KUALA LUMPUR - Indonesia, Malaysia and other Muslim nations in Asia are looking to the cash-rich Middle East as a prime funding source to enable them to promote development in the real estate, natural resource and energy sectors.
These countries are actively engaging in summit talks and pushing deregulation to spur investment from Middle Eastern firms.
The moves appear to be paying off for Indonesia, as Mideast investment there is gaining momentum. In one of the planned megaprojects targeting the country, Emaar Properties PJSC, a major Dubai-based real estate firm, will spend $600 million to build hotels, golf courses and other resort facilities on a 1,200-hectare (2,965-acre) site on Lombok Island. The project is slated to begin by the end of the year.
Gulf Oil LP and another firm from Qatar plan to invest some $400 million to construct a 300,000kw thermal power plant in Indonesia, while two major companies from the United Arab Emirates are considering pouring about $1.5 billion into a coal development project there. These projects will be the first investments in Indonesia's energy and natural resources sectors by Middle Eastern firms.
In its push to attract Middle Eastern cash for infrastructure development, the Indonesian government passed legislation aimed at authorizing bond issuances that comply with Shariah Islamic law, aiming to implement the law by the end of the year.
Indonesian President Susilo Bambang Yudhoyono is playing a central role in wooing investors from the Middle East, frequently visiting the region to ask companies to invest in his country.
During a trip to Iran in March, Yudhoyono struck a roughly $5.6 billion deal with the government to set up a joint oil-refinery venture with a daily output capacity of 300,000 barrels on the Indonesian island of Java.
Malaysia is also being targeted by Middle Eastern investors. For example, Islamic banking giant Kuwait Finance House has bought a 49% stake in the operator of Kuala Lumpur's largest commercial complex, opened last year. The Kuwait firm also plans to invest in new projects involving high-rise buildings and commercial facilities.
Diving in
Qatar's Gulf Oil has also clinched a number of high-profile deals in Malaysia, including one for building an oil refinery in the state of Perak.
In an effort to prompt a flow of money from the Middle East, the Malaysian government has eased its foreign capital controls to liberalize foreign investment in the country's housing market. The government also plans to issue brokerage licenses to financial institutions and other entities in the Middle East.
Pakistan is another Asian Muslim nation eager to attract money from the Middle East. Emaar Properties is now involved in three projects to develop commercial complexes in Islamabad and Karachi at a total cost of about $2.4 billion.
With Western financial institutions growing reluctant to lend money amid the credit squeeze triggered by the U.S. subprime mortgage crisis, Indonesia and other Muslim countries are keen to attract funds from the Middle East, the heart of Islam.
Meanwhile, Arab countries have become more interested in Asia's Muslim nations now that a U.S. economic recession and other factors are forcing them to review their lists of investment targets.
Malaysia and Indonesia are broadening their ties with Middle Eastern nations beyond investment to include exchanges among people and products. For instance, Malaysia welcomed 245,000 tourists from the region in 2007, three times the figure in 2003.
The number of Arab tourists to Asian destinations has begun to increase partly because Western nations have tightened their grips on visa issuances since the terrorist attacks on the U.S. in September 2001.
Prime destination
Malaysia is seen as one of the most attractive Asian destinations for Arab tourists because halal meat, fish and other foods that are permissible under Islamic law are available there and also because of its reputation for safety. Another attraction is that it recently opened several shopping centers handling jewelry and other luxury goods.
Java and other Indonesian locales have also become popular tourist sites for affluent people from the Middle East as well. Due to strong demand, Middle Eastern airlines have been launching more flight services to Asia's Muslim nations. Emirates airline of the UAE now operates nine flights a week on the Dubai-Kuala Lumpur route after offering just three flights a week when it opened the route in 1996.
Qatar Airways is also considering operating more flights to and from Asia.
Trading ties between both regions have also deepened, with the value of trade between Middle Eastern nations and Indonesia surging 14% to $7.87 billion in 2007 from the previous year - more than double the figure in 2003.
Indonesia is expanding its crude-oil imports from the Middle East after the country became a net oil importer in 2004, and it is boosting exports of textile products and automobiles to the region.
Trade between Malaysia and the Middle East expanded 12% on the year to $11.68 billion in 2007, driven mainly by an increase in exports of electrical/electronic equipment, palm oil and jewelry from the Southeast Asian country.
