Guidelines for Property Valuation and Presentation of Property Valuation Reports in the Capital Market — OJK — ID

To:
Property Valuers,
At your office.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 33 /SEOJK.04/2021 CONCERNING GUIDELINES FOR PROPERTY VALUATION AND PRESENTATION OF PROPERTY VALUATION REPORTS IN THE CAPITAL MARKET

In order to implement the mandate of Article 29 paragraph (2), Article 34 paragraph (3), Article 41 paragraph (2), Article 44 paragraph (2), Article 49 paragraph (2), Article 52 paragraph (2), Article 54 paragraph (2), Article 56 paragraph (2), Article 58 paragraph (2), Article 60 paragraph (2), and Article 66 paragraph (2) of Financial Services Authority Regulation Number 28/POJK.04/2021 concerning Property Valuation and Presentation of Property Valuation Reports in the Capital Market (State Gazette of the Republic of Indonesia Year 2021 Number 290, Supplement to the State Gazette of the Republic of Indonesia Number 6749), it is necessary to regulate provisions regarding guidelines for property valuation and presentation of property valuation reports in the Capital Market, in this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS

In this Financial Services Authority Circular, the following terms are meant:

Valuer is an individual who, with their expertise, conducts valuation activities in the capital market.
Valuation is a work process to provide a written opinion on the economic value of a valuation object.
Property Valuer is a Valuer who conducts Property Valuation activities as referred to in the Financial Services Authority regulations regarding Valuers who conduct activities in the capital market.
Property Valuation is a work process to provide a written opinion on Property Valuation objects as referred to in the Financial Services Authority regulations regarding Valuers who conduct activities in the capital market.
Professional Valuation Assignment is an assignment received by the Valuer from the assignor to conduct a Valuation on an object, for a specific Valuation purpose, and on a specific date where the Valuer bases their opinion, which is presented in a Valuation Report.
Value is an opinion of the economic benefit of asset ownership or the most probable price to be paid for an asset in an exchange on the Valuation Date.
Market Value is an estimate of the amount of money that can be obtained or paid from the exchange of an asset or liability on the Valuation Date, between a buyer interested in buying and a seller interested in selling, in an arm's length transaction, which is marketed properly, where both parties act based on their understanding, caution, and without coercion.
Market Value for Existing Use is the Market Value of an asset based on the continuation of existing use, with the assumption that the asset can be sold in an open market for existing use at that time, but still in accordance with the definition of Market Value without considering whether the existing use represents the highest and best use.
Value in Use is the Value possessed by an asset for a specific use for a specific user and therefore not related to Market Value, or the Value given by a specific asset to the business entity where that asset is part of the business entity without regard to the highest and best use of that asset, or the amount of money that can be obtained from its sale.
Real Property is the legal control over land that includes all rights over land including legal relations with specific land areas, all interests, and benefits related to real estate ownership.
Personal Property is a legal concept referring to all rights, interests, and benefits related to the ownership of a property other than real estate.
Special Property is property that has specific characteristics, has benefits limited to specific uses or users, and is rarely traded in the open market, except as part of a whole property sale.
Operational Asset is an asset used in the company's operations which is used continuously.
Non-Operational Asset is an asset separable from the company's operations consisting of assets to be used in the future, surplus assets, or investment assets.
Property Valuation Report is a written report made by a Property Valuer containing the Property Valuer's opinion on the Valuation object and presenting information about the Valuation process.
Valuation Approach is a way to estimate Value using one or more Valuation Methods.
Market Approach is a Valuation Approach by comparing the asset being valued with comparable and similar assets, where transaction or offer price information is available.
Income Approach is a Valuation Approach that provides an indication of Value by converting future cash flows into a single present value.
Cost Approach is a Valuation Approach to obtain an indication of the Value of the Valuation object based on new reproduction cost or new replacement cost, on the Valuation Date after being reduced by depreciation.
Valuation Date is the date on which the Value, Valuation result, or economic benefit calculation is stated.
Property Valuation Report Date is the date the Property Valuation Report is signed by the Property Valuer.
Inspection is a visit conducted to a Valuation object to examine the physical aspects and obtain relevant information in order to provide a credible value opinion.
Assumption is something considered to happen, including facts, conditions, or circumstances that may affect the Valuation object or Valuation Approach and whose reasonableness has been analyzed by the Property Valuer as part of the Valuation process.
Valuation Method is a specific way or series of ways to conduct Valuation.
Replacement Cost Method, also known as Depreciated Replacement Cost Method (DRC Method), is a method that indicates value by calculating the cost to create an asset with equivalent utility.
Reproduction Cost Method is a method that indicates Value by calculating the cost to create a replica of the asset.
New Replacement Cost is an estimate of the cost to create a new property equivalent to the property being valued, based on local market prices on the Valuation Date.
New Reproduction Cost is an estimate of the cost to reproduce a new property that is the same or identical to the property being valued, based on local market prices on the Valuation Date.
Quantity Survey Method is a method of estimating construction costs based on detailed unit work quantities and unit work prices.
Unit In Place Method is a method of estimating construction costs based on the unit price of installed units.
Square Meter Method is a method of estimating construction costs based on currency units per unit area or volume.
Depreciation is the amount of reduction in the Value of the Valuation object caused by physical deterioration, functional obsolescence, and economic obsolescence.
Discount Rate is the return rate used to discount cash flow projections that reflect the time value of money, risks associated with the type of cash flow, and future operational risks of the asset.
Capitalization Rate is the divisor amount used to convert income into Value.
Vacancy Factor is a factor used to reduce gross potential income so as to reflect effective gross income.
Expert is a person who has expertise and qualifications in a specific field outside the scope of Valuation activities and does not work at a public accounting firm.
Plantation Forest is a forest built to increase the potential and quality of production forests by applying intensive silviculture.
Crop Cycle is the time required for a type of plant from planting until reaching harvesting age.
Plant Age is the period during which a plant can be cultivated, starting from planting until the end of the productive period.
Planted Area is an area that has been cultivated (land clearing) and planted with plantation commodities, whether already producing or not yet producing.

II. INSPECTION

In conducting Inspection, the following provisions apply:

