<DOCUMENT>
<TYPE>EX-4.19
<SEQUENCE>19
<FILENAME>u92256exv4w19.txt
<DESCRIPTION>EX-4.19 PARTNERSHIP AGREEMENT, DATED SEPT.24,2003
<TEXT>
<PAGE>
                                                                    Exhibit 4.19



                              PARTNERSHIP AGREEMENT
                         NO. K.TEL.213/HK.910/UTA-00/2003
                        --------------------------------
                           DATE : SEPTEMBER 24, 2003

                                       FOR
                       THE PROCUREMENT AND CONSTRUCTION OF
                          BACKBONE TRANSMISSION NETWORK
                            T-21 PACKAGE-I KALIMANTAN
                              & PACKAGE-II SULAWESI

                                    BETWEEN

                        PT TELEKOMUNIKASI INDONESIA, TBK

                                       AND

                               SIEMENS CONSORTIUM

<PAGE>

                                TABLE OF CONTENT

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>
CHAPTER 1 - GENERAL TERMS AND CONDITIONS ..........................................    3

ARTICLE 1        :       DEFINITIONS ..............................................    3

ARTICLE 2        :       GENERAL CONDITIONS .......................................    7

ARTICLE 3        :       SCOPE OF WORKS ...........................................    8

ARTICLE 4        :       PERIOD AND LOCATION OF WORKS IMPLEMENTATION ..............    9

ARTICLE 5        :       SITE PREPARATION, ACQUISITION, RIGHTS OF WAY AND
                         PERMITS ..................................................   10

ARTICLE 6        :       APPENDICES ...............................................   11

CHAPTER 2 - TECHNICAL REQUIREMENTS ................................................   12

ARTICLE 7        :       TECHNICAL REQUIREMENTS ...................................   12

ARTICLE 8        :       QUALITY ASSURANCE ........................................   12

ARTICLE 9        :       SURVEY, DESIGN AND PLANNING ..............................   12

ARTICLE 10       :       OUTSIDE PLANT CIVIL WORKS ................................   13

ARTICLE 11       :       INSTALLATION PROCEDURES AND STANDARDS ....................   13

ARTICLE 12       :       LOCAL SUPPORT INFRASTRUCTURE .............................   15

ARTICLE 13       :       ACCEPTANCE TEST AND HAND OVER ............................   15
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                   <C>
ARTICLE 14      :       GOODS DELIVERY PROCEDURE ..................................   20

ARTICLE 15      :       REPORTS AND MEETINGS ......................................   21

ARTICLE 16      :       PROJECT MANAGEMENT ........................................   21

ARTICLE 17      :       WARRANTY PERIOD ...........................................   27

ARTICLE 18      :       SPARE PARTS ...............................................   28

CHAPTER 3 - COMMERCIAL TERMS AND CONDITIONS .......................................   29

ARTICLE 19      :       AGREEMENT PRICE ...........................................   29

ARTICLE 20      :       INSURANCE AND SAFETY ......................................   31

ARTICLE 21      :       TAXES AND IMPORTATION .....................................   31

ARTICLE 22      :       TRANSFER OF TITLE AND RISKS ...............................   32

ARTICLE 23      :       PARTNER'S RIGHT AND OBLIGATION ............................   33

ARTICLE 24      :       TELKOM'S RIGHT AND OBLIGATION .............................   34

CHAPTER 4 - TERMS AND CONDITIONS OF FINANCE .......................................   35

ARTICLE 25      :       FINANCING .................................................   35

ARTICLE 26      :       PAYMENT'S TERMS AND CONDITIONS ............................   36

ARTICLE 27      :       MEANS OF PAYMENT ..........................................   39

ARTICLE 28      :       PERFORMANCE AND WARRANTY BONDS ............................   43
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                   <C>
CHAPTER 5 - TERMS AND CONDITIONS OF CONSORTIUM ORGANIZATIONAL .....................   45

ARTICLE 29      :       CONSORTIUM ORGANISATION CRITERIA ..........................   45

ARTICLE 30      :       ASSIGNMENT AND SUB-CONTRACTING ............................   45

ARTICLE 31      :       INVOLVEMENT OF LOCAL ENTITIES .............................   46

ARTICLE 32      :       LOGISTICS .................................................   47

ARTICLE 33      :       INVENTORY .................................................   48

ARTICLE 34      :       COMPLIANCE WITH ENVIRONMENTAL STANDARDS ...................   49

CHAPTER 6 - OTHERS TERMS AND CONDITIONS ...........................................   50

ARTICLE 35      :       DOCUMENTS .................................................   50

ARTICLE 36      :       COSTS FOR SUPERVISION AND HAND OVER .......................   52

ARTICLE 37      :       LIQUIDATED DAMAGES ........................................   52

ARTICLE 38      :       INDEMNIFICATION ...........................................   53

ARTICLE 39      :       REPRESENTATION AND WARRANTY ...............................   55

ARTICLE 40      :       TRAINING, TRANSFER KNOW HOW AND DEVELOPMENT OF
                        INTELLECTUAL PROPERTY .....................................   57

ARTICLE 41      :       TERMINATION OF AGREEMENT ..................................   57

ARTICLE 42      :       LIABILITY .................................................   60

ARTICLE 43      :       INTELLECTUAL PROPERTY RIGHT ...............................   61
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                   <C>
ARTICLE 44      :       RIGHT OF USE FOR SOFTWARE .................................   63

ARTICLE 45      :       SPECIFIC CONDITIONS .......................................   64

ARTICLE 46      :       WORKS VARIATIONS ..........................................   65

ARTICLE 47      :       NATIONAL REGULATIONS ......................................   66

ARTICLE 48      :       FORCE MAJEURE .............................................   66

ARTICLE 49      :       APPLICABLE LAW ............................................   68

ARTICLE 50      :       SETTLEMENT OF DISPUTES ....................................   68

ARTICLE 51      :       CORRESPONDENCES ...........................................   69

ARTICLE 52      :       NOMINATED SUB-CONTRACTORS .................................   69

ARTICLE 53      :       MISCELLANEOUS .............................................   70

ARTICLE 54      :       EFFECTIVE DATE OF CONTRACT (EDC) ..........................   71


APPENDICES

APPENDIX  1     :       PRICE BREAKDOWN, TERMS AND PAYMENT SCHEDULE ...............

APPENDIX  2     :       LIST OF SUB SYSTEMS AND LOCATIONS .........................

APPENDIX  3     :       SCHEDULE OF IMPLEMENTATION AND PROJECT MANAGEMENT .........

APPENDIX  4     :       MINUTES OF MEETING FROM NEGOTIATIONS ......................

APPENDIX  5     :       TECHNICAL SPECIFICATION ...................................

APPENDIX  6     :       BIDDING DOCUMENT ..........................................

APPENDIX  7     :       CONSORTIUM AGREEMENT ......................................

APPENDIX  8     :       SAMPLES OF DOCUMENTS TO BE PRESENTED ......................

APPENDIX  9     :       ANNOUNCEMENT FOR THE PACKAGE I AND PACKAGE II TO PARTNER ..

APPENDIX 10     :       PARTNER'S COMMITMENT LETTER ...............................

APPENDIX 11     :       TRAINING'S SCHEDULE AND DOCUMENT ..........................

APPENDIX 12     :       ACCEPTANCE TEST PROCEDURE .................................
</TABLE>

<PAGE>

                              PARTNERSHIP AGREEMENT
                                       FOR
                               THE PROCUREMENT AND
                                 CONSTRUCTION OF
                          BACKBONE TRANSMISSION NETWORK
                            T-21 PACKAGE-I KALIMANTAN
                              & PACKAGE-II SULAWESI
                                     BETWEEN
                        PT TELEKOMUNIKASI INDONESIA, Tbk.
                                       AND
                               SIEMENS CONSORTIUM

                      No.: K.TEL. 213 /HK.910/UTA-00/2003

THIS PARTNERSHIP AGREEMENT (the "Agreement") is made the day of WEDNESDAY dated
24 September 2003, by and between :

I.       PERUSAHAAN PERSEROAN (PERSERO) PT TELEKOMUNIKASI INDONESIA,Tbk., a
         network and services telecommunication provider, established under the
         laws of the Republic of Indonesia, having its office at Jalan Japati
         No. 1, Bandung, in this legal action duly represented by KRISTIONO in
         his capacity as President Director, hereinafter referred to as
         "TELKOM", and

II.      SIEMENS CONSORTIUM, CONSISTS OF PT SIEMENS AG (SAG), a corporation
         organized and existing under the laws of the Federal Republic of
         Germany having its registered office at Hofmannstr.51,D-81359
         Munich-Germany, PT SIEMENS INDONESIA (PTSI), a corporation organized
         and existing under the laws of the Republic of Indonesia having its
         registered office at Jl. Jendral Ahmad Yani Kav. 67-68, Pulomas,
         Jakarta - Indonesia, PT LEMBAGA ELEKTRONIK INDONESIA (LEN), a
         corporation organized and existing under the laws of the Republic of
         Indonesia having its principal office at Jl. Soekarno Hatta 442,
         Bandung - Indonesia, CORNING CABLE SYSTEM GmbH & CO.KG (CCS), a
         corporation organized and existing under the laws of the Federal
         Republic of Germany having its principal office at Kistlerhofstrasse
         170, D-81397 Munich -Germany, consortium already established under the
         Consortium Agreement dated April 1, 2002 and legalized by Iman Immanuel
         Sinaga,

                                                                               1

<PAGE>

         S.H., CN., Subtitute Notary of Dr. Irawan Soerodjo, SH, Msi., Notary in
         Jakarta on April 3, 2002 under legalization number 94/L/2002, in this
         legal action duly represented by MR. ROLF UNTERBERGER as Director of
         PT. SIEMENS INDONESIA and MR. HERBERT FETTIG as General Manager Finance
         and Business Administration, hereinafter referred to as PARTNER.

(TELKOM and PARTNER are individually hereinafter referred to as a "Party" and
collectively as the "Parties").

                                   WITNESSETH

a.       whereas TELKOM is Indonesia's pre-eminent provider of telecommunication
         services through its fixed wire line telecommunications facilities
         throughout Indonesia;

b.       whereas TELKOM has embarked on a significant investment program to
         modernize and expand its network infrastructure (the "T-21 Program);

c.       whereas PARTNER under the control of the leading technology supplier,
         SIEMENS having at least one Indonesian member with specialized
         telecommunication expertise, knowledge or infrastructure, has the
         necessary technical expertise and financial resources in the T-21
         Program implementation;

d.       whereas TELKOM, in accordance with the procedures established in the
         Request for Proposal (RfP), dated 21 February 2002 has selected and
         appointed PARTNER under the control of the leading technology supplier
         to enter into this Agreement for the purpose of implementing the T-21
         Program.

e.       whereas TELKOM trough its letter number : TEL.416/LG000/T-21/2003 dated
         28 August 2003, has appointed the SIEMENS CONSORTIUM as a PARTNER to
         execution the procurement and development of Backbone Transmission
         Package-I for Kalimantan which contract amounting of US$.3,776,269 and
         Rp.74.020.633.646 and Package-II for Sulawesi which contract

                                                                               2

<PAGE>

         amount is amounting of US$.3,815,295 and Rp.70.732.644.265 excluding
         10% VAT.

f.       whereas PARTNER through its commitment letter no.900/C3/T-21/IX/03
         dated 1 September 2003 hereby commit and agree to carry out the Works
         accordance with point e. mentioned above.

NOW THEREFORE, based upon the above- mentioned considerations, the Parties
hereto have agreed to bind each other into this AGREEMENT under the following
terms and conditions:

         CHAPTER 1.
         GENERAL TERMS AND CONDITIONS

         ARTICLE I
         DEFINITIONS

1.1.     Where the context permits, the following expressions shall have the
         following meanings:

         a.       BILL OF QUANTITIES (BoQ) means the bill of quantities set out
                  in Appendix 1, as may be modified from time to time in
                  mentioned in Articles 3.3. and 46;

         b.       BUSINESS DAY(S) means a day, other than a Saturday, Sunday or
                  official Indonesian holiday;

         c.       AGREEMENT shall mean this Agreement together with appendices
                  and amendments thereof;

         d.       WORKS shall mean any and all works which are covered in this
                  AGREEMENT including survey, design and engineering plan,
                  material calculation and procurement, manufacturing, packing
                  and transportation, construction and installation, testing,
                  integration within supplied SUB-SYSTEM(s) and between supplied
                  SUB-SYSTEM(s), integration between EXISTING SYSTEM and
                  supplied SYSTEM, documentation, warranty and transfer of the
                  works of procurement and installation of SYSTEM and
                  SUB-SYSTEM(s) of Backbone

                                                                               3

<PAGE>

                  Transmission Network in Kalimantan and Sulawesi whereby TELKOM
                  shall receive ready for use, with due regard of the volume and
                  scope of works agreed by TELKOM and PARTNER as mentioned in
                  Appendices I;

         e.       AGREEMENT PRICE shall mean amounts payable by TELKOM for the
                  fulfillment of the PARTNER's whole obligations under this
                  AGREEMENT;

         f.       SYSTEM shall mean all of the supplied SUB-SYSTEM of Backbone
                  Transmission Network in Kalimantan and Sulawesi that are
                  integrated with each other and shall work in accordance to
                  Technical Specification and which shall be handed over by
                  PARTNER to TELKOM to enable commercial operation.

         g.       SUB-SYSTEM shall mean the supplied NETWORK ELEMENTS comprised
                  of Fiber Optic Cable, Transmission Equipment, Power Supply and
                  building (for some locations only) including related
                  supporting facilities that comprise one or more operational
                  ROUTE of the Backbone Transmission Network, as well as
                  SUB-SYSTEM "S", which consist of INTEGRATION and Transmission
                  Network Management System (TNMS) as detailed in Appendix 2;

         h.       ROUTE shall mean an installation of High Performance Backbone
                  Network from one terminal to another terminal as mentioned in
                  Appendix 2;

         i.       LINK(S) shall mean an installation of NETWORK ELEMENT(s)
                  connecting two or more LOCATION(s) as mentioned in Appendix 2;

         j.       LOCATION shall mean locations where the EQUIPMENT shall be
                  delivered, installed, commissioned, tested and handed over and
                  where the WORKS shall be performed by the PARTNER as mentioned
                  in Appendix 2;