Nihon Keizai Shimbun, Inc.
These countries are actively engaging in summit talks and pushing deregulation to spur investment from Middle Eastern firms.
The moves appear to be paying off for Indonesia, as Mideast investment there is gaining momentum. In one of the planned megaprojects targeting the country, Emaar Properties PJSC, a major Dubai-based real estate firm, will spend $600 million to build hotels, golf courses and other resort facilities on a 1,200-hectare (2,965-acre) site on Lombok Island. The project is slated to begin by the end of the year.
Gulf Oil LP and another firm from Qatar plan to invest some $400 million to construct a 300,000kw thermal power plant in Indonesia, while two major companies from the United Arab Emirates are considering pouring about $1.5 billion into a coal development project there. These projects will be the first investments in Indonesia's energy and natural resources sectors by Middle Eastern firms.
In its push to attract Middle Eastern cash for infrastructure development, the Indonesian government passed legislation aimed at authorizing bond issuances that comply with Shariah Islamic law, aiming to implement the law by the end of the year.
Indonesian President Susilo Bambang Yudhoyono is playing a central role in wooing investors from the Middle East, frequently visiting the region to ask companies to invest in his country.
During a trip to Iran in March, Yudhoyono struck a roughly $5.6 billion deal with the government to set up a joint oil-refinery venture with a daily output capacity of 300,000 barrels on the Indonesian island of Java.
Malaysia is also being targeted by Middle Eastern investors. For example, Islamic banking giant Kuwait Finance House has bought a 49% stake in the operator of Kuala Lumpur's largest commercial complex, opened last year. The Kuwait firm also plans to invest in new projects involving high-rise buildings and commercial facilities.
Diving in
Qatar's Gulf Oil has also clinched a number of high-profile deals in Malaysia, including one for building an oil refinery in the state of Perak.
In an effort to prompt a flow of money from the Middle East, the Malaysian government has eased its foreign capital controls to liberalize foreign investment in the country's housing market. The government also plans to issue brokerage licenses to financial institutions and other entities in the Middle East.
Pakistan is another Asian Muslim nation eager to attract money from the Middle East. Emaar Properties is now involved in three projects to develop commercial complexes in Islamabad and Karachi at a total cost of about $2.4 billion.
With Western financial institutions growing reluctant to lend money amid the credit squeeze triggered by the U.S. subprime mortgage crisis, Indonesia and other Muslim countries are keen to attract funds from the Middle East, the heart of Islam.
Meanwhile, Arab countries have become more interested in Asia's Muslim nations now that a U.S. economic recession and other factors are forcing them to review their lists of investment targets.
Malaysia and Indonesia are broadening their ties with Middle Eastern nations beyond investment to include exchanges among people and products. For instance, Malaysia welcomed 245,000 tourists from the region in 2007, three times the figure in 2003.
The number of Arab tourists to Asian destinations has begun to increase partly because Western nations have tightened their grips on visa issuances since the terrorist attacks on the U.S. in September 2001.
Prime destination
Malaysia is seen as one of the most attractive Asian destinations for Arab tourists because halal meat, fish and other foods that are permissible under Islamic law are available there and also because of its reputation for safety. Another attraction is that it recently opened several shopping centers handling jewelry and other luxury goods.
Java and other Indonesian locales have also become popular tourist sites for affluent people from the Middle East as well. Due to strong demand, Middle Eastern airlines have been launching more flight services to Asia's Muslim nations. Emirates airline of the UAE now operates nine flights a week on the Dubai-Kuala Lumpur route after offering just three flights a week when it opened the route in 1996.
Qatar Airways is also considering operating more flights to and from Asia.
Trading ties between both regions have also deepened, with the value of trade between Middle Eastern nations and Indonesia surging 14% to $7.87 billion in 2007 from the previous year - more than double the figure in 2003.
Indonesia is expanding its crude-oil imports from the Middle East after the country became a net oil importer in 2004, and it is boosting exports of textile products and automobiles to the region.
Trade between Malaysia and the Middle East expanded 12% on the year to $11.68 billion in 2007, driven mainly by an increase in exports of electrical/electronic equipment, palm oil and jewelry from the Southeast Asian country.
Nihon Keizai Shimbun, Inc.