Letter from Bali: The party is just getting started in Paddy's Bar.
It is almost midnight and one of Bali's most popular nightclubs is filling up with teenagers gearing up for a night of drinking and dancing.
Most of the clientele are young Australians, relaxing after a day surfing at the beach. But Paddy's Bar attracts people from all nationalities eager to get a taste of the nightlife in Kuta, one of Bali's most popular entertainment districts.
Sipping a cocktail in Paddy's, it is hard to imagine that three years ago this same district was transformed into hell on earth for the young tourists enjoying a night out.
At exactly 11.08pm on October 12th, 2002, two co-ordinated suicide bombings perpetrated by extremists linked to the al-Qaeda terrorist movement obliterated Paddy's and the nearby Sari Club.
The devastation on Kuta's crowded main strip was immense. In the bomb blasts and the subsequent fires at both clubs, 202 people from 22 countries died. At least 330 people were also injured in the attacks.
A few doors from the new Paddy's (the bar was rebuilt 100m down the strip from the original bomb site) an official memorial to the victims of the Bali explosions has been erected, with each victim's name etched into stone.
Its location on the strip provokes an odd ritual among bleary-eyed revellers, many of whom spend a few minutes at the monument as they bar hop from pub to nightclub.
The attacks, which were the first big suicide bombings since September 11th, killed 88 Australians, 28 British and 38 Indonesians. They also devastated the tourist industry in Bali, robbing hundreds of thousands of Balinese of their livelihood.
"Hotel occupancy was hovering close to 100 per cent at the time of the bomb, but it went to almost zero in a week," says Komang Arya Tridarma, who owned one of the many health spas that dot the island, offering massages and herbal treatments to tourists.
"I opened up in June 2002 and was doing well, attracting eight to 10 clients a day and turning over up to $500. But after the bomb I had to close for three months. When I reopened, we got hit by the Sars scare and I had to close the business for good."
Official statistics show that tourist arrivals fell to 993,027 in 2003 in the year following the bombs, compared to 1.46 million tourists a year earlier.
Many workers in the tourist trade were laid off immediately after the bombings and wages for those who retained their jobs fell dramatically. Tens of thousands of Balinese have since left the island in search of work on cruise ships or at other tourist destinations, while thousands more unemployed people returned to their villages.
Although the bomb attacks were directed at Bali's backpacker haven of Kuta, the top end of the tourist market was hit just as hard by the terrorist bombings.
"We saw a huge drop in tourist numbers following the bombing," says Julita Chandra, director of marketing at paradise resort Nusa Dua Beach Hotel and Spa. "We had up to 80 per cent capacity prior to the bomb, but this was cut to 20 per cent."
The luxurious resort, which is owned by the Sultan of Brunei, is popular with Europeans, many of whom decided to holiday in destinations perceived to be less at risk from terrorist attacks in the immediate aftermath of the bombings.
The slump in tourist numbers also forced many new projects to be put on ice.
A new hotel development close to the Nusa Dua Beach Hotel was held up for more than a year. But perhaps most spectacularly, work on an $80-million cultural theme park, which was intended to be the symbol of Bali, stalled in the aftermath of the bombs.
The park, which played host to the first anniversary ceremony to commemorate the Bali bombs in 2003, is dominated by a massive half-built statue of Garuda Wishnu, the god known as the protector to Bali's predominantly Hindu population.
Picking my way up to the top of Ungasan Hill to view the statue, a guide at the cultural park explains how raising the $80 million in private financing to fund the project became a huge challenge after the bombings in Kuta.
"We are now looking overseas for investors," he jokes to our group, as the bronze head and shoulders of Wishnu come into full view at the top of the path.
Yet, three years after the Bali bombings, there are clear signs of recovery. A few miles down the road from Garuda Wishnu at the Nusa Dua Beach Hotel, bookings are now back at pre-bomb levels. An increase in Asian tourists is compensating for lower numbers arriving from some European destinations such as Britain, which maintains a government travel warning of potential terrorist attacks on holidaying in Indonesia.
Bali's tourist officials predict a record year for foreign arrivals in 2005, with total numbers scheduled to beat the previous record of almost 1.5 million people.
But perhaps the best signal that Bali's tourist trade is on its way back to rude health is in Kuta's entertainment district, where the Australians have returned in droves to the new Paddy's.