INDONESIAN LEGAL REVIEW Code of Ethics

296 PT Telkom Indonesia Persero Tbk of data, both in corporate sector and in public. NCG KNKG formulated the 2006 Code of Corporate Governance the “Code” which recommends a more stringent corporate governance standards for Indonesian companies, such as the establishment of the independent audit Committee, nomination and remuneration Committee by the Board of Commissioners, as well as an increase in the scope of the disclosure obligations Indonesian companies. Although the NCGKNKG recommends that the Code to be applied by the Government as a basis for legal reform, however, as of the date of the conclusion of this annual report, the Government has not yet issued regulations that fully implement these provisions.

B. COMPOSITION OF INDEPENDENT DIRECTORS AND COMMISSIONERS

The NYSE listing standards require that the Board of Directors of companies listed in the U.S. shall be composed of a majority of Independent Directors and that particular Committee should be comprised of Independent Directors. Unlike companies incorporated in the U.S., Indonesian companies’ management consist of two institutions with the same status, namely, the Board of Commissioners and the Board of Directors. In general, the Board of Directors is responsible for routine business activities of the company and is authorized to act for and on behalf of the company, while the Board of Commissioners has the authority and responsibility of overseeing the Board of Directors and based on Indonesian Company Law, is mandated to provide advice to the Board of Directors. With regard to the Board of Commissioners, the Company Law requires at least two members of the Board of Commissioners are existed in public companies. Although the Company Law does not regulate the composition of the Board of Commissioners, however, the Listing Regulation No.I-A under KEP.305BEJ07-2004 issued by the Indonesia Stock Exchange IDX Regulation No.I-A stated that at least 30 of members of the Board of Commissioners of public companies such as Telkom must be independent. The Company Law stipulates that the Board of Directors is composed by at least two members, each of which must meet the minimum qualiication requirements set forth in the Company Law. In addition, pursuant to IDX Regulation No.I-A, it is stated that at least one member of the Board of Directors must be a non-ailiated member.

C. COMMITTEES

The NySE listing standards require that a listed company in the U.S must have an Audit Committee, Corporate Governance Committee and Compensation Committee. Each of these committees must consist of independent directors and is equipped with a written charter that addresses the matters speciied in the listing standards. The Company Law does not require Indonesian public companies to form any Committee as set forth in the NySE listing standards. However, the FSA Rules No.IX.I.5 and IDX Regulation No.I-A require the Board of Commissioners of a listed public company such as Telkom to form an Audit Committee comprising at least three members, one of whom must be an Independent Commissioner and acts as chairperson of the Audit Committee. While the two other members of the Audit Committee must be appointed from independent parties and at least one member must have an understanding of accounting and inance. The NySE listing regulation which applied pursuant to Rule No.10A-3 of Exchange Act requires a foreign private issuer with shares listed on the NySE to have an Audit Committee comprised of independent directors. However, not all members of our Audit Committee are independent directors as required by Rule No.10A-3 of the Exchange Act. Pursuant to Rule No.10A-3c 3 of Exchange Act, foreign private issuers may be exempted from the independence requirements if i the Government or the Stock Exchange of the home origin country requires that companies have an Audit Committee, ii the Audit Committee is separated from the Board of Directors and has members from outside the Board of Directors, iii Audit Committee members are not elected by the management and no executive oicer of the company is a member of audit Committee, iv the Government or the Stock Exchange of the country of origin requires the Audit Committee to be independent from the management of the company, and v the Audit Committee is responsible on the appointment, retention and oversight of the work of external auditors. 297 PT Telkom Indonesia Persero Tbk Not all members of our Audit Committee are independent directors as required by Rule No. 10A-3 of the Exchange Act. We refer to the general exemption pursuant to Rule No.10A-3c3 regarding the composition of the Audit Committee. We believe that this does not materially afect the ability of the Audit Committee to act independently.

D. DISCLOSURE IN RELATION WITH CORPORATE GOVERNANCE

The NySE listing standard requires the U.S. companies to adopt and put on their website, the guidelines for the implementation of corporate governance. These guidelines, among other things, shall stipulate directors qualiication standards, director responsibilities, relations between directors with management and independent advisors, compensation for the directors, orientation and continuing education for the directors, management succession and annual work performance evaluation. Moreover, each year, the CEO of the U.S. company must certify to the NySE that heshe is not aware of any violations committed by the company with regard to the NySE corporate governance standard listing. Certiication must be disclosed in the company’s annual report to the shareholders. There is no disclosure requirement in the applicable Laws in Indonesia that is similar to the NySE listing standards described above. However, the Capital Markets Law generally requires Indonesian public companies to disclose certain types of information to their shareholders and to the FSA OJK, particularly information relating to the change of ownership of shares of public companies and material facts that may afect the decision of shareholders to maintain their stake in the said public company.

D. CODE OF ETHICS AND BUSINESS CONDUCT

The NySE listing standards require each listed companies in the U.S. to adopt and to post on their company’s website, the code of ethics and business conduct for the Board of Directors, officials and employees. No similar requirement under the applicable Laws in Indonesia. However, the company shall submit periodic reports to the U.S. SEC, which stated the implementation of the code of ethic by senior inancial oicials in the company.