                                                                               4

<PAGE>

         k.       NETWORK ELEMENT shall mean complete and good functional
                  EQUIPMENT properly installed and set to work on a location
                  basis.

         l.       EXISTING SYSTEM shall mean all of TELKOM's existing and
                  operational backbone system in Kalimantan and Sulawesi;

         m.       EQUIPMENT shall mean all equipment (both hardware and
                  software), cables, apparatus, drawings, manuals, documents and
                  anything else which shall be provided by the PARTNER to TELKOM
                  in accordance with this AGREEMENT;

         n.       TECHNICAL SPECIFICATION shall mean technical specifications
                  mutually agreed upon by the Parties and as mentioned in the
                  Appendix 5 of this AGREEMENT;

         o.       INTEGRATION shall mean the integration between the SYSTEM and
                  EXISTING SYSTEM which properly fuction;

         p.       INFORMATION shall mean anything containing information and
                  relating to this AGREEMENT, including but not limited to
                  drawings, technology, data and so forth;

         q.       ACCEPTANCE TEST shall mean physical and visual checking of the
                  installation and materials, and testing of EQUIPMENT per
                  SUB-SYSTEM to test the proper functionality as mentioned in
                  Article 13 of this AGREEMENT of the EQUIPMENT installed;

         r.       PARTIAL ACCEPTANCE TEST shall mean an ACCEPTANCE TEST
                  conducted on specific ROUTE or LINK within a SUB-SYSTEM;

         s.       ACCEPTANCE TEST REPORT shall mean written document being made
                  and signed by Parties hereto through their respective duly
                  representatives, certifying the ACCEPTANCE TEST or the

                                                                               5

<PAGE>

                  PARTIAL ACCEPTANCE TEST has been completed and stating the
                  results.

         t.       BAST - I is the Certificate of First Hand Over certifying that
                  ACCEPTANCE TEST for a SUB-SYSTEM has been successfully
                  completed and accepted by TELKOM;

                  The issuance of each BAST - I indicates the commencement of
                  WARRANTY PERIOD of twelve (12) months for each SUB-SYSTEM;

         u.       BAST - II is the Certificate of Second Hand-over for each
                  SUB-SYSTEM certifying that PARTNER has fulfilled the warranty
                  obligation and that there is no pending items relating to
                  SUBSYSTEM's performance and reliability during the WARRANTY
                  PERIOD under this AGREEMENT;

         v.       SUB-CONTRACTOR means any party or parties (other than PARTNER)
                  to which any part or parts of the WORKS have been contracted
                  by the PARTNER, by giving written notice to TELKOM, which
                  shall include the legal personnel representative(s),
                  successor(s) of such Party or Parties;

         w.       COMMISSIONING means such activities that shall be done by the
                  PARTNER in preparation of the ACCEPTANCE TEST;

         x.       WARRANTY PERIOD means a period of twelve (12) months from BAST
                  -I;

         y.       EFFECTIVE DATE OF CONTRACT (EDC) means the date on which all
                  the provisions of Article 54 are fulfilled.

         z.       FINANCING shall mean all facilities provided by internal
                  TELKOM's fund or a bank or other body mutually agreed by the
                  parties upon with value and terms and conditions in accordance
                  with Articles 19, 25,26 and 27 of this AGREEMENT.

                                                                               6

<PAGE>

aa.      LOAN AGREEMENTS shall mean the Buyer's Credit Loan Agreement to be
         signed between TELKOM and a bank or other body mutually agreed by the
         parties upon and the Commercial Loan Agreement to be signed between
         TELKOM and bank or other body mutually agreed by the parties upon. LOAN
         AGREEMENTS shall be in accordance with the provisions contained in this
         AGREEMENT.

bb.      COMMERCIAL OPERATION shall mean operation which TELKOM provides to
         internal or external customers, in the form of services (e.g. voice,
         data or multimedia transmission) over any part or whole of the
         SUB-SYSTEM.

cc.      BUYER'S CREDIT FACILITIES shall mean the bank or other body covered
         Buyer's Credit Facility to be arranged by a bank in accordance with the
         Buyer's Credit Loan Agreement to be signed between arranged bank and
         TELKOM.

ARTICLE 2
GENERAL CONDITIONS

2.1.     If any provision of this Agreement or part thereof is rendered void,
         illegal or unenforceable by any legislation to which it is subject, it
         shall be rendered void, illegal or unenforceable only to that extent
         and it shall in no way affect or prejudice the enforceability of the
         remainder of such provision or the other provisions of this Agreement.
         The invalidity, illegality or unenforceability of any provision in this
         Agreement under the laws of any one jurisdiction shall not in itself
         affect the validity, legality and enforceability of such provision
         under the laws of any other jurisdiction.

                                                                               7

<PAGE>

2.2.     No failure on the part of either Party to exercise and no delay on the
         part of either Party in exercising any right hereunder will operate as
         a release or waiver thereof, nor will any single or partial exercise of
         any right under this Agreement preclude any other or further exercise
         of it.

2.3.     This AGREEMENT shall enure to the benefit of and be binding upon the
         Parties and their respective successors and permitted assigns.

ARTICLE 3
SCOPE OF WORKS

3.1.     The Scope of this AGREEMENT covers the procurement of a Backbone
         Transmission Network, Network Management System, spares and services
         from PARTNER in Kalimantan and Sulawesi according to the configuration,
         capacity plan, Bill of Quantity, and Technical Specification as set out
         in Appendix 5 (Technical Specification).

3.2.     For the purpose of the implementation of the WORKS, PARTNER shall carry
         out the followings:

         a.       Survey, design and engineering plan;

         b.       Procurement and/or manufacturing of EQUIPMENT and delivery of
                  the EQUIPMENT to the LOCATIONS;

         c.       Implementation, INTEGRATION of SUB-SYSTEM and SYSTEM to
                  EXISTING SYSTEM;

         d.       Warranty for one (1) year period after BAST -I; and After
                  Sales Service;

         e.       All risks insurance; Testing and Commissioning; and Training &
                  On the Job Training;

3.3.     The Scope of WORKS shall be adjusted and executed under an Amendment to
         this AGREEMENT:

                                                                               8

<PAGE>

         a.       after the detailed survey, design and engineering is completed
                  and approved by TELKOM; and

         b.       after the final As-Built Bill of Quantity is completed and
                  approved by TELKOM

3.4      This AGREEMENT is a contract covering various steps involved in the
         T-21 Program on a turnkey basis.

3.5.     "TURNKEY BASIS" pursuant to the Scope of Work, upon the effective date
         of this contract, PARTNER shall be fully and solely responsible for the
         survey, design, development, manufacture, delivery, supply,
         installation, integration and Commissioning of the Network, and the
         remedying of any defects, so as to make the Network ready for service.
         PARTNER shall also do everything necessary as reasonably may be
         inferred from this AGREEMENT as being required of PARTNER to perform
         all of its obligations under this Agreement.

ARTICLE 4
PERIOD AND LOCATION OF
WORKS IMPLEMENTATION

4.1.     The WORKS. The WORKS for High Performance Backbone in Kalimantan and
         Sulawesi shall be carried out and completed entirely within seventeen
         (17) months from the Effective Date of Contract.

4.2.     LOCATIONS of the WORKS. The WORKS shall be carried out in Kalimantan
         and Sulawesi area as referred to in Appendix 2 of this AGREEMENT.

4.3.     Delays. In the event PARTNER has a delay in the completion of the WORKS
         as mentioned in Article 4.1 and 4.2 above then PARTNER shall be imposed
         liquidated damages as referred to in Article 37 of this AGREEMENT.

4.4.     If such delays are due to (i) PARTNER and TELKOM agreed upon a
         variation of

                                                                               9

<PAGE>

         WORKS as mentioned in Article 46, or (ii) caused by third parties which
         are not appointed or nominated by PARTNER or (iii) Force Majeure, then
         PARTNER shall be permitted to extend the completion period of the WORKS
         based on approval from TELKOM.

ARTICLE 5
SITE PREPARATION, ACQUISITION,
RIGHTS OF WAY AND PERMITS

5.1      The Parties shall be responsible for preparing the Locations/Sites
         where the Deliverables are to be installed in accordance with Appendix
         2 (List of Sub Systems and Locations).

5.2      PARTNER shall perform all necessary tasks to ensure Location/Site
         preparation for Network roll-out in coordination with TELKOM, as
         follows:

5.2.1.   Arrange and acquire all the permits required to perform the work for
         and on behalf of TELKOM, such as trenching/road excavation permits,
         installation permits, rights of way, building construction permit (IMB)
         and other permits necessary either from local municipality or other
         Parties. The costs for acquiring the permit have been included in the
         unit price and shall not be priced separately;

5.2.2.   Conduct the land acquisition process, subsequent to TELKOM's approval
         to construct a new building relating with the Project. The cost
         associated with the land acquisition process (but not the cost of the
         land fee itself) shall be borne by the PARTNER. The cost of the land
         itself shall be agreed in advance with TELKOM (such agreement not to be
         unreasonably withheld or delayed) and then added to the Contract Value.

         TELKOM shall pay 100% to PARTNER by full reimbursement of the land
         costs including taxes which evidenced by the Certificate of Land
         Ownership as described in Appendix I-C of this AGREEMENT.

                                                                              10

<PAGE>

5.3      In the event omission of or delay in providing licenses, clearances, or
         permits by public authorities occurs, which affects the implementation
         schedule, provided all requirements have been fulfilled by PARTNER, and
         after TELKOM provides its assistance, then the Parties shall agree to
         extend the implementation period.

ARTICLE 6
APPENDICES

6.1.     Appendices. The following documents shall be attached and constitute as
         integral parts of this AGREEMENT:

         Appendix 1  : Price Breakdown, Terms and Payment Schedule;

         Appendix 2  : List of SUB-SYSTEMS and LOCATIONS;

         Appendix 3  : Schedule of Implementation and Project Management;

         Appendix 4  : Minutes of Meetings from negotiations;

         Appendix 5  : Technical Specification;

         Appendix 6  : Bidding Document;

         Appendix 7  : Consortium Agreement;

         Appendix 8  : Samples of documents to be presented.

         Appendix 9  : Announcement for the Package-I and Package-II to PARTNER

         Appendix 10 : PARTNER's Commitment Letter

         Appendix 11 : Training's Schedule and Document

         Appendix 12 : Acceptance Test Procedure

6.2.     Discrepancies. In the event of discrepancies between the provisions of
         this AGREEMENT with Appendices thereof, then the provisions of this
         AGREEMENT shall prevail.

                                                                              11

<PAGE>

CHAPTER 2.
TECHNICAL TERMS AND CONDITIONS

ARTICLE 7
TECHNICAL REQUIREMENTS

The WORKS shall be carried out under this AGREEMENT in accordance with TECHNICAL
SPECIFICATIONS as referred to in Appendix 1 and 5 of this AGREEMENT;

ARTICLE 8
QUALITY ASSURANCE

8.1.     PARTNER shall make all reasonable efforts to ensure TELKOM, is entitled
         to inspect and/or audit the production and installation phases of the
         processes of all members of PARTNER's consortium and its
         sub-contractors. PARTNER shall co-operate with TELKOM in case TELKOM
         elects at own expense to conduct such inspections and/or audits.

8.2.     PARTNER warrant any equipment or a component thereof is produced by a
         sub-contractor working for PARTNER, PARTNER shall include similar
         provisions in its contract with the sub-contractor in order to enable
         TELKOM to perform inspections of a similar nature.

8.3.     PARTNER warrant that the good performance of SYSTEM of the Backbone
         Transmission Network in Kalimantan and Sulawesi until the expiry of
         WARRANTY PERIOD through repair or replacement as necessary as detailed
         in Appendix 5.

ARTICLE 9
SURVEY, DESIGN, AND PLANNING

9.1.     The planning and design activities for the Project shall be able to
         fully accommodate the DRM mechanisms as described in Article 15 of this
         AGREEMENT.

                                                                              12

<PAGE>

9.2.     The planning and design works shall consist of Survey of the Location /
         Site(s) that PARTNER and TELKOM together to determine the optimum
         location/site for installation of the equipment, provided that the
         Location has been determined by TELKOM.

ARTICLE 10
OUTSIDE PLANT CIVIL WORKS

10.1     PARTNER shall apply flat rate for the trenching and reinstatement
         (assembly unit: BC-TR) works. TELKOM's payment to PARTNER associated
         with the works shall be determined only by the actual length of the
         fiber optic cable route. The actual conditions of the soil (soft soil,
         macadam, hotmix) will not determine the cost of the trenching and
         reinstatement works. TELKOM will pay only as according to the actual
         length of fibre optic routes as shall be agreed in the Design Review
         Meeting.

10.2     The flat rate for trenching and reinstatement shall refer to Level 5 of
         the OSP Civil Work Price Schedule as detailed in Appendix 1.

10.3     PARTNER shall install the Fiber Optic at a depth level of 130 cm.

ARTICLE 11
INSTALLATION PROCEDURES AND
STANDARDS

11.1.    PARTNER shall provide all services to ensure proper installation of all
         equipment, provide optimal operating conditions and maximize its long
         term viability. PARTNER shall provide all tools and equipment necessary
         to install and commission their equipment.

11.2.    PARTNER shall provide equipment installation services and shall consist
         of the following activities:

         a.       provision of materials, labor, equipment, tools and machinery
                  for installation;

                                                                              13

<PAGE>

         b.       materials delivery and storage;

         c.       transportation of goods;

         d.       installation of the equipment;

         e.       cleaning-up sites; and

         f.       site preparation plan and drawings.