The Inspection Object is a Valuation object consisting of:
a. Operational Assets; and/or b. Non-Operational Assets.
The Property Valuer must submit a written request to the assignor to obtain Valuation object data, including the legality of the Valuation object and permits.
The Property Valuer must conduct identification to obtain objective information about the condition of the Valuation object.
The Property Valuer must identify the legality and form of ownership of the Valuation object and permits, including:
a. form of ownership, including sole ownership, partnership, or partial ownership rights; b. type of ownership or control of the Valuation object, including:
1. freehold;
2. building use right;
3. business use right;
4. built operating transfer;
5. property lease; or
6. other rights and controls.
  c. identity of the holder of rights over the Valuation object; and
  d. terms and conditions of the Valuation object, including:
7. agreements binding the Valuation object;
8. impact on spatial and urban planning, environmental, and other spatial and urban planning plans;
9. impact on government plans for areas subject to construction restrictions; and/or
10. violations of statutory regulations.
The Property Valuer must conduct verification to check the conformity between the Valuation object data obtained from the assignor and the condition of the Valuation object.
The Property Valuer must obtain a list of assets and/or other proof of ownership from the assignor and conduct confirmation to ensure the legality of the Valuation object as referred to in item 4.
The Property Valuer must disclose doubts regarding the legality of the Valuation object after conducting confirmation as referred to in item 6 that may affect Value, if there are doubts regarding the legality of the Valuation object that may affect Value.
In the event the Property Valuer conducts an Inspection of land, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of land is conducted to obtain data and information including:
1. physical condition of the land, including shape, size, elevation, topography, surface condition (contour), area, and boundaries.
2. general characteristics of the region, city, local environment, social, economic, and other environmental facilities, as well as statutory regulations affecting Value;
3. land use on the Valuation Date; and
4. existing improvements.
  b. In the event the Property Valuer does not obtain data and information regarding the physical information of the land as referred to in letter a item 1), the Property Valuer may request such data and information from the assignor.
  c. Data and information as referred to in letter b provided by the assignor must be verified by the Property Valuer and must be disclosed in the Property Valuation Report.
In the event the Property Valuer conducts an Inspection of a building, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of a building is conducted to obtain data and information including:
1. technical specifications of the building, including type of building, type of construction, number of floors, shape and size of building materials used, and supporting equipment;
2. physical condition of the building;
3. use of the building on the Valuation Date;
4. building permit;
5. local government regulations regarding building planning in the property location area; and
6. data and information including rental rates, occupancy rates, tenant lists, operating costs, and general operational conditions, in the case of commercial buildings such as rented offices and shopping centers.
  b. In the event the Property Valuer does not obtain the exact size of the Valuation object as referred to in letter a item 1), the Property Valuer may conduct professional self-measurement.
  c. The implementation of professional self-measurement as referred to in letter b above must be disclosed in the Property Valuation Report.
In the event the Property Valuer conducts an Inspection of Personal Property in the form of machinery and equipment, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of machinery and equipment is conducted to obtain data and information including:
1. technical specifications, including name of machinery and equipment, brand, origin, type or model, year of manufacture, capacity, and other main specifications, as well as supporting equipment;
2. condition of machinery and equipment;
3. production process and grouping of production machines and supporting machines used in an industry;
4. market condition of the products produced by the industry or business where the machinery and equipment are used, as well as the market condition of the machinery and equipment;
5. usage period of the land and building where the machinery and equipment are attached;
6. government regulations related to the type of industry or business of the Valuation object; and
7. ownership status of the machinery and equipment, including ownership documents, contracts, purchase or procurement proofs, invoices, fixed asset lists, and/or property ownership certificates from the owner.
  b. In the event the Property Valuer does not obtain information regarding the technical specifications of machinery and equipment as referred to in letter a item 1), the Property Valuer may professionally estimate the technical specifications of the machinery and equipment.
  c. The implementation of professional estimation of technical specifications of machinery and equipment as referred to in letter b above must be disclosed in the Property Valuation Report.
In the event the Property Valuer conducts an Inspection of infrastructure, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of infrastructure is conducted to obtain data and information including:
1. technical specifications of infrastructure, including type of infrastructure, type of construction, shape, and size; and
2. physical condition of infrastructure.
  b. In the event the Property Valuer does not obtain data and information regarding the technical specifications of infrastructure as referred to in letter a item 1), the Property Valuer may conduct professional self-measurement.
  c. The implementation of professional self-measurement of infrastructure technical specifications as referred to in letter b above must be disclosed in the Property Valuation Report.
In the event the Property Valuer conducts an Inspection of plantation property, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of plantation property is conducted to obtain data and information, including:
1. type of plant commodities developed, total area and Planted Area, plantation location, and existing plantation facilities and infrastructure;
2. general facilities and infrastructure existing around the plantation location;
3. climate in the plantation location area;
4. market conditions, both for the commodities produced and the plantation itself;
5. government regulations regarding the type of plantation that is the Valuation object and the commodities produced;
6. plantation plants, meeting provisions including:
  a) Inspection of plants can be conducted randomly or one by one (census); b) in random plant Inspection, the Property Valuer must clearly disclose the method of sampling and determination of samples along with the reasons in the Property Valuation Report; and c) Inspection of plants is conducted to obtain data and information including:
  (1) plant varieties or types of seeds developed; (2) plant age; (3) planted area per plant age; (4) planting distance and plant density; (5) plant condition including plant maintenance treatments, fertilization, prevention and eradication of plant pests and diseases; (6) seedlinging, including seed sources, seedlinging methods, and seed availability; and (7) data and information about plant productivity, product quality, harvesting systems, result collection, and post-harvest treatments, for plants that have already produced.
7. Inspection of plantation land is conducted in accordance with general land Inspection as referred to in item 8 and must obtain additional data and information, including:
  a) certificates or types of land use rights; b) land area, details of planted area, area for plantation facilities and infrastructure, area for seedlinging, undeveloped land area, and non-plantable land area; and c) soil fertility level and land suitability for the type of plantation commodities developed;
8. Inspection of buildings included in plantation property is conducted in accordance with general building Inspection as referred to in item 9;
9. Inspection of machinery and equipment included in plantation property can be conducted in accordance with general machinery and equipment Inspection as referred to in item 10; and
10. Inspection of infrastructure included in plantation property is conducted in accordance with general infrastructure Inspection as referred to in item 11.
  b. In the event the Property Valuer does not obtain the exact size of the Valuation object as referred to in letter a item 7) letter b), the Property Valuer may conduct professional self-measurement.
  c. The implementation of professional self-measurement as referred to in letter b above must be disclosed in the Property Valuation Report.
In the event the Property Valuer conducts an Inspection of forestry property, in addition to the provisions as referred to in items 1 to 7, the following provisions also apply:
a. Inspection of forestry property in the form of natural forest management rights is conducted to obtain data and information including:
1. type of forestry right or authority owned, including requirements and limitations contained therein along with supporting documents;
2. condition of the area around the forest location including existing facilities and infrastructure;
3. climate in the forest location area;
4. market conditions for each type of timber stand contained and processed wood products;
5. government regulations regarding forestry that is the Valuation object and the commodities produced;
6. timber stands contained in the forest that is the Valuation object, meeting provisions including:
  a) Inspection of timber stands can be conducted by comparing the content of timber stands with average potential stand value documents or by random sampling or one by one (census); b) in stand Inspection as referred to in letter a), the Property Valuer must clearly disclose the method of sampling and determination of samples along with the reasons in the Valuer's working papers and Property Valuation Report; and c) Inspection of stands is conducted to obtain data and information including:
  (1) types of timber contained in the forest that is the Valuation object; (2) diameter and height of each stand and number of stands for each type of timber including volume and average number of trees per unit area; and (3) area and general condition of the forest;
7. Inspection of buildings included in forestry property in the form of natural forest management rights is conducted in accordance with general building Inspection as referred to in item 9;
8. Inspection of machinery and equipment included in forestry property in the form of natural forest management rights is conducted in accordance with general machinery and equipment Inspection as referred to in item 10; and
9. Inspection of infrastructure included in forestry property in the form of natural forest management rights is conducted in accordance with general infrastructure Inspection as referred to in item 11.
  b. Inspection of forestry property in the form of industrial plantation forest management rights is conducted to obtain data and information, including:
10. type of plant commodities developed, total area and Planted Area, forest location, and existing forest facilities and infrastructure;
11. general facilities and infrastructure existing around the forest location;
12. climate in the forest location area;
13. market conditions, both for the commodities produced and the plantation forest itself;
14. government regulations regarding the type of plantation forest that is the Valuation object and the commodities produced;
15. plantation forest plants, meeting provisions including:
  a) Inspection of plantation forest plants can be conducted by comparing the number of plantation forest plants with the results of previous inventories, or by random sampling or one by one (census); b) in Inspection of plantation forest plants as referred to in letter a), the Property Valuer must clearly disclose the method of sampling and determination of samples along with the reasons in the Valuation working papers and Property Valuation Report; c) Inspection of plantation forest plants is conducted to obtain data and information including:
  (1) plantation forest plant varieties or types of seeds developed; (2) plantation forest plant age; (3) planted area per plant age class; (4) planting distance and plant density; (5) plantation forest plant condition including plant maintenance treatments, fertilization, prevention and eradication of plant pests and diseases; (6) seedlinging, including seed sources, seedlinging methods, and seed availability; and (7) data and information about harvesting systems, result collection, and post-harvest treatments, for plantation forest plants that are ready for harvest;
16. Inspection of land included in forestry property in the form of industrial plantation forest management rights is conducted in accordance with general land Inspection as referred to in item 8 and must obtain additional data and information, including:
  a) certificates or types of land use rights; b) land area, details of planted area, area for facilities and infrastructure, area for seedlinging, undeveloped land area, and non-plantable land area; and

c) soil fertility levels and land suitability for plantation commodity types being developed.

8) Inspection of buildings included in forestry property in the form of Industrial Forest Plantation management rights is conducted in accordance with general building inspection as referred to in item 9;

9) Inspection of machinery and equipment included in forestry property in the form of Industrial Forest Plantation management rights is conducted in accordance with general machinery and equipment inspection as referred to in item 10; and

10) Inspection of infrastructure included in forestry property in the form of Industrial Forest Plantation management rights is conducted in accordance with general infrastructure inspection as referred to in item 11.

In the event that the Property Valuer conducts an inspection on mining property in the form of mining rights or mining business licenses, in addition to the provisions referred to in items 1 through 7, the following provisions also apply:

a. Inspection of mining property in the form of mining rights or mining business licenses is conducted to obtain data and information, including:

1) the type of mining right or mining business license owned, including the requirements and limitations contained therein;

2) the condition of the area surrounding the mine location, including existing facilities and infrastructure;

3) government regulations regarding mining property that is the object of Valuation and the commodities produced;

4) geological survey or research reports on the mining property that is the object of Valuation, conducted by competent third parties to obtain data and information regarding:

a) general mine conditions, including the area size and formation of mineral deposits;

b) the quality and quantity of mineral deposits, as well as the variation in thickness and depth of mineral deposit layers; and

c) recommendations for mineral exploitation systems, the possibility of requiring further processing, and the mineral transport system; and

5) Projection of annual exploitation volume obtained from management, taking into account machine and equipment capacity, other available facilities, and market conditions.

b. Inspection of land included in mining property in the form of mining rights or mining business licenses is conducted in accordance with general land inspection as referred to in item 8;

c. Inspection of buildings included in mining property in the form of mining rights or mining business licenses is conducted in accordance with general building inspection as referred to in item 9;

d. Inspection of machinery and equipment included in mining property in the form of mining rights or mining business licenses is conducted in accordance with general machinery and equipment inspection as referred to in item 10; and

e. Inspection of infrastructure included in mining property in the form of mining rights or mining business licenses is conducted in accordance with general infrastructure inspection as referred to in item 11.

In the event that inspection of the Valuation Object is not possible due to the characteristics of the Valuation Object, the Property Valuer must:

a. use data that reflects the conditions and specifications of the Valuation Object that can be accounted for;

b. believe that the data source can be accounted for; and

c. disclose the reasons for the inability to conduct inspection on the Valuation Object in the Property Valuation Report.

III. VALUATION APPROACH, VALUATION METHOD, AND VALUATION PROCEDURE

In using Valuation Approach, Valuation Method, and Valuation Procedure, the Property Valuer must:

a. select and apply Valuation Approach, Valuation Method, and Valuation Procedure that are appropriate with the purpose and objective of Valuation, the definition of Value sought, and the characteristics of Valuation;

b. use at least 2 (two) Valuation Approaches to obtain accurate and objective Valuation results; and

c. pay attention to the requirements and disclosures established in Financial Services Authority regulations regarding Valuation and presentation of Property Valuation Reports in the capital market.

The Valuation Approaches referred to in item 1 letter b consist of:

a. Market Approach;

b. Income Approach; and

c. Cost Approach.

