10. Internal Control and Internal Audit Systems

The Company gives emphasis on its and its subsidiaries’ operational
internal control and monitoring systems. The Company, therefore, has
suitable and clear internal control system in place, which includes
policies, regulations, responsibilities, and authorities of officers of
the Company at all levels to ensure effectiveness and the law compliance
of the Company’s business operation. In designing the organization of
the Company, job and duties segregation has been adopted for the purpose
of check and balance of power to protect the property of the Company.
The business control unit has been established with responsibilities
entrusted to it to control and analyzes business operation of the
Company to see whether it meets the target and business plan. The
Company has accurate, reliable and timely financial and operational
reporting systems.

The Company has an independent internal audit department, entrusted with
the duties and responsibilities as set forth in the Internal Audit
Charter approved by the Audit Committee. The scope of work of the
internal audit includes auditing to make sure that the Company has
adequate and efficient internal control system. The internal audit
reports directly to the Audit Committee.

In addition, the Company has established business risk management
function that is responsible for assessment of risks, business planning
and coordinating with management in both managerial and operating levels
to provide preventive measures and appropriate processes to manage risks
which could have a significant impact on operations and regularly report
the risk management activities to the Executive Committee and the Audit
Committee.

The Audit Committee, appointed by Board of Directors of the Company,
consists of independent directors that are not the Company’s executive,
and operates under the Internal Audit Charter, which includes the
following responsibilities:

  - Controlling, monitoring and auditing, to ensure the adequacy and
  effectiveness of risk management and internal control systems that
  safeguarding Company’ s assets and protecting interest of shareholders
  and stakeholders of the Company;

- Reviewing the Company’s financial statements to ensure that the
financial statements represent accurate and complete operating results
in according with the accounting standard and information disclosure
regulation;

- Regularly reviewing the activities and performance of Internal Audit
Function;

  - Considering the suitability of risk management and scope of
  activities;

  - Reviewing and giving recommendation to the management to improve the
  internal control system as described in Internal Audit Report;

  - Supporting effort to the conduct business in accordance with
  transparency principle, responsibilities to performance of duties and
  appropriate balance of power; and

  - Promoting the conduct of business in accordance with good governance
  principle seriously.

The Board of Directors concurred with the Audit Committee regarding the
adequacy and suitability of the Company’s internal control system as
described in the Audit Committee’s report, a copy of which is attached
hereto designated as Attachment 3.