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The Company is highly committed to continuously improving its GCG practices while conducting business activities in a transparent, accountable, responsible, independent and fair manner as part of the Group’s efforts to adopt best practice governance to create added value for its shareholders and other stakeholders.

The Company always ensures that the principles of GCG are implemented in all business aspects and all levels within the Company to reach business sustainability by taking into account the stakeholders' interests. The implementation of five GCG principles can be elaborated as follows:

  1. Transparency
    The Company consistently provides clear, accurate, complete and timely information to the shareholders and other stakeholders, in the form of financial statements, investor information, and other relevant materials or disclosures. These are easily accessible on the corporate website,, and disclosed in the Company’s annual reports.
  2. Accountability
    The Management accepts its responsibility to the shareholders and other stakeholders with regard to the implementation of the Company’s strategies and achievement of its objectives, and is ready to account for all its actions and decisions to the Board, the shareholders, and other interested parties. The Board of Commissioners takes responsibility for the effective supervision of Management and its accountability to the shareholders.
  3. Responsibility
    The Company complies with the relevant laws and regulations and respects the rights of all the stakeholders. It also fulfils its responsibility to protect and promote the sustainability of the environment, public welfare and healthy living.
  4. Independence
    The Company manages the business in a professional manner, without any conflict of interest or influence or pressure from any party that is in contravention with the laws and regulations. This is demonstrated in the Company’s objective decision making, which is free of any intervention from third parties.
  5. Fairness
    The Company treats all the shareholders equitably, irrespective of whether they are majority or minority shareholders, and guarantees the rights of the shareholders and stakeholders. The Company therefore always provides the same opportunities to all shareholders to vote and challenge the Company at the AGM, and treats all stakeholders fairly by providing equal opportunities with regard to employment, training, promotion, access to information, and so on.

Implementation of GCG principle

Implementation of GCG principle

Internal Monitoring and Control

Code of Conduct

The Company’s Code of Conduct serves as a reference for everyone in the Company by establishing the standards of behaviour they are expected to display at all times to ensure that the GCG principles of transparency, accountability, responsibility, independence and fairness are upheld in every aspect of the business:

    • The key objectives of the Code of Conduct are:
          • Integrating the Company’s values into employees’ ethical business practices in line with the Company’s vision and mission; and
          • Clearly describing the Company’s values and the acceptable conduct that must be followed by all employees in carrying out their day-to-day duties and responsibilities.
    • Providing basic guidelines for all levels in the Company with regard to the interaction between employers and employees, shareholders, suppliers, Government, and other stakeholders.
The Code is reviewed periodically to ensure that it remains consistent with these objectives.
Content of the Code of Conduct for Business Partners

The Code provides guidance for employees on their interactions with colleagues, employees, shareholders, suppliers, and regulatory officials in the following areas:

    • Improving accountability, transparency, and compliance with existing laws and regulations;
    • Implementing tasks with the highest degree of professionalism and integrity;
    • Avoiding giving or accepting inappropriate corporate gifts, bribery and kickbacks in any form and for any reason, for example: cash and its equivalent, membership/entertainment, unusual discounts, unusual (in terms of frequency and/or value) meals or banquets, fund support for tours or vacations, hampers, bouquets;
    • Avoiding activities which may give rise to a conflict of interest with their work in any form or situation, for example: an employee has a financial interest with vendors, contractors or brokers who have business relations with the Company; an employee operates and manages an enterprise that is related to the Company; an employee uses the Company’s asset for personal benefit; and
    • Protecting the Company’s proprietary information, both during and after an employee’s term of employment with the Company.


Internal Audit

The Internal Audit of the Company functions to provide objective assurance and independent as well as objective consultation that aims to strengthen Internal Control and other specific operational issues. The Internal Audit was established pursuant to a Decree of the Board of Commissioners dated 1 May 2013.

Internal Audit Charter

The Company complies with POJK No. 56/ POJK.04/2015 on the Establishment and Guidelines for the Internal Audit Charter dated 22 June 2020 by having an Internal Audit Charter that specifies the responsibilities of the Internal Audit. In carrying out its duties and responsibilities, the Internal Audit refers to the Internal Audit Charter, which covers the following:

  • The organisational structure of the Internal Audit and its position within the Company;
  • The qualifications, duties, responsibilities and authority of the auditors;
  • The procedures for their appointment, replacement and termination;
  • The plans, guidelines and reporting procedures of the IA;
  • The independence and objectivity of the IA; and
  • The Code of Ethics for the IA.

