Fair value of financial assets and liabilities continued

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2010, 2009 AND 2008 Expressed in millions of Rupiah, unless otherwise stated Appendix 5173 57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued

c. Value Added Tax VAT on Bank Syariah Mandiri BSM Murabahah Financing Transactions

continued On 1 December 2005, the Directorate General of Taxation rejected BSM’s objection through its letter No. Kep-277PJ.542005. Based on newly issued Law No. 42 year 2009 dated 15 October 2009 in relation to the third amendment of Law No. 8 year 1983 regarding Value Added Tax on Goods and Services and Sales Tax on Luxury Goods, it is stated that financing services, which include sharia financing, is exempted from VAT. This Law started effectively on 1 April 2010. In 2010, the Government issued Law No. 2 Year 2010 in relation to the Amendment of Law No. 47 Year 2009 regarding State Budget of Revenues and Expenditures APBN 2010 dated 25 May 2010. The article and explanatory paragraph of this Law stated that the Government bear VAT on murabahah transactions of several sharia banks. Based on the explanatory paragraph of this Law, the BSM’s VAT borne by the Government amounting to Rp25,542 from the total outstanding SKPKB and STP received by BSM of Rp37,649. BSM management believes that difference between VAT borne by Government and total SKPKB and STP received by BSM will not be billed to BSM which is inline with objective and purposes of the law.

d. Trade Financing with Asian Development Bank ADB

On 25 November 2009, Bank Mandiri signed a Confirmation Bank Agreement CBA, Issuing Bank Agreement IBA and Revolving Credit Agreement RCA under Trade Finance Facilitation Program TFFP with ADB. Based on CBA and IBA, Bank Mandiri can act either as confirming bank or issuing bank for its customer’s LC based export import transactions. As a confirming bank, Bank Mandiri can request a guarantee from ADB for LC issued by issuing bank and as issuing bank, Bank Mandiri can obtain confirmation guarantee from ADB for LC that has been issued. TFFP scheme is a program initiated by ADB to facilitate the LC based trade transactions within Asian developing countries to increase the trade-volume growth. Becoming a participant in this program, Bank Mandiri will have an easier access to increase its trade finance credit lines, its trade volume and to open new business opportunities especially to countries that have low trade volume with Indonesia. Pursuant to the RCA, Bank Mandiri received a credit revolving facility up to USD25,000,000 full amount. By using the facility, Bank Mandiri will be charged with interest of total margin plus LIBOR during the interest period.

e. Settlement Mandatory Convertible Bond MCB PT Garuda Indonesia Persero

In 2000, the debt of PT Garuda Indonesia Persero Garuda at Bank Mandiri was restructured bilaterally, through conversion of Garuda’s borrowing to Bank Mandiri amounting to USD103,000,000 full amount, which consist of loans of USD80,000,000 full amount and Rp168,409, into Mandatory Convertible Bond MCB denominated in Rupiah currency with 4.00 coupon rate per annum, 5 years tenor and expected IRR of 18.00 per annum. This MCB facility matured on 2 November 2006.