both resemble two sides that make up one coin as a whole. only through strong banking, which is able to execute its intermediary role properly, can we achieve financial system stability and ensure the usefulness of banking to the general public. throughout the past three years, bank indonesia has undertaken numerous measures to fortify our regulation as well as supervision of ; to persist with the restructuring of individual banks ; to establish sound banking industry infrastructure throughout 2004 - 2006, we have personally experienced activities which should have been concluded expeditiously but ended up protracted. conversely, there have been activities that we thought would take a long time which were concluded swiftly. this is why we make adjustments to our policy. however, in the process of determining policy, the overarching goal, which is to build a solid and beneficial banking system, is something that we must consistently strive to achieve. in the process, policy instruments may require adjustment depending on the prevalent situation. this restructuring process to me is a continuous and dialectic social process, which we can all dynamically comprehend and participate in. we have overcome numerous troubles and challenges, but there are even more that we must address, since it is true that “ life is a game of improvement, not a game of perfection ”. therefore, it is quite ordinary if adjustments occur in a policy, especially when the conditions and dynamics of our environment demand so. there is, however, a contemplation that we rely on as the monetary and banking authority : we will only consider adjustments to micro policy on condition that adjustments are taken measurably and cautiously, without sacrificing macroeconomic stability as a whole and consistent in the context of the overarching goal. in entering this defining moment, it also critical to note that in order to achieve such continuous economic growth, we require the presence of a robust formal sector which able to perform optimally. emphasis on the informal and micro, small and medium enterprise sectors, albeit with significant growth, should be considered as a temporary supporting pillar. it is true that we must push these two sectors to become a formal sector that is thriving, large, reliable and not merely serving as a social pillar. we must also encourage the expansion of the formal industry sector so that it can absorb more of the available unemployed human resources. regrettably, since the dynamic and developing crisis, this sector has remained insufficiently significant to achieve the desired growth. investment in this sector is limited compared to the amount required for noteworthy

development of domestic financial market, in particular, the government bond market. second, the need to increase the efficiency of domestic money market, which in turn benefits to enhance and to further strengthen banks ’ liquidity management. steps were also taken in the area of improving the capacity of financial institution, as well as improving financial market efficiency. banks are encouraged to strengthen their capital and compel to conduct best practices, especially in the area of risk management. on the other hand, we are also bounded to increase our supervisory capacity to ensure a prudent banking practice. years of strong commitment on reform has resulted in a resilient economic fundamental, at least, in the last five years. the economic growth accelerated to a 10 - year high. fiscal consolidation significantly reduces government debt, a proof of commitment of fiscal discipline. prudent macroeconomic management has also led to the declining trend of inflation and exchange rate volatility as well. in the financial sector, the banking sector is well capitalized and in a better balance sheet structure. strong macroeconomic fundamentals and resilient microeconomics structures lead to better risk perception, or a more accurate valuation from my point of view, as reflected by the recent rating upgrade. but to be frank, i feel that from the sovereign risk assessment, indonesia is still somewhat “ undervalued ”. it is perhaps that major rating agencies tend to be too conservative in assessing indonesia ’ s risk profile. this might possibly be a reflection of the “ traumatic ” view relate to the 1998 crisis. however, the recent update from some rating agencies has become a promising recognition into the fundamental transformation process in indonesia. following standard and poor ’ s, fitch, and moody ’ s, oecd has also upgraded indonesia ’ s country risk classification ranks from 5 to 4 on early april 2010. similar progress also came from the ranking upgrade of our global competitiveness index from 72 in 2003 to 54 recently. prospect and challenge ahead global recovery coupled with favorable risk perceptions support our optimism toward the outlook in 2010 and 2011. we are quite confident that the indonesian economy will grow at around 6. 0 % in 2010 and to 6. 0 – 6. 5 % range in 2011. this is mainly supported by the upturn on export and increasing investment. for the next periods, we expect that the economy will keep growing in an upward trend given the proven strong commitment from the government to implement reform measures on infrastructure projects and investment climate. on the later, it is important to