The Charter is periodically reviewed and updated.

Structure and Position of the Internal Audit

Structurally, the Internal Audit is independent of all the Company’s business units and reports directly to the President Director, as shown in the corporate organisation chart in the Company Profile chapter of this Report. The Internal Audit Unit is led by the Head of RM & IA, who is appointed and dismissed by the President Director, pursuant to a Circular Letter regarding the Appointment of the Head of RM & IA, upon approval of the BoC.
Pursuant to the BoC Circular Letter dated 1 May 2013, Maju Tarigan serves as the Head of the Internal Audit of the Company and reports directly to the President Director of the Company. His appointment was conducted following the merging of the Audit and Social Affairs Division with the Risk Management Division.

Duties and Responsibilities

As stated in the Internal Audit Charter, the Internal Audit Unit carries out the following duties and responsibilities:

    • Prepare and execute the annual Internal Audit Plan;
    • Evaluate the implementation of the Company’s internal control and risk management systems, recommending areas for improvement and monitoring the effectiveness of the recommended follow-up actions;
    • Evaluate the efficiency and effectiveness of the Company’s performance in key strategic areas, including finance, accounting, operations, human resources, marketing and information technology;
    • Conduct special audits and/or investigations as required;
    • Prepare reports on the audit findings for the President Director, the Board of Commissioners and the Audit Committee;
    • Provide objective information as well as value-added recommendations for the improvement of the activities under review at all management levels;
    • Monitor, analyse, and report on the implementation of followup actions on the recommended improvements;
    • Cooperate with the Audit Committee;
    • Design programs for quality assessment activities conducted by the Internal Audit Unit.


Whistleblowing System

As referred to in the Company Code of Conduct, the Company provides the official mechanism for a whistleblower to report misconduct. This mechanism, ‘Suara Matahari’, is part of our internal control system and plays a critical role in our commitment to fair working conditions.

Suara Matahari offers a range of confidential channels through which employees and other stakeholders can report if they genuinely suspect that a violation of the Code of Conduct or other misconduct has taken place, remaining anonymous if they wish. The Company’s whistleblowing policy, including the procedures and contact numbers for reporting, has been disseminated to all our employees, management, suppliers and business partners.

Suara Matahari has some features that support its accessibility, trustworthiness and effectiveness:

    • Numerous hotline channels, including toll-free phone lines, Short Message Services/SMS, website, email and mailbox;
    • Promotion of anti-fraud awareness and the whistleblowing program to all management, employees and suppliers;
    • Experienced contact centre operators who handle incoming reports;
    • Forensic investigation experts follow up the incoming reports and present the issues to management;
    • Recommendations for improvements.

Suara Matahari is under the management of an independent third-party administrator, Deloitte, to ensure objectivity and effectiveness. The setting ensures that informants have complete anonymity and protection. The Risk Management and Internal Audit Division monitors the incoming reports' status and consolidates them for reporting to the Board of Directors and the Risk Management Committee.


Suspected misconduct or violations of the Code of Conduct can be reported through any of the following channels:

    • Hotline: Informants can contact Suara Matahari on +62 21 2350 7056; they have the right to remain anonymous if they choose.
    • SMS: Reports can be sent by SMS to +62 81586709196.
    • Email: Reports can be sent via email to The informant’s email address will not be disclosed without permission.
    • Website: Reports can be sent via the Suara Matahari Website at Reports should provide as much information as possible about the suspected violation.
    • Mail: Reports can be sent via regular mail to Suara Matahari PO Box 3670/JKP 10036, Central Jakarta.

Reports submitted in writing must be accompanied by a disclosure cover sheet, which can be downloaded from the Suara Matahari website. Informants should provide at least the following information to ensure that the appropriate actions can be taken:

    • Name(s) of those involved;
    • Name of a witness (if available);
    • Information about the incident, including date, time and location;
    • Evidence;
    • The related nominal or assets; and
    • The frequency of the incident(s).


The Suara Matahari operator receives the whistleblowing report through one of the above channels and assigns a unique, anonymous reference number to the informant, which he or she can use when requesting information about the progress of the case.


The report is sent to a Deloitte analyst for assessment. The results are returned to the Company’s representative within one working day.


The Risk Management and Internal Audit Division determine further investigation and clarification actions. Later on, this division will present the results to the Risk Management Committee to decide on the penalties or sanctions on the suspects and determine any internal control improvements or other changes the Company needs to make.


