Palm

m-Oil:
m -O
Oil:
2018
8-20
2019,
2 019, A Defining
Defini
finiin
ng
Moment for Long g-Te
Term
T erm
Sustainability and Price

Presented by Arif P. Rachmat

Rachm
Founderer & Exec
Executive
cutive Ch
Chairman
hairman
Triputraa Agro
o Persadaa Group

Defining Moment

A “STRESSED TEST” The “FINALE”

SUSTAINABILITY

2
 Defining Moment

A “STRESSED TEST”

2018 . . . A Defining Moment

CPO Mdex Price
( Period : 1996 – 2018 )

USD/Ton Forecast
1,400

1,249
1,200

5-year-avg USD 625 – 675 (F)

1,000 5-year-avg USD 630

800

600

400 445

200 185
7-year-avg USD 349
-
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

2018 Bottom > Average 1999

9 – 2005, but Even then Last Year Bottom
m wass a BLIP
From Our Prediction in 2017

The Growth Ratee PEAKED

D in 2018
8 - 2019

From Our Prediction in 2017

The peak growth in 2018 & 2019
because
se of doubling of new
n
neew planting
pl
between 200606-
06
6-2013
New Planting Area in Indonesiaa Doubled in 2006
6 - 2013

Mio Ha
18
“Doubled
16 1.01
in 2006-2013” 0.73
0.62
14 0.49
0.52
0.33 0.57
12
10 5.64 1-2% Annual Growth
8 4.0% Annual Growth
6
4 6.14
2
-
As of 2006 - 2014 2015 2016 2017 2018 2019 - 2022 -
2005 2013 2021 2026

Source : Directorate General of Estate Crops & Internal Analysis

Those Plantations Now in

n PRIME AGE

Defining Moment

A “STRESSED TEST”
CPO Supply

CPO Demand

Trade War US vs China

201
018
8 CPO & Soyoilil Production
Mio Ton
45 Indonesia CPO Production

~10% (Actual)
40 ~8% (Forecast in POC 2018)
~6% (Forecast in POC 2017)
35

30
2015 2016 2017 2018

Indonesia 2018 CPO Production

Mio Ton
14

13 12

12

~42.2%
11 11

10 10

9 9

8
Q1 Q2 Q3 Q4
Source : Internal Analysis

Q3 Increased
d MORE THAN 40%
% compared to Q1
201
018
8 CPO & Soyoilil Production
Mio Ton
45 Indonesia CPO Production

~10% (Actual)
40 ~8% (Forecast in POC 2018)
~6% (Forecast in POC 2017)
35

30
2015 2016 2017 2018
Mio Ton
Malaysia CPO Production Mio Ton
22
58.00 World Soyoil Production

56.00 ~4.2%
~-2.2%
19 54.00

52.00

16 50.00
2015 2016 2017 2018 2015 2016 2017 2018
Source : MPOB, USDA & Internal Analysis

ABUNDANCEE of Oil Production Both Palm and Soy

MPOB Stock Vs CPO

O Mdexx Price
USD / Ton Mio Ton
MPOB Stock CPO Mdex Price Q3/Q4 4.0

1,250
3.5

1,050
3.0
Q3
Q3
850 Q3
Q3 2.5
Q4 Q3

650 2.0
Q4

450 1.5
Q4

Q4 Q4 Q4
250 1.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

In the Last Decade,

ecade, Q3
Q3-
Q 3-Q4
3 Q4 were Generally thee LO
Q4 LOWEST
OW PRICES
due to
o Peak Crop and Rising Stock
Historical CPO
O MDexx Price

USD / Ton
1,300
1,239 1,249
1,200 MAX
1,157 1,171
1,142 1,143
1,100
1,076 1,059
1,034 1,048
1,000 995
935
900
Q3
806 844 819 794 830 841
800 775 794
MEAN 776 787 779 764
769 767 778
760 776 741
716 724 714 719 729
700 Q1 703
636 636 637 647 633 642 639 643
627 620
600 592 601 589 601
MIN 557 583
522 529 538 506
500 485 483
445 463
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Des

