Government warnings after Bali bomb
Britain and Australia have warned citizens based in Indonesia to leave the country, following the terrorist bombing in Bali on October 17. A warning of future threats was also extended to tourists planning to journey to the Far East - the bombing in Bali mainly targeted Australian holidaymakers.
Explaining the new travel advice, the British Foreign Secretary said: "In the light of further information and consideration, I have now agreed that we should advise against all travel to Indonesia, and also to recommend that all British citizens should consider leaving Indonesia if their presence is not essential." Some British diplomats and dependants would be withdrawn and Britons who remained were strongly advised to "exercise extreme caution". Australia also urged its estimated 10,000 citizens in Indonesia to leave.
Last week, the British Foreign Office also updated its travel advice for specific countries in South East Asia: Indonesia, Thailand, Cambodia, Laos, Philippines, Vietnam, Burma, Brunei, Singapore, Malaysia, and East Timor.
The short- and long-term implications of the attack on business operations in the Far East are still unclear. However, with an anticipated upturn in the Indonesian economy - which has been struggling since the 1997 financial crisis - dashed by the damage to Indonesia's tourist industry (its third-largest source of revenue), the prospect of much needed large-scale foreign investment will be severely diminished.
Prior to the attack, economists had predicted that Indonesia's economy could expand by 4.5% this year. Many US companies such as Nike, IBM, Motorola and Procter & Gamble have used Indonesia as a low-cost production base for decades, yet economic prospects in recent years have suffered from the political instability that has led to four presidents in the past five years.
In addition, the funds flowing out of Indonesia have been greater than the investment coming in.
Some analysts and US business leaders believe terrorist attacks could, in fact, improve Indonesia's economy in the long-term by forcing President Megawati Soekamoputri to take the threat of Islamic fundamentalism seriously and improve security, particularly around highly visible foreign operations.
Other policy-level factors that have scared foreign investors away, even before the terrorist attack, include onerous tax policies, a weak judiciary and hesitancy on the privatisation of protected industries.