In the event that the Property Valuer conducts Property Valuation on a specific Valuation Object, the Property Valuer may use 1 (one) Valuation Approach as referred to in item 2.
Types of property Valuation Objects that can be valued using 1 (one) Valuation Approach:

a. vacant land;

1) land that meets the principle of highest and best use to be developed as property that does not generate income; and

2) land that meets the principle of highest and best use to be developed as property that can be sold in parts or lots.

b. property units with strata title status;

c. property with built operate and transfer (BOT) status;

d. industrial property;

Example of industrial property includes machinery, equipment, land and/or buildings classified as operational property including warehouses that are an inseparable part of the production process, and medical equipment.

e. Special Property that is part of business activities;

f. other office furniture and equipment (furniture, fixtures, and office equipment);

g. transportation vehicles and heavy equipment that are not income-producing property;

h. shophouses; and

i. inventory items that are not finished goods inventory.

Market Approach

a. Procedures that the Property Valuer must perform in the Market Approach are as follows:

1) Data collection; and

2) Adjustment in the Market Approach.

b. Data collection as referred to in letter a item 1) is conducted by conducting research to obtain transaction data and offering data from comparable and similar properties.

c. Data as referred to in letter b must be sourced from and/or validated by Property Valuer professional associations.

d. Adjustment as referred to in letter a item 2) is conducted on at least the following factors:

1) location, including attention to environment, access, and facilities;

2) zoning, including attention to regulatory provisions at the time of Valuation;

3) physical characteristics of the Valuation Object;

a) land, including attention to physical condition, area, shape, and elevation;

b) buildings, including attention to building condition and facilities; and

c) other Valuation Objects are adjusted according to the characteristics of the type of Valuation Object.

e. Comparison factors that must be considered include at least:

1) rights contained in the Valuation Object and comparable property;

2) sales conditions;

3) market conditions;

4) location; and

5) physical characteristics.

f. The Property Valuer must identify the rights present in the Valuation Object and comparable property as referred to in letter e item 1) that are selected for analysis and subsequently perform adjustment for each difference in rights present in the Valuation Object and comparable property.

g. The Property Valuer must perform adjustment on the transaction price or offering price of the relevant comparable property regarding sales conditions as referred to in letter e item 2).

h. Sales conditions as referred to in letter g include seller and buyer motivation in a fair and arm's length transaction, transactions with related parties, or government control (eminent domain).

i. The Property Valuer must perform adjustment on the transaction price or offering price of the comparable property with market conditions as referred to in letter e item 3).

j. The Property Valuer must perform adjustment on the transaction price or offering price of the comparable property related to location as referred to in letter e item 4).

k. The Property Valuer must perform adjustment on comparison, in the event there are differences in physical characteristics as referred to in letter e item 5) between comparable property and the Valuation Object.

l. Differences in physical characteristics as referred to in letter k between comparable property and the Valuation Object include, among others, size, age, condition, construction quality, architectural model, building materials, ancillary facilities, plot size, or other characteristics in the event the Valuation Object is not land and building.

m. In performing adjustment of comparable property data so that it meets the requirements or Assumptions in Market Value, the Property Valuer must fulfill the following provisions:

1) apply consistently in determining adjustment between Valuation Object data and comparable property data;

2) perform adjustment of comparable property data, using adjustment forms as follows:

a) percentage form adjustment; or

b) monetary unit form adjustment; and

3) perform a sequence of adjustment by summing up adjustment factors together or can be done individually according to the adjustment method performed in percentage or monetary unit form.

n. Percentage form adjustment as referred to in letter m item 2) letter a) is used to adjust differences between Valuation Object data and comparable property data.

o. Adjustment of differences between Valuation Object data and comparable property data includes, among others, physical conditions and location in percentage form.

p. Adjustment is conducted by calculating the difference in superiority or inferiority in percentage form, including:

1) if Valuation Object data and comparable property data are the same, no adjustment is required;

2) if Valuation Object data is superior by x% (x percent) from comparable property data, the superiority of x% (x percent) is added to the comparable property value; and

3) if Valuation Object data is inferior by x% (x percent) from comparable property data, the inferiority of x% (x percent) is subtracted from the comparable property value.

q. Monetary unit form adjustment as referred to in letter m item 2) letter b) is used to adjust differences between Valuation Object data and comparable property data.

r. Adjustment of differences between Valuation Object data and comparable property data includes, among others, physical conditions and location in monetary units.

s. Adjustment is conducted by calculating the difference in superiority or inferiority in monetary unit form, as follows:

1) if Valuation Object data and comparable property data are the same, no adjustment is required;

2) if Valuation Object data is superior by x rupiah from comparable property data, the superiority of x rupiah is added to the comparable property value; and

3) if Valuation Object data is inferior by x rupiah from comparable property data, the inferiority of x rupiah is subtracted from the comparable property value.

t. In performing adjustment, the Property Valuer may use adjustment techniques, as follows:

1) overall plus-minus adjustment technique (Overall Adjustment/Pluses Minuses);

2) cost adjustment technique (Cost Adjustment);

3) paired comparison technique (Paired Comparison); or

4) statistical technique.

u. Overall adjustment technique (Overall Adjustment / Pluses Minuses) as referred to in letter t item 1) is conducted by directly comparing the overall superiority and inferiority of the Valuation Object with comparable property.

v. Cost adjustment technique (Cost Adjustment) as referred to in letter t item 2) is conducted by considering the costs required to equalize conditions with comparable property if there are differences that can be changed, such as land elevation (elevation), topography, soil structure. Adjustment can be done by considering the cost of filling (cut and fill).

w. In using the cost adjustment technique as referred to in letter v, the Property Valuer must pay attention to the fact that land improvement costs are not always equivalent to the value of such improvement.

x. Paired Comparison technique as referred to in letter t item 3) is conducted based on one difference from a pair of matched comparable properties.

y. Statistical technique as referred to in letter t item 4) requires a sufficient number of comparable properties, at least 20 (twenty) comparable properties.

z. The Property Valuer must use a market data grid to express the consistency of adjustments made.

aa. The grid is a section for reconciling several indications of Value from comparable properties that have been adjusted.

bb. The Property Valuer must make reconciliation or weighting of various indications of Value generated after adjustment on each comparable property to generate a single value indication.

cc. The weighting level for each comparable property is determined based on the level of similarity of each comparable property to the object being valued.

Income Approach

a. Methods used in the Income Approach consist of:

1) discounted cash flow method;

2) direct capitalization method;

3) residual method; and/or

4) gross income multiplier.

b. In the event that the Property Valuer uses the discounted cash flow method as referred to in letter a item 1), the following provisions apply:

1) In the event that income projections are not or have not been stable and with a limited income period (not perpetual/not perpetuity), the Property Valuer must use the discounted cash flow method.

2) The value of the Valuation Object is obtained by multiplying a series of projections of future income flows with a specific Discount Rate to become present value.

3) Steps that must be performed in using the discounted cash flow method, at least:

a) conduct income and expense analysis of the Valuation Object and comparable property;

b) calculate estimated potential gross income, paying attention to, at least:

(1) reliability of Assumptions used;

(2) historical data used; and

(3) rental costs and building area size.

c) sum other income and potential gross income after subtracting Vacancy and Collection Loss to obtain effective gross income;

d) determine operating expenses, paying attention to, at least:

(1) reliability of Assumptions used;

(2) historical data used; and

(3) building maintenance costs.

e) subtract effective gross income from operating costs to obtain net operating income before interest and taxes;

f) determine Discount Rate;

g) determine discounting procedure;

h) discount net operating income to estimate the indication of Value of the Valuation Object; and

i) in the event there is a terminal value as one of the elements forming the indication of Value, the Property Valuer may use the direct capitalization method in calculating terminal value by considering the Initial Capitalization Rate which serves as a benchmark to ensure the magnitude of the terminal capitalization rate or use the residual value of the property.

c. In the event that the Property Valuer uses the direct capitalization method as referred to in letter a item 2), the following provisions apply:

1) The value of the Valuation Object is obtained by dividing the projected annual income that reflects and represents future annual income with a specific Capitalization Rate.

2) In conducting Valuation using the direct capitalization method, the following requirements must be met, at least:

a) net income per year during the investment period is estimated to remain constant; and

b) the investment period is infinite (perpetuity).

3) Steps that must be performed in using the direct capitalization method, at least:

a) conduct income and expense analysis of the Valuation Object and comparable property;

b) estimate potential gross income of the Valuation Object;

c) estimate Vacancy and Collection Loss of the Valuation Object;

d) subtract total potential gross income from Vacancy and Collection Loss to obtain effective gross income;

e) estimate total operating costs consisting of fixed costs, variable costs, and reserves;

f) subtract effective gross income from total operating costs to obtain net operating income;

g) establish Capitalization Rate; and

h) capitalize net operating income to estimate the indication of Value of the Valuation Object.

d. In the event that the Property Valuer uses the residual technique method as referred to in letter a item 3), the following provisions apply:

1) This method is used to value Valuation Objects that are part of a unified property.

2) The value of the Valuation Object is obtained by capitalizing the income component that is part of the property component, consisting of land and buildings as well as machinery and equipment.

3) Perform subtraction between the net operating income of the entire property with the annual income from other property components that are not the Valuation Object to obtain the Valuation Object's income component.

4) Techniques used in the residual technique method, as follows:

a) Land Residual Technique; Land Residual Technique for land valuation also applies income and cost data as elements in its analysis. Financial analysis is made on the net income that can be generated by an income-producing use and subtraction from net income is made for the financial return elements required in land development. Residual income is considered as residual for land and capitalized into the indication of value.

