the sustainability of indonesia ’ s economic performance in a very challenging and still fragile global economy and financial market environment. recent economic development i will start my brief description on the development of the indonesian economy by emphasizing that what indonesia has been through and achieved, particularly during the most recent global turmoil, is mostly as a result of years of “ post 1998 crisis ” transformation process. indonesia is now transformed into one of the world largest democratic and structurally different with what it was a decade ago. this is as a result of more than ten years of consolidation and dynamic transition in almost all sectors. the extensive transformation measures that became a continuing agenda with full commitment, despite its challenging process, have provided a more resilience foundation into the indonesian economic development. of course, there are still many agendas to be executed to improve and to increase the efficiency of the whole business and economic activities. but, the progress so far, particularly the consistent prudent practice of macroeconomic management, has proven to contribute to shelter the domestic economy from further adverse impact of the most recent global crisis. among few countries in the region, indonesia was still experiencing a positive growth of 6. 0 % in 2008 and 4. 5 % in 2009. while, in the first half of 2010, supported by a better than expected global the economic recovery is expected to grow at 6 %, which is higher than previously estimated of 5. 7 %. in 2010, the indonesian economy is expected to grow at 6 % and slightly higher in 2011 and 2012. these were mainly sustained by high and inclusive growth of domestic demand, in particular consumption. yet, export performance and investment has also showed a slight increase and expected to sustain their upward trend. inflation has also moderated at 5. 05 % ( year - on - year ) in june 2010, held by adequate supply responses and rupiah exchange rate appreciation, despite that there was a hike in volatile price component. hence, the june inflation is slightly higher than previously estimated. however the recent increase of the volatile food price is expected to be temporary and inflation is expected to be maintained within target range of 5 % + / – 1 % in 2010 and 2011. the core inflation figure is also supportive to bank indonesia inflation assessment. to this respect, the latest monetary policy decision to keep bi rate at 6. 50 %, is considered as adequate to ensure the inflation expectation within the target range and supportive to maintain the growth momentum, as well as to encourage bank lending. meanwhile, the balance of payment

transfers. tourism council of the south pacific, 1990, economic impact of tourism in fiji. fiji ’ s tourism industry – retention rate and economic impact • retention rate : the 1990 study by the tcsp showed the tourism industry in fiji has a retention rate of 44 percent. hence for every $ 1000 of tourist dollars spent in the country, $ 438 is retained in the economy after deducting import requirements ( direct, indirect and induced ). • factors contributing to higher leakage : these include : 1. an industry which is not fully integrated into the domestic economy 2. import of food and other requirements 3. repatriation of income and interest payments on foreign loans 4. overseas marketing costs 5. other foreign services • tourism ’ s impact on the economy : based on the methodology and tourism multiplier ( 2. 9 ) provided in an in - house study, which compares well with the 1990 study by the tcsp, and using projections for 2008, the tourism industry is expected to contribute $ 1, 424 million this year, equivalent to 24 percent of gdp. • policy implications o given that there is 50 percent spare capacity, strategies must be put in place immediately to increase visitor arrivals!! o improve local input into tourism industry. possible ways are : - improve the quality and consistency of local fruits & vegetables, thereby reducing imports - examine ways to increase production of beef and other meat and dairy products - encourage manufacturers to produce goods demanded by tourists - provide more opportunities for tourists to spend locally ( eg, expanding retail opportunities ) summary • tourism is a key driver for economic growth in fiji • provides vital support to balance of payments • highly resilient, has quick bounce - back • industry with substantial spare capacity to immediately propel growth to higher levels • need to remain competitive • some downside risks : o the global slowdown o rising oil and food prices