domestic demand which continues to be the main growth driver for the thai economy. private consumption would continue to benefit from the first - car tax rebate program as well as the reduction in personal income tax which would take effect this year. furthermore, private investment continues to expand steadily on positive growth prospects, post - flood reconstruction in some parts of the manufacturing sector, and various government stimulus measures. meanwhile, exports started to show signs of a broadbased recovery, and should pick up pace in the latter half of this year, lending an additional support to growth momentum as the effect of government ’ s stimulus wanes. inflationary pressure meanwhile should remain contained. the impact of the second minimum wage hike on inflation is expected to be limited, as most businesses manage to keep a lid on cost via increased production efficiency, encouraged in part by a highly competitive goods market. the bot will however continue to closely monitor any inflationary impact of the wage increase. policy challenges for 2013 while it may seem that the worst is behind us, one must continue to be vigilant of risks. it is crucial for policy to be forward - looking and proactive, quickly adjusting to changing environment and shifting challenges. as i have mentioned, the key immediate challenges is to preserve the right balance of policy mix, in order to ensure that each policy ’ s effectiveness is maximized and grounded on the basis of sustainable economic well - being, as well as safe and sound financial system. toward these goals, the bot has a number of functions to perform. monetary policy and exchange rate policy the overriding objective of monetary policy continues to be the safeguarding of economic stability, which encompasses the dimensions of growth, inflation, and financial stability. this year, a key challenge will be in striking the right balance between providing sufficient support to growth while ensuring that financial stability is also preserved. in particular, a prolonged accommodative monetary policy may pose risks to financial stability if it bis central bankers ’ speeches encourages excessive debt accumulation, or induces overinvestment in risky assets as investors search for higher yields. financial imbalances or a bubble may develop as a result, further complicating policy decisions. thus, the bot will continue to closely monitor credit developments and household ’ s debt servicing ability, especially for the lowerincome group. another key challenge will be the management of volatile capital flows, and implications of exchange rate movements on the real economy. in meeting this challenge, the bot has at its disposal various policy

business, not only in malaysia but regionally as well as globally. the commencement of commerce takaful berhad, which is indeed the first takaful operator to be launched this year, complements bank negara's initiatives of promoting the establishment of a core of strong players that could heighten competition and promote innovation in the takaful industry. this certainly will be reinforced by the establishment, insyaallah by the end of the year, of four additional takaful consortia and joint ventures between malaysia and well - known foreign institutions. these four new institutions have recently been given official approval to conduct takaful business. the progress achieved by the takaful industry as a key component of the islamic financial system has contributed towards the overall development of the islamic financial industry. islamic finance in malaysia has evolved through several phases of development through the establishment of a number of key players and key market infrastructure. the islamic finance industry in malaysia has emerged as a viable and competitive component of the financial system, operating in parallel with the conventional financial system in contributing towards the nation's economic development and growth. lembaga tabung haji, acknowledged to be the first islamic financial institution in malaysia, is now a major institution with a total deposits of more than rm13 billion. the islamic banking industry, that consists of both dedicated islamic banks and islamic banking schemes in the conventional banks, continues to show commendable performance with profitability and assets surpassing for the first time the threshold of rm1 billion and rm100 billion respectively at the end of 2005. the industry has become a major contributor to the overall economic growth, with assets equivalent to nearly 25 % of the country's gross national product. this strong progress is complemented by equally encouraging performance by the specialized non - bank financial institutions and ancillary institutions such as tabung haji and cagamas berhad. structured development of the islamic money and capital markets has further enhanced the enabling environment for the islamic financial system to effectively play its role as an efficient conduit to mobilize resources and provide financing for productive economic activities. today, we have a comprehensive islamic financial landscape underpinned by strong institutional infrastructure and effective legal, regulatory and shariah framework. moving forward in this dynamic global economic environment, it is imperative for our players to take strategic steps towards gaining further sustainable competitive advantage so as to maintain the first mover advantage we currently enjoy. a famous philosopher had once said : " well begun is half done