This method is limited to income-producing property and is primarily applied to relatively new properties where fewer Assumptions are required.

b) Building Residual Technique; and/or

c) Building Equipment Residual Technique.

e. In the event that the Property Valuer uses the Land Residual Technique as referred to in letter d item 4) letter a), the following provisions apply:

1) determination of projected annual income from the property and Capitalization Rate as referred to in the direct capitalization method in letter c item 3);

2) determination of projected annual income specifically generated by land by subtracting the projected annual income of the entire property from the projected annual income generated by property other than land, which may include buildings, infrastructure, machinery, and other equipment;

3) property other than land as referred to in item 2) may be existing property or projections if built/developed in the event it meets the principle of highest and best use of the land;

4) determination of specific Capitalization Rate for land; and

5) capitalize the projected annual income from land as referred to in item 2) with the land Capitalization Rate to obtain the indication of land value.

f. In the event that the Property Valuer uses the Building Residual Technique as referred to in letter d item 4) letter b), the following provisions apply:

1) determination of projected annual income from the property and Capitalization Rate as referred to in the direct capitalization method in letter c item 3);

2) determination of projected annual income specifically generated by buildings by subtracting the projected annual income of the entire property from the projected annual income generated by property other than buildings, namely land, machinery, and other equipment;

3) determination of specific Capitalization Rate for buildings; and

4) capitalize the projected annual income from buildings as referred to in item 2) with the building Capitalization Rate to obtain the indication of building value.

g. In the event that the Property Valuer uses the Building Equipment Residual Technique as referred to in letter d item 4) letter c), the following provisions apply:

1) determination of projected annual income from the property and Capitalization Rate as referred to in the direct capitalization method in letter c item 3);

2) determination of projected annual income specifically generated by building machinery and equipment by subtracting the projected annual income of the entire property from the projected annual income generated by property other than building machinery and equipment, namely land, buildings, and infrastructure;

3) determination of specific Capitalization Rate for building machinery and equipment; and

4) capitalize the projected annual income from building machinery and equipment as referred to in item 2) with the building machinery and equipment Capitalization Rate to obtain the indication of building machinery and equipment value.

h. In the event that the Property Valuer uses the gross income multiplier method as referred to in letter a item 4), the following provisions apply:

1) The value of the Valuation Object is obtained by converting potential gross annual income that reflects and represents future annual income with a specific constant.

2) In conducting Valuation using the gross income multiplier method, the following requirements must be met:

a) availability of market data on sales and leases of comparable and similar properties; b) comparable properties analyzed with the Valuation Object must be comparable in terms of physical characteristics, location, and investment characteristics; and c) the income data used for comparable properties must be consistent with the income data used for the Valuation Object.

3) Steps that must be taken in the use of the gross income multiplier method, at minimum:
a) estimating the sales value of comparable and similar properties to the Valuation Object; b) estimating the potential gross income of comparable and similar properties to the Valuation Object; c) dividing the sales value of comparable properties by the potential gross income of comparable and similar properties to obtain the gross income multiplier; d) estimating the potential gross income of the Valuation Object; and e) multiplying the gross income multiplier by the potential gross income of the Valuation Object to obtain an indication of the Valuation Object's Value.

i. In establishing revenue projections and net operating income projections after adjustments to relevant items in the cash flow and income statements, the Valuer must meet at minimum the following requirements:
1) using revenue projections based on financial projections obtained from management to estimate the Valuation Object's revenue flow and making adjustments to those revenue projections according to market conditions;
2) Financial projections as referred to in item 1) must be disclosed in the Property Valuation Report;
3) it is prohibited to base revenue projections solely on historical data trends;
4) being responsible for the adjusted projections;
5) analyzing the income statement and other comprehensive income as well as the cash flow statement of the Valuation Object, considering market conditions such as data and information regarding the operational level of comparable and similar companies in the same industry, in order to make adjustments as referred to in item 1);
6) considering conditions occurring after the Valuation Date that may affect revenue projections;
7) considering the Valuation Object's business growth projections in accordance with the revenue generated by the Valuation Object and the business interest of the Valuation Object;
8) adjustments as referred to in item 1) are used as the Property Valuer's working paper;
9) financial information resulting from adjustments as referred to in item 8) must be disclosed in the Property Valuation Report;
10) in making adjustments to the income statement and other comprehensive income as well as the cash flow statement as referred to in item 1), the Property Valuer must do the following:
a) analyze and present the Valuation Object's financial data consistently, and use the same currency as used in the financial statements; b) adjust the values presented in the income statement and other comprehensive income as well as the cash flow statement to fair values; c) adjust income and expenses to fair levels and reflect sustainable results; d) group and adjust all non-operating income and expenses; and e) make adjustments to unusual income and costs.
11) after adjusting the income statement and other comprehensive income as well as the cash flow statement, the Property Valuer must present revenue projections and net operating income projections in the Property Valuation Report; and
12) revenue projections and net operating income projections must be made for at least 5 (five) years into the future, or adjusted according to the remaining life of the main production facility of the Valuation Object.

j. In determining the Discount Rate as referred to in letter b item 3) letter f), it can be determined from:
1) market data, by comparing the annual rate of return of the Valuation Object with investments in comparable and similar properties, according to market conditions;
2) the build-up method, by adding or subtracting the risk-free rate from the business risk level of investments in comparable and similar properties;
3) band of investment, by:
a) calculating the cost of equity by considering:
(1) the rate of return on funds placed in a risky investment; (2) inflation estimates set by the government; and (3) beta coefficients must come from average industry data in the same sector as the Valuation Object. b) considering returns from investments available in the market from comparable and similar industries; c) considering the capital structure available in the market from comparable and similar industries; d) considering industry risk and conditions of similar properties; e) considering specific risks of the Valuation Object; and f) performing at minimum the following procedures:
(1) calculating the percentage of investment capital structure based on the average of government banks in carrying out financing functions on the Valuation Date; (2) using loan interest rate data from the average of government banks in carrying out financing functions to determine the cost of debt on the Valuation Date; and (3) calculating the weighted average cost of capital proportionally based on the weight of each type of capital structure and the cost of each type of capital structure; or
4) adding the estimated growth rate from the Capitalization Rate used in the direct capitalization method.

k. The Property Valuer must disclose in the Property Valuation Report the reasons, Assumptions, and calculation process of the Discount Rate.

l. In determining the Capitalization Rate, the Property Valuer must distinguish:
1) the current Capitalization Rate, which is only used in the direct capitalization method; and
2) the terminal Capitalization Rate, which is only used in the discounted cash flow method.

m. In determining the Capitalization Rate as referred to in letter b item 3) letter i) and letter c item 3) letter g), the Property Valuer may determine from:
1) market data, by comparing the annual net income of the Valuation Object with the value of comparable properties, according to market conditions.
2) the summation method, by adding or subtracting the risk-free rate from the business risk level of investments in comparable and similar properties.
3) band of investment, by:
a) calculating the cost of equity by considering:
(1) the rate of return on funds placed in a risky investment in similar properties; (2) inflation estimates set by the government; and (3) beta coefficients must come from average industry data in the same sector as the Valuation Object; b) considering returns from investments available in the market from comparable and similar industries; c) considering the capital structure available in the market from comparable and similar industries; d) considering industry risk and conditions of similar properties; e) considering specific risks of the Valuation Object; and f) performing at minimum the following procedures:
(1) calculating the percentage of investment capital structure based on the average of government banks in carrying out financing functions on the Valuation Date; (2) using loan interest rate data from the average of government banks in carrying out financing functions to determine the cost of debt on the Valuation Date; and (3) calculating the weighted average cost of capital proportionally based on the weight of each type of capital structure and the cost of each type of capital structure; or
4) subtracting the estimated growth rate still existing in the continuous or infinite (perpetuity) period from the Discount Rate used in the discounted cash flow method period.

n. The Property Valuer must disclose in the Property Valuation Report the reasons, Assumptions, and calculation process of the Capitalization Rate.

Cost Approach
a. Procedures that must be taken in Valuation with the Cost Approach are:
1) determining the estimated cost to be used, namely New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New);
2) calculating the amount of estimated cost determined as referred to in item 1) from the Valuation Object;
3) calculating the amount of Depreciation of the Valuation Object;
4) subtracting the amount of estimated cost calculated as referred to in item 2) from the amount of Depreciation calculated as referred to in item 3); and
5) in the event the Valuation Object includes land, the Land Value must be added to the indication of the Valuation Object's Value, which is the result of the calculation as referred to in item 4).

b. Calculation of New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) as referred to in letter a item 1) must use one of the following methods:
1) Quantity Survey Method;
2) Unit In Place Method;
3) Square Meter Method; or
4) Cost Indexing Method.

c. In using the Quantity Survey Method as referred to in letter b item 1), the following provisions apply:
1) The Property Valuer must obtain the following data:
a) direct costs;
Direct costs include land preparation costs, material costs, and labor costs. b) indirect costs; and Indirect costs include survey costs, permitting costs, insurance costs, other costs (overhead cost), profit, and taxes. c) unit prices used; Unit prices used include material costs and labor costs.
2) The Quantity Survey Method reflects the quality and quantity of all materials used in construction and all categories of labor.

d. In using the Unit In Place Method as referred to in letter b item 2), the Property Valuer must calculate the estimated cost of buildings or construction based on the unit price of installed units.

e. In using the Square Meter Method as referred to in letter b item 3), the Property Valuer must:
1) calculate the estimated construction cost by considering the contract price or construction cost of comparable and similar properties that were newly completed within a maximum period of one year from the Valuation Date;
2) make adjustments to the data of comparable and similar properties, in the event there are significant differences in data between the Valuation Object and comparable and similar properties that may affect the Value;
3) make adjustments to the estimated construction cost against trends in changes in construction costs from the contract date or construction date until the Valuation Date; and
4) calculate the estimated construction cost that can be taken from the construction cost of comparable and similar properties or the construction cost of properties newly completed within a maximum period of one year before the Valuation Date, in the event that construction costs on the contract date or construction date are unknown, provided they meet the following requirements:
a) comparable and similar properties meet the principle of highest and best use; b) comparable and similar properties are in a stable market condition; and c) the location value of comparable and similar properties can be known.