11.3.    Provision of materials, labor, equipment, tools and machinery for
         installation shall consist of the following activities:

         a.       PARTNER's contractor shall provide all materials, labor,
                  tools, transportation, telecommunication facilities
                  (telephone, facsimile, etc.) and everything else necessary for
                  completion of work in accordance with this AGREEMENT;

         b.       PARTNER's contractor shall employ an adequate supervisory
                  force and an adequate staff of experienced engineers
                  consisting of technicians and workmen to complete the work in
                  a satisfactory and workman like manner within the time
                  specified in this AGREEMENT;

         c.       PARTNER's contractor shall itemize and provide all equipment,
                  tools, measuring equipment, machinery and electricity
                  necessary for execution of the Scope of Work in Indonesia; and

11.4.    Installation of the equipment shall consist of the following
         activities:

         a.       PARTNER's contractor shall be responsible for providing
                  connection and integrating sub-components into system units,
                  i.e. Transmission Equipment and Outside Plant (OSP);

         b.       PARTNER's contractor shall be responsible for system unit
                  check and shall ensure the each system units functions as
                  required.

11.5.    Cleaning-up at each Location/site shall be conducted during
         installation periods and consist of the following activities:

                                                                              14

<PAGE>

         a.       PARTNER's contractor shall keep the work and storage areas
                  clean and tidy and shall remove daily all combustible rubbish
                  from inside and near the buildings, structures and plant;

         b.       Upon completion of each installation, PARTNER's contractor
                  shall remove from the Location/site as early as possible all
                  tools, appliances, packing cases and plant not constituting an
                  integral part of this AGREEMENT.

         c.       PARTNER's contractor shall either remove or level as required
                  by TELKOM's Project Manager, all excess earth or spoils
                  resulting from any excavation.

         d.       PARTNER's contractor shall make good to the satisfaction of
                  TELKOM's Project Manager at his own expense, all damages to
                  buildings, plants, finishes etc caused by contractor, his
                  subcontractor(s) and/or their employees.

ARTICLE 12
LOCAL SUPPORT INFRASTRUCTURE

PARTNER shall provide TELKOM access to its local technical staff to ensure
effective deployment, operations and timely problem solving. PARTNER shall
ensure such local support is timely, cost effective, and of high quality in
order to meet TELKOM's desired service levels.

ARTICLE 13
ACCEPTANCE TEST AND HAND OVER

13.1.    ACCEPTANCE TEST. The list of items to be tested and the test procedure
         shall be completed and agreed upon by the Parties prior to the first
         ACCEPTANCE TEST. ACCEPTANCE TEST shall be carried out after the
         SUB-SYSTEM is commissioned by PARTNER and is ready for ACCEPTANCE TEST.
         PARTNER shall carry out ACCEPTANCE TEST over the whole WORKS as
         referred to in this

                                                                              15

<PAGE>

         AGREEMENT, at the LOCATIONS of installation in accordance with
         ACCEPTANCE TEST schedule which shall be submitted by PARTNER to TELKOM.
         The ACCEPTANCE TEST shall be carried out in the presence of both
         parties' authorized representatives.

13.2.    Prior Notice to ACCEPTANCE TEST. PARTNER shall give notification to
         TELKOM within fourteen (14) calendar days prior to the date of the
         ACCEPTANCE TEST. Within seven (7) calendar days after receipt of such
         notification, TELKOM shall notify PARTNER of its approval for such
         ACCEPTANCE TEST schedule or TELKOM may propose another ACCEPTANCE TEST
         schedule which shall not be later than seven (7) calendar days after
         PARTNER's proposed date. In the event TELKOM does not respond to
         PARTNER's notification within seven (7) calendar days, then TELKOM
         shall be deemed to approve such ACCEPTANCE TEST schedule.

13.3.    PARTIAL ACCEPTANCE TEST. TELKOM shall have the option to request
         PARTNER to perform PARTIAL ACCEPTANCE TEST for certain ROUTES and/or
         LINKS or will be determined within a particular SUB-SYSTEM under
         construction.

         In the event PARTIAL ACCEPTANCE TEST has been performed, and the ROUTES
         and/or LINKS is functioning properly and good cooperation in the
         technical accordance with the technical specification of this Agreement
         and commercial aspects, then TELKOM will issue BAST-Partial covering
         only ROUTES and/or LINKS that have been completed. BAST-Partial shall
         be treated as BAST-I for the accepted WORKS.

         The WARRANTY PERIOD for the accepted WORKS based on this Article shall
         commence after the issuance of BAST-Partial and shall end after twelve
         (12) months, whether or not the BAST-I will be issued for the relevant
         SUB-SYSTEM later.

                                                                              16

<PAGE>

13.4.    ACCEPTANCE TEST implementation. Subsequent to the implementation of all
         parts of the SUB-SYSTEM, due for ACCEPTANCE TEST, the ACCEPTANCE TEST
         shall be carried out to test the compatibility within the SUB SYSTEM
         that has been completed and EQUIPMENT being installed, with TECHNICAL
         SPECIFICATIONS agreed by PARTNER and TELKOM. Further, PARTNER shall
         deliver the ACCEPTANCE TEST REPORT to TELKOM.

13.5.    Error rectification obligations. Should there be any non-compliance
         with the TECHNICAL SPECIFICATIONS (hereinafter referred to as "Error")
         during ACCEPTANCE TEST period, TELKOM and PARTNER shall record such
         Error in writing and PARTNER shall start to rectify such Error at the
         earliest.

13.6.    Major Remaining Errors. If the result on ACCEPTANCE TEST indicates
         EQUIPMENT which is not operable, or causes damage or loss of data or
         software, or causes corrupted data (hereinafter referred to as "Major
         Remaining Errors"), then PARTNER shall notify TELKOM in writing (a) to
         stop the ACCEPTANCE TEST or (b) to extend the ACCEPTANCE TEST period.

         In case of (a) above, after the Error has been rectified, PARTNER shall
         notify TELKOM seven (7) calendar days before conducting re-testing.

13.7.    Minor Remaining Errors. If ACCEPTANCE TEST result indicates the
         EQUIPMENT shall cause failures other than Major Remaining Errors that
         do not affect the fundamental operation of any parts of the SUB-SYSTEM,
         then PARTNER shall rectify such Minor Remaining Errors within three (3)
         months after the issuance of BAST-I.

13.8.    Stability Test. Upon the completion of ACCEPTANCE TEST, PARTNER shall
         conduct a stability test for the period of ten

                                                                              17

<PAGE>

         (10) calendar days to observe the performance of the SUB SYSTEM
         thoroughly and to ensure that the WORKS related to the SUB-SYSTEM has
         been technically achieved in accordance with TECHNICAL SPECIFICATIONS
         under this AGREEMENT. During such observance period, Parties are not
         allowed to conduct any adjustments in the event of any abnormality
         arising within any parts of the SUB-SYSTEM.

13.9.    Checking on Acceptance Test Report and Stability Test Reports. Upon the
         completion of such tests as referred to in this Article and PARTNER has
         submitted reports on the SUB-SYSTEM, and any other requirements have
         been made available in accordance with the provisions of this
         AGREEMENT, TELKOM shall check all such reports of PARTNER. In the event
         any part of functionality is not in compliance with TECHNICAL
         SPECIFICATION under this AGREEMENT or incomplete, TELKOM shall notify
         PARTNER in writing within seven (7) calendar days from the presentation
         by PARTNER of said reports.

13.10.   Cost for Corrections. All costs incurred in connection with corrections
         as referred to in this Article shall become the full responsibility of
         PARTNER.

13.11.   BAST-I for SUB-SYSTEMS 1 up to 3 for Kalimantan and SUB-SYSTEM 1 up to
         4 for Sulawesi shall be issued if the following activities are
         fulfilled:

         a.       installation is completed;

         b.       each SUB-SYSTEM has been tested and is functioning properly in
                  accordance to the TECHNICAL SPECIFICATION without pending
                  items that are detrimental to the functional operation;

         c.       each SUB-SYSTEM is possible to be commercially operated.

BAST-I for SUB-SYSTEM "S" shall be issued after INTEGRATION and Transmission
Network Management System have been completed, tested and is

                                                                              18

<PAGE>

         functioning properly without Major Remaining Error.

13.12.   The issuance of BAST I (First Hand-Over Certificate); Minor Remaining
         Error. The SUB-SYSTEM shall be accepted if PARTNER has shown to TELKOM
         all requirements in accordance with the TECHNICAL SPECIFICATIONS as
         referred to in Appendix 5 have been fulfilled under the following
         conditions:

         a.       Within 7 (seven) calendar days after result of stability test,
                  TELKOM will notify PARTNER whether the SUB SYSTEM has been
                  accepted or not;

         b.       In the event such reports indicate each SUB-SYSTEM has been
                  tested and is functioning properly in accordance to the
                  TECHNICAL SPECIFICATION without pending items that are
                  detrimental to the functional operation, then TELKOM c.q.
                  Project Manager will issue First Hand-Over Certificate
                  (BAST-I) for the relevant SUB SYSTEM within seven (7) calendar
                  days after submission of ACCEPTANCE TEST REPORT and Stability
                  Test Report.

                  Should TELKOM for whatsoever reason neither inform PARTNER of
                  non-acceptance in writing, nor issue the BAST-I within the
                  above mentioned seven (7) days period or TELKOM commercially
                  operate the SUB-SYSTEM, then the SUB-SYSTEM shall be
                  deemed_accepted and the BAST-I shall be issued.

         c.       The issuance of First Hand-Over Certificate (BAST-I) by TELKOM
                  shall not be withheld due to Minor Remaining Errors by taking
                  into consideration that (i) such deficiency shall not
                  adversely affect normal operation and maintenance work of the
                  SUB SYSTEM in accordance

                                                                              19

<PAGE>

                  with the Technical Specifikation as referred to in Appendix 5;
                  (ii) such deficiency will be put as an attachment to the First
                  Hand-Over Certificate (BAST -1) in order for PARTNER to
                  rectify in accordance with Article 13.7.

13.13.   Second Hand-Over Certificate ("BAST-II) shall be Issued by TELKOM cq.
         Project Manager, twelve (12) months After the date of BAST I provided
         PARTNER has fulfilled the following conditions:

         a.       all remaining errors have been rectified and reported;

         b.       all warranty obligations have been fulfilled;

         c.       as-built documentation has been completed and submitted.

ARTICLE 14
GOODS DELIVERY PROCEDURE

14.1.    All physical deliveries of deliverables covered by this agreement
         shall be accompanied by a consignment note, which includes:

         a.       Name and registered office of PARTNER;

         b.       Partnership Agreement Number,

         c.       Date of shipment and delivery;

         d.       Quantities and type of goods included; and

         e.       Certificate of Origin.

14.2.    Delivery of equipment to the intended Location/Site shall be
         implemented by reference to complete Systems or Sub-systems and not
         piecemeal, except as otherwise mutually agreed between the Parties.

14.3.    PARTNER shall be responsible for  delivery of the equipment,
         components and software from the country of origin to the point of
         landing in Indonesia, and from the point of landing to the intended
         Location/Site as specified in this AGREEMENT in accordance with
         Appendix 3 (Implementation Schedule and Project Management). PARTNER
         and

                                                                              20

<PAGE>

         shall be responsible for all inland transportation shipping costs to
         the intended Location/Site.

14.4.    PARTNER represents and warrants that all equipment and components
         delivered are type-approved by the relevant authorities in Indonesia
         and have passed quality assurance by TELKOM in accordance with the
         quality assurance as mentioned in Article 8 and in Appendix 12
         (Acceptance Test Procedures) of this AGREEMENT.

14.5.    PARTNER shall be responsible for the provision and cost of any of the
         following facilities, equipment and services may be required by PARTNER
         and its staff.

14.6.    The terms as stipulated in this Article 4 will be applied in this
         AGREEMENT in the event the payment of the project which executed based
         on this AGREEMENT will provided by internal TELKOM's fund.

ARTICLE 15
REPORTS AND MEETINGS

15.1     Written reports. PARTNER shall give written reports (progress report)
         on any stage of the WORKS in accordance with Schedule of Works
         Implementation as provided in Appendix 3, at least once in a month,
         which shall be made in five (5) copies, four (4) shall be sent to
         TELKOM c.q. Project Manager and another one shall be submitted to HEAD
         OF LONG DISTANCE DIVISION.

15.2     Periodical meetings. For the purpose of the smoothness of the WORKS and
         to cope with any technical obstacle, TELKOM and PARTNER agree to
         convene periodical meetings at least once a month or any other time
         interval as agreed by both Parties from time to time.

ARTICLE 16
PROJECT MANAGEMENT

16.1.    PARTNER shall propose a Project Management Plan ("PMP"), in a form as

                                                                              21

<PAGE>

         mentioned in Appendix 3. TELKOM and PARTNER shall discuss and mutually
         agree on the details of the PMP.

16.2.    Prior to start-up of Project activities, the Parties shall have agreed
         on a PMP containing at least the following:

         a.       Role and responsibility;

         b.       Project organization and personnel;

         c.       Reporting of progress and issues.

16.3.    PARTNER shall appoint the Project personnel as described in the PMP
         including a Project Manager who shall be responsible for contact with
         TELKOM with respect to resolving issues arising in the course of
         Project implementation.

16.4.    The identity and qualifications of all Project personnel proposed by
         PARTNER to work on the Project, including the Project Manager as
         mentioned in the PMP shall be notified in writing by PARTNER to TELKOM
         before appointment. The Project Manager shall only be appointed with
         TELKOM's prior approval. For all other Project personnel, TELKOM shall
         inform PARTNER of any objections within seven (7) Days of notification
         and any Project personnel to whom TELKOM objects shall not be
         appointed. Replacements must be equally well qualified and appropriate
         for the Project

16.5.    At TELKOM's sole discretion, TELKOM may appoint its Project Manager
         with whom PARTNER Project personnel shall maintain close cooperation
         and communication at all times. TELKOM may also appoint local
         supervisors with whom PARTNER'S local Project personnel shall maintain
         close cooperation and communication at all times.

         The Project Manager as appointed by TELKOM for the execution of the
         WORKS under this AGREEMENT shall be HEAD OF TELKOM

                                                                              22

<PAGE>

         CONSTRUCTION CENTRE, however the owner of the Project which has been
         appointed in this AGREEMENT is LONG DISTANCE DIVISION.

16.6.    TELKOM may object to and, after consultation with PARTNER direct
         PARTNER to remove from any site immediately any person employed by
         PARTNER or any sub-contractor at the site who, in the reasonable
         opinion of TELKOM, misconducts himself, has proved to be unsuitable
         under the terms of the Scope of Work or is incompetent or negligent in
         the performance of his duties, and such person shall not be employed
         again at any Project site except with the prior written approval of
         TELKOM.

