Indonesia has overtaken India to emerge as the second-most attractive destination in the Asia-Pacific region for foreign direct investment after China. A new report by The Economist Corporate Network indicates that 12 per cent of companies that were included in a global survey planned to reduce their level of investment in India.

This was partly due to the weak state of the economy, but also the poor job that policymakers have done in managing the investment landscape. The report said it was clear that Western companies looking at Asia are increasingly picking Indonesia as their second big bet in the region after China.

Around 53 per cent of the companies that were covered in the survey said they plan to hike investments in the South-East Asian country in 2014. FDI inflows have already picked up, with the country attracting more foreign capital in the first nine months of 2013 than the whole of 2012, which was a record year.

Behind the three big population centres of China, India and Indonesia, a number of South-East Asian countries are also emerging as popular investment destinations. Myanmar is fourth in the list of investment priorities, with the economy opening up. Thailand and Malaysia figure next in the list.

But Vietnam is notable for its fall from fourth place in the 2011 list to seventh this year. Among developed nations in the list, the survey found that 10 per cent of countries planned to trim their investment in Australia.

In 2012, the Asia-Pacific made up 31 per cent of the global economy, but managed to attract 36 per cent of FDI flows. Asia, in particular, is outperforming in its ability to attract investment. Given the size of the region and superior growth rates, this out-performance is expected to continue.

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