f. The Square Meter Method as referred to in letter e must be used to calculate the estimated value of the Valuation Object, based on the cost of comparable and similar properties by making adjustments, in the event that comparable properties and the Valuation Object have different specifications.

g. In using the cost indexing method as referred to in letter b item 4), the Property Valuer must multiply the construction cost of comparable and similar properties by a specific cost index to generate an estimate of the Valuation Object's construction cost.

h. The cost indexing method can only be used if the construction cost of the Valuation Object or comparable and similar properties is known.

i. Differences in cost levels due to time differences must be obtained by comparing cost levels at present with cost levels at the time of construction.

j. Differences in cost levels due to location differences must be obtained by comparing market prices at the location of comparable and similar properties with market prices at the location of the Valuation Object.

k. The Property Valuer must calculate the estimated cost depreciation of the property using one of the following Depreciation methods:
1) market extraction method;
2) economic life method; or
3) breakdown method.

l. The market extraction method as referred to in letter k item 1) can only be used if:
1) sales data of comparable properties from the Valuer professional association is available;
2) comparable properties used must meet comparable and similar criteria; and
3) the calculation of land value and/or New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) for comparable properties can be done accurately.

m. Depreciation calculation procedures using the market extraction method as referred to in letter k item 1) are:
1) obtaining transaction or offer data for comparable properties from the Valuer professional association;
2) adjusting transaction or offer data for comparable properties;
3) calculating the depreciated value of comparable properties consisting of land and buildings and other infrastructure by subtracting the transaction or offer data for comparable properties with the land value of comparable properties;
4) calculating the New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) of comparable properties;
5) calculating Depreciation by subtracting the New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) of comparable properties with the depreciated value of comparable properties; and
6) converting Depreciation into percentage form by dividing Depreciation by the New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) of comparable properties.

n. In calculating Depreciation using the economic life method as referred to in letter k item 2), the Property Valuer must first obtain the following data:
1) actual property age by calculating the number of years since the property was completed or constructed until the Valuation Date;
2) effective age by making adjustments to the actual age based on the condition and use of the property, or remaining economic life of the property by estimating the remaining life before the property can no longer be used or operated economically; and
3) economic life or useful life by calculating the number of years since the property was constructed or made until the estimated time the property can no longer be used or operated economically;

o. The economic life method can only be used if the economic life and effective age of the Valuation Object can be determined accurately.

p. Depreciation calculation procedures using the economic life method are:
1) determining the economic life and effective age of the Valuation Object; and
2) determining Depreciation in percentage form by dividing the effective age by the economic life of the Valuation Object.

q. In the breakdown method as referred to in letter k item 3), Depreciation is grouped into three main parts, namely:
1) physical deterioration;
2) functional obsolescence; and
3) economic obsolescence.

r. In determining Depreciation due to physical deterioration as referred to in letter q item 1), the Property Valuer must consider the following:
1) physical deterioration is caused by the following factors:
a) age; b) intensity of use; c) maintenance methods; or d) visible condition; and
2) Depreciation calculation procedures based on physical deterioration, as follows:
a) incurable physical deterioration is based on the age factor, calculated by dividing the effective age by the economic life; or b) curable physical deterioration is based on the visible condition factor, calculated by estimating the size of the repair costs required.

s. In determining Depreciation due to functional obsolescence as referred to in letter q item 2), the Property Valuer must consider the following:
1) functional obsolescence is caused by factors arising from within the Valuation Object, as follows:
a) poor planning; b) room sizes not suitable for their function; c) use of building materials not in accordance with convention; d) unavailability of facilities that should exist; e) use not in accordance with the original function; or f) technological lag (model); and
2) Depreciation calculation due to functional obsolescence is done by estimating the size of the costs required to make the Valuation Object function optimally, or estimating operational inefficiency.

t. In determining Depreciation due to economic obsolescence as referred to in letter q item 3), the Property Valuer must consider the following:
1) economic obsolescence is caused by factors arising from outside the Valuation Object, as follows:
a) regulatory provisions; b) changes in designation; c) changes in social and economic conditions; d) security conditions; e) land and building usage periods where machinery and equipment are attached; f) scarcity of raw materials; and g) environmental issues; and
2) Depreciation calculation due to economic obsolescence is done by considering the following:
a) in the event the Valuation Object can be sold, it is calculated from the size of the comparative sales price before the occurrence of economic obsolescence with the sales price after the occurrence of economic obsolescence; b) in the event the Valuation Object is commercial property, it is calculated from the size of the decrease in the Valuation Object's revenue, considering the cause of the revenue decrease; and c) in the event the Valuation Object is industrial property, it is calculated from the size of the decrease in the Valuation Object's production, considering the cause of the production decrease.

u. In making adjustments, the Property Valuer must meet the following requirements:
1) apply consistently in setting unit price and volume adjustments on the Valuation Object;
2) make unit price and volume adjustments according to current conditions on the Valuation Date, using the following forms of adjustment:
a) percentage form adjustment; or b) monetary unit form adjustment; and
3) convert unit price and volume adjustments in percentage form or monetary unit form to obtain New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) of the Valuation Object.

v. Percentage form adjustment as referred to in letter u item 2) letter a) is used to adjust differences in unit prices and volumes in percentage form.

w. Monetary unit form adjustment as referred to in letter u item 2) letter b) is used to adjust differences in unit prices and volumes in monetary unit form.

x. In the event the Cost Approach generates the Market Value of the Valuation Object, then:
1) Market Value with New Replacement Cost (Replacement Cost New) or New Reproduction Cost (Reproduction Cost New) minus Depreciation; and
2) New Replacement Cost (Replacement Cost New) or New Reproduction Cost (Reproduction Cost New) and Depreciation used are calculated based on market data or data consistent with conventions in the market or entirely from the market.

y. In using the Cost Approach, the Property Valuer must provide an explanation regarding the reasons for using the Cost Approach as regulated in letter a and letter b, in the Property Valuation Report.

z. In the event the Property Valuer uses the Depreciated Replacement Cost Method (DRC Method), the following provisions apply:
1) The Valuation Object must meet the criteria for Specialized Property.
2) The Valuation Object has no market data or non-market-based data, but must consider market conditions for the Valuation Object according to its use.
3) Calculation of New Reproduction Cost (Reproduction Cost New) or New Replacement Cost (Replacement Cost New) and Depreciation uses non-market-based data, but must consider market conditions for the Valuation Object according to its use.
4) Procedures used in the Depreciated Replacement Cost Method (DRC Method) are as regulated in letter a.
5) The Depreciated Replacement Cost Method (DRC Method) will generate Value in Use or Market Value for the Existing Use.

IV. REAL PROPERTY VALUATION

In the event Real Property Valuation is conducted on a Valuation Object consisting of land, the Property Valuer must meet the following requirements:
a. Market Value of land is the Market Value of:
1) vacant land without or without other properties attached above it;
2) land ready to be built;
3) land with buildings on it to be developed into more productive buildings; and
4) land that has been developed according to its designation.
b. Considering the economic capacity of the land and the position or location of the land.
c. The Valuation Approach used in conducting Real Property Valuation of land is:
1) Market Approach;
2) Income Approach with the residual technique method or land development method; or
3) Income Approach with the residual technique method is only used if:

a) The Market Value of land is designated for commercial buildings, such as office buildings, hotels, shopping centers, and apartments; or b) the professional association of Valuers cannot provide comparable and similar property comparison data and information for the land that is the subject of the Valuation. d. In the event that Real Property Valuation is conducted on an object of Valuation consisting of vacant land, the Property Valuer must use the Market Approach or the residual technique method. e. In the event that Real Property Valuation is conducted on an object of Valuation consisting of developed and undeveloped land, the Property Valuer must conduct a highest and best use analysis as regulated in the regulations of the Financial Services Authority regarding Valuation and Presentation of Property Valuation Reports in the capital market, and is not permitted to consider changes in the designation of the object of Valuation, building floor area ratio, building floor area coefficient, green area coefficient, and building height.
2. In the event that Real Property Valuation is conducted on an object of Valuation consisting of buildings, the Property Valuer must meet the following provisions:
a. The indication of Market Value for Real Property consisting of buildings is part of an indivisible value unit comprising the elements of Land Value and Building Value. b. The separation of Building Value (value extraction) from Real Property consisting of land and buildings does not reflect the Market Value of the building separately but only indicates Value.
c. The determination of the Value indication as referred to in letter b can only be done through the Cost Approach by considering Reproduction Cost New or Replacement Cost New minus Depreciation.
d. Real Property Valuation consisting of buildings standing on land owned by a third party must take into account the land use agreement. e. Real Property Valuation consisting of buildings as referred to in letter d must be conducted by adjusting the building Depreciation rate based on the remaining land use period. f. Real Property Valuation consisting of buildings using the Income Approach with the residual technique method.
3. In the event that Real Property Valuation is conducted on an object of Valuation consisting of strata title, the Property Valuer must meet the following provisions:
a. Strata title is a building standing on jointly owned land with ownership status of ownership rights over apartment units. b. The determination of Market Value for Real Property consisting of strata title can be done using the Market Approach or the Income Approach.
c. The determination of Market Value for Real Property consisting of strata title using the Income Approach can only be done if data is available in the form of rental prices and selling prices of comparable and similar comparison properties.
4. In the event that Real Property Valuation is conducted on an object of Valuation consisting of commercial property, the Property Valuer must meet the following provisions:
a. Commercial property is property that has the potential to be operated in the long term and generate income for its owner. b. Obtain information from management parties about conditions that can affect the income of the object of Valuation.
c. Real Property Valuation consisting of buildings using the Income Approach with the residual technique method.
d. Real Property Valuation consisting of commercial property can use the following Valuation Approaches:
1) Market Approach;
2) Income Approach; and/or
3) Cost Approach.
e. The determination of Market Value for Real Property consisting of commercial property using the Income Approach must use the discounted cash flow method.
5. In the event that Real Property Valuation is conducted on an object of Valuation consisting of hotel property, the Property Valuer must meet the following provisions:
a. Conduct an analysis of data and information, at least including:
1) tourist development in the surrounding area;
2) number of hotels in the surrounding area;
3) competing hotels;
4) hotel room rates in the surrounding area;
5) occupancy rate of hotels in the surrounding area; and
6) conditions affecting the income of the hotel that is the object of Valuation.
b. Conduct an analysis of the strengths and weaknesses of the object of Valuation compared to competing hotels.
c. The determination of Market Value for Real Property consisting of hotel property using the Income Approach must use the discounted cash flow method.
d. Income elements used in the discounted cash flow method as referred to in letter c, at least include:
1) room income;
2) food and beverage income; and
3) other income directly related to hotel activities.
6. In the event that Real Property Valuation is conducted on an object of Valuation consisting of office property, the Property Valuer must meet the following provisions:
a. Conduct an analysis of data and information, at least including:
1) business activity development in the area surrounding the location;
2) number of office buildings in the area surrounding the location;
3) other office buildings that are competitors;
4) office space rental rates in the area surrounding the location;
5) occupancy rate of offices in the area surrounding the location; and
6) conditions affecting the income of the object of Valuation.
b. Conduct an analysis of the strengths and weaknesses of the object of Valuation compared to competing offices.
c. The determination of Market Value for Real Property consisting of office property using the Income Approach must use the discounted cash flow method.
d. Income elements used in the discounted cash flow method as referred to in letter c, at least include:
1) rental income and service charges; and
2) other income directly related to office property activities.
7. In the event that Real Property Valuation is conducted on an object of Valuation consisting of shopping center property, the Property Valuer must meet the following provisions:
a. Conduct an analysis of data and information, at least including:
1) shopping business activity development in the area surrounding the location;
2) number of shopping centers in the area surrounding the location;
3) other shopping centers that are competitors;
4) shopping center floor rental rates in the area surrounding the location;
5) occupancy rate of shopping centers in the area surrounding the location; and
6) conditions affecting the income of the shopping center that is the object of Valuation.
b. Conduct an analysis of the strengths and weaknesses of the object of Valuation compared to competing shopping centers.
c. The determination of Market Value for Real Property consisting of shopping center property using the Income Approach must use the discounted cash flow method.
d. Income elements used in the discounted cash flow method as referred to in letter c, at least include:
1) rental income and service charges; and
2) other income directly related to shopping center property activities.
V. PERSONAL PROPERTY VALUATION