16.7.    PARTNER shall submit to TELKOM the required progress report as
         mentioned in the Scope of Work. With respect to any period covered by a
         progress report, in the event that PARTNER fails to inform TELKOM of
         any problem, TELKOM shall be entitled to presume that no such problem
         arose during such period. However, submission by PARTNER to TELKOM of
         the specified progress reports will not alter, amend or modify PARTNER
         obligations pursuant to any provision of this Agreement.

16.8.    PARTNER shall provide complete project management support to the
         Project including without limitation, managing the constituents members
         of PARTNER, subcontractors and other suppliers, as well as managing the
         acquisition of required sites, permits and rights of way.

16.9.    PARTNER shall immediately deliver newest Performance Schedule to
         TELKOM. The newest Performance Schedule shall contain important
         progress step (milestones) including:

         a.       Starting performance on any

                                                                              23

<PAGE>

         location;

         b.       Starting detail survey on any location;

         c.       Finishing installation, development design, related drawing
                  with Project;

         d.       Date of readiness, for commisioning, and Acceptance Test for
                  any location/Site;

16.10.   Deliver of equipment, component, software and service by PARTNER shall
         fulfill provisions of this AGREEMENT include schedule and progress step
         (milestones) as set out in Appendix 3 (Schedule of Implementation and
         Project Management).

16.11.   Any changes of Schedule of Implementation shall be based on mutually
         agreement of the Parties and be legally if its done as Variation duly
         signed by legal representation from each Party.

16.12.   Site Survey

         1.       After the Effective Date of this AGREEMENT award, the PARTNER
                  shall carry out a detailed site survey and engineering taking
                  into consideration the detailed design standard provided by
                  the PARTNER and approved by TELKOM. The Partner shall justify
                  the installation/construction designs together with the
                  associated bill of quantities.

         2        Upon completing the site surveys, PARTNER shall report, survey
                  findings to TELKOM. In addition, PARTNER will be required to
                  baseline all existing infrastructure that can be utilized for
                  T-21 backbone transmission and incorporate it into
                  implementation plans.

         3        Site Surveys shall aim to include, but not limited to, the
                  following activities:

                  (i)      Determining fiber optic installation route, new
                           building

                                                                              24

<PAGE>

                           and its supporting facilities including assessing
                           reusability of existing duct systems

                  (ii)     Baselining reusable supporting facilities, including
                           power supply, buildings.

                  (iii)    Determining lay-out/placement of the transmission
                           equipment within TELKOM's STO or other TELKOM's
                           building.

                  (iv)     Determining the exact location/ address for new
                           repeater buildings,

                  (v)      Determining the exact quantity and length of cable
                           bridges and duct attachments to bridge.

         4.       PARTNER shall take responsibility for the organizational and
                  administrative activities required to conduct the Site
                  Surveys. PARTNER shall be responsible for all reasonable costs
                  of performing the Site Surveys, including personnel,
                  transportation, accommodation, communications; and shall fund
                  at its own expense the cost of other related party in
                  performing any of the work or analyses contemplated as
                  mentioned in Article 16.12. TELKOM shall only be responsible
                  for the costs of providing accommodations and transport for
                  TELKOM staff involved in the Site Surveys.

16.13.   Design Review Meeting (DRM)

         1.       After the performance detailed survey, TELKOM dan PARTNER
                  shall perform Design Review Meeting.

         2.       The first DRM shall be conducted within ten (10) Business Days
                  after detailed survey. Further DRMs only intended to be held
                  in case there is any modification design.

         3.       At the DRM, TELKOM and PARTNER jointly shall conduct and/or
                  agree on at least the following activities:

                                                                              25

<PAGE>

                  (i)      review and finalize list of reusable infrastructure
                           based on result of Site Survey

                  (ii)     finalize detailed route;

                  (iii)    finalize trenching depth level along the route;

                  (iv)     finalize detailed bills of quantity;

                  (v)      agree and approve adjustments, if any, to the Project
                           Management Plan and the Implementation Schedule;

         4.       PARTNER shall take responsibility for the organizational and
                  administrative activities required to organize all DRMs.
                  PARTNER shall be responsible for all reasonable costs of
                  convening the DRM and shall fund at its own expense the
                  analysis as mentioned in Article 16.13 TELKOM shall only be
                  responsible for the costs of providing accommodations and
                  transport for TELKOM staff attending a DRM.

         5.       The Parties shall produce minutes of each DRM in which any
                  substantive agreements shall be recorded as agreements of the
                  Parties, as evidenced by signature of the minutes by the
                  authorized representative of each Party.

         6.       In the conduct of each DRM, the Parties shall always refer to
                  maximum Agreement Price as stated in the Article 19 of this
                  AGREEMENT.

         If the Parties cannot reach agreement at the DRM, the matters shall be
         escalated to senior management of each Party for resolution.

16.14.   Representation at Site Survey and DRM

         TELKOM and PARTNER shall notify each other from time to time regarding
         their appointments (and any changes to such appointments) of authorized

                                                                              26
<PAGE>

         representatives who have authority to execute or make agreements in any
         DRM and/or monthly meeting on their behalf.

ARTICLE 17
WARRANTY PERIOD

17.1.    The WARRANTY PERIOD a period of 12 months starting from the date of
         BAST-I for each relevant SUBSYSTEM or the date the EQUIPMENT has been
         used commercially by TELKOM, whichever date comes earlier.

17.2.    PARTNER warrants the EQUIPMENT shall work properly and stable in
         accordance with TECHNICAL SPECIFICATION during the WARRANTY PERIOD. In
         the event of any damage, error or technical malfunction in normal
         operation during the WARRANTY PERIOD, PARTNER shall repair and/or
         replace the damage, error and technical malfunction at its own cost.
         PARTNER warrants for the period as mentioned in paragraph I, the
         hardware is free from manufacture's defect and shall comply to the
         function as described in TECHNICAL SPECIFICATION. TELKOM's exclusive
         remedy for breach of the warranty is the repair or replacement of the
         defective EQUIPMENT.

17.3.    Defects during WARRANTY PERIOD. In the event of major defect or
         disruption to the SUB SYSTEM within twelve (12) months period, save to
         the extent of Force Majeure events and/or events for which PARTNER not
         liable under this AGREEMENT, which cumulatively shall exceed or equal
         to 24 (twenty four) hours of non availability of SUB SYSTEM, then the
         issuance of the BAST II (Second Hand-Over Certificate) shall be
         postponed and the WARRANTY PERIOD of such SUB-SYSTEM shall be extended
         to the number of days of such disruption. PARTNER shall use its best
         commercially reasonable efforts to provide alternative solution at its
         own

                                                                              27
<PAGE>

        cost.

17.4.   PARTNER shall have no obligation and/or responsibility to rectify any
        errors and/or non-compliances or subsequent errors and non-compliances
        if these have been caused by TELKOM or third parties which are not
        nominated or appointed by PARTNER.

ARTICLE 18
SPARE PARTS

18.1.    During WARRANTY PERIOD, all parts that are required to be replaced,
         shall be supplied by PARTNER without charge unless PARTNER is released
         from this obligation in accordance to Article 39.3. of this AGREEMENT.

18.2.    PARTNER shall provide prices and suppliers (local or overseas)
         information, regarding spare parts, sub assemblies, etc., and advise
         the required quantities to be purchased and stocked for the successful
         maintenance of the SYSTEM.

18.3.    PARTNER shall provide a list of spare part, description and quantity of
         EQUIPMENT, module and sub module level as appropriate.

18.4.    PARTNER shall agree to supply the spare parts to TELKOM and TELKOM
         shall have the right to purchase these spare parts from PARTNER for
         TELKOM's maintenance requirements at a price to be agreed upon. The
         spare parts or suitable equivalents with the same performance should be
         available throughout the EQUIPMENT-design-lifetime of the SYSTEM.

18.5.    PARTNER shall agree to provide a list of spare part and consumable
         items, to the best of its knowledge, to be purchased and stocked by and
         to be property of TELKOM for maintenance and usage for the SYSTEM for a
         period of six (6) years after BAST-II.

                                                                              28
<PAGE>

18.6.    PARTNER shall provide spare parts and consumable items to be purchased
         and stocked by TELKOM for a minimum period of six (6) years after the
         final production of each EQUIPMENT, unless suitable equivalents for
         spare parts and consumables are available. Subsequent to this, should
         supplies of any spare parts relevant to the SYSTEM be discontinued,
         PARTNER shall notify TELKOM at least one (1) year in advance of such
         discontinuation.

18.7.    Spare part and tools as quoted in the Bill of Quantity according to
         Appendix I of this AGREEMENT shall be delivered by PARTNER upon the
         BAST-I of relevant SUB SYSTEM where the spare part pool are located.

CHAPTER 3
COMMERCIAL TERMS AND CONDITIONS

ARTICLE 19
AGREEMENT PRICE

19.1     The Contract Value excluding VAT currently at 10%, but including income
         tax, other taxes, duties and costs in accordance with the prevailing
         laws and regulations for execution of the Project under this AGREEMENT
         is US$ 7,591,564 (Seven Million Five Hundred Ninety One Thousand Five
         Hundred Sixty Four US Dollar) and Rp. 144,753,277,911 (One Hundred
         Forty Four Billion Seven Hundred Fifty Three Million Two Hundred
         Seventy Seven Thousand Nine Hundred Eleven Rupiahs) with the details as
         mentioned in Appendix 1 this AGREEMENT.

19.2.    The detail of Agreement Price as mentioned in Article 19.1 above as
         follows:

                                                                              29
<PAGE>

<TABLE>
<CAPTION>
                                                         CURRENCY
                                             --------------------------------
 No    PACKAGE              LOCATION         IDR PORTION          USD PORTION
 --    -------              --------         -----------          -----------
<S>                        <C>             <C>                    <C>
 1    Package-I            Kalimantan       74.020.633.646          3,776,269
 2    Package-II            Sulawesi        70.732.644.265(+)       3,815,295(+)
 3    Sub Total (a)                        144.753.277.911          7,591,564
 4    PPN 10% x(a)                          14.475.327.791(+)         759,156(+)
 5    Total (including
      10% VAT)                             159.228.605.702          8,350,720
</TABLE>

19.3.    However, both TELKOM and PARTNER agree in the event the Scope of Works
         is amended due to the result of the Design Review Meeting as well as
         the final survey and "As-Built Bill of Quantity" per SUB-SYSTEM, then
         the final AGREEMENT PRICE shall be calculated and adjusted accordingly
         as required.

19.4.    No further costs. AGREEMENT PRICE set forth in the breakdown of costs
         as as mentioned in Appendix 1 of this AGREEMENT shall cover the
         entirety of parts which are required for the implementation of the
         WORKS in accordance with this AGREEMENT, save to the extent any
         additional or reduced WORKS as required by TELKOM in writing as
         referred to in Article 46 (Works Variation) and Article 3.3 (Adjustment
         of Scope of Work) with respect to Additional or Reduction of the WORKS
         under this AGREEMENT.

19.5.    Unit prices quoted in Appendix 1 (Price Summary, Terms and Payment
         Schedule) are firm fixed prices and shall not be varied except as
         permitted under this AGREEMENT. Unit prices for equipment are deemed to
         include payments by PARTNER for all costs of freight, insurance,
         customs and import duties, taxes related to importation, clearance at
         the port of entry, inland transportation, warehousing and delivery to
         the Location/Site where the equipment to be installed. Unit prices for
         equipment related services shall include survey, planning, design,
         permits, rights of way, installation, integration, project management,
         insurance up to transfer of title, testing and

                                                                              30
<PAGE>

         commissioning costs, services related to land acquisition, and all
         related materials and expenses to complete the Project on a turnkey
         basis as contemplated as mentioned in Article 3.5. Import or custom
         duties are included in the unit prices as mentioned in Appendix 1
         (Price Summary, Terms and Payment Schedule) and shall remain fixed.

ARTICLE 20
INSURANCE AND SAFETY

20.1.    PARTNER shall arrange and cover the insurance at his own cost for the
         shipment, during transportation, installation until BAST-1 for all risk
         according to this AGREEMENT.

20.2.    The Insurance company to be appointed by the PARTNER for local
         transportation and terrestial installation works shall be a local
         Indonesian Insurance Company PT Jasa Indonesia (PT JASINDO) through the
         broker PT Sarana Janesia Utama (PT SJU).

20.3.    For the first invoice submission, PARTNER or its members shall attach
         the copy of original policy or cover note. The original policy or cover
         note shall be presented to TELKOM for verification if required.

20.4.    PARTNER shall arrange the Social Security (ASTEK) insurance for his own
         employees at his own cost.

ARTICLE 23
TAXES AND IMPORTATION

21.1.    Taxes and Importation. All taxes (excluding VAT), stamp duty and other
         duties in accordance with the Government regulations shall be the
         responsibility of the PARTNER Any withholding tax shall be deducted
         directly by TELKOM from the payment to be made to PARTNER in accordance
         with the prevailing laws which is applicable to this AGREEMENT. VAT and
         other related taxes shall be settled with the Government directly by
         TELKOM. Upon settlement of VAT and other related taxes between TELKOM
         and the Government, TELKOM will submit

                                                                              31
<PAGE>

         original receipts of settlement to PARTNER, to enable PARTNER to refund
         the VAT and other related taxes.

21.2.    Importer. All the EQUIPMENT (both hardware and software) imported based
         upon this AGREEMENT shall be conducted under DDP (Delivered Duty Paid)
         as referred to in Incoterm 2000. Therefore, it is agreed by the Parties
         hereto that: (i) the Party who acts as the importer shall be PARTNER;
         and (ii) PARTNER shall use its Import Licence or (Agent's) Master List
         in conducting custom clearance of the EQUIPMENT from Custom Authority.

21.3.    Additional devices. In the event PARTNER shall require additional
         devices, apparatus or any other tools in carrying out the WORKS which
         shall be obtained by means of importing them from abroad, then all
         costs, taxes, retribution and any other levies thereof shall become the
         responsibility of PARTNER.

21.4.    PARTNER, shall be responsible at its own cost, for obtaining in a
         timely fashion all necessary export permits, licenses and approvals
         from the country of origin and any intermediate locations, including
         the payment of any and all levies for freight handling and other costs
         related to such permits, licenses and approvals.

