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President Commissioner Messages

Dear Honorable Shareholders,

By offering praise and thanks to God Almighty for His blessings and guidance, please allow us to present the results of the Board of Commissioners’ oversight of the management of the Company to Shareholders and Stakeholders.

As we all know, the Indonesian economy in 2016 is slightly better than the previous year. Economic growth reached 5.02%, higher than the growth in 2015 of 4.88%. This situation provided positive expectations for the business world, including sea transport business.

The sea transport business has had a good opportunity since the declaration of the Toll Maritime by the President. The conversion of energy from fuel oil to gas fuel has an impact on the increasing interest of sea transport investors, especially gas transportation, including foreign investors such as China, Japan and South Korea.

IMPLEMENTATION OF SUPERVISION

In carrying out the oversight function, the Board of Commissioners periodically, at least twice a week to supervision, guidance and direction to management. The supervision involves attending performance evaluation meetings held by the Board of Directors with the agenda of evaluating the performance of subsidiaries and business units for the preceding month. Then the Board of Commissioners held a limited strategic meeting by inviting the Board of Directors with an agenda to discuss the strategic issues faced by the Company, as well as to explore the potential for business development.

The Board of Commissioners also requests an explanation from the head of the business unit in relation to the current issue or concerning the business opportunity to be realized, followed by a working visit to the ships related to the maintenance, operation, and safety and security of the ships. The Board of Commissioners also carried out inspections on board docking, to ensure that the work is carried out as planned so that the ships get a ship certificate of eligibility and security guarantee of ship operations. The Board of Commissioners at the same time provides an assessment of the ships that will be purchased by the Board of Directors. For supervision in the field of HR, the Board of Commissioners provides training materials and gives references to the speaker for internal knowledge briefing as well as supervise in the selection of staff/crew, especially for the position of Captain and Chief Engineer or other important position, if necessary.

ASSESSMENT TOWARD THE IMPLEMENTATION OF SUPERVISION

During 2016, in relation to the strategic plan, the Board of Commissioners viewed the Board of Directors had conducted a thorough analysis of the strengths, weaknesses, opportunities and threats in the business environment. The Company has strong competence in the field of gas transportation business, combined with the opening of opportunities for gas transportation services through sea lane, resulting in the business strategy of the Company that prioritizes business development especially on the provision of gas, LNG and LPG transport.

Meanwhile, the limitations in capital and vessel assets, combined with the threat of competitors from large shipping companies, are addressed by joint ventures with companies that have funds and vessel assets. In addition, the Company also embraced several financial institutions or banks to assist the funding.

ASSESSMENT ON BOARD OF DIRECTORS’ PERFORMANCE

The Board of Commissioners followed and assessed the Company’s business strategies and policies adopted by the Board of Directors. The Board of Commissioners considered that the business strategies and policies adopted by the Board of Directors bear positive results for the Company. The Board of Commissioners’ assessment of the overall performance of the Board of Directors is good.

In relation to the Company’s performance, the Board of Commissioners expressed high appreciation to the Board of Directors and all employees who have produced excellent performance. A substantial increase in profit in 2016 was recorded at US$5.39 million, with an increase of almost 64% when compared to 2015, which stood at US$3.29 million.

This adds to the upward trend in the Company’s positive earnings in the last 3 years, as shown in 2016 increase 64%.

When viewed from the total assets, by the end of 2016, there was an increase of 14.72% compared to the end of the previous year, from US$143.91 million to US$165.09 million. Similarly, in terms of equity, it increased 69.84%, from US$20.6 million to US$35 million.

From the operational side, the Company also enjoys a significant revenue increase from the provided services. The Board of Commissioners observes that the Board of Directors has done its best to improve various operational systems to maximize the capacity and facilities owned by the Company. The operational activities of the shipss are generally quite good, except for the MT Griya Ambon vessel which experienced some constraints. The utilization rate of LNG, chemical, and oil ships throughout 2016 was on average 87.5%, lower than the previous year’s utilization of 97%. This decrease was because Griya Ambon underwent docking and crankshaft repair. However, at the same time, the Company added 3 ships on hire: LNG Triputra, MT Griya Melayu, and MT Griya Cirebon.

In terms of vessel utilization, bulk cargo carriers or finished goods (tug & barge) are still not getting a good chance to get out of trouble, but towards the end of the year their utilization began to increase up to 48%. This condition is a common phenomenon that also experienced by similar shipping companies. The Board of Directors has responded to this situation by looking for business alternatives, namely dredging.

The Board of Commissioners considers that the Board of Directors’ decision to undertake various investment initiatives and other business initiatives is an appropriate strategy to increase revenue sources to accelerate future business growth.