The Company guarantees to protect informants who report in good faith from any retaliation by the allegation's subject. Informants have the following options regarding the disclosure of their identity:

    • Full disclosure: the informant is willing to disclose his/her identity to Deloitte and the Company.
    • Partial anonymity: the informant is willing to disclose his/her identity only to Deloitte. In this case, Deloitte will keep the informant’s identity confidential from the Company.
    • Full anonymity: the informant is unwilling to disclose his/her identity to either Deloitte or the Company. The Company guarantees to protect informants who report in good faith from any retaliation by the allegation's subject


During 2021, 67 cases were reported, in which 61 cases were received via Suara Matahari and 6 cases through other reporting channels. The cases involved internal and external parties, which includes alleged breaches on code of conduct, conflict of interests, stealing of merchandises, manipulation of sale transactions (discounts are not matched with approved promotion), and sexual harassment. All cases have been investigated, with 25 proven cases, 40 unproven cases, and 2 undergoing cases during the publication of 2021 Annual Report.



Risk Management

We are committed to identifying and managing the risks that inevitably arise during the normal course of business in order to minimise any potential negative impacts on the achievement of the Company’s strategic business objectives, reputation, and business continuity and sustainability. Matahari’s integrated, company-wide approach to risk management is led by the Risk Management Committee, the Audit Committee, the Internal Audit and the Company’s External Auditors, which work together to identify, evaluate and mitigate risks by reviewing risk parameters in various areas, particularly critical systems, areas affecting costing and/or profitability, fraud, and abuse of authority.

Matahari’s Enterprise Risk Management (ERM) framework describes the Company’s risk management objectives, strategy, governance, organization, methodology, monitoring and reporting processes. This enables us to identify and address risks proactively in strategic areas in every part of the organization. While the Board of Directors, the Board of Management and the relevant committees and management functions have overall accountability for risk management, with the ERM we seek to drive ownership of risks at every level of the organization by engaging all employees, business partners and other stakeholders in identifying, monitoring and managing risks. The ERM framework covers:

    • Risk identification, measurement, monitoring and control, including awareness;
    • Risk management infrastructure, including organizational structure, governance systems, data collection, analysis methods, policies and procedures and reporting; and
    • Corporate culture, including training, performance measurement, value development and rewards.


The Company has developed a road map for implementing risk management processes across the organisation via several functions in Loss Prevention, Security and Safety, to protect corporate assets.

At the same time, the Risk Control Awareness and Assessment Program was implemented continuously to ensure that all stakeholders (including business partners) understand and support the Company-wide risk management approach. From this we have developed a risk treatment, risk tolerance and risk control matrix. Regular Internal Control Newsletters/Bulletins and Compliance updates, which contain information on key risks, best practices in risk mitigation and new regulations, were distributed to all business process owners several times a year. As part of our overall approach to risk management, we maintain a zero tolerance policy towards integrity issues.

In 2021, the key risks faced by the Company and its mitigation efforts are summarised below:

Extraordinary Risk & Mitigation

In July 2021, COVID-19 cases surged and reached a new record number of 56,757 confirmed cases per 15 July 2021. By this time, the pandemic had started to affect retail sales in Indonesia, including Matahari’s performance.

The Company closely monitored the consistency of adherence to COVID-19 health protocols in the Support Centre and stores. The Safe Office Management continuously updated company policies to adhere to regulatory development, including the operational hours, business travels, campaign/training on COVID-19 health protocols. The Company had 74 incidental inspections by COVID-19 Response Taskforce and the local government teams and earned 100% compliance.

The Company made sure that its employees received complete vaccinations. At the time of this Report prepared, 100% of the Matahari’s staff had received a second dose of COVID-19 vaccine, while about 80% of the total employees had been boosted.


Macroeconomic and Industry Risk & Mitigation

In general, economic growth drives rising wages. Thus, the number of consumers who have sufficient income to spend on our product increases, and demand may vary. The customer preferences also change rapidly, with new trends emerging.

Matahari focuses on its mission to delight customers with aspirational yet affordable fashion. Hence, Matahari as a customer-centric Company has a flexible business model and initiatives to rapidly adapt its merchandising and operations to the changing customer needs and changing macroeconomic or industrial situation. Matahari gains the flexibility through a well maintained relationship with the diverse supplier base and agile organisation.


Productivity Risk & Mitigation

The Company’s performance is linked to stores’ productivity, measured by two indicators, i.e., SSSG and sales per square metre of retail space. SSSG is driven by the store refurbishment program, merchandise mix improvements, and the target market’s income. While, the sales per square metre are subject to the economy’s condition, price point mix, merchandise attractiveness, stores’ location, appearance, operation, marketing effectiveness, and adverse publicity.