Personal Property
Personal Property is a legal concept referring to all rights, interests, and benefits related to the ownership of a property other than real estate. Personal Property is legally declared as personalty, which is different from real estate. Tangible Personal Property usually does not permanently attach to real estate and is usually characterized by its movable nature, such as machinery and equipment, transportation tools, heavy equipment, and supplies. See also collectibles, equipment and building fixtures, furniture and other equipment, personal items and equipment, leasehold improvements or tenant improvements, machinery and its equipment, trade fixtures or tenant fixtures. Machinery and equipment include:
a) machinery and equipment including installations that are assembled as a single unit and/or stand alone, used in the production process; b) transportation tools, heavy equipment, communication tools, health tools, laboratory tools and utilities, equipment and furniture, and military equipment; and c) telecommunication devices including network transmitter and receiver equipment, satellites, and earth stations.
In the event that machinery and equipment are property owned by a third party, they are not included in the Valuation.
In the event that machinery and equipment consist of Specialized Property classification and non-Specialized Property, the Value conclusion is made based on each classification and cannot be combined.
Procedures that must be carried out in the Valuation of machinery and equipment, at least:
a. consider the costs of machinery and equipment that form a single production unit including foundation costs, installation, and preparation of machinery and equipment operations; b. obtain a general overview of the production process of the machinery and equipment;
c. conduct identification of machinery and equipment which includes among others the name of the machine or equipment, brand, type or model, capacity, year of manufacture, and year of use;
d. obtain data and information regarding the maintenance program carried out on the machinery and equipment; e. obtain data and information regarding the condition of the machinery and equipment; f. obtain data and information regarding production capability and machine utility conditions; g. obtain data and information regarding economic or industrial conditions; h. calculate the estimated Depreciation of machinery and equipment which includes physical deterioration, functional obsolescence, and economic obsolescence;
i. determine Assumptions regarding the status and condition of the machinery and equipment;
j. obtain information about:
1) availability of raw material sources;
2) land and building use period;
3) regulatory provisions; and
4) environmental impacts affecting the value of machinery and equipment;
k. determine the classification of parts of machinery and equipment as Specialized Property or non-Specialized Property;
l. obtain data and information regarding the ownership status of the machinery and equipment; and
m. obtain data and information regarding the existence of intangible value that is an inseparable part of the machinery and equipment that adds value;
5. Valuation Approaches used in conducting Valuation of Personal Property consisting of machinery and equipment are:
a. Market Approach; b. Income Approach; and/or
c. Cost Approach.
6. In the event that the Cost Approach is used, the amount of Depreciation for machinery and equipment is determined using the following Depreciation methods:
a. market extraction method; and/or b. economic life method; and
c. breakdown method.
7. The market extraction method as referred to in item 6 letter a can only be used if:
a. selling prices of comparable property consisting of machinery and equipment from the professional association of Valuers are available; b. comparable property consisting of machinery and equipment used must have comparable and similar criteria;
c. the age and condition of comparable property consisting of machinery and equipment can be known; and
d. the calculation of Reproduction Cost New or Replacement Cost New for comparable property consisting of machinery and equipment can be done accurately.
8. Depreciation calculation procedures using the market extraction method are:
a. obtain transaction data or offers of comparable property consisting of machinery and equipment from the professional association of Valuers; b. adjust transaction data or offers of comparable property consisting of machinery and equipment;
c. calculate the depreciated value of comparable property consisting of machinery and equipment by adjusting transaction data or offers of comparable property consisting of machinery and equipment;
d. calculate Reproduction Cost New or Replacement Cost New of comparable property consisting of machinery and equipment; e. calculate Depreciation by subtracting Reproduction Cost New or Replacement Cost New of comparable property consisting of machinery and equipment from the depreciated value of comparable property consisting of machinery and equipment; and f. convert Depreciation into percentage form by dividing Depreciation by Reproduction Cost New or Replacement Cost New of comparable property consisting of machinery and equipment.
9. In calculating Depreciation using the economic life method as referred to in item 6 letter b, the Property Valuer must first obtain data as follows:
a. actual age of machinery and equipment by calculating the number of years since the machinery and equipment were finished being made until the Valuation Date; b. economic life or useful life by calculating the number of years since the machinery and equipment were made until the estimated time when the machinery and equipment can no longer be used or operated economically; and
c. effective age by adjusting the actual age based on the condition and use of the machinery and equipment, or remaining economic life of machinery and equipment by estimating the remaining life before the machinery and equipment can no longer be used or operated economically.
10. The economic life method can only be used if the economic life and effective age of the machinery and equipment that are the object of Valuation can be determined accurately.
11. Depreciation calculation procedures using the economic life method are:
a. determine the economic life, effective age, and remaining economic life of the machinery and equipment that are the object of Valuation; and b. determine Depreciation in percentage form by dividing the effective age by the economic life of the object of Valuation, or 100% (one hundred percent) minus the percentage of dividing the remaining economic life by the economic life of the machinery and equipment that are the object of Valuation.
12. In calculating Depreciation using the breakdown method as referred to in item 6 letter c, depreciation is grouped into three main parts, namely:
a. Physical Deterioration; b. Functional Obsolescence; and
c. Economic Obsolescence.
13. Causes of physical deterioration as referred to in item 12 letter a are:
a. due to age; b. intensity of use;
c. maintenance method; and
d. visible condition.
14. Depreciation calculation procedures based on physical deterioration are:
a. incurable physical deterioration is based on the age factor, calculated by dividing the effective age by the economic life; or b. curable physical deterioration is based on the visible condition factor, calculated by estimating the amount of repair costs required.
15. Depreciation due to functional obsolescence as referred to in item 12 letter b, which is caused by factors arising from the machinery and equipment that are the object of Valuation but outside of physical deterioration, is:
a. technological lag; b. suboptimal planning;
c. imbalance related to size, model, shape, and capacity;
d. unavailability of supporting equipment that should exist; and e. use not in accordance with the original function.
16. Depreciation due to functional obsolescence can be calculated from the amount of costs required so that the machinery and equipment that are the object of Valuation function as planned.
17. Depreciation due to economic obsolescence as referred to in item 12 letter c is caused by factors arising from outside, namely:
a. regulatory provisions; b. changes in social and economic conditions of society;
c. economic conditions;
d. limited land and building use period; e. scarcity of raw materials; and f. environmental issues.
18. Depreciation due to economic obsolescence of the machinery and equipment that are the object of Valuation can be calculated by:
a. in the event that there is market data, using the comparison of selling prices before and after the occurrence of economic obsolescence; and b. from the capacity utilization rate before and after the occurrence of economic obsolescence.
19. Machinery and equipment that are included in the type of Specialized Property are valued based on Value in Use or Market Value for Existing Use, while machinery and equipment that are included in the type of non-specialized property are valued based on Market Value.
VI. PLANTATION PROPERTY VALUATION
1. Stages that must be carried out in conducting Plantation Property Valuation are as follows:
a. conduct a review of the assignment plan, which includes:
1) identification of the object of Valuation;
2) identification of the status of the object of Valuation;
3) Valuation Date;
4) purpose of Valuation;
5) Basis of Value; and
6) Assumptions and limiting conditions.
b. create an Inspection plan which includes:
1) identifying the quantity and type of data required;
2) identifying data sources;
3) identifying labor requirements;
4) creating a work plan; and
5) identifying regulatory provisions in the plantation sector.
c. conduct data collection and data analysis, namely:
1) general data, including:
a) location;
Location includes region, accessibility, and social conditions. b) economic conditions; and Economic conditions include market analysis, growth, and direction of economic development. c) land characteristics. General land characteristics include climate, altitude above sea level, topography, effective soil depth, type, physical and chemical soil, water sources and irrigation systems (drainage), and surface and subsurface rocks.
2) specific data, including:
a) agronomic and cultivation data of plantation commodities being cultivated; Agronomic and cultivation data of plantation commodities being cultivated include among others planting distance, number of main plant population per planting year based on census results or sampling, production per planting year, seed/seedling origin, land suitability data, fertilization, and plant maintenance. b) cultivation techniques, seed origin certificates, land class classification, plant census results or sampling results, soil and leaf analysis reports (if available), rainfall list; c) legality (validity period of business use rights), general company description, number of workers; and d) regulatory provisions in the plantation sector. d. conduct highest and best use analysis as regulated in the regulations of the Financial Services Authority regarding Valuation and Presentation of Property Valuation Reports in the capital market, and is not permitted to consider changes in the designation of the object of Valuation; e. apply approaches and Valuation Methods; f. conduct value reconciliation in the event of using more than 1 (one) approach; and g. provide Value conclusion.
Valuation Approaches used in Plantation Property Valuation are:
a. Market Approach; b. Income Approach; and/or
c. Cost Approach.
The Market Approach as referred to in item 2 letter a can only be used if comparable and similar comparison properties with the object of Valuation are obtained.
The Income Approach as referred to in item 2 letter b can only be used for Plantation Property Valuation that has productive plants.
The Cost Approach as referred to in item 2 letter c can only be used for Plantation Property Valuation that consists entirely of unproductive plants.
In the event that the Income Approach and/or Market Approach is used, the value of plants must be obtained through extraction techniques, namely by subtracting the plantation value from the land value, non-plant asset values such as buildings, infrastructure, vehicles and heavy equipment, machines and other equipment.
To obtain the value of non-plant assets in the extraction technique as referred to in item 6, the Property Valuer must use the Cost Approach and/or Market Approach.
Costs that can be included in valuing unproductive plants include:
a. land clearing. b. piling.
c. making planting holes.
d. planting shade trees, legumes (if any). e. nursery. f. planting. g. replanting and insertion, (if any). h. maintenance of unproductive plants.
i. supporting facilities include, as follows:
1) office buildings and housing;
2) road and bridge infrastructure;
3) machinery and equipment;
4) heavy equipment and vehicles;
5) office inventory; and
6) processing units (factories).
j. Costs that can be included in valuing plantation land assets include costs incurred in handling permits until the business use right is obtained, namely as follows:
1) land acquisition costs; and
2) administrative and land procurement costs, which include, among others:
a) business use right registration costs; b) surveying costs; c) committee costs; d) land use analysis costs; e) Environmental Impact Analysis (AMDAL) preparation costs; f) crop and tree compensation costs, (if any); and g) other paid costs.
In the event that the Cost Approach is used, for Plantation Property Valuation that consists entirely of unproductive plants, for cost per hectare (unit cost) of plants and standard plant maintenance per hectare, the following provisions apply:
a. estimation of all costs incurred refers to plantation property standards issued by the Government multiplied by the planting area size and adjusted (adjustment) with actual conditions according to the results of technical plant assessment; and b. adjustment (adjustment) with actual conditions as referred to in letter a is done against, as follows:
1) plant population;
2) plant diversity;
3) plant maintenance level; and

