efforts through expanded access to financial institutions ( financial inclusion ) and bpd regional championship program are continuously carried out. 71. an improved resilience of banking industry policy seeks to sustain the banking industry growth, to strengthen competitiveness and to mitigate the crisis surprises. to achieve these goals, banking industries are required to strengthen their qualitative and quantitative improvement aspects, which is attained through the existing sets of rules in fit and proper test, increased compliance of commercial banks, risk based balance asset ( atmr ) and associated effective risk management in business cooperation bancassurance. 72. policies related to institutional empowerment, competitiveness and the resilience of rural banks and islamic banks are aimed to create an equal playing field with conventional banks. these efforts will be endorsed by sets of rules and regulations in earning assets quality rating, bank financing and sharia unit restructuring, the maximum limit of funds for rural banks ( rb ) sharia financing, and changes in licensing change from conventional banks into islamic banks. 73. through this policy package, bank indonesia attempted to strengthen the effectiveness of banking supervision, particularly through the creation and implementation of early warning system and macro prudential supervision. these efforts will be in line with the refinement of rules and regulation in risk - based banking supervision, improvement in bank entry and exit policies, and adoption of risk - based supervision and consolidated supervision. distinguished guests, ladies and gentlemen, 74. let me also seize this opportunity to propose my ideas on indonesia ’ s policies and guidelines for desirable future to cope with economic turbulence ahead. these are generally basics but in my humble opinion these issues are critically important as steps to be taken in order to transform the post - economic conditions of economic and banking crisis today, towards sustainable economic growth. 75. first, i recognize that the sustainable supply of indonesian foreign exchange is crucial to sustain macroeconomic stability, particularly in maintaining exchange rate stability. we need to think thoroughly how the foreign exchange, particularly from export, can comprehensively cover import and financing needs, in addition to its contribution to financial deepening. 76. second, i believe the strengthening of banking supervision system and the deepening of the banking industry through consolidation remains vital to determine the success for overcoming a crisis amid the global competition. banking capital might be sufficient to boost up the national economy pillars progressively ; however i develop a feeling this is not sufficient to face the incoming potential crisis. lessons bis central bankers ’ speeches learned from the crises in 1997 / 1998 and 2007 / 2008 have

measures taken include among others imposing a level of interest rate in combination with macroprudential measure to manage excess liquidity. this is done through increasing minimum reserve requirement. the scope, sequencing and timing of the policy mix took into consideration inflation and macroeconomic projections, the current excess liquidity ( including the impact of foreign exchange intervention and fiscal expansion ), and the cost of monetary operation. 32. we continue to calibrate the mix of policy measures taken to strike an optimal trade off between various macroeconomic targets. bank indonesia also maintains on going coordination with the government especially to minimize the impact of volatile foods and administered prices inflation on the economy. distinguished guests, ladies, and gentlemen, 33. in the short run, i believe the opportunity for higher economic growth is still very much wide open. bank indonesia projects economic growth in 2011 to reach the range of 6. 0 % – 6. 5 %, and increasing to 6, 1 % – 6, 6 % in 2012. investment which bis central bankers ’ speeches began to improve since 2010 is expected to continue its growth hence creating a more balanced economic growth structure. 34. higher growth in 2011 is also supported by solid performance of the external sector. exports is expected to be more diversified and grow stronger while the fast growing imports is in line with robust investment and consumption. 35. the portion of foreign direct investment as a composition of capital inflows is estimated to expand. overall, the 2011 balance of payment is projected to reach a surplus of usd16. 4 billion, and the foreign reserves to reach usd112. 6 billion by the end of the year. this is equivalent to 7. 5 months of imports and short - term government debt repayment. the sizable foreign reserves will strengthen sustainability of the indonesian economy in mitigating various external shocks ( a self insurance mechanism ). distinguished guests, ladies, and gentlemen, 36. we observe stronger economic growth in 2011 is expected to be accompanied with rising inflationary pressure. we are well aware of the number of sources of inflationary pressure, especially those coming from increase food prices as well as possible adjustment of administered prices. the rise in inflation expectation due to the impact of food price increase on the perception and dynamics of the domestic financial market recently, is also a special concern to us. 37. in this context, bank indonesia together with the government will continuously coordinate to fine tune various programs to increase supply and improve distribution of staple goods. bank indonesia has high hopes and is certain that the