Last
st 10
10-
0-Year
ar-Data
- Showed that Lowest Price Occurred Most Probable in
n SEPTT - OCT

Defining Moment

A “STRESSED TEST”
CPO Supply

CPO Demand

Trade War US vs China

IDR was One of the Worst Performing Currenciess in Oct 2018

Source : Bloomberg
Prompting Our Presidentt to PUSH
USH B20
B20
0 to
o Minimize Cu
Current Account Deficit due to
Import of Crude Oil

Indonesia Biodiesel Mandatory

Actual 2018 : 3.9 mio KL vs Actual 2017 : 2.6 mio KL Æ Growth: 46%
Thousands KL Government How Sustain The Biodiesel Program
500 PSO (Transportation) : 3.3 mio KL 474
447
450
Non PSO (Industry) : 0.6 mio KL 404
400
350
180 151
300 144
250
250
200
150 128
100
50
250 222 276 326 344 218 301 333 260 294 122 296
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Logistic & Administrative

hurdle
Source : Coordinating Ministry for Economic Affairs

September 1st Enforcement of Penalty IDR 6,000/L hass PUSHED NON PSO
O (Industry)
Major Issues on Logistic

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability

32 (345,000 KL/Mth)
Oil Tankers & Barges

Source : Coordinating Ministry For Economic Affairs & Pertamina

CHALLENGES TO BE RESOLVED
D to Meet Mandatory B20 & Beyond

Major Issues on Logistic

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability Too Scattered

32 (345,000 KL/Mth) 112

Oil Tankers & Barges Locations

Source : Coordinating Ministry For Economic Affairs & Pertamina

CHALLENGES TO BE RESOLVED
D to Meet Mandatory B20 & Beyond
Current Delivery Points

112 Locations
Scattered in All Areas of Indonesia

Source : Coordinating Ministry for Economic Affairs & PT Pertamina

Logistic Delivery Points weree too COMPLEX

Major Issues on Logistic

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability Too Scattered Small in Numbers

32 (345,000 KL/Mth) 112 2 (31,000 KL)

Oil Tankers & Barges Locations FAME Storages

Source : Coordinating Ministry For Economic Affairs & Pertamina

CHALLENGES TO BE RESOLVED
D to Meet Mandatory B20 & Beyond
Scheme of Export Levy Revised to Boost CPO Price

USD/Ton
CPO Local Price 2018 Flexible Export Levy
550 Mechanism
CPO
530 KPB Dumai 26 Nov 2018 Reference
Daily-Spot Announcement Price
510
- Zero Levy -
490 Monthly-
Average USD
470 50 /Ton
450 619
USD/Ton USD
430 25 /Ton 596
410 570 565
390 Rising USD/Ton
0 USD 503
/Ton
370
JAN FEB MAR
350 0
1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec Export Levy
Source : KPB CPO Index , Ministry of Trade & Ministry of Finance Actual Price

This Mechanism Effectivelyy LIFTED

D- P CPO Price
D-UP

Defining Moment

A “STRESSED TEST”
CPO Supply

CPO Demand

Trade War US vs China

Impact of US vs China Trade War on Soybean

USD/Ton
China Soybean imports, Jan - Dec US Soybean Price Brazil Soybean Price
From: 2017 2018 Change 460
China targeted US & China call a
Million metric tons 440 import tariff +25% 90-day truce in
on US Soybeans trade war
Brazil 50.9 66.1 +15.2 420
United States 32.9 16.6 -16.2 400
Argentina 6.6 1.5 -5.1 380
Uruguay 2.6 1.2 -1.4 360
Canada 2.0 1.8 -0.3
340
Russia 0.5 0.8 0.3
320
Others 0.0 0.1 0.1
300
Total 95.5 88.1 -7.5 Jan' Feb' Mar' Apr' May' Jun' Jul' Aug' Sep' Oct' Nov' Dec' Jan' Feb'
18 18 18 18 18 18 18 18 18 18 18 18 19 19