For the success of the Company in terms of both finance and operations, the Board of Directors and the Company have earned several awards from several sources. This shows the appreciation of others to the performance of the Board of Directors and the Company including: The Best CEO - 2nd rank from SWA magazine, The Best Restructured-Rebound Company from Investor magazine, Special Awards - Most Transformative Company from Bisnis Indonesia, The Best CFO for Significant Value Creation from Economic Review magazine, The Best Significant Financial Structuring Results from Economic Review magazine, Best Financial Performance: Business Group Transportation Infrastructure, Utilities and Transportation sector-3rd rank from Economic Review magazine and Top Infrastructure on Transportation Sector of Business News magazine.

OUTLOOK TO THE BUSINESS PROSPECTS OF THE COMPANY

The Board of Commissioners has studied the business plan proposed by the Board of Directors for the upcoming 2017. The Board of Commissioners believes that the Board of Directors has a clear view of the direction of Indonesia’s economic development and the industry especially in the short and long term goal.

Nevertheless, the Board of Commissioners provides an overview of the development of a highly dynamic strategic environment both globally and nationally, as well as the development of specific regulations which directly or indirectly affect the business implementation. Board of Directors recognize that changes can occur at any time and business opportunities can be open at any time. By keeping abreast of the business environment in a “real time” and thorough way, the Board of Directors can determine which business has high chances will occur. Ultimately, the Board of Directors can respond quickly and make business decisions appropriately.

The ongoing business activities undertaken by the Company cover the business of LNG, LPG, Oil, and Chemicals transporting, as well as business in the field of crewing, training, and dredging, which will be developed in the future. Overall, the business activities have good prospects. The indications are, among others, the acquisition of several new contracts and the extension of some old contracts. The training activities have pocketed permission from the Ministry of Transportation for 5 training packages and now add 6 packages of training in the field of LNG. The business development activities that utilize these prospects are expected to realize the Company’s growth significantly, while helping to realize the vision and mission of the government in national development.

OUTLOOK TO THE APPLICATION OF GOVERNANCE

In implementing the principles of good corporate governance (GCG), the Board of Commissioners regularly holds meetings with the Board of Directors to discuss the achievements of the Company, including evaluation of the Company’s plans and strategies. In addition, the Board of Commissioners also cooperates with the subordinate committees in carrying out their duties and responsibilities to the highest GCG standards.

The Company also increases its commitment to the implementation of GCG principles independently amongst the Company’s organs, transparency aspects with the fulfillment of information disclosure and reporting compliance to the authorities and regulators as well as the public, fairness aspects by treating all stakeholders fairly or proportionally, including minority of Shareholders, accountability aspect with the clarity of the functions, rights, obligations and authorities and responsibilities between Shareholders, Board of Commissioners and Board of Directors, and aspects of responsibilitas in the sense of complying with all applicable provisions, such as complying with tax laws, fulfilling corporate obligations to employees, including health insurance, and so forth.

OUTLOOK TO THE WHISTLEBLOWING SYSTEM (WBS) AND THE ROLES OF BOARD OF COMMISSIONERS

The WBS management policy in the Company regulates a mechanism for reporting violations by Stakeholders regarding the occurrence of violations within the Company. The WBS is a commitment of the Board of Directors and Board of Commissioners to manage the company based on the principles of Good Corporate Governance. The scope of WBS policy includes complaints of violations of the Code of Conduct that may harm the Company financially as well as its negative reputation.

WBS management is undertaken by the Internal Audit Unit in which the Board of Commissioners plays a role in providing insights into the results of investigations conducted by the Internal Audit Unit if there is processing of reports of infringement reporting through the WBS mechanism.

COMPOSITION CHANGE OF BOARD OF COMMISSIONER MEMBERS

In the fiscal year 2016 there was no change in the composition of the members of the Board of Commissioners, as in the previous year, consisting of Sumardjono (President Commissioner) and HM Roy Sembel (Independent Commissioner).

CLOSING

The Board of Commissioners congratulates the Board of Directors and staff for the performance and achievements made during 2016. This was the result of the effective leadership of the Board of Directors and the hard work of all employees. The Board of Directors succeeded in establishing a solid cooperation between management and employees.

For the achieved performance, the Board of Commissioners expresses its gratitude and appreciation to all employees and Directors of the Company, the subsidiaries and associates of the Company and other Stakeholders having given their support to the Company.

The Board of Commissioners hopes that the 2016 performance can be maintained and enhanced for the prosperity of the Company and the Stakeholders. In order to meet these expectations, management needs to maintain assets professionally, develop competence and maintain employee motivation, as well as review and improve practical work systems, and implement effective supervision.

Dear Honorable Shareholders,

By offering praise and thanks to God Almighty for His blessings and guidance, please allow us to present the results of the Board of Commissioners’ oversight of the management of the Company to Shareholders and Stakeholders.

As we all know, the Indonesian economy in 2016 is slightly better than the previous year. Economic growth reached 5.02%, higher than the growth in 2015 of 4.88%. This situation provided positive expectations for the business world, including sea transport business.

The sea transport business has had a good opportunity since the declaration of the Toll Maritime by the President. The conversion of energy from fuel oil to gas fuel has an impact on the increasing interest of sea transport investors, especially gas transportation, including foreign investors such as China, Japan and South Korea.

IMPLEMENTATION OF SUPERVISION

In carrying out the oversight function, the Board of Commissioners periodically, at least twice a week to supervision, guidance and direction to management. The supervision involves attending performance evaluation meetings held by the Board of Directors with the agenda of evaluating the performance of subsidiaries and business units for the preceding month. Then the Board of Commissioners held a limited strategic meeting by inviting the Board of Directors with an agenda to discuss the strategic issues faced by the Company, as well as to explore the potential for business development.

The Board of Commissioners also requests an explanation from the head of the business unit in relation to the current issue or concerning the business opportunity to be realized, followed by a working visit to the ships related to the maintenance, operation, and safety and security of the ships. The Board of Commissioners also carried out inspections on board docking, to ensure that the work is carried out as planned so that the ships get a ship certificate of eligibility and security guarantee of ship operations. The Board of Commissioners at the same time provides an assessment of the ships that will be purchased by the Board of Directors. For supervision in the field of HR, the Board of Commissioners provides training materials and gives references to the speaker for internal knowledge briefing as well as supervise in the selection of staff/crew, especially for the position of Captain and Chief Engineer or other important position, if necessary.

ASSESSMENT TOWARD THE IMPLEMENTATION OF SUPERVISION

During 2016, in relation to the strategic plan, the Board of Commissioners viewed the Board of Directors had conducted a thorough analysis of the strengths, weaknesses, opportunities and threats in the business environment. The Company has strong competence in the field of gas transportation business, combined with the opening of opportunities for gas transportation services through sea lane, resulting in the business strategy of the Company that prioritizes business development especially on the provision of gas, LNG and LPG transport.

Meanwhile, the limitations in capital and vessel assets, combined with the threat of competitors from large shipping companies, are addressed by joint ventures with companies that have funds and vessel assets. In addition, the Company also embraced several financial institutions or banks to assist the funding.

ASSESSMENT ON BOARD OF DIRECTORS’ PERFORMANCE

The Board of Commissioners followed and assessed the Company’s business strategies and policies adopted by the Board of Directors. The Board of Commissioners considered that the business strategies and policies adopted by the Board of Directors bear positive results for the Company. The Board of Commissioners’ assessment of the overall performance of the Board of Directors is good.

In relation to the Company’s performance, the Board of Commissioners expressed high appreciation to the Board of Directors and all employees who have produced excellent performance. A substantial increase in profit in 2016 was recorded at US$5.39 million, with an increase of almost 64% when compared to 2015, which stood at US$3.29 million.

This adds to the upward trend in the Company’s positive earnings in the last 3 years, as shown in 2016 increase 64%.

When viewed from the total assets, by the end of 2016, there was an increase of 14.72% compared to the end of the previous year, from US$143.91 million to US$165.09 million. Similarly, in terms of equity, it increased 69.84%, from US$20.6 million to US$35 million.

From the operational side, the Company also enjoys a significant revenue increase from the provided services. The Board of Commissioners observes that the Board of Directors has done its best to improve various operational systems to maximize the capacity and facilities owned by the Company. The operational activities of the shipss are generally quite good, except for the MT Griya Ambon vessel which experienced some constraints. The utilization rate of LNG, chemical, and oil ships throughout 2016 was on average 87.5%, lower than the previous year’s utilization of 97%. This decrease was because Griya Ambon underwent docking and crankshaft repair. However, at the same time, the Company added 3 ships on hire: LNG Triputra, MT Griya Melayu, and MT Griya Cirebon.

In terms of vessel utilization, bulk cargo carriers or finished goods (tug & barge) are still not getting a good chance to get out of trouble, but towards the end of the year their utilization began to increase up to 48%. This condition is a common phenomenon that also experienced by similar shipping companies. The Board of Directors has responded to this situation by looking for business alternatives, namely dredging.

The Board of Commissioners considers that the Board of Directors’ decision to undertake various investment initiatives and other business initiatives is an appropriate strategy to increase revenue sources to accelerate future business growth.

For the success of the Company in terms of both finance and operations, the Board of Directors and the Company have earned several awards from several sources. This shows the appreciation of others to the performance of the Board of Directors and the Company including: The Best CEO - 2nd rank from SWA magazine, The Best Restructured-Rebound Company from Investor magazine, Special Awards - Most Transformative Company from Bisnis Indonesia, The Best CFO for Significant Value Creation from Economic Review magazine, The Best Significant Financial Structuring Results from Economic Review magazine, Best Financial Performance: Business Group Transportation Infrastructure, Utilities and Transportation sector-3rd rank from Economic Review magazine and Top Infrastructure on Transportation Sector of Business News magazine.

OUTLOOK TO THE BUSINESS PROSPECTS OF THE COMPANY

The Board of Commissioners has studied the business plan proposed by the Board of Directors for the upcoming 2017. The Board of Commissioners believes that the Board of Directors has a clear view of the direction of Indonesia’s economic development and the industry especially in the short and long term goal.

Nevertheless, the Board of Commissioners provides an overview of the development of a highly dynamic strategic environment both globally and nationally, as well as the development of specific regulations which directly or indirectly affect the business implementation. Board of Directors recognize that changes can occur at any time and business opportunities can be open at any time. By keeping abreast of the business environment in a “real time” and thorough way, the Board of Directors can determine which business has high chances will occur. Ultimately, the Board of Directors can respond quickly and make business decisions appropriately.

The ongoing business activities undertaken by the Company cover the business of LNG, LPG, Oil, and Chemicals transporting, as well as business in the field of crewing, training, and dredging, which will be developed in the future. Overall, the business activities have good prospects. The indications are, among others, the acquisition of several new contracts and the extension of some old contracts. The training activities have pocketed permission from the Ministry of Transportation for 5 training packages and now add 6 packages of training in the field of LNG. The business development activities that utilize these prospects are expected to realize the Company’s growth significantly, while helping to realize the vision and mission of the government in national development.

OUTLOOK TO THE APPLICATION OF GOVERNANCE

In implementing the principles of good corporate governance (GCG), the Board of Commissioners regularly holds meetings with the Board of Directors to discuss the achievements of the Company, including evaluation of the Company’s plans and strategies. In addition, the Board of Commissioners also cooperates with the subordinate committees in carrying out their duties and responsibilities to the highest GCG standards.

The Company also increases its commitment to the implementation of GCG principles independently amongst the Company’s organs, transparency aspects with the fulfillment of information disclosure and reporting compliance to the authorities and regulators as well as the public, fairness aspects by treating all stakeholders fairly or proportionally, including minority of Shareholders, accountability aspect with the clarity of the functions, rights, obligations and authorities and responsibilities between Shareholders, Board of Commissioners and Board of Directors, and aspects of responsibilitas in the sense of complying with all applicable provisions, such as complying with tax laws, fulfilling corporate obligations to employees, including health insurance, and so forth.

OUTLOOK TO THE WHISTLEBLOWING SYSTEM (WBS) AND THE ROLES OF BOARD OF COMMISSIONERS

The WBS management policy in the Company regulates a mechanism for reporting violations by Stakeholders regarding the occurrence of violations within the Company. The WBS is a commitment of the Board of Directors and Board of Commissioners to manage the company based on the principles of Good Corporate Governance. The scope of WBS policy includes complaints of violations of the Code of Conduct that may harm the Company financially as well as its negative reputation.

WBS management is undertaken by the Internal Audit Unit in which the Board of Commissioners plays a role in providing insights into the results of investigations conducted by the Internal Audit Unit if there is processing of reports of infringement reporting through the WBS mechanism.

COMPOSITION CHANGE OF BOARD OF COMMISSIONER MEMBERS

In the fiscal year 2016 there was no change in the composition of the members of the Board of Commissioners, as in the previous year, consisting of Sumardjono (President Commissioner) and HM Roy Sembel (Independent Commissioner).

CLOSING

The Board of Commissioners congratulates the Board of Directors and staff for the performance and achievements made during 2016. This was the result of the effective leadership of the Board of Directors and the hard work of all employees. The Board of Directors succeeded in establishing a solid cooperation between management and employees.

For the achieved performance, the Board of Commissioners expresses its gratitude and appreciation to all employees and Directors of the Company, the subsidiaries and associates of the Company and other Stakeholders having given their support to the Company.

The Board of Commissioners hopes that the 2016 performance can be maintained and enhanced for the prosperity of the Company and the Stakeholders. In order to meet these expectations, management needs to maintain assets professionally, develop competence and maintain employee motivation, as well as review and improve practical work systems, and implement effective supervision.

President Commissioner Messages