Asian firms investing heavily in Indonesia

"Direct foreign investment in Indonesia soared by 73% last year, to $10.3 billion. A bigger sum is expected this year, despite the credit crunch" reports The Economist. Money quote:

As commodity prices soar, and secure supplies become ever more alluring, the queue of companies seeking to invest in Indonesian natural resources reads like a “Who's Who” of global industrialists. . .

But the growing interest in South-East Asia's largest economy does not mean that Indonesia's problems with corruption, bureaucracy and legal uncertainty have evaporated. Many of the investments are in areas where little capital is required and the returns are rapid. Bumi Resources, for example, is expected to make profits equivalent to a third of its $14 billion stockmarket value over the next two and a half years.

Investments with a longer pay-off are rarer. Western firms are particularly cautious. . . .

That is unlikely to stop the Asian invasion. Growth in China and India is expected to slow only slightly this year. Asian firms are also said to be more tolerant of Indonesia's quirks, which may remind some of them of home. But many analysts predict that it is only a matter of time before Western firms bite the bullet and follow the Asians' lead.