4) Plant quality.

Property valuation methods for plantations with mature crops must use the discounted cash flow method.
Procedures to be carried out in using the discounted cash flow method as referred to in item 10 must include at least:
a. calculating annual net income from crop production; b. estimating and projecting operating costs, namely variable costs, fixed costs, and reserve expenses for replacement assets;
c. calculating annual net income, obtained from the difference between gross income and operating costs; and
d. discounting annual net income over the operational period or the productive crop period using a Discount Rate adjusted to the business risk of the Valuation object.

VII. FORESTRY PROPERTY VALUATION

Valuation Approaches that can be used in Forestry Property Valuation in the form of natural forest management rights are the Income Approach and/or the Market Approach.
Valuation Approaches used in Forestry Property Valuation in the form of industrial plantation forest management rights are as follows:
a. The Market Approach can only be used if comparable and similar comparable properties are obtained with the Valuation object. b. The Income Approach can be used to value a forest stand located in a forest area, whether managed as natural forest or industrial plantation forest, using the discounted cash flow method.
c. The Cost Approach is used to value industrial plantation forest stands that are not yet ready for harvest and/or trees that cannot be used if felled.
Property Appraisers in conducting Valuation of forestry properties must have adequate understanding of the type and characteristics of the forestry properties being valued.
The Income Approach in Forestry Property Valuation must consider:
a. Income Sources
1) Income sources for forestry properties are obtained from the sale of timber stands contained in the forest that is the object of Valuation.
2) The selling price of timber stands is obtained from market data around the forest location, considering the type, estimated age, and diameter of the stand.
3) The number of stands that can be felled and sold is adjusted to the potential of stands contained in the forest.
4) Conducting analysis on forest function, forest conditions (primary or secondary), and forest stand growth.
b. Costs and Expenditures
Costs and expenditures considered in forestry property operations include:
1) Natural Forest
a) felling and transportation costs; b) fees and other obligations to the government; c) operational and marketing costs; d) reforestation costs; and e) licensing costs.
2) Cultivated Forest
a) licensing costs b) planting and maintenance costs; c) operational costs; d) felling, transportation, and marketing costs; and e) fees and other obligations to the Government.
c. Discount Rate
The magnitude of the Discount Rate applied refers to the determination of the Discount Rate as referred to in item III item 6 letter j.

VIII. MINING PROPERTY VALUATION

In conducting Mining Property Valuation, Property Appraisers must consider the following:
a. general exploration, including geological observation to establish signs of the presence of minerals (prospecting); b. exploration, with mining geological investigation to more precisely and carefully establish the presence and location of the nature of mineral deposits;
c. exploitation of mining properties with the aim of producing minerals and utilizing them by:
1) open pit mining;
2) underground mining; and
3) underwater mining/marine mine.
d. processing and refining of minerals; e. sale of minerals from processing and refining results; and f. analysis of environmental impact and post-mining planning.
In conducting mining valuation procedures, Property Appraisers must consider data collection and preliminary analysis aspects as follows:
a. technical aspects;
1) geological and exploration studies;
2) geotechnical studies;
3) hydrogeological studies;
4) mining system;
5) processing and refining system;
6) transportation system;
7) stripping ratio (SR);
8) cut-off grade (COG); and
9) average minimum thickness (COT);
b. economic aspects;
1) infrastructure;
2) labor;
3) mineral commodity prices and competition;
4) type of by-products and final products; and
5) Value and prospects of minerals.
c. environmental, health, and occupational safety aspects; and
d. legal aspects.
Approaches used in conducting Mining Property Valuation are as follows:
a. In the event that Mining Property Valuation involves reserve assets, the approaches used are as follows:
1) The Cost Approach is used for Valuation in unproductive areas (areas in the general exploration, exploration, and construction stages) within the mining business license area;
2) The Income Approach is used for Valuation in productive areas (productive zone areas and unproductive areas but where the amount of mining reserves can be measured) within the mining business license area using the discounted cash flow method;
3) Reserve value determination is done by calculating estimated receipts to be obtained in future years during the mine life and discounting them to present value; and
4) Extraction techniques to obtain reserve value are done by reducing mining value with land value and non-reserve asset values such as buildings, infrastructure, vehicles, heavy equipment, machines, and equipment.
b. In the event that Mining Property Valuation involves non-reserve assets, the Valuation Approaches used are the Cost Approach and/or the Market Approach.
In conducting Valuation using the discounted cash flow method, Mining Property Appraisers must:
a. carry out procedures as referred to in item III item 6 letter b; b. meet the following provisions:
1) estimate and project annual gross income; and
2) estimate operating costs obtained from variable costs, fixed costs, and reserve expenses, according to expenditure items as follows:
a) exploration costs; b) exploitation costs, including:
(1) preparation and cleaning costs; (2) overburden (OB) stripping costs; (3) excavation or blasting and loading costs of minerals; (4) transportation costs to stockpiles; (5) road maintenance costs; (6) direct labor costs; (7) fuel and lubricant costs; (8) heavy equipment maintenance costs; (9) reclamation or mine closure costs; and (10) reserve costs. c) processing, refining, or extraction costs; d) processing costs, including chemicals (if any); e) direct labor costs; f) fuel and lubricant costs; g) marketing costs; h) general and administrative costs; i) maintenance costs, for example, maintenance costs for heavy equipment, machines and equipment, docks, other Operational Assets, infrastructure; j) reserve costs, for example, reserve costs for heavy equipment, machines and equipment, docks, other Operational Assets, infrastructure; k) loading costs from stockpile to vessel; l) royalty costs; m) retribution costs; n) land and building tax costs; o) insurance costs; and p) reasonable miner's profit.
c. estimate annual net income, obtained from the difference between projected gross income and projected operating costs; and
d. discount projected annual net income over the operational period or productive mining period based on the Discount Rate as referred to in item III item 6 letter j.

