PT. Waskita Beton Precast Tbk

Dear Shareholders and Stakeholders,

First of all, allow us to send highest gratitude to the presence of God Almighty, since due to His grace and blessings, we can carry out the duties and responsibilities mandated to us as the Board of Commissioners of PT Waskita Beton Precast Tbk.

Board of Commissioners always upholds the integrity and independence in carrying out the supervisory and advisory duties and functions to Board of Directors on the management of the Company, including overseeing the risks faced by the Company in accordance with the mandate of the laws and the Company’s Articles of Association.

As the Fiscal Year 2019 ended, in accordance with the applicable provisions and legislation, including the Regulation of Financial Services Authority (OJK) No. 29/ POJK.04/2016 concerning Annual Report of Issuers or Public Companies and the Circular Letter of of Financial Services Authority No. 30/SEOJK/04/2017, which require every company to prepare the Board of Commissioners Report, on behalf of the Board of Commissioners, allow us to submit an accountability report the implementation of supervisory duties over the Company’s management that has been carried out throughout 2019.

Supervision of the Implementation of Corporate Strategy and the frequency and method of providing advice to members of Board of Directors

Pursuant to the applicable laws and regulations, the existence of Board of Commissioners strengthens the supervisory function over the Company’s management carried out by Board of Directors. For this reason, the working relationship between Board of Commissioners and Board of Directors is built through a shared vision to achieve the Company’s Vision.

Board of Commissioners and Board of Directors hold regular Joint Meetings to establish a dialectical working relationship. In the supervisory function, Board of Commissioners has the duty to give approval for matters requested by Board of Directors in accordance with the provisions of the Company’s Articles of Association. Board of Commissioners also submits responses and approvals both in writing and verbally about the proposed Corporate Work Plan and Budget (RKAP), Company policies compiled by Board of Directors and its amendments, proposes remuneration for Board of Commissioners and Board of Directors, evaluates the performance of Board of Directors as well as monitoring and advising over the application of prevailing laws and regulations.

The Joint Meeting becomes a strategic forum for Board of Commissioners to obtain comprehensive information about the Company’s conditions. Throughout 2019, Board of Commissioners held 12 Joint Meetings with Board of Directors. This meeting discussed a number of strategic matters, in which Board of Commissioners carried out its supervisory function thoroughly through the meeting.

The supervisory function carried out by Board of Commissioners is part of the Shareholders’ mandate, which has been decided through the GMS mechanism. Both directly and indirectly, Board of Commissioners is a representation of the interests of Shareholders to oversee the management of the Company conducted by Board of Directors. The competencies owned by members of Board of Commissioners enable them to provide input to Board of Directors regarding the direction and strategy in the management of the Company; certainly within the limits of the rights, authority and obligations of Board of Commissioners and Board of Directors.

Assessment of Board of Directors Performance and Basis of Assessment

In carrying out the assessment of Board of Directors performance evaluation, Board of Commissioners considers several matters, especially the achievement of Corporate Key Performance Indicators (KPI) and the achievement of the targets set in the Corporate Work Plan and Budget (RKAP). Board of Commissioners realizes that the achievement of KPI and RKAP targets are influenced by various things, one of which is the economic conditions which are also considered by Board of Commissioners.

In 2019, the global economy showed a slowing trend with an estimated growth of only 2.9%. The key factors affecting the economy include uncertainty surrounding trade and geopolitical tensions around the world, especially the China-US trade conflict and the prolonged Brexit conflict.

Despite pressure from the global situation, according to data released by the Central Statistics Agency, Indonesia’s economic growth remained at 5.0%, the second highest growth among the G20 countries after China. The Indonesian Rupiah also showed better performance compared to last year, strengthening 4.0% from the end of 2018 with lower volatility. Large capital flows to the stock and bond markets help the currency to appreciate towards the end of the year. The inflation rate was maintained at 2.7% this year.

Indonesia’s success in maintaining economic growth cannot be separated from various policies issued by the Government and Bank Indonesia (BI). In 2019, BI recorded to lower the BI 7 Days Reverse Repo Rate four times each by 25 basis points (bps) to 5.0%. This policy was expected to be able to attract loan rate to a lower level, so that the business players can increase their investment or expand until can encourage production. In addition, the decline in loan interest rates was expected to give stimulus to the public to continue to maintain their consumption.

Indonesia’s economic growth in 2019 was also be supported by government spending. Throughout 2019, the Government continued to develop infrastructure in various regions in an effort to encourage the acceleration of national economic growth. The government has budgeted Rp415 trillion for infrastructure projects in various regions, an increase of 2.4% compared to the previous year of Rp410.7 trillion. The budget is used to build 667 kilometers of new national roads, 905 kilometers of toll roads, 48 dam units, and 162 thousand hectares of irrigation networks, as well as various other infrastructure projects.

The incessant development of infrastructure in Indonesia was one of the factors increasing the role of construction sector in the Indonesian economy as reflected by the contribution of construction sector to Indonesia’s GDP in 2019 reaching 5.02%. The rapid development of infrastructure has also encouraged an increase in concrete production as a construction chain. PT Waskita Beton Precast Tbk as a company engaged in the precast and ready mix concrete manufacturing industry continues to make its best contribution to the acceleration of Government infrastructure development programs by providing precast and ready mix concrete products with superior and competitive quality.

In the midst of the complexity of global and national economic conditions and the opportunities that exist, Board of Commissioners highly appreciates the Company’s Board of Directors that have tried to achieve a good performance in 2019. Based on the Board of Directors KPI, the score obtained by Board of Directors in 2019 was 96.5 out of a total score of 100. This score increased by 0.5 points from the previous year of 96.00 from a total score of 100.

In addition, Board of Commissioners considers that the Board of Directors and all management have managed the Company by increasing asset growth, mitigating risks in dealing with a dynamic precast and ready mix concrete business environment, exploring potential and optimizing existing resource, as well as improving business processes and business efficiency sustainably.

Board of Commissioners also observes that the Board of Directors has been able to improve Human Capital competencies to create Human Capital that is professional, reliable, and has high integrity. This is done through a planned training program and the internalization and dissemination of WSBP Culture.

Board of Commissioners also believes that the Board of Directors needs to continue to strengthen strategies and improve programs that can encourage the optimization of the Company’s assets so as to boost the Company’s performance in the future.

Views on the Company’s Business Outlook Compiled by Board of Directors

The formulation of the 2020 target set out in the RKAP 2020 is an illustration of the Company’s optimism. The opportunities to grow are quite open, especially related to the acceleration of infrastructure projects development in an effort to encourage the process of accelerating national development, in which the precast and readymix concrete manufacturing industry is getting a breath of fresh air. Moreover, the government has stated its commitment to continue to develop infrastructure at least until 2024.

The National Development Planning Agency (Bappenas) has released the National Medium Term Development Plan along with a list of national strategic projects until 2024. To support this plan, a budget of at least Rp6,445 trillion is needed. Of this amount, the government only provides a budget of 37% of the total budget, the rest is expected to come from SOEs and private sector.

As a conclusion, it can be seen that the precast and readymix concrete manufacturing industry has very good business outlook. However, given the large market potential, the competition between players in the precast and readymix concrete industry will also be tighter. Every company will surely compete to obtain a large portion of the market potential. Therefore, WSBP has prepared comprehensive strategies that are expected to maintain and increase the Company’s market share in the national construction industry.

Views on the Implementation of Corporate Governance

Good Corporate Governance (“GCG”) practices in Indonesia have experienced tremendous growth. The encouragement of regulators who require all business entities to prioritize compliance in the management of their operations and business should be appreciated.

All elements of the Company are committed to implementing GCG practices in the hope that the Company has a solid, transparent and accountable organizational foundation. As one of the main organs, Board of Commissioners has a great responsibility to take a role in the implementation of GCG within the Company. The oversight function that goes hand in hand with the management function by Board of Directors is an important note, so that the concept of 2 (two) entities balance in a Limited Liability Company can be realized.

Board of Commissioners views that the implementation of GCG in the Company’s environment has run according to existing regulations, as well as the expectations of shareholders and stakeholders. Risk management, internal control systems, and internal audits have been carried out with the aim of creating accountable business processes. The Company also carries out an independent audit process by public accountant on the Company’s financial statements. In order to maintain the independence of public accountant, the mechanism for appointing public accountant is carried out up to the level of shareholders approval at the GMS. This mechanism is expected to create an audit process that is free from conflicts of interest.

Specifically, Board of Commissioners appreciates the assessment process of GCG implementation by the Company. Assessment becomes an important part to provide evaluation and improvement for the implementation of GCG principles and practices. The assessment results of for the 2019 fiscal year showed an improvement, with a score of 89,142 and “Very Good” predicate, an increase from the assessment score in 2018 of 78,158 with “Good” predicate. This shows the Company’s commitment to continuously improve itself, especially in the implementation of GCG principles and practices.

Performance Assessment of Committees Under Board of Commissioners

In carrying out its supervisory function, Board of Commissioners is assisted by 2 (two) supporting organs, namely the Audit Committee and the Risk & Insurance Committee. Audit Committee is tasked with assisting Board of Commissioners in supervising the implementation of Board of Directors’ functions to ensure that the Company is consistently managed with sound management and in accordance with GCG principles, and imbued with the Company’s values and ethics. The Risk & Insurance Committee has the duty to regularly monitor and recommend improvements to the risk management implemented and developed by the Company.

The assessment of these two Committees’ performance is based on the implementation of meetings, as well as recommendations and reporting provided to Board of Commissioners. These recommendations become a reference for Board of Commissioners in providing direction and advice to Board of Directors. During, 2019 the Audit Committee and the Risk & Insurance Committee have performed their duties properly in providing input and supporting the implementation of Board of Commissioners’ duties.

Views on the Implementation and Management of Whistleblowing System (WBS) and Board of Commissioners’ Role in the System

The development of GCG cannot be separated from the Company’s ability to present GCG processes and mechanisms that can facilitate the implementation of 5 (five) basic principles of GCG, namely Transparency, Accountability, Responsibility, Independence, and Fairness. The implementation of these 5 principles will guarantee the Company’s continuity, especially in understanding the compliance with applicable laws and regulations.

One of the most important GCG processes or mechanisms is the implementation of Whistleblowing System (WBS). In order for the management of WBS in the Company’s environment can run independently, the Company formed a WBS Team that reports directly to the President Director.

In the WBS mechanism implemented in the Company, the Board of Commissioners acts as the recipient of report if the alleged reported party is a member of Board of Directors, or a person who has a special relationship with a member of Board of Directors. Further handling is submitted to the Board of Commissioners, assisted by two suuporting organs of Board of Commissioners to conduct an examination and an investigation, if needed. Throughout 2019, there were no WBS reports that needed to be followed up by Board of Commissioners.

Changes in Board of Commissioners Composition in 2019

Changes in the composition or structure of Board of Commissioners are entirely the right of Shareholders. The diversity of educational backgrounds and experiences of members of Board of Commissioners supports the proper implementation of Board of Commissioners functions and responsibilities.

The active role of members of Board of Commissioners in carrying out the supervisory function over the management of PT Waskita Beton Precast Tbk will continue to be improved, in order to encourage the Company’s increasingly positive performance in the future.

In 2019, there were no change in the composition of Board of Commissioners, hence Board of Commissioners composition as of December 31, 2019 are as follows:

Closing Remarks

We would like to express our gratitude to the Shareholders, since their trust has enabled us to carry out the supervisory duties properly. To all suppliers, subcontractors, creditors and other stakeholders, we would like to thank for the trust given, and hope that this good cooperation can continue to be established. We also would like to send high appreciation to Board of Directors and all employees for their commitment and optimal contribution in the Company’s management, hence the Company can continue to grow. We hope this 2019 journey will be an important note for the Company to formulate appropriate strategies and policies that will bring the Company to better growth in the future.

Jakarta, March 2020
On behalf of Board of Commissioners,
Fery Hendriyanto
President Commissioner