The Audit Committee report has been prepared pursuant to the regulations of the Capital Market and Financial Institutions Supervisory Board (BAPEPAM-LK) and the Indonesia Stock Exchange.

During 2008, the Audit Committee met for a total of five times, to discuss the following matters:

• Financial reporting and audit
• Corporate governance
• Enterprise risk management
• Internal Audit and control
• Business planning
• Monitoring the limit of “related-party transactions”
• Employee Ethics Policy

The Audit Committee was involved in the selection and appointment of the independent public accounting firm to audit the Company’s financial statements. The Committee considered the scope and methodology of the audits, as well as the independence, objectivity and qualification of the external auditors. The Audit Committee reviewed the external audit works and concluded that the financial reporting was satisfactory and in compliance with generally accepted accounting principles in Indonesia and that the audit was satisfactorily conducted. Additionally, the Audit Committee reviewed the audit plan for the year 2008.

Still in connection with financial reporting, the Audit Committee also reviewed the Company’s 2008 financial statements. We concluded that financial results were presented in accordance with applicable rules. Several assumptions that were made to estimate possibilities in 2009 were also reasonable and regarded as fair assumptions.

The Audit Committee reviewed Indocement’s self assessment of Corporate governance practices, based on a checklist provided by the Forum for Corporate Governance in Indonesia (FCGI). The Committee concluded that Corporate governance practices within Indocement exceeded the national standards, and conformed to international standards with a total score of 85.83 out of 100. This, covers Corporate governance practices (score of 23.13 from 30), disclosure policy and practices (17.5 from 20), shareholders’ rights (16.11 from 20), audit practices (14.32 from 15) and Corporate governance policy (14.47 from 15).

Several of the above scores exceeded from those of 2007, indicating some improvements in several components of the Company’s Corporate governance.

The Audit Committee reviewed Indocement’s key enterprise-wide risk identification, assessment and mitigation methodologies, process and management, based on the HeidelbergCement Group’s risk management framework and local risk issues. The Committee concluded that risk management was satisfactory, with the formulation of highly structured and well-defined risk categories, as well as the identification and review of the major risks affecting Indocement’s flow of operations and their impact in upcoming years.

The Audit Committee reviewed potential significant risks in fourth quarter of 2008 and those anticipated in 2009 taking into account of the possible impact of the prevailing global financial, banking and economic crisis. We concluded that management fully understands the related risks and has developed relevant strategies to mitigate these risks.

Indocement adopted a risk-based audit approach in accordance with the HeidelbergCement Group’s Internal Audit guidelines. The Internal Audit Division had shown satisfactory achievement. Besides providing assessment on several critical risks, the Internal Audit Division had also developed audit plans to address control deficiencies and suggested three-year audit plans and re-evaluation of priority findings of 2008 audits.

The Audit Committee recommends that outstanding audit queries in 2006 and 2007 be cleared in 2009. Outstanding audit items from 2005 have been cleared in 2008.

The Audit Committee reviewed Indocement’s ongoing key marketing and business strategies, and concluded that they are realistic in terms of existing and expected international and domestic market factors that affect supply and demand, competitive focus and pricing.

However, due to expected deteriorating economic conditions in 2009, the Audit Committee has suggested that Management base business plans using best-case, worst-case and most-probable-case scenarios while monitoring progress against these cases.

The Audit Committee reviewed and concluded that “related-party transactions” during 2008 were made in accordance with prevailing policy and kept well below the approved limits. The value of recurring transactions with affiliated parties in 2008 amounted to IDR52 billion, well below the threshold limit of 5% of the Company’s stockholders’ equity, or IDR425 billion.

The Audit Committee reviewed alignment of Code of Conduct to corporate governance compliance. We concluded that they are indeed aligned, but suggested also that starting in 2009, Internal Audit Division should include random checking of effectiveness of compliance and report violations.

	I Nyoman Tjager Chairman of Audit Committee Indonesian Citizen, born on 30 March 1950. Vice President Commissioner/Independent Commissioner since 26 April 2001. He is currently President Commissioner of Indonesia Stock Exchange. He holds a Master’s degree in Economics from Fordham University, New York, USA. He received his Doctorate degree in Business Law from University of Gajah Mada, Indonesia in 2003.
	Kanaka Puradiredja Member of Audit Committee Indonesian Citizen, born on 8 December 1944. Member of Audit Committee of Indocement since 3 May 2007. Former Senior Partner of the Public Accounting Firm of Kanaka Puradiredja, Robert Yogi, Suhartono. Former Managing Director and Chairman of KPMG Indonesia. Honorary Council Chairman of the Indonesian Accountant Association, Chairman of the Managing Board of the Audit Committee Association. Previously served as member of the Managing Board of International Transparency; Board member of the Agency for the Reconstruction and Rehabilitation of Nanggroe Aceh Darussalam (NAD) and Nias. He holds a Bachelor’s degree in Economics from Padjadjaran University, Bandung.
	Pat Lisk Member of Audit Committee Australian Citizen, born on 7 March 1941. Member of Audit Committee of Indocement since 3 May 2007. He is currently banking and risk management consultant and Chief Executive Officer of PT Lisk Van Lisk Indonesia. He holds a Bachelor of Science degree in Economics London (Honours) Upper Second from the University of London. He is also a fellow of the Chartered Institute of Bankers, London (FCIB), fellow of the Financial Services Institute of Australia (F. Fin), and a fellow of the Finance & Treasury Professionals Association of Australia (FFTP).