To mitigate the risk, we closely monitor the underperforming stores, analyse the causes of the weakness, and take necessary actions. The actions, among others, are store refurbishment, merchandise optimisation, and staff productivity improvement. The Company refurbished 2 stores in 2020 and 4 stores in 2021. 

Following those efforts, the underperforming stores could be closed, modified, or replaced by new stores in other potential locations. In 2021, we have closed 11 stores.


Expansion Risk & Mitigation

Opening a new store increased the Company’s expenses, such as rent, salary and wages, depreciation, energy, distribution and insurance expenses. Yet, a new store’s success depends on synergies from integration with existing operations and optimal merchandise mix and pricing that match consumers’ preferences. In addition, the malls’ traffic may also determine success. New stores tend to be less profitable in the early years than more mature stores because lower sales productivity and most operating expenses fixed.

The Company identifies and evaluates potential new sites on an ongoing basis to ensure a robust pipeline of new stores. There are financial hurdles that need to be achieved to open a new store. With around two-third of sales coming from the consignment vendors, Matahari has the negative working capital to mitigate the risk. Matahari also aims to ensure that each new store has an optimal merchandise mix that matches local consumer preferences and needs.


Merchandise Mix Risk & Mitigation

Net revenues on consignment sales make up a significant proportion of the total net revenues. In the meantime, revenue from the Company’s Direct Purchase (DP) goods results from its sales performance and prices. The prices are determined by several factors, including the cost of sales, supplier terms with overall supply and demand for retail consumer products in Indonesia, market, seasonality, inventory volume, inventory age, fashion and consumer trends, promotions, and manufacturer recommendations.

We have the opportunity to adjust the merchandise margins when we enter into an agreement with a vendor or renew the contract. Management believes that the mutually symbiotic relations with consignment vendors and the strength of the Company’s brand will ensure the consignment margins to remain stable for the foreseeable future.

Given the considerable diversity in our DP goods range, the pricing strategy for a specific product does not significantly impact the Company’s net revenue. Yet, discounts, rebates, or other promotional activities may influence profitability. The Company has the flexibility to adjust the price and gross profit margin on DP goods. We also regularly review each brand’s performance and may have to take necessary actions, such as discontinuing the brand.


Operating Expenses Risk & Mitigation 

The Company’s main components of operating expenses are rent, depreciation, employee costs, and marketing. Operating expenses increase in line with increased volumes as the business grows. Moreover, operating expenses may increase due to inflation or other factors.

Amid the pandemic, the Company kept strict control over non-essential expenses. Matahari maintains the expense growth through rigorous cost control programs, including negotiating better prices with suppliers. The Company negotiates with the landlords in terms of occupancy cost, aiming for a more flexible rental scheme and lower charges to reduce the pandemic impact.

The Company continuously ensures wage competitiveness. Matahari also optimises the headcount requirement focusing on the power brands, stores with healthy profitability, and a single warehouse. Various initiatives like multi-tasking, labour scheduling, multi-shifts, and others enable Matahari to operate with a lower headcount than in the past. In addition, Matahari ensures that headcount increases at a lesser velocity than sales recovery or leverage seasonal opportunities. All in all, Matahari always keep the minimum necessary for maximum service level.

The management keeps the low level of inventory shrinkage through tight inventory control. The Company also deployed an in-house distribution team, equipped with an electronic article surveillance system for high-priced merchandise.


Risk of Seasonality & Mitigation 

Our stores experience sales seasonality several times in a year, mainly linked to Eid al-Fitr, Chinese New Year, Christmas, school holidays and the ‘Back to School’ moments in June-July. Because the dates of several holidays change from year to year, the sales peak and results in a given interim financial period may not be directly comparable to results from the preceding interim period or the corresponding period in prior years. The number of pay periods spanned by a particular peak season may also increase sales.

To tap the seasonal sales momentum, such as Eid al-Fitr, Chinese New Year, Christmas, school holidays and the ‘back to school’ event, the Company secures the seasonal merchandise well in advance. The Company activates specific promotions and advertising linked to those main events and holidays to maximise sales traction. The Company also has more seasonal staff in stores and sufficient points of sales to anticipate the high store traffic during the events.


Risk of Geographical Diversity & Mitigation 

Our stores in Java contributed a significant share of our merchandise sales (56.5% in 2020 and 56.1% in 2021). The remaining stores are located outside Java, spread across the country.

