There seems to be little doubt that the Marriott hotel was targeted because it is US-owned and frequented by foreigners. Jakarta's American expatriates held their July-4th celebrations at the hotel, and it was a popular lunch spot for western businessmen. But will those same businessmen now reassess their commitment to Indonesia?

Presenter/Interviewer: Deborah Steele

Speakers: Mardesiana, an equities analyst at Kim Eng Securities in Jakarta; James Castle, chairman of the economic and business intelligence firm, the Castle group; Rizal Ramli, leading Indonesian economist and former co-ordinating minister for finance; H.S. Dillon, economist, advisor and Executive Director of The Partnership for Good Corporate Governance; Simon Flint, a senior currency strategist at Bank of America

Steele: Doing business in Indonesia has never been easy ... but the end of the Suharto era has not brought the windfall some foreign investors had hoped. Political uncertainty, decentralisation, corruption, a confused regulatory environment and a volatile economy have all presented their challenges. But now it seems lives are at stake...

Mardesiana is an equities analyst at Kim Eng Securities in Jakarta. She says concerns about security have been heightened by the fact that the bombers were able to carry out their mission while Jakarta was on the highest possible level of alert. She says it's vital that arrests are made quickly.

Mardesiana: I believe people will see how the police handle the blast. If everything taken care of it's like what they did on the Bali bombing, people start to have confidence, I believe the people have more confidence again.

Steele: James Castle is chairman of the economic and business intelligence firm, the Castle group. He's also American. He says the economic impact of the bombing will be significant.

Castle: The first half of the year the financial markets had been moving very well. They started to slow down recently just because they were over-bought, but I would expect that to slow further in the weeks ahead, and probably start to stabilise again towards the end of the year. Hotel occupancy in Jakarta had started to go back up and it was above 70 per cent, some of the better hotels for the first time since the Bali bombing, and I expect that to be harmed somewhat. So it definitely will be an economic blow to the country, but I think it will be short term.

Steele: Leading Indonesian economist Rizal Ramli was co-ordinating minister for finance under Abdurrahman Wahid. He says the bombing threatens to exacerbate falls in foreign investment in Indonesia.

Ramli: This bomb in Marriott will have significant effects in terms of further contractions in the investment and other sectors of the economy. If the government has pro-active program to attract foreign investment, including law enforcement and streamlining and deregulation, then the effects of the bomb might be less. But the way this government is doing [it] has not been very effective, so I'm afraid because the government are unable to do something of significance, the effects of this bomb is going to be widely felt.

Steele: Prominent economist and advisor H.S Dillon is more optimistic about the government's capacity to entice foreign investors to stay in Indonesia.

Mr Dillon – