Russia, Indonesia pose 'biggest investment risks'

Russia, Indonesia pose 'biggest investment risks'

LONDON (Dow Jones): Russia ranked number one in the risk rankings for foreign direct investment in the fourth quarter of 1999, Merchant International Group said Tuesday in its Quarterly Regional Review.

The group, a risk intelligence consultancy, gave Russia ratings of 9.5 for religious extremism, 10 for corruption and 10 for organized crime, meaning that investors will find these factors "unavoidable."

Following Russia in the top five are Indonesia, Pakistan, Belarus and Kenya, MIG said in a press release.

The group rates 60 markets from the point of view of locally- based U.K. companies.

"The problems corporates face, especially those in energy and communications, are the marked lack of legal framework, the blatant corruption and organized crime, and in the worst case terrorist actions," said Stuart Poole-Robb, chief executive officer of MIG.

Over the next six months, investors can look forward to "secessionist pressures, a rise in Islamism and increasing military influence in Russia, Indonesia and Pakistan, the report said.

Other factors that will affect investment include "the politics of religion and oil in the Caspian Sea and its repercussions in Central Asia, Turkey and Russia; (and) the spill-over effects of independence movements in Indonesia on ASEAN countries."

MIG said Singapore, Estonia, Slovenia, Japan and Hong Kong were the five least risky markets for foreign direct investment.