Despite the apparently globe-girdling reach of extremist Islamic terror groups, some of the biggest Western multinational corporations are holding fast to their investments in most Muslim countries.
Though foreign investment is falling in countries where terrorists have struck, other predominantly Muslim countries with a good record of controlling violence have seen little or no diminution.
Most developing countries, including those with large Muslim populations, badly need foreign investment to help develop modern industries and service sectors. Such investment has been depressed in recent years by the global economic slowdown. But now, as the worst of the slowdown appears to have passed, the threat of terrorism is continuing to hamper foreign economic engagement in some countries.
Even before the explosions in Balu, investment in Indonesia was declining as the country's problems with terror groups received more attention. In the first nine months of 2002, the country attracted 780 investment projects worth US$5.4 billion, compared with 1,017 projects worth US$6.1 billion in the same period last year, according to the country's Investment Coordinating Board.
Contrast that experience with nearby Malaysia, half of whose territory lies on Kalimantan, an island it shares with Indonesia and Brunei. About 60 percent of Malaysia's population is Muslim, according to the State Department's estimates. Yet it is lightyears distant from Indonesia's troubles in the eyes of multinational companies and foreign portfolio managers.
"Being a Muslim country has not been a deterrent" to investment, said Rafidah Aziz, Malaysia's minister of international trade and industry, in an interview last week. "We have become the kind of Muslim country that people do not fear."
On Sept. 11, 2002, the US closed its embassy in Malaysia -- along with those in Cambodia, Indonesia and Vietnam -- after officials cited "credible and specific" threats of terrorism. Yet at virtually the same time, all three major credit-rating agencies raised their ratings of Malaysia's unsecured foreign-currency debt, a vote of confidence.
Foreign investment in Malaysia has not suffered; rather, it has risen as the country has come to be seen as a more affordable alternative to Singapore, Aziz said.
Central Asia has also been called a potential hotbed of terrorist activity. Some Qaida terrorists who trained in Afghanistan may have come from nearby Uzbekistan, Kyrgyzstan and Tajikistan, and may have slipped back there since the Taliban's fall. But terrorism and the fear of it have not affected all the region's largely Muslim countries.
"In countries like Kazakhstan and Azerbaijan, domestic politics is much more important for the way foreign investment works out," said Alexander G. Zaslavsky, director of consulting at the Eurasia Group. These resource-rich countries, he said, "have much more pressing issues than those of religious conflict."
More than one-third of Kazakhstan's foreign investment has come from the US, and that trend shows no signs of slowing. Much of the investment has been in oil, but earlier this month, the two countries launched a program to make more American investors' money available to small and medium-sized businesses in Kazakhstan.
"Relationships with companies have been strong for the past 10 years," said Roman Vassilenko, press secretary at Kazakhstan's embassy in Washington. "They have seen no change whatsoever in the past year. They have even strengthened."
RSS