21.5.    Irregularities to importation procedures. PARTNER shall be fully
         responsible for the occurrence of irregularities to either the delivery
         of EQUIPMENT from country of origin, transport procedures or supporting
         import documents, as set forth in the Presidential Instruction Number 3
         of 1991 dated 25th July 1991 or any replacement regulations thereof, if
         any.

ARTICLE 22
TRANSFER OF TITLE AND RISKS

22.1.    Event of Transfer. Transfer of title and risk from PARTNER to TELKOM
         shall occur

                                                                              32
<PAGE>

         for each SUB-SYSTEM when (i) First Hand-Over Certificate (BAST-I) has
         been issued or deemed to have been issued by TELKOM, or (ii) the SUB
         SYSTEM has been put into commercial operation by TELKOM, whichever is
         the earliest.

22.2.    Remaining PARTNER's responsibilities. Transfer of title as referred to
         in Article 22.1 shall not impair, release or discharge PARTNER's risks
         and responsibilities towards warranty over EQUIPMENT and any other
         materials or towards Minor Remaining Errors in the EQUIPMENT as
         described in Articles 13.7 dan 13.10 of this AGREEMENT until the
         issuance of Second Hand Over Certificate (BAST - II).

ARTICLE 23
PARTNER'S RIGHT AND OBLIGATION

         Beside the rights and obligations as stated in other Articles of this
         AGREEMENT, PARTNER shall have the following rights and obligations:

23.1.    PARTNER's obligations:

           a.     To ensure the good performance of SYSTEM of the Backbone
                  Transmission Network in Kalimantan and Sulawesi until the
                  expiry of WARRANTY PERIOD through repair or replacement as
                  necessary as detailed in Appendix 5.

           b.     To ensure the service/feature quality at least to the minimum
                  requirement until the expiry of WARRANTY PERIOD through repair
                  or replacement as necessary as stated in this AGREEMENT.

           c.     Completion of the WORKS according to Article 3 of this
                  AGREEMENT such that the SYSTEM of Backbone Transmission
                  Network in Kalimantan and Sulawesi is functioning in
                  accordance with the

                                                                              33
<PAGE>

                  Technical Spesification and can be put into commercial
                  operation, in accordance to Article 4.1. of this AGREEMENT.

         d.       To conduct the NMS software up grade of Backbone Transmission
                  Network in Kalimantan and Sulawesi whenever required due to
                  additional or expansion of new equipment during the Warranty
                  Period without any costs shall be imposed to TELKOM.

23.1.    PARTNER'S right:
         To receive the payment from TELKOM in the due time for the execution of
         AGREEMENT.

ARTICLE 24
TELKOM'S RIGHT AND OBLIGATION

Beside the rights and obligations as stated in other Articles of this AGREEMENT,
TELKOM shall have the following rights and obligations:

24.1.    TELKOM'S obligations:

         a.       To make the payment to PARTNER for the execution of the WORKS
                  on schedule based on this AGREEMENT.

         b.       To issue the recommendation needed by PARTNER to proceed with
                  the permission as stipulated in Article 5 of this AGREEMENT.

         c.       To provide the LOCATIONS as well as all the necessary
                  infrastructure (including but not limited to electricity,
                  water supply, air conditioning, security, grounding, fire
                  alarm, fire extinguisher, access road) at the LOCATIONS for
                  the installation of EQUIPMENT in accordance with
                  implementation schedule and the result of Design Review
                  Meeting.

24.2.    TELKOM'S rights:

                                                                              34
<PAGE>

         a.       To get the system performance of the Jaringan Transmisi
                  Backbone in Kalimantan and Sulawesi through repair or
                  replacement as necessary until the expiry of the WARRANTY
                  PERIOD, as detailed in Appendix 5.

         b.       To get the service/feature quality at least to the minimum
                  requirement through repair or replacement as necessary until
                  the expiry of the WARRANTY PERIOD, as stated in this
                  AGREEMENT.

CHAPTER 4
TERMS AND CONDITIONS OF FINANCE

ARTICLE 25
FINANCING

25.1.    The Parties shall give their best endeavour to do what is under their
         relevant competence and possibility to put in place the FINANCING
         within three (3) months from the date of this AGREEMENT.

25.2.    Reffering to the Article 25.1. as mentioned above, TELKOM shall
         authorize a nominated bank (BANK) to work with the PARTNER to obtain
         any necessary information related to the Transmission Backbone
         Kalimantan and Sulawesi project to file an application to the
         respective Export Credit Agencies ("ECAs") which is HERMES of Germany,
         to obtain their approvals to extend their insurance or guarantee
         support to the project.

25.3.    If BANK is successful in its application and negotiations with the
         ECAs, TELKOM agrees to appoint BANK to exclusively arrange the ECA
         supported financing, subject to mutual agreement on the detailed terms
         and conditions.

25.4.    Up to 85% of all USD portion eligible under ECA-cover of the AGREEMENT
         PRICE as detailed in Appendix 1 (Price

                                                                              35
<PAGE>

         Summary and Payment Schedule) shall be paid by means of Buyer Credit
         Facilities to be provided by BANK. All USD portion not eligible under
         ECA-cover, shall be paid by means of Commercial Loan or other financing
         which will be decided by TELKOM under conditions as detailed in Article
         27.2. Terms and conditions of FINANCING shall be regulated by the Loan
         Agreement (s) to be signed between TELKOM and BANK and shall be in
         accordance with the provisions contained in this AGREEMENT.

25.5.    PARTNER engage themselves to obtain from their Head Offices in Germany
         all possible help to do what is under their relevant competence and
         possibility to work with BANK to facilitate and speed up the
         application and the negotiations with the ECAs.

25.6.    TELKOM shall on demand pay or reimburse the other parties (including
         the Bank) for all costs and expenses incurred in connection with the
         financing including but not limited to the filing of the necessary
         applications with the relevant ECAs.

25.7.    After three (3) months have been elapsed as described in Article 25.1.
         of this AGREEMENT, financing has not been realized as required by the
         Parties then financing of the project under this AGREEMENT will be
         provided by internal TELKOM's fund.

ARTICLE 26
PAYMENT'S TERMS AND CONDITIONS

26.1.    The Terms and Condition of this WORKS based on this AGREEMENT will be
         made by TELKOM to PARTNER with Cash on Delivery upon 2 alternatives
         payment, as follows:

                                                                              36
<PAGE>

         a.       Payment shall affected out of the buyer's credit facilities
                  and other credit facilities, or

         b.       Payment shall be provided from internal TELKOM's fund.

26.2.    In the event the payment of Agreement Price will use the buyer's credit
         facilities and other credit facilities as stated in Article 26.1.a,
         then the terms of payment will be made by the following conditions:

         a.       For the Foreign currency portion which will be funded by
                  Export Credit Agency (ECA) the payment will be made as
                  follows :

                  i.       Prelimenary payment as of fifteen percent (15%) of
                           Agreement Price of Ex imported Goods (excluding the
                           services) will be made after the Goods has been
                           arrived at LOCATION for related SUB SYSTEM after
                           issued Goods Arrival Certificate.

                  ii.      Final payment as of eighteen percent (85%) of
                           Agreement Price of Ex imported Goods and a hundred
                           percent (100%) of Services Agreement Price after
                           PARTNER has completed the Project related SUB SYSTEM
                           basic after issued BAST-I.

         b.       For the Rupiah currency portion shall follows the conditions
                  as stated in Article 26.3. of this AGREEMENT.

26.3.    In the event the payment of Agreement Price will use the Internal
         TELKOM funds as stated in Article 26.1.b., then the terms of payment
         will be made by the following conditions:

         a.       First Stage equivalent to ten percent (10%) of the Agreement
                  Price of Goods (excluding services) after the Goods has been
                  arrived at LOCATION for related SUB SYSTEM after issued Goods
                  Arrival Certificate.

         b.       Second stage equivalent to ninety

                                                                              37
<PAGE>

                  percent (90%) of Agreement Price of Ex imported Goods and a
                  hundred percent (100%) of Services Agreement Price after
                  PARTNER has completed the Project related SUB SYSTEM basic
                  after issued BAST-I.

26.4.    The detail of terms of payment as specified in Appendix 1 of this
         AGREEMENT.

26.5.    Period of Payment
         Each of payment shall be made within twenty one (21) calendar days
         after receipt of complete and correct documents by TELKOM.

26.6.    Address of invoicing.
         Any invoices and related documents under this AGREEMENT shall be
         submitted to the following addresses:

         TO:-TELKOM
         PT Telekomuniukasi Indonesia,Tbk
         1. Att. Senior Manager Shared Services
         DIVISI TELKOM LONG DISTANCE
         Jalan Japati No. 1, 2nd Floor
         Bandung 40133

         2. Att. VP Perbendaharaan
         Jalan Japati No. 1, 5th Floor
         Bandung 40133

         CC: BANK and /or other Bank as
         necessary

26.7.    Completeness and Correctness
         Documents shall be correct and complete, when fulfil the criteria as
         stated in the "Required Document Verification for Procurement and
         Construction of Backbone Transmission Network Kalimantan and Sulawesi"
         which shall be attached to this AGREEMENT.

26.8.    The payment shall be made by TELKOM to PARTNER though direct transfer
         which to be addressed to:

                                                                              38
<PAGE>

         Bank         : Deutsche Bank AG
         Address      : JI.Imam Bonjol No.80
                        Jakarta

         For USD Portion :
         Account No.     : 000-3467-05.0
         For IDR Portion :
         Account No.     : 000-3467-00.2

         Both in favour of PT. Siemens Indonesia The transfer fee shall be
         responsibility OF PARTNER.

ARTICLE 27
MEANS OF PAYMENT

27.1     Buyer's Credit Loan Agreement

         27.1.1. Hermes-covered Buyer's Credit Facility.

         Disbursement of funds under the HERMES-covered Buyer's Credit Facility
         shall be made automatically on the 22nd calendar days after receipt of
         complete and correct documents from PARTNER to TELKOM with cc. to BANK,
         in accordance with clause 26 of this AGREEMENT, unless BANK receives
         written objection letter from TELKOM until the end of the 7th calendar
         day from the date of presentation to TELKOM as detailed in Article 26.4
         of such documents, signed by authorized personnel as to be defined in
         the Buyer's Credit Loan Agreement, from which specimen of signature
         exists, and giving valid and detailed reasons of non-conformance
         according to Article 26.5 and Appendix I-C of this AGREEMENT. If the
         written objection letter is not received by BANK within the above
         mentioned 7 (seven) days, then TELKOM waives the right to object the
         submitted documents.

         Under the Buyer's Credit Loan Agreement, Telkom shall allow BANK to
         make direct payments to PARTNER.

         27.1.2. General Terms and Conditions of the Buyer's Credit Loan
         Agreement. The Buyer's Credit Loan Agreement which is to be signed
         between TELKOM

                                                                              39
<PAGE>

         and BANK shall include, among the others, the following irrevocable
         terms and conditions:

         a.       The conditions of the Buyer's Credit L/A shall reflect the
                  same terms and conditions as set out in this AGREEMENT
                  including but not limited to automatic payment.

         b.       The Buyer's Credit L/A shall irrevocably provide for payments
                  made directly by BANK to PARTNER after receipt of complete and
                  correct documents by TELKOM as detailed in this AGREEMENT;

         c.       The Buyer's Credit L/A shall cover at a minimum an amount
                  corresponding to the eligible portion under the AGREEMENT
                  PRICE and according to the ECAs' rules (i.e. up to 85% of the
                  Final Payment to PARTNER);

         d.       The availability period for drawing under the Buyer's Credit
                  L/A shall be a minimum of 21 (twenty-one) months from EDC, and
                  shall be extendable upon written notice of PARTNER to TELKOM
                  and BANK;

27.2.    Commercial Loan Agreement (C/L)

a.       Payments of the IDR portion

         Disbursement of funds under the Commercial Loan in respect of any
         amount denominated in IDR under the CONTRACT VALUE and payable to
         PARTNER, shall be made automatically 22 calendar days after receipt of
         complete and correct documents from PARTNER to TELKOM and with cc. to
         BANK, in accordance with Article 26 of this AGREEMENT, unless BANK
         receives written objection letter from TELKOM until the end of the 7th
         calendar day from the date of presentation to TELKOM as detailed in
         26.5. of such documents, signed by authorized personnel as to be
         defined in the

                                                                              40
<PAGE>

         Commercial Loan Agreement, from which specimen of signature exists, and
         giving valid and detailed reasons of non-conformance according to
         Article 26.5 and Appendix I-C of this AGREEMENT.

         If the written objection letter is not received by BANK within the
         above mentioned 7 (seven) days, then TELKOM waives the right to object
         the submitted documents.

         Under the Commercial Loan Agreement, TELKOM shall allow BANK to make
         direct payments to PARTNER.

b.       Payments of the USD portion

         Disbursement of funds under the Commercial Loan in respect of any
         amount denominated in USD under the Agreement Price not covered through
         the Buyer's Credit Loan Agreement and payable to PARTNER and/or any
         NOMINATED SUBCONTRACTOR, shall be made automatically 22 calendar days
         after receipt of complete and correct documents from PARTNER by TELKOM
         with cc. to BANK, in accordance with clause 26 of this AGREEMENT,
         unless BANK receives written objection letter from TELKOM until the end
         of the 7th calendar day from the date of receipt by TELKOM as detailed
         in 26.5 of such documents, signed by authorized personnel as to be
         defined in the Commercial Loan Agreement, from which specimen of
         signature exists, and giving valid and detailed reasons of
         non-conformance according to Article 26.5 and Appendix I-C of this
         AGREEMENT.

         If the written objection letter is not received by BANK within the
         above mentioned 7 (seven) days, then TELKOM waives the right to object
         the submitted documents.