Source : Bloomberg, International Grains Council, Internal Analysis

Brazil Become
mess thee WINNER
R and USS thee LOSER

China Import : Soybean vs CPO

China Soybean Import China Palm Oil Import

Mio Ton Mio Ton
105.0 LOW Spread 10.0
USD 84
100.0 HIGH Spread
95.5 9.0
95.0 HIGH Spread USD 99
LOW Spread
USD 108 8.0
90.0 USD 81 88.1

85.0 83.2 7.0

81.7
6.0
80.0 5.5 6.0
75.0 5.1
4.4 5.0
70.0
4.0
65.0
60.0 3.0
2015 2016 2017 2018

Source : Mdex & Internal Analysis

2015 & 2018

8 HIGH PALM OIL IMPORTT Due to Low CPO Price and Low Import of Soybean
Soyoilil Stays as Ceiling for Palm Oil

Major Countries Palm Oil Stock CPO Price (Mdex) Soyoil Price (CBOT)
USD / Ton Mio Ton
850 11
Avg 7 Months Spread USD 78 Avg 5 Months Spread USD 127
In Q4, the
750 10 spread widening
because of
Building Palm
Oil Stocks
650 9

550 8

450 7

350 6
Jan '18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18
Source : CBOT, Mdex & Internal Analysis

Spread
d WIDENED
D because of Increasing Palm Oil Stock Level

CPO Vs Crude Oil Price...

... The Negative Spread were Short & Short
rt-
t-Lived
Price Spread
USD / Ton USD / Ton
1,400 Spread CPO (Mdex) Crude Oil (Brent)
1,400
1,200
1,200

1,000 1,000

800 800

600
600
400
400
Crude Oil > 100 USD /bbl 200

200
-

- (200)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source : Mdex & Bloomberg

Crude Oil remainss the FLOOR

R for CPO
 Defining Moment

SUSTAINABILITY

Palm Oil Continues to be a Strategic Commodity for Indonesia

Employment Export Value Agriculture Energy Security Regional US EPA Carbon
Absorption Absorption Stability
y Emission

59%
41%

Perkebunan Rakyat
Smallholders
Perkebunan Besar
Big Plantations

5.5 Mio USD18.1 Bio * 41% 3 Mio KL 10.8% 17%

through biodiesel The annual growth Emission reduction
Directly Related (Rp 244.4 T) Of total area
Labours Total Export Value is smallholder program in 2016 of job absorption as a result of the
As The Biggest plantations Equal to Substitute form palm oil use of palm oil-
Exporting Imported diesel industry based biofuel
Commodity and we saved that contributes
12 Mio 2.3 Mio $1.1Bio = directly to the
even Higher Than
Indirectly Related farmers Rp14.83 T development of
Oil and Gas
Labours *) 2016 social welfare
Source : Ministry of State Secretariat

HIGH CONTRIBUTIONSS to 3Ps (People, Planet, Prosperity)

Moratorium Shows Forwar
Forwardrrd-
d
d-Looking
Looking Policy
Lo
Despite Strategic Role of Palm Oil
Moratorium of New Licenses & One Map Policy 450 Companies ISPO Certification as of 2018

Mio Ton Planted Volume Mio Ha

12 11.03 3.5
10 9.00 3
3.10
CAGR 45% 7.00 2.5
8
5.30 2
6 2.04
1.5
4 2.70 1.35 1
2 1.05
0.5
0.55
0 0
2014 2015 2016 2017 2018

3.0 Mio Ha 11.0 Mio Ton CPO/Year

Source : ISPO & Internal Analysis

UNPRECEDENTED COMMITMENTT by Indonesia Government on Sustainability

ISPO Principles and Criteria Aligned to UN SDGs

5. Responsibility to Employee ISPO covers 12/17 UN SDGs

Rights
People 6. Socio-Economic Responsibility

3. Primary Forest and Peatland

Protection
Planet 4. Environment Management

1. Legality
2. Application of GAP
Prosperity 7. Business Development &
Improvement

ENORMOUS CONTRIBUTION
N of ISPO to UN SDGs
Indonesia has Made Great Efforts to Reduce Wildland Forest Fires