IX. PROPERTY VALUATION REPORTS

General Provisions for Property Valuation Reports
a. Property Appraisers conducting Professional Valuation Assignments are required to create a Property Valuation Report. b. Property Valuation Reports as referred to in letter a are required to be created in the form of a complete report (narrative report or long form report) and a summary report (short form report).
c. Summary reports (short form reports) as referred to in letter b are a summary of all important information from Property Valuation Reports in the form of complete reports (long form reports).
d. Summary reports (short form reports) can be presented separately but are an integral part of the Property Valuation Report. e. The type and content of reports depend on the use of the Valuation Report, legal requirements for the type of property, basic nature, and complexity of the assignment. f. Property Appraisers are required to disclose in the Property Valuation Report regarding provisions related to reporting obligations in the Financial Services Authority regulations regarding Valuation and Presentation of Property Valuation Reports in the Capital Market. g. Property Appraisers are required to use definitions and terms as referred to in item I and Financial Services Authority regulations regarding Valuation and Presentation of Property Valuation Reports in the Capital Market. h. In the event that Property Appraisers use definitions and terms other than those established in Financial Services Authority regulations regarding Valuation and Presentation of Property Valuation Reports in the Capital Market and this Financial Services Authority Circular, such other definitions and terms must be clearly disclosed in the Property Valuation Report.
Content of Property Valuation Reports
Property Valuation Reports as referred to in item 1 letter b in the form of complete reports (narrative reports or long form reports) must contain at least the following:
a. Cover Letter. b. Table of Contents.
c. Introduction, which must explain and disclose at least the following:
1) Valuation Report number or reference number;
2) Report Date;
3) Client identity including name, business field, address, telephone number, facsimile, email address;
4) number and date of the work agreement contract or proposal approved for the assignment;
5) description of the Valuation object;
6) date of property Inspection described for each Valuation object;
7) Valuation Date;
8) purpose and objective of Valuation;
9) scope of Valuation;
10) Basis of Value used;
11) definitions and terms used in Valuation;
12) description of information used in analysis;
13) Valuation Approaches and Methods established and reasons for their use;
14) description of the Valuation process;
15) independence statement from the Property Appraiser and the Professional Valuation Assignment team involved in the assignment and the public appraisal firm;
16) Assumptions and limiting conditions as well as hypothetical scenarios that directly affect Valuation;
17) description of Experts and the results of Experts' work in the event that the Property Appraiser bases Valuation on the work results of Experts;
18) explanation of significant events after the Valuation Date (subsequent event);
19) description of relevant legislation regarding Valuation (if any); and
20) other additional information required outside the matters described in items 1) to 19).
d. Market Review
Property Appraisers must describe a market review containing at least:
1) the Valuation object, including conditions affecting the Valuation process and results; and
2) products produced by the Valuation object.
e. Disclosure of assets as follows:
1) Operational Assets
Technical description, approach used to obtain Value, and Value of each Operational Asset including ownership status; and
2) Non-Operational Assets
Technical description, approach used to obtain Value, and Value of each Non-Operational Asset including ownership status. f. Data and Information Property Appraisers must identify and disclose data and information, whether known or reasonably knowable, obtained from within or from outside parties of the client, regarding the Valuation object owned and/or controlled by the client, including at least:
1) In the event that the Valuation object includes land, matters that must be disclosed include technical descriptions of land including:
a) Location and Identification;
Contains a description of the land location by stating:
(1) full address;
(2) access to the land location; (3) distance from the land location to easily identifiable properties or places; and (4) specifications of roads around the land location. b) Environmental Data; Description of the environmental conditions of the land location and surroundings, including at least:
(1) utilization or use of surrounding land; (2) land use zoning; (3) easily identifiable properties or places around it that can serve as location references; and (4) available public facilities. c) Land Data; Description of the status or legality of land certificates and technical specifications of the Valuation object land, including at least:
(1) type and number of certificates, date and place of issuance, validity period, number and date of situation maps or survey letters, land area, and name of the rights holder; and (2) shape, size, surface condition, and other relevant and related information. d) Land Utilization; Description of land utilization or use at the time of Valuation. e) Highest and Best Use Description of the highest and best use of the Valuation object, in the event it meets the principle of highest and best use. f) Description of Valuation objects that do not meet the principle of highest and best use; and g) Comparable Data and/or Properties Description of data and/or comparable properties used as comparisons in the Valuation process.
2) In the event that the Valuation object includes buildings, matters that must be disclosed include at least:
a) technical description, approach used to obtain Value, and Value of each building; and b) technical specifications of buildings including building name, construction type, number of floors, foundation type, materials used, layout, building completeness, floor area, and physical condition.
3) In the event that the Valuation object includes machinery and equipment, matters that must be disclosed include:
a) technical description, approach used to obtain Value, and Value of each machinery and equipment; and b) technical specifications of machinery and equipment including machine type, machine name, manufacturer, model or type of machine, year of manufacture, country of origin, working system, output capacity, power source, resource and labor needs, supporting equipment, machine completeness, and physical condition.
4) In the event that the Valuation object includes infrastructure, matters that must be disclosed include:
a) technical description, approach used to obtain Value, and Value of each infrastructure; and b) technical specifications of infrastructure including infrastructure name, construction type, foundation type, materials used, infrastructure completeness, and physical condition. g. Consideration of Valuation Approaches and Valuation Methods Property Appraisers must state that they have considered the use of Valuation Approaches and Valuation Methods as referred to in Financial Services Authority regulations regarding Valuation and Presentation of Property Valuation Reports in the Capital Market and this Financial Services Authority Circular. h. Use of Valuation Approaches and Valuation Methods Property Appraisers must explain and disclose the use of Valuation Approaches and Valuation Methods and descriptions in their application.
i. Calculation of Value Indication
Property Appraisers must disclose the calculation process to generate the Value indication. j. Reconciliation of Value Estimates and Value Conclusion
1) Property Appraisers must present a reconciliation of various Value estimates obtained from Valuation Approaches and Valuation Methods used and disclose the reconciliation considerations underlying the Value conclusion, except for Valuation of Valuation objects that can use 1 (one) Valuation Approach as regulated in Financial Services Authority regulations regarding Valuation and presentation of Property Valuation Reports in the capital market.
2) Description of the Valuation object's Value indication or part of the Valuation object and the final Value conclusion in the form of a single amount.
k. Property Appraiser Statement
Property Appraisers must state that:
1) Professional Valuation Assignment was conducted on the Valuation object on the Valuation Date;
2) analysis was conducted for the purpose of Valuation disclosed in the Property Valuation Report;
3) Professional Valuation Assignment was carried out in accordance with applicable legislation;
4) Inspection of the Valuation object was conducted;
5) the estimated Value generated in the Professional Valuation Assignment was presented as the Value conclusion;
6) the scope of work and data analyzed have been disclosed;
7) the Value conclusion is consistent with Assumptions and limiting conditions;
8) all data and information disclosed in the report can be accounted for; and
9) the amount of the Appraiser's service fee is not dependent on the Valuation results.
l. Property Appraiser Qualifications
Property Appraisers must disclose information regarding the qualifications and expertise of the Property Appraiser. m. Property Appraiser Signature Property Appraisers must sign the Property Valuation Report by stating the name, place, registered letter number, and reporting date. n. Appendices Property Appraiser Reports must contain appendices necessary for conducting analysis and supporting Valuation results.
In the event that Property Appraisers conduct Valuation of Special Properties, the complete report (long form report) must contain at least:
a. information as referred to in item 2; b. explanation of Special Property identification; and
c. reasons for using the Cost Approach with the Depreciated Replacement Cost Method (DRC Method).
In the event that Property Appraisers conduct Valuation of Valuation objects in the construction or development stage, the complete Valuation Report (long form report) must contain at least:
a. information as referred to in item 2; b. construction or development completion level;
c. construction or development completion plan; and
d. plan to commence commercial operation.
In the event that Property Appraisers conduct Valuation of plantation properties, the complete report (long form report) must contain at least:
a. information as referred to in item 2; b. additional information that must be presented in the Plantation Property Valuation Report, including:
1) plantation crops including mature crops and immature crops;
2) seedlings;
3) plasma plantations; and
4) non-plant assets.
In the event that Property Appraisers conduct Valuation of forestry properties, the complete Valuation Report (long form report) must contain at least:
a. information as referred to in item 2; b. property identification, including:
1) property legality;
2) permits for utilization of forest products obtained;
3) history of forest area management;
4) physical and socio-economic conditions;
5) forest function;
6) effective area analysis;
7) area and Crop Age;
8) potential survey, types of timber that can be traded and protected;
9) area stand, volume stand, Crop Cycle, exploitation and security factors;
10) forest protection obligations;
11) concession areas and annual work plan projections according to cycles; and
12) forest property management performance.
c. market analysis according to the type and use of timber of the Valuation object;
In the event that Property Appraisers conduct Valuation of mining properties, the complete report (long form report) must contain at least:
a. information as referred to in item 2; b. description of data verified in Mining Property Valuation including:
1) Company licensing legality including building use rights certificates at processing units, and other permits related to mining including:
a) description of ownership, land use rights, mining business licenses; b) date of approval, start, and validity period of mining business licenses; c) explanation of exploitation target areas and/or released areas; d) explanation of minerals explored; and e) area of mining property, and area of exploration zones.
2) Processing cost standards per ton or per kilogram or per other unit of mineral product results (break-even stripping ratio/BESR);
3) Expert work results regarding mining feasibility and reserve analysis reports;
4) Description of mining location by disclosing:
a) access to the mine location; b) distance from the Valuation object to easily identifiable properties, assets, or places; and c) specifications of roads around the mine.
c. additional information that must be presented in the Mining Property Valuation Report, including:
1) reserve assets; and
2) non-reserve assets.

X. CLOSING PROVISIONS

This Financial Services Authority Circular takes effect on the date of establishment.

Established in Jakarta on December 31, 2021

EXECUTIVE HEAD
CAPITAL MARKET SUPERVISOR
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

signed
HOESEN

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