         Under the Commercial Loan Agreement, Telkom shall allow BANK to make
         direct payments to PARTNER.

c.       In the event that USD currency is not available at the moment of
         disbursement of funds, all payments for the USD portion not

                                                                              41
<PAGE>

         covered under the buyer's credit facilities shall be paid in IDR out of
         the CL, and shall be exchanged in US$ by BANK before payment, so that
         the paid US amount is equivalent to the amount stated in the invoice.

d.       Should the CL not contain sufficient funds, TELKOM shall make direct
         payment for any discrepancy within 21 calendar days from receipt of
         correct and complete documents by TELKOM in the currency stated in the
         invoice.

e.       In respect of all payments of the USD portion of the CONTRCAT VALUE to
         be covered through the IDR denominated C/L, PARTNER shall have the
         right to obtain, with resulting fees to be borne solely by PARTNER,
         from BANK or from any other bank or financing institution or insurance
         company acceptable to PARTNER an insurance cover in a form and
         substance satisfactory to PARTNER covering them against any risk of,
         but not limited to, non convertibility and non transferability and
         against any other risk that PARTNER might consider not acceptable.

f.       General Terms and Conditions of the Commercial Loan Agreement.

         The Commercial Loan Agreement which is to be signed between TELKOM and
         BANK Jakarta shall include, among the others, the following irrevocable
         terms and conditions:

         1)       The conditions of the Commercial Loan Agreement shall reflect
                  the same terms and conditions as set out in this AGREEMENT
                  including but not limited to automatic payment.

         2)       The C/L shall irrevocably provide for payments made directly
                  by BANK to PARTNER after receipt of complete and correct
                  documents by TELKOM as

                                                                              42
<PAGE>

              detailed in this AGREEMENT;

         3)   The IDR denominated C/L shall cover at a minimum an amount
              corresponding to the IDR and USD payable to PARTNER under the
              AGREEMENT PRICE eventually not-eligible according to the ECAs'
              rules and then not financed through the Buyer's Credit Loan
              Agreement;

         4)   The availability period for drawing under the C/L shall be a
              minimum of 21 (twenty-one) months from EDC, and shall be
              extendable upon written notice of PARTNER to TELKOM and BANK;

27.3.    Amounts not covered in above-mentioned facilities upon signature of
         this AGREEMENT.

         Amounts which are not covered through the above mentioned Buyer's
         Credit Loan Agreement and/or Commercial Loan Agreement upon signature
         of this AGREEMENT, like but not limited to Amendments to the CONTRCAT
         VALUE due to addition or reduction in the BoQ, shall be paid directly
         by TELKOM. TELKOM will pay all direct payments within 21 calendar days.

ARTICLE 28
PERFORMANCE AND WARRANTY BONDS

28.1     The Performance Bond and Warranty Bond shall be in form of a Bank
         Guarantee issued by the Government Bank or International Bank operated
         in Indonesia and accepted by TELKOM amounting to 5 % (five percent) of
         the total CONTRACT VALUE as stated in Article 19, which shall be USD
         417,536 (Four Hundred Seventeen Thousand Five Hundred Thirthy Six US
         Dollars) -and Rp 7,961,430,285 (Seven Billion Nine

                                                                              43
<PAGE>

         Hundred Sixty One Million Four Hundred Thirty Thousand Two Hundred
         Eighty Five Rupiahs).

         The Performance bond shall be valid from the Effective Date of Contract
         until the last BAST-I while the Warranty Bonds shall be valid from the
         last BAST-I up to the last BAST-II.

28.2     The Performance Bond shall be submitted by PARTNER to TELKOM within 14
         (fourteen) days from signing of this AGREEMENT while the Warranty Bond
         shall be submitted on the last BAST-I. Both of the bonds submitted to:

         PT Telekomunikasi Indonesia, Tbk.
         Att. Senior Manager Shared Services
         DIVISI TELKOM LONG DISTANCE
         Jalan Japati No. 1, 2nd Floor
         Bandung 40133

28.3     In case either the combined Performance/ Warranty Bond, and Preliminary
         payment Bond expires before the WORKS is completed, PARTNER shall
         extend the validity of the bonds at the latest within fourteen (14)
         calendar days before its expiration and submit it to:

         PT Telekomunikasi Indonesia, Tbk
         Att. Senior Manager Shared Services
         DIVISI TELKOM LONG DISTANCE
         Jalan Japati No. 1, 2nd Floor
         Bandung 40133

28.4     The Performance Bond as stipulated in Article 28.1. shall be released
         to PARTNER upon submission of the last First Hand Over Certificate
         (BAST - I). The Warranty Bond as stipulated in Article 28.1 shall be
         released to PARTNER upon submission of the last Second Hand Over
         Certificate (BAST - II).

28.5     In the event PARTNER fails to accomplish the WORKS or its parts in
         accordance with the terms and conditions of this AGREEMENT, due to
         gross negligence and/or willful misconduct of

                                                                              44
<PAGE>

         PARTNER, then PARTNER and TELKOM shall meet to review the situatation.
         If no mutual agreement reached, then TELKOM is entitled to forfeit the
         Performance/ Warranty Bond and become to property of TELKOM.

CHAPTER 5
TERMS AND CONDITIONS OF CONSORTIUM ORGANIZATIONAL

ARTICLE 29
CONSORTIUM ORGANIZATION
CRITERIA

29.1     The Consortium of which PARTNER is a part shall have at least one (I)
         Indonesian member.

29.2     The Consortium leader shall be required to be the leading technology
         supplier for the Project Backbone Transmission)

29.3     All substitutions, replacements or other changes to the composition of
         the membership of PARTNER's Consortium must be submitted to and
         approved by TELKOM in writing.

ARTICLE 30
ASSIGNMENT AND SUB-CONTRACTING

30.1.    PARTNER shall not, without the prior written consent of TELKOM, assign
         this Agreement, or assign or encumber any of the moneys due or becoming
         due under it. TELKOM reserves the right to assign this Agreement,
         without prior approval of PARTNER to an Investor provided the Investor
         gives PARTNER satisfactory payment assurances in accordance to this
         AGREEMENT.

30.2.    TELKOM reserves the right to assign this Agreement, with the prior
         approval of PARTNER which such approval shall not be unreasonably
         withheld, to any of TELKOM's subsidiaries or related companies.

                                                                              45
<PAGE>

30.3.    A schedule of each proposed sub-contractor and the part of the Scope of
         Work proposed to be performed by such sub-contractor will be submitted
         on DRM session. In case of any plan to change and/or to add a
         sub-contractor, PARTNER shall notify TELKOM in writing immediately
         before the proposed sub-contractor is appointed. TELKOM shall advise
         within seven (7) Business Days if it has substantive objections to the
         appointment of any of such proposed sub-contractors and/or the work
         they were intended to do, and PARTNER shall take such objections into
         account so as to meet with TELKOM's approval.

30.4.    The use of sub-contractors shall in no way relieve PARTNER from its
         responsibility to deliver the Deliverables to TELKOM (in particular to
         ensure that any Deliverables comply with all requirements of this
         AGREEMENT) or to perform necessary tasks such as project management.

30.5.    PARTNER shall ensure that the addition or removal of any
         sub-contractors shall not impact the agreed Contract Value or
         implementation of the Scope of Work.

ARTICLE 31
INVOLVEMENT OF LOCAL ENTITIES

31.1.    PARTNER shall use all reasonable efforts to maximize involvement of
         entities in Indonesia in its provision of Deliverables, the objective
         being to maximize financial benefits as well as transfer of knowledge
         and learning in Indonesia and thereby reduce TELKOM's exposure to
         foreign exchange risk. In this connection, "all reasonable efforts"
         shall be defined by reference to a minimum threshold level of local
         Indonesian involvement in executing the Project, comprising a
         percentage of the total contract value of the Project, which consist of
         minimum 20% of the Contract Value as mentioned in Article 19 of this

                                                                              46
<PAGE>

         AGREEMENT.

31.2.    The Local Content requirement can be fulfilled by reference to the
         Contract Value of the Project executed through Local Indonesian
         Entities, whether as members of PARTNER, key subcontractors or through
         other external Indonesian parties.

31.3.    The undertaking required by TELKOM shall state that PARTNER will, over
         the duration of the Project, procure certain materials and services
         within Indonesia (stating all categories of materials and services) to
         support the local operations of the overseas companies in the
         Consortium. Further, that all such procurements will be in accordance
         with this AGREEMENT.

ARTICLE 32
LOGISTICS

32.1.    PARTNER shall provide all logistical requirements from the point of
         origin of the any equipment, components or other Project goods to the
         applicable Project Location/Site, Including of all charges, such as
         transport and transit, demurrage, storage, insurance, fees, levies,
         taxes, etc.

32.2.    PARTNER shall provide all arrangements for shipping / transportation,
         forwarding and servicing equipment, components or other Project goods
         from point of origin to the Project Location/Site where they are
         finally deployed.

32.3.    PARTNER shall provide all warehousing requirements and explain the
         locations of the facilities to be used for this purpose. PARTNER will
         also be required to arrange for warehousing and storage facilities at
         installation sites to ensure proper storage and protection of all
         equipment, components or other Project goods. PARTNER shall ensure all
         equipment is adequately packaged and stored to avoid any damage. While
         in such warehousing, the equipment and material shall be the sole
         responsibility of PARTNER.

                                                                              47
<PAGE>

32.4.    PARTNER shall provide all required protection, insurance and other
         services to ensure safe delivery of the all equipment, components or
         other Project goods. PARTNER shall be responsible for any damage or
         loss of goods.

ARTICLE 33
INVENTORY

33.1.    PARTNER shall provide all services to ensure proper installation of
         equipment, components or other goods according to this AGREEMENT,
         provide optimal operating conditions PARTNER shall provide all tools
         and equipment necessary to install and commission any Project equipment
         procured under this AGREEMENT.

33.2     Provision of materials, labor, equipment, tools and machinery for
         installation shall consist of the following activities:

         a.       PARTNER's contractor shall provide all materials (including
                  cables, connectors and other miscellaneous materials), labor,
                  tools, transportation, telecommunication facilities
                  (telephone, facsimile, etc.) and everything else necessary for
                  completion of work in accordance with this AGREEMENT;

         b.       PARTNER's contractor shall employ an adequate supervisory
                  force and an adequate staff of experienced technicians and
                  workmen to complete the Scope of Work in a satisfactory and
                  workman like manner within the time as mentioned in this
                  AGREEMENT.

33.3     PARTNER and its sub-contractors provide all equipment, tools, measuring
         equipment, machinery and electrical power equipment necessary for
         execution of the Scope of Work in Indonesia; and

                                                                              48
<PAGE>

33.4     Delivery and storage of Project equipment and materials shall consist
         of the following activities:

         a.       PARTNER and its sub-contractors shall be responsible for
                  storage arrangements during the interval from the delivery of
                  equipment until it is required for installation;

         b.       PARTNER and its sub-contractors shall be responsible for
                  loading and unloading as well as handling of any equipment and
                  materials at all stages up to Commissioning;

         c.       PARTNER and its sub-contractors shall also be responsible for
                  unpacking (and repacking where necessary), identification and
                  checking of materials and relevant invoices or other
                  documents; and

         d.       PARTNER and its sub-contractors shall be responsible for
                  handling and storage of any goods during transportation and at
                  the site.

ARTICLE 34
COMPLIANCE WITH ENVIRONMENTAL STANDARDS

34.1.    The Deliverables supplied by PARTNER shall comply with all applicable
         legal requirements and shall not contain any legally prohibited
         substances and/or preparations. The Deliverables shall not contain any
         substances and/or preparations that cannot be processed by means of a
         normal waste processing method.

34.2.    PARTNER shall allow TELKOM to examine its degree of environmental care
         and provide reasonable assistance to TELKOM in examining that of the
         manufacturers concerned.

34.3.    PARTNER shall provide TELKOM with the information early enough to give
         TELKOM reasonable time to pass it on to

                                                                              49
<PAGE>

         all Parties involved before Deliverables are received:

         a.       Such substances and/or preparations present in the equipment
                  are harmful to people, property or the environment, including
                  soil, water and air;

         b.       Such substances and/or preparations are located in the
                  equipment and the components concerned shall be treated at the
                  end of their useful life and at the end of the useful life of
                  the equipment, and how such components can be removed from the
                  equipment safely and correctly;

         c.       Regulations are applicable to the transport, storage,
                  installation, use, dismantling and processing of the substance
                  in connection with the harm it is capable of causing; and

         d.       To improve the information distribution /acquisition process
                  at and by TELKOM to a reasonable extent without its costs.

34.4.    PARTNER shall state which components of the equipment are suitable for
         re-use or recycling other than by incineration at the end of its useful
         life.

34.5.    PARTNER shall provide TELKOM with the above-mentioned information,
         either via an electronic information carrier or electronically in a
         commonly used computer program and in a format requested by TELKOM.

34.6     PARTNER shall warrant all of the information which provided to TELKOM
         is complete and correct to the best of its knowledge.

CHAPTER 6
OTHERS TERMS AND CONDITIONS

ARTICLE 35
DOCUMENTS

35.1.    Notwithstanding any other documents to

                                                                              50
<PAGE>

         be provided in other articles of this AGREEMENT, PARTNER shall submit
         five (5) copies of documents relating to this AGREEMENT for each SUB
         SYSTEM, consists of:

         (i)      As-Built Drawing (original, hard copy and soft copy), within
                  two (2) month after BAST-1;

         (ii)     Technical documentation of EQUIPMENT as detailed in the Scope
                  of Works before the issuance of BAST-I;

35.2.    PARTNER shall provide an adequate number of handbooks and drawings that
         shall be required to support equipment maintenance, installation, and
         test function. Handbooks and drawings shall include assembly drawings,
         wiring information, schematics, drawings, circuit diagrams/descriptions
         and complete instruction for familiarization, installation, operation,
         theory, maintenance, and parts replacements, as well as appropriate
         system drawings. Instruction handbooks for each piece of equipment
         shall be prepared separately, and submitted to TELKOM. Instruction
         handbooks to be supplied shall include the following:

         a.       Installation and system handbooks;

         b.       Equipment handbook including Standard Operating Procedure
                  (SOP) and Standard Maintenance Procedure (SMP);

         c.       Repair handbooks including circuit diagrams;

35.3.    Documents retention. Upon the completion of the WORKS, any drawings and
         documents with respect to the SYSTEM owned by PARTNER related to the
         WORKS shall be kept for the EQUIPMENT-design-lifetime of such SYSTEM.
         This is purportedly to enable PARTNER to supply any parts which need
         replacement and/or expansion of such SYSTEM as agreed by the Parties
         during the EQUIPMENT-

                                                                              51
<PAGE>

         design-lifetime of the SYSTEM.

35.4.    Intellectual Property Rights documents. Any intellectual property
         rights with respect to any drawings, specifications and data issued by
         the respective Party hereto in regard of this AGREEMENT shall remain
         the possession of such relevant Parties.

35.5.    Clarification on documents. Any incompleteness, doubts with respect to
         breakdown and/or elaboration contemplated in any documents, which
         constitute parts of this AGREEMENT, shall be presented to TELKOM for a
         clarification.

ARTICLE 36
COSTS FOR SUPERVISION AND HAND OVER

36.1.    TELKOM's responsibilities. TELKOM shall bear all costs incurred in
         connection with its representative in the implementation of
         supervision, ACCEPTANCE TEST and hand over of each SUB-SYSTEM as
         referred to this AGREEMENT, save to extent all matters concerning
         utilities and work space in PARTNER's premises which shall become the
         responsibility of PARTNER.

36.2.    PARTNER's responsibilities. PARTNER shall at its own costs, provide all
         equipment and own staff which are required for the implementation of
         test, supervision, and inspection in accordance with its requirements
         until the accomplishment of the BAST - 1 (First Hand-Over Certificate).

ARTICLE 37
LIQUIDATED DAMAGES

37.1.    Liquidated Damages Amount. For any delay in the completion of WORKS
         implementation, TELKOM shall be entitled to impose penalty to PARTNER
         amounting to 1 0 / 00 (one per mil) of the delayed SUB-SYSTEM WORKS
         value excluding 10 % VAT for every day delay

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<PAGE>

         up to a maximum of five per cent (5%) of the CONTRACT VALUE.

37.2.    The sum or sums of money to be paid under Article 37.1 shall be paid as
         liquidated damages and payable by PARTNER to TELKOM in respect of the
         loss or damages sustained by reason of such delay and any sum of money
         paid shall be TELKOM's sole remedy for the delay for which the sums are
         paid, without prejudice to TELKOM's right of termination AGREEMENT
         under section 41 of this AGREEMENT.

37.3.    Time of payment for Liquidated Damage. Liquidated Damage as mentioned
         in Article 37.1, if any, shall be payable by PARTNER to TELKOM no later
         than thirty (30) calendar days upon written notice of the imposition of
         such Liquidated Damages.

37.4.    Payment deduction. In the event PARTNER shall fail to make payment on
         Liquidated Damages referred to above, then TELKOM shall be entitled to
         Liquidated Damages amounts so imposed by means of deducting forthwith
         from payment of AGREEMENT PRICE.

ARTICLE 38
INDEMNIFICATION

38.1     Without prejudice to any other provisions of this Agreement, PARTNER
         shall indemnify TELKOM and hold TELKOM harmless from all damages, cost
         and expenses arising from any Claims (as defined below), if Claims
         arise:

         a.       as a result of a failure by PARTNER to perform its obligations
                  pursuant to this AGREEMENT or other specific agreement related
                  to this AGREEMENT;

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<PAGE>

         b.       in connection with the work carried out pursuant to its
                  obligations under this AGREEMENT, unless the occurrence of the
                  damage is not attributable to PARTNER;

         c.       in connection with the faulty design of the equipment or any
                  other material or supplies which are supplied by PARTNER;

         d.       in connection with an infringement of any Intellectual
                  Property Rights or industrial property right belonging to a
                  third party in relation to Article 43;

         e.       In connection with any Claims including any fines or other
                  penalties suffered by TELKOM as a result of the violation by
                  PARTNER or any of its employees or agents of any laws or
                  regulations in Indonesia related to Article 49;

         f.       for personal injury to and death of any persons and damage to
                  any property arising out of the performance of this AGREEMENT
                  due to acts or omissions whether negligent or otherwise of
                  PARTNER, its employees, agents or sub-contractors;

         g.       In connection with termination by TELKOM for non-delivery of
                  contracted equipment, components or software.

         Provided that TELKOM:

         1.       Gives PARTNER prompt written notice of such Claim;

         2.       Permits PARTNER to defend or settle the Claim;

         3.       Does not at any time admit liability in respect of the whole
                  or any part of the Claim or agrees to settle or

                                                                              54
<PAGE>

                  dispose of the Claim; and

         4.       Provides all reasonable assistance to PARTNER in defending or
                  settling the Claim.

38.2.    "Claims" shall mean any demands, claims, actions, liabilities, losses,
         damages awarded by a court or arbitration tribunal against TELKOM,
         costs (including legal and other professional costs), penalties and
         expense incurred by TELKOM as a result of a breach by PARTNER or any
         sub-contractor of any of its obligations, representations, undertakings
         or warranties under this AGREEMENT.

ARTICLE 39
REPRESENTATION AND WARRANTY

39.1.    PARTNER warrants that the EQUIPMENT and SYSTEM to be delivered to
         TELKOM are new, shall not contain any refurbish parts, having no hidden
         defect and shall not be originated illegally. PARTNER shall further
         undertake that all EQUIPMENT (both hardware and software) delivered to
         TELKOM under this AGREEMENT shall have EQUIPMENT design-life time of
         product at least ten (10) years as of the date of issuance of BAST - 1
         (First Hand-Over Certificate), or from the time the EQUIPMENT has been
         used commercially by TELKOM, whichever occurs first.

39.2.    Detriment. In the event during WARRANTY PERIOD i.e. twelve (12) months
         as of BAST - I (First Hand-Over Certificate) due to fault in design,
         negligence of workmanship or other similar causes, a detriment or
         damage to the EQUIPMENT occurs then PARTNER shall start the activities
         to rectify or replace it with the replaced or rectified ones at
         PARTNER's costs, within fourteen (14) calendar days after a written
         notice has been received by PARTNER from

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         TELKOM.

39.3.    Release of obligation. PARTNER shall be fully released from obligations
         to rectify or replace defective material during WARRANTY PERIOD, if
         such detriment or damage is caused by the operation of EQUIPMENT which
         does not follow the procedures determined in the operating manuals or
         any other reasons which PARTNER can proves that such detriment or
         damage shall not constitute PARTNER's fault.

39.4.    Transportation costs. All costs for transportation with respect to
         re-export and import, import duties and custom clearance in connection
         with or due to the rectification or replacement of the damaged
         EQUIPMENT during the WARRANTY PERIOD shall become the responsibility of
         PARTNER subject to provisions of Article 17.

39.5.    Maintenance of EQUIPMENT after WARRANTY PERIOD. If, upon the expiry of
         WARRANTY PERIOD of 12 (twelve) months, TELKOM requires maintenance
         assistance for the EQUIPMENT from PARTNER, then PARTNER shall agree to
         carry out such maintenance including replacement of the same or
         comparable spare parts within the EQUIPMENT-design-life time of the
         EQUIPMENT as mentioned in Article 18 with costs thereof as mutually
         agreed.

39.6.    Failure by PARTNER. If PARTNER fails to accomplish the WORKS, which is
         due to PARTNER's default, and after the elapse of the agreed
         implementation schedule, and after the full liquidated damages as
         stipulated in Article 37 is applied, PARTNER shall be given a
         reasonable time, which shall be mutually agreed upon, to complete the
         WORKS. If PARTNER still fails to complete the WORKS after such period,
         then TELKOM shall be entitled to the following cumulatively: (a) to
         terminate this AGREEMENT by issuing a Termination Notice (b) to appoint
         any third party to continue this AGREEMENT

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<PAGE>

         on condition that any reasonable excess amounts incurred for continuing
         such WORKS shall be borne by PARTNER.

39.7.    Undertaking by PARTNER. PARTNER undertakes that all EQUIPMENT, supplied
         to TELKOM and the execution of the WORKS in accordance with this
         AGREEMENT and shall meet the slate of the art technology, owned by
         PARTNER or licence to him as agreed upon in the Scope of Work at the
         date of entering into this AGREEMENT.

ARTICLE 40
TRAINING, TRANSFER OF KNOW HOW AND DEVELOPMENT OF INTELLECTUAL PROPERTY

 40.1  PARTNER shall provide training to TELKOM employees and TELKOM shall
       provide qualified employees for training programs provided by PARTNER
       under this AGREEMENT.

 40.2  Training shall be conducted both domestic and overseas (Germany) and
       PARTNER shall propose detailed schedules for both types of training based
       on TELKOM's requirements.

 40.3. The Terms of Payment, Conditions, Schedule and Syllabus of Training as
       specified in Appendices 1, 2, 3 and 11 of this AGREEMENT.

  ARTICLE 41
  TERMINATION OF AGREEMENT-

41.1.    PARTNER's Default. PARTNER shall be deemed to be in default if:

         a.       PARTNER is not materially executing the WORKS in accordance
                  with this AGREEMENT or is neglecting to perform his
                  obligations thereunder so as to seriously affect the carrying
                  out of the WORKS and fails to remedy the deficiencies, or

                                                                              57

<PAGE>

         b.       PARTNER becomes subject to bankruptcy, insolvency, liquidation
                  or winding-up proceedings in any jurisdiction, or is otherwise
                  insolvent or unable to pay its debts, or if a receiver is
                  appointed over or steps are taken to enforce any security
                  interest against the whole or a part of its assets; or

         c.       PARTNER is in material breach of its obligations as stipulated
                  under this AGREEMENT; or

         d.       PARTNER repudiates this AGREEMENT

41.2.    TELKOM shall then immediately dispatch default notice to PARTNER.
         PARTNER shall then take a reasonable action to remedy its default and
         send to TELKOM a redemption plan, which describes PARTNER's recovery
         schedule. The form and the details of the notice shall be discussed and
         mutually agreed by Parties.

41.3.    If within thirty (30) days after the date of notice, PARTNER does not
         show its intention to remedy the default, TELKOM shall without
         prejudice to any other right PARTNER may have, terminate this AGREEMENT
         by issuing a written termination notice thirty (30) days prior to the
         termination.

41.4.    Upon termination of this AGREEMENT notice by TELKOM, PARTNER shall
         complete the SUB-SYSTEMS which already under construction, which will
         then be accepted and paid according to the AGREEMENT.

41.5.    TELKOM's Default. TELKOM shall be deemed to be in default if:

         a.       being in bankruptcy, insolvency, liquidation or winding-up
                  proceedings in any jurisdiction, or is

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<PAGE>

                  otherwise insolvent or unable to pay its debts, or if a
                  receiver is appointed over or steps are taken to enforce any
                  security interest against the whole or a part of its assets;
                  or

         b.       fails to meet its contractual obligations, or

         c.       fails to make its payment obligation within twenty one (21)
                  calendar days after the first delay occurs;

41.6.    In the event TELKOM commits such default, PARTNER shall, as soon as
         possible, give notice to TELKOM which specifies the default. TELKOM
         shall within thirty (30) days after the date of such notice diligently
         pursue to remedy such default.

41.7.    If within thirty (30) days after the date of notice, TELKOM does not
         show its intention to remedy the default, PARTNER shall have the right
         to terminate the AGREEMENT.

41.8.    Upon termination of this AGREEMENT under paragraph 7 TELKOM will pay:

         a.       any EQUIPMENT already delivered and/or installed according to
                  Bill-of-Lading or similar/comparable documents; and

         b.       any Services according to As-Built Survey; and

         c.       any materials which are under progress of manufacturing,
                  transport or other means and which are included in the
                  Progress Report upon delivery to TELKOM's premises;

         d.       Any reasonable expenses for demobilization according to Cost-
                  Report provided by PARTNER upon presentation of Cost-Report.

         Documents under Article 41.8.a automatically accepted.

         Documents under Article 41.8. b to d

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<PAGE>

         above shall be submitted to TELKOM by PARTNER.

         TELKOM shall respond these documents within ten (10) working days as of
         receipt of such documents.

         If TELKOM does not respond within such 10 days, then the documents will
         be deemed as accepted.

         Settlement shall be reached within 60 days. After such 60 days, the
         matter shall be taken to BANI as mentioned in Article 50

41.9.    Payment under Article 41.8 shall be effected no later than twenty-one
         (21) days after presentation of the documents. Letter of Termination of
         the AGREEMENT together with the above mentioned documents will replace
         all other documents required for receiving payment.

ARTICLE 42
LIABILITY

42.1.    PARTNER's liability. PARTNER shall, at its own costs, take all
         reasonable precautions to prevent any loss or damage to person and
         property of TELKOM. PARTNER shall be liable for losses and claims,
         which arise in connection with wilful misconduct or gross negligence of
         PARTNER or its personnels, labors or servants up to the limits stated
         in Article 42.4.

42.2.    Damage to the equipment. In the event any damage to the equipments
         belonging to TELKOM during the execution of the WORKS, due to willful
         misconduct or gross negligence of PARTNER or its personnel or its
         labors or its subordinates, then a protocol shall be made in writing
         and to be signed by PARTNER's officer and the supervisor from TELKOM
         which are appointed to supervise the WORKS. All damages or losses
         referred to in this Article shall be the responsibility of PARTNER.

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<PAGE>

42.3.    PARTNER shall not be liable, whether in contract, tort (including
         negligence or strict liability) or any other legal or equitable theory,
         for damage to or loss of other property or equipment, business
         interruption or lost revenue, profits or sales, loss of information and
         data, or for any special, incidental, punitive, indirect or
         consequential damages.

42.4.    For the term of this AGREEMENT, PARTNER's aggregate overall liability
         for any act or omission, whether in contract, tort (including
         negligence or strict liability), will in no event exceed a maximum
         amount of 20% (twenty percent) of contract value.

42.5.    loss or damage caused by the gross negligence or willful act, fault or
         omission of PARTNER, its employees, agents or sub-contractors,
         including any damage or interruption to TELKOM's existing Network
         during the migration to the new network to be provided by PARTNER; or

42.6.    Unless otherwise provided for by mandatory applicable law, the rights
         and remedies as mentioned in this AGREEMENT are exclusive, and the
         parties accept these remedies in lieu of any and all other rights and
         remedies available at law or otherwise, in contract or in tort, for any
         and all claims of any nature arising out of or in connection with this
         AGREEMENT or any other agreement regarding its performance.