Wildfire A joint
oint Project between
betwe
Government,
Mio Ha International NGO
(TNC) and Private Sector
1. Clustering 2. SIGAP
P – TNC
Government NGO
Coordinating Ministry
Mini for
Economic Affairs (Indonesia):
Forest and land fire prevention Private Sector
programs based on clusters

17 x
3. Prosperous Fire
re-
e-free Village (DMPA)

Fire Prevention and Social Economic

Environment Protection Contribution Development
Source :
1. US Forest Service https://www.nifc.gov/fireInfo/nfn.htm
2. Ministry of Environment and Forestry Republic of Indonesia

Key Success Factors: Collaboration & Prevention through

h COMMUNITY EMPOWERMENT

INVITATION

SAVE THE DATE

March 18, 2019
Public Private Partnership Movement
Kick-Off

Global Fire Prevention

n COMMITMENT MOVEMENTT with Over 30 Companies
Defining Moment

The
e “FINALE
E”

Defining Moment

The “Finale”
CPO Supply

CPO Demand

Price Forecast
201
019
9 CPO & Soyoilil Production
Mio Ton
50 Indonesia CPO Production
45
~6.1%
40

35

30

25
2015 2016 2017 2018 2019 (F)
Mio Ton
Mio Ton
22 World Soyoil
Malaysia CPO Production 58.00 Production ~1.1%
~4.2% 56.00
19
54.00

52.00

16 50.00
2015 2016 2017 2018 2019 (F) 2015 2016 2017 2018 2019 (F)
Source : MPOB, USDA & Internal Analysis

LOWER GROWTH RATEE of CPO Production in 2019 Compared to 2018

Mild to Moderate EL NINO

Ț
C (ONI)
3.0
1998 El Nino 2016 El Nino Forecast 2019
2.5

2.0

1.5 Moderate El Nino

1.0
Mild El Nino
0.5
Neutral
0.0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
-0.5
La Nina Area
-1.0

-1.5

-2.0

2016 2017 2018 2019

Source : NOAA & Internal Analysis

Weather mightt RESTRICTT Production & Potentiallyy BOOSTT Price

 Defining Moment

The “Finale”
CPO Supply

CPO Demand

Price Forecast

Prediction
n 2019:
9: Indonesia Biodiesel Plan 6.2 Mio KL

Mio KL PSO (Transport) Non PSO (Industry) Signing MOU ENI and PERTAMINA
8 To open business opportunities in
the BIOFUEL PROJECTS from PALM OIL
7
~6.2
6
+60%
5 ~ 2.8
~ 3.9
4
+48% ~ 0.6
3 ~ 2.6
2 ~ 3.4
~ 3.3
1
• President Director of Pertamina, Nicke Widyawati
• CEO of Eni, Claudio Descalzi
2017 2018 2019 F • Minister of Energy and Mineral Resources, Ignasius Jonan
Source : Coordinating Ministry For Economic Affairs & Internal Analysis

Additional Projects in thee Pipeline:

e: PLN & B30
Supply Chain Solution

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability

32 (345,000 KL/Mth)
È
48 (518,000 KL/Mth)
Oil Tankers & Barges

Source : Coordinating Ministry For Economic Affairs & Pertamina

SPEED
D- P the Implementation
D-UP n of Mandatory B20

Supply Chain Solution

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability TToo Scattered

32 (345,000 KL/Mth) 112

È È
48 (518,000 KL/Mth) 10
Oil Tankers & Barges Locations

Source : Coordinating Ministry For Economic Affairs & Pertamina

SPEED
D- P the Implementation
D-UP n of Mandatory B20
Delivery Points Simplification Solution

