Opportunity in the Global Financial Crisis

US financial crisis and its contagion to Europe and the rest of the world could also create new
opportunity for Indonesia in term of foreign direc investment and the development of basic
infrastructure.

As the US, financial crisis has now spread to Europe, the oil-rich countries such as Saudi
Arabia, Kuwait and Arab Emirate which have accumulated hundreds of billion of Dollars in
their foreign reserve, are now reviewing their holding or investment vehicle. They are
looking for more diversified investment outside the US and Europe.

Because of unfavorable political developments in Thailand and Malaysia over the past few
months, Indonesia which has largely Muslim population could become one of these oil-rich
countries’ favorite place for foreign direct investment. That wil be true if the conditions, legal
and market infrastructures are conducive for Islamic financial instruments.

The government had improved the legal framework with the recent actment of laws on sharia
banking and bonds. The long term nature of Islamic bonds could make them the most suitable
investment instrument for Indonesia, as these bonds grant an investor a share in an asset
along with the cash flows and risks commensurate with such ownership.

The financial crisis that has gripped the globe and weakening economic growth in the rest of
the world will serve to the government to accelerate the investment reform measures in order
to grab the hidden opportunity in the global crisis. (Simplified from the jakartapos.com on
Oct 9)