We have our logistic capabilities to reach out to the farthest area in Indonesia, such as Aceh and Papua. Meanwhile, to reach out to our customers in underserved areas, Matahari provides the e-commerce platform and official stores in the marketplace platforms.


Competition Risk & Mitigation 

Despite being the largest fashion retailer targeting the middle-income segment, the Company faces growing competition from new entrants, including international operators, existing department stores, and speciality retailers. In particular, the more intense competition in Java also yields lower Merchandise Sales per square metre of retail space than the total average across all regions.

To keep pace with evolving trends and customer preferences, the Company has collaborated with several global fashion brands as their distributor in Indonesia. To minimise the risks associated with such initiatives in the future, the Company focuses more on data-driven pilots, with small test rollouts leading to more nationwide successes and fewer costly exits.

Matahari’s business model is moving toward omnichannel capabilities, which combines the online channels with an extensive store network to sustain sales growth and enhance customers’ experience. In 2021, the non-store channels, including social commerce platform Shop and Talk and official stores in marketplaces, became more active during tight restrictions.

The Company also continuously improves the offering through the revamped loyalty program, Matahari Rewards. Moreover, Matahari progresses toward bringing the consumer ecosystem into its stores, creating a one-stop solution for customers in a bid for store traffic.

To mitigate the impact of competition intensity in certain areas on lower productivity, the Company regularly reviews the stores’ condition and the merchandising mix and pricing in each store. In the meantime, the Company continuously explore the untapped potential area to grow.


Bank Borrowing and Interest Rates Risk & Mitigation 

The Company enters into loan agreements and credit facilities for working capital purposes.

Matahari may occasionally withdraw the loan but repay it as quickly as possible after fulfilling the needs. In the general course, the Company relies on trade payable to purchase merchandise from suppliers.    


Security Risk & Mitigation

At the store level, the Company has a risk exposure related to the security of its merchandise. 

We have mitigated these risks by installing an advanced Electronic Article Surveillance system, including Closed Circuit Television (CCTV), pedestals, and other store security systems. These measures allow for more effective control over operations by enabling enhanced monitoring in selected stores with a high-risk profile.  


Cyber Security Risk & Mitigation 

The COVID-19 pandemic has accelerated the Company’s digital transformation process, both in terms of sales and operations.

Thus, the Company regularly assesses data/information security and cyberattack risk. In June 2021, the National Cyber and Crypto Agency evaluated the Company’s information security preparedness level (Information Security Index/KAMI), and gave “Adequate” status.  


Environmental Risk  & Mitigation  

The increasing intensity and frequency of extreme weather events, such as excessive rain or severe dry season causing floods, landslides, fires, rising temperatures, and rising sea levels, may negatively affect the Company’s operation. Moreover, Matahari has stores across Indonesia, which is geologically prone to various natural disasters, such as volcanic eruptions, earthquakes, and tsunamis. Therefore, this condition may disrupt Matahari’s business operations. 

Matahari has regularly updated the risk mapping of Matahari’s business areas related to environmental risks so that it does not significantly affect Matahari’s operations. This risk assessment helps the Company to value the insurance needed to support the operation sustainability. Matahari has also established a Disaster Recovery Centre (DRC), managed by a third party. All hardware and software have standalone duplicates and will instantly and seamlessly replace the main system in a catastrophic event. The Company conducts Disaster Recovery Test (DR Test) twice a year. 



Information Access


The Company provides public access to the Company’s information and data through reports that the Company produces for capital market regulators and information for shareholders disseminated through the IDX website and the mass media, as well as other information published on the Company’s website or present www., available in Indonesian and English. Matahari also provides information about the Company, its stores and products, as well as offers and promotions through the following social media platforms, such as Facebook (Matahari), Instagram (@matahari and @ storyofmatahari), TikTok (tiktokmatahari). In 2021, the Company issued 14 press releases to various media.


External Audit

Audit on the Company’s Consolidated Financial Statements for the year ended December 31, 2021, which include the statements of financial position, statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows, prepared in accordance with Indonesian Financial Accounting Standards.

Public Accounting Firm

Tanudiredja, Wibisana, Rintis & Rekan
(Anggota firma dari/member of PricewaterhouseCoopers International Limited)
WTC 3 | Jl. Jend. Sudirman Kav. 29-31 | Jakarta 12920 - Indonesia
T: (62-21) 50992901/31192901
F: (62-21) 52905555/52905050