Source : Coordinating Ministry For Economic Affairs & PT Pertamina

REDUCE NUMBER
R of Delivery Points from 112 in 2018 to 10 in 2020

Supply Chain Solution

FAME Oil Tankers Delivery Locations FAME Biodiesel End

Suppliers & Barges Storages Transportation Users

`
Ports
Non PSO
GAS Station (SPBU)

PSO

Availability TToo Scattered Small in Numbers

32 (345,000 KL/Mth) 112 2 (31,000 KL)

È È È
48 (518,000 KL/Mth) 10 20 (314,000 KL)
Oil Tankers & Barges Locations FAME Storages

Source : Coordinating Ministry For Economic Affairs & Pertamina

SPEED
D- P the Implementation
D-UP n of Mandatory B20
Maintaining the Zero Export Levy

CPO Funds More than Sufficient USD/Ton CPO Local Price 2019
530
Prediction in 2019 IDR USD
28 Feb 2019
End of Year 2018 Balance 20.9 T 1.44 Bio 520 Announcement
– Zero Levy –
510 Extended time
Biodiesel Uptake 6.2 Mio KL
Price Spread* 3,000 IDR/Ltr 500
(Biodiesel – Diesel Fuel Index) KPB Dumai
Daily-Spot
Foreign Exchange 14,500 IDR/USD 490

Subsidy Needed 18.6 T 1.28 Bio Rising

i
480

End of Year 2019 Balance 2.3 T 0.16 Bio 470

15 18 19 20 21 22 25 26 27 28 1 4
*YTD Feb 2019 average price spread
d 786 IDR/Ltr February Maret

Source : Coordinating Ministry for Economic Affairs, BPDP Sawit ( The Estate Crop Fund )

Indonesian Governmentt PRACTICAL & EFFECTIVE

VE… Essential to
o Benefit Farmers

Palm Oil Demand

Mio Ton Mio Ton EU Import
India Import ~8.7%
9.0 9.0
~2.0%
7.0 7.0

5.0 5.0

3.0 3.0
2015 2016 2017 2018 2019 (F) 2015 2016 2017 2018 2019 (F)

Mio Ton
China Import Mio Ton
Pakistan & Bangladesh Import
9.0
9.0

7.0 ~8.2% 7.0

~10.3%
5.0
5.0

3.0 3.0
2015 2016 2017 2018 2019 (F)
2015 2016 2017 2018 2019 (F)
Source : Internal Analysis

Palm Oil Demand

d willll CONTINUE to GROW
Soyo
yoil Demand
Mio Ton World Soyoil Consumption
59

57
3,4%
55

53

51

49

47

45
Source : USDA & Oil World 2015 2016 2017 2018 2019 (F)

HIGHER
R Soyoilil Demand in 2019 Compared to 2018

Defining Moment

The “Finale”
CPO Supply

CPO Demand

Price Forecast
CPO Supply and Demand Forecast
st 201
019
2017
17-
7-18 2018
18-
18
8-19 Growth Rate

Indonesia + 3.9 M + 2.5 M

SUPPLY Malaysia - 0.4 M + 0.8 M

(TON)
Others + 1.0 M + 0.7 M =
Indonesia + 2.5 M + 3.1 M

DEMAND Malaysia + 0.5 M + 0.5 M =

(TON) China + 0.4 M + 0.5 M = Demand
d > Supply
India - 0.4 M + 0.6 M
Europe Union + 0.0 M + 0.2 M =
Others + 0.2 M + 1.1 M
Note = +/- 0.5 M
Source : Internal Analysis ɇ SSUPPLYY – DEMAND + 1.
1.3
3M -2
2..0 M

We don’t Predict 2018 Bottom This Year, Avg 2019 willll bee US
USD
SD 550
0 – USD 600

THANK YOU
Arif P. Rachmat

Triputraa Agro
o Persada @tap_agri tap.corsec@tap
ap-
p-agri.com

@tap_agri @tap.agri www.tap

ap
p-agri.com
-