ARTICLE 43
INTELLECTUAL PROPERTY RIGHTS

43.1.    Intellectual Property Rights. The AGREEMENT PRICE as mentioned in this
         AGREEMENT already covers the amount to be paid for the right to use for
         the EQUIPMENT. PARTNER will use

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<PAGE>

         its best endeavors to undertake that the use of all EQUIPMENT and
         apparatus thereof by TELKOM will not infringe any intellectual property
         rights (IPR) of any third party. The term "IPR" shall include patent,
         mark, industrial design, copyrights and neighboring rights. TELKOM
         shall inform PARTNER promptly of any third party's claim regarding IPR.

43.2.    Third Party claim. In the event any legal claims or any other legal
         actions against TELKOM in connection with the use of such patent and/or
         third party intelectual property rights, as mentioned in Article 43.1
         PARTNER shall indemnify and hold TELKOM harmless for any legal claims,
         whether in courts or any other forum, and PARTNER shall settle such
         legal claims at his own costs.

43.3.    In the event of any allegation of infringement of any third party's IPR
         which is subject to indemnification as mentioned in Article 43.2.
         PARTNER shall use its commercially reasonable efforts at its option,
         (i) to obtain a licence from the third party; (ii) to defend against
         such allegation through final judgement and all timely fields appeal;
         (iii) to redesign the allegedly infringing products in order to avoid
         infringement.

43.4.    The above Art. 43.3 states the sole and entire obligation of PARTNER
         with respect to any claim regarding the IPR of any third party.

43.5.    PARTNER will have no obligation with respect to any claim or action
         pursuant to this article unless: (i) PARTNER is promptly notified in
         writing of such third party claim by TELKOM, within maximum ten (10)
         calendar days after TELKOM receive written notification/claim from
         such third party; and (ii) TELKOM allows PARTNER sole control of the
         defence and settlement of

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<PAGE>

         such third party claims and (iii) TELKOM provides PARTNER with
         reasonable assistance, at PARTNER's expense, in connection with the
         settlement and defence of such third party's claims. Notwithstanding
         the above, TELKOM shall have the right, to employ counsel to
         participate in any such defense at TELKOM's expense.

43.6.    PARTNER shall have no liability for any claim of the nature referred to
         in this Article based upon: (i) use of the products in a manner other
         than for which it was intended; (ii) unauthorised modification or
         changes made to the products; (iii) operation of the products in
         combination with products not supplied by PARTNER; or (iv) PARTNER's
         compliance with TELKOM's designated designs, material usage or
         specifications furnished by TELKOM, in which case TELKOM shall defend,
         indemnify and hold PARTNER harmless against any claim of infringement
         of any such IPR.

ARTICLE 44
RIGHT OF USE FOR SOFTWARE

44.1.    PARTNER hereby grants to TELKOM subject to the terms and conditions of
         this AGREEMENT a non-exclusive, non-transferable license to use the
         Licensed Software on the Hardware and the Software Documentation for
         the TELKOM's internal purposes.

         Without limiting the foregoing, the license does in particular not
         include the right to modify, copy (other than as mentioned per
         paragraph 2 below), port, translate or sublicense the Licensed Software
         and the Software Documentation.

44.2.    TELKOM shall be entitled to produce one (1) back-up copy of each item
         of the

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<PAGE>

         Licensed Software, whereby the use of such back-up copy shall be
         limited to replace the original Licensed Software if the original
         Licensed Software is inoperable. TELKOM shall keep records about the
         storage of such back-up copies and present such the records to PARTNER
         on demand.

44.3.    Certain programs of the Licensed Software and/or the Software
         Documentation may be proprietary to third party licensors of PARTNER
         who may be direct and intended third party beneficiaries of certain
         terms and conditions herein relating to the protection of such third
         party proprietary Software. TELKOM agrees those third party
         beneficiaries may enforce these terms and conditions directly against
         TELKOM.

44.4.    The Licensed Software may contain freeware or shareware obtained by
         PARTNER from a third party source. No license fee has been paid by
         PARTNER for the inclusion of any such freeware or shareware, and no
         license fee is charged to TELKOM for its use. TELKOM acknowledges and
         agrees that PARTNER provides no warranties and shall have no liability
         whatsoever in respect of TELKOM's possession and/or use of the freeware
         or shareware.

ARTICLE 45
SPECIFIC CONDITIONS

45.1.    Confidentiality on INFORMATION. The Parties agree to perform their best
         efforts in keeping confidentiality on INFORMATION with respect to this
         AGREEMENT and The Parties shall ensure its directors, employees,
         agents, or servants shall not disclose information, data, documentation
         and knowledge to third parties without written approval from the other
         party, nor

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<PAGE>

         shall produce information, data, documentation and knowledge in the
         form of paper, cassettes, diskettes, discs or any other forms, save to
         extent that such action is performed as a report to the relevant
         Governmental agencies as required by the laws.

45.2.    Exceptions of INFORMATION. The provision as mentioned in Article 45.1
         above shall not apply in the event such INFORMATION has become public
         domain or upon the expiry of 10-year period as of the signature of this
         AGREEMENT.

ARTICLE 46
WORKS VARIATION

46.1.    Changes to the scope of Works. The Scope of Work shall be adjusted and
         executed (i) under an Amendment to this AGREEMENT after the detailed
         survey, design and engineering is completed and approved by TELKOM, and
         (ii) after the final As-Built Bill of Quantity is completed and
         approved by TELKOM.

46.2.    Upon mutual agreement between the Parties, TELKOM may alter the Scope
         of Works, Drawing, specification design, place or time of delivery,
         addition or reduction of WORKS. Changes of WORKS, can be conducted
         prior to or at the commencement of the WORKS under an implementation
         schedule, feasibility and possible Agreement Price variation as
         mutually agreed upon by Parties.

46.3.    Cost addition/reduction. If such alteration shall cause cost addition
         or reduction and/or changes of completion period of WORKS, then an
         adjustment shall be made to the AGREEMENT Price and/or completion
         period of WORKS based upon mutual agreement of the Parties;

46.4.    Agreement variation. Any variations to the content of this AGREEMENT,
         whether

                                                                              65

<PAGE>

         with respect to Scope of Works, Agreement Price, Period or any other
         parts of this AGREEMENT shall bind TELKOM and PARTNER if it expressly
         made in writing and agreed by TELKOM and PARTNER by providing and
         signing an amendment to this AGREEMENT.

46.5.    Unit Price. The agreed unit prices for variations to the Scope of Work
         being performed under this AGREEMENT shall be the same as the unit
         prices detailed in this AGREEMENT until the last BAST-II. This does not
         include free of charge items as applicable or if no unit price is
         given.

ARTICLE 47
NATIONAL REGULATIONS

PARTNER shall obey all prevailing regulations and governmental policies in
Indonesia whether those have been expressly provided in the provisions of laws
or not.

ARTICLE 48
FORCE MAJEURE

48.1.    Definition of Force Majeure. Force Majeure shall mean events or
         circumstances which occur beyond reasonable control of the Parties
         hereto which cause the stoppage or prevention of the implementation of
         AGREEMENT such as earthquake, flood, landslides, typhoon, fires,
         explosion, sabotage, riots, disturbances, military actions, -strikes,
         changes in law, orders or regulations of public authorities.

48.2.    Notices. Any event which categorized as Force Majeure shall be informed
         to the other Party within fourteen (14) calendar days at the latest
         upon such occurrence. If such period is exceeded, the other Party is
         entitled to refuse such Force Majeure as the reasons of the delay or
         the failure to perform such party's obligation.

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<PAGE>

48.3.    Delays due to Force Majeure. If, due to Force Majeure, the
         implementation of manufacturing, delivery, construction, installation,
         training, ACCEPTANCE TEST or any other program shall be temporarily
         prevented, then the period of program implementation so prevented shall
         be revised by extending the implementation period of the affected
         activity/program. If this shall affect the completion period as
         mentioned in this AGREEMENT, then Parties shall agree to extend the
         completion period of the WORKS with the number of days at least equal
         to the prevention of the program implementation mentioned above plus a
         reasonable time necessary to re-mobilise and to cover the impact of the
         Force Majeure (e.g. bad weather).

48.4.    Changes to AGREEMENT PRICE. The extension period of program
         implementation or completion period of the WORKS in connection with the
         Force Majeure event as mentioned in article 48.1 shall not cause the
         increase of AGREEMENT PRICE.

48.5.    Liability in the event of Force Majeure. All damages in connection with
         the occurrence of Force Majeure shall become the responsibility of the
         respective Party hereto.

48.6.    If the WORKS are suspended, due to the occurrence of Force Majeure, for
         more than six (6) months in the aggregate, by giving 30 day prior
         notice, either Party shall have the right to terminate this AGREEMENT
         and TELKOM shall pay PARTNER for all WORKS carried out until the
         occurrence of Force Majeure, excluding any EQUIPMENT which is still
         originally packed and located at TELKOM's LOCATIONS.

48.7.    For the avoidance of doubt, in the event of termination due to Force
         Majeure, TELKOM shall pay for the followings against supporting
         documents

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<PAGE>

         (i)      EQUIPMENT already on site ;

         (ii)     Services already performed;

48.8.    Such termination shall not omit the rights and obligations of the
         Parties which have occurred before such Force Majeure event.

ARTICLE 49
APPLICABLE LAW

This AGREEMENT construed and under perception of law of the Republik of
Indonesia.

ARTICLE 50
SETTLEMENT OF DISPUTES

50.1.    Amicable settlement. Any discrepancies or disputes arising between
         TELKOM and PARTNER with respect to the execution of this AGREEMENT or
         all matters in connection with the implementation of this AGREEMENT or
         all related matters thereof shall be settled amicably between Parties
         based upon good faith.

50.2.    BANI. In the event that such disputes cannot be settled amicably within
         sixty (60) days, then the dispute shall be submitted to the Indonesian
         National Board of Arbitration (or "BANI") in Jakarta in accordance with
         rules and procedures of BANI. The governing law shall be the Indonesian
         law, while the proceeding language shall be in Bahasa Indonesia.

50.3.    Nature of BANI decision. The Parties hereto agree decision of BANI
         shall be final and binding upon them and therefore no other legal
         appeal may be permitted to any court of competence. Upon decision of
         BANI aforesaid, all terms and conditions of this AGREEMENT shall remain
         valid and the respective Parties' obligations shall be completed until
         such dispute is declared to he settled.

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<PAGE>

ARTICLE 51
CORRESPONDENCES

All correspondences in connection with the implementation of this AGREEMENT
shall be made in Indonesian or English and addressed to:

FOR TELKOM:

1.  Head of Long Distance Division
    PT.TELEKOMUNIKASI INDONESIA, Tbk.
    TELKOM Building 2nd Floor
    Jl. Japati No.1
    Bandung 40133 - INDONESIA
    Phone     022-452 2317
    Fax       022-452 2321

2.  Head of TELKOM Construction Centre
    PT.TELEKOMUNIKASI INDONESIA, Tbk.
    TELKOM Building 2nd Floor
    Jl. Japati No.1
    Bandung 40133 - INDONESIA
    Phone     022-452 6417
    Fax       022-720 6530

FOR PARTNER:

PT. SIEMENS INDONESIA
Siemens Business Park
Building B Lantai 1
Jl. MT.Haryono Kavling 58-60
Jakarta 12780
INDONESIA
Phone    021-27509200
Fax      021-79178989
Att. Project Manager T-21 Backbone

ARTICLE 52
NOMINATED SUB-CONTRACTORS

It is agreed the parts of the WORKS of this AGREEMENT as detailed in the Scope
of Works attached hereto will be sub-contracted by PARTNER to its Nominated
Sub-Contractors.

The sub-contracted parts of the WORKS shall be invoiced by the PARTNER to TELKOM
and the payments against these invoices shall be directed to the PARTNER.

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<PAGE>

ARTICLE 53
MISCELLANEOUS

53.1.    Headings. All headings of the articles set forth in this AGREEMENT
         shall only be for convenience and therefore it shall not alter, add or
         affect certain meaning in the interpretation of this AGREEMENT.

53.2.    Languages. This AGREEMENT is provided in two (2) languages being
         Indonesian and English languages each of which shall have the same
         meaning, provided that in the event of discrepancy between them, then
         Indonesian language version shall prevail.

53.3.    PARTNER shall make by its own costs twenty six (26) copies of this
         AGREEMENT to be delivered to TELKOM for the control of implementation
         of the AGREEMENT and other related activities.

53.4.    The terms "PARTNER" and "PARTNERSHIP" are used for easy reference only
         and should not be interpreted or construed so as to imply the creation
         of any legal partnership between the Parties. Notwithstanding anything
         to the contrary, in no event shall either Party be deemed to be a
         partner or agent of the other party nor have any authority to act on
         behalf of the other party pursuant to this AGREEMENT.

53.5.    In the event any of the articles of this AGREEMENT is unenforceable,
         then such article shall be deleted and-shall be deemed to be of no
         force or effect. The Parties shall, to the extent possible, negotiate
         in good faith to agree upon an enforceable provision having a
         materially similar effect, and this AGREEMENT shall be amended
         accordingly.

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<PAGE>

ARTICLE 54
EFFECTIVE DATE OF CONTRACT (EDC)

This AGREEMENT shall be effective from the date signing of this AGREEMENT by
duly authorized Representatives of the Parties.

IN WITHNESS WHEREOF, this AGREEMENT is made in two (2) original and executed in
Jakarta by duly representatives of the Parties hereto in view of prevailing
laws, bearing sufficient stamp duties, each of which shall be binding and having
the same legal power.

                                                     For and on behalf of:
PT.TELEKOMUKASI INDONESIA, Tbk.                       SIEMENS CONSORTIUM

                                                           [STAMP]

         /s/ Kristiono                               /s/ Rolf Unterberger
         -------------                               --------------------
           KRISTIONO                                   ROLF UNTERBERGER
      PRESIDENT DIRECTOR                      DIRECTOR OF PT. SIEMENS INDONESIA

                                                     /s/ Herbert Fetting
                                                     -------------------
                                                        HERBERT FETTING
                                                 GENERAL MANAGER FINANCE AND
                                                   BUSINESS ADMINISTRATION

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</TEXT>
</DOCUMENT>
