaffed in quite large numbers, causing unrest and labor disputes/strikes with quite material impact on Debtor/Counterparty's business activities.
				• Company planning is not well-thought-out, supported by poor or non-existent systems.<br>• Company does not pay attention to human resources.<br>• Overstaffed in large numbers, causing unrest and labor disputes/strikes with material impact on Debtor/Counterparty's business activities.
Support from Group or Affiliate	Affiliate or group company is stable and supportive of the business.	Affiliate or group company is stable and has no burdensome impact on Debtor/Counterparty.	Relationship with affiliate or group company begins to have a burdensome impact on Debtor/Counterparty.	Affiliate or group company has had a burdensome impact on Debtor/Counterparty.
				Affiliate company is very detrimental to Debtor/Counterparty.
Efforts made by Debtor/Counterparty to maintain environmental sustainability	Environmental management efforts are good and achieve at least the minimum requirements as regulated in legislation.	Environmental management efforts are less good and have not met the minimum requirements as regulated in legislation.	Environmental management efforts are less good and have not met the minimum requirements as regulated in legislation, with quite material deviations.	Company has not implemented meaningful environmental management efforts or has implemented efforts but has not met the requirements as regulated in legislation, with material deviations.
				Company has not implemented meaningful environmental management efforts or has implemented efforts but has not met the minimum requirements as regulated in legislation, and has the possibility of being sued in court.

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This copy matches the original
Legal Director 1
Legal Department signed
Yuliana

Established in Jakarta on 7 March 2018
EXECUTIVE HEAD OF SUPERVISOR OF
INSURANCE, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI

Appendix IV

Circular Letter of the Financial Services Authority

Number 7/SEOJK.05/2018
Regarding
Financial Health Level of Venture Capital Companies

WORK PAPER FOR ASSESSING THE QUALITY OF PRODUCTIVE ASSETS IN FORMS OTHER THAN EQUITY PARTICIPATION

No.	Assessment Component	Condition*	Quality
I.	Debtor/Counterparty's Repayment Ability Factors
1.	Availability and accuracy of financial information of Debtor/Counterparty
2.	Completeness of financing documentation
3.	Compliance with financing agreements
4.	Appropriateness of fund usage
5.	Fairness of liability payment sources
II.	Financial Performance of Debtor/Counterparty
1.	Profit generation
2.	Capital structure
3.	Cash flow
4.	Sensitivity to market risks
III.	Business Prospects of Debtor/Counterparty
1.	Business growth potential
2.	Market conditions and Debtor/Counterparty's position in competition
3.	Management quality and labor issues
4.	Support from group or affiliate
5.	Efforts made by Debtor/Counterparty to maintain environmental sustainability

QUALITY OF ASSETS IN FORMS OTHER THAN EQUITY PARTICIPATION*

*) Condition is filled with the Debtor/Counterparty's condition based on the assessment of the quality components of Productive Assets based on Appendix III, which is an integral part of this Financial Services Authority Circular Letter.

*) Productive Asset Quality is filled with the Debtor/Counterparty's Productive Asset Quality (Performing/Special Mention/Substandard/Doubtful/Loss) considering the Debtor/Counterparty's condition with reference to Appendix III, which is an integral part of this Financial Services Authority Circular Letter.

*) Productive Asset Quality is filled with the Debtor/Counterparty's Productive Asset Quality (Performing/Special Mention/Substandard/Doubtful/Loss) considering the quality of each assessment component as a whole.

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This copy matches the original
Legal Director 1
Legal Department signed
Yuliana

Established in Jakarta on 7 March 2018
EXECUTIVE HEAD OF SUPERVISOR OF
INSURANCE, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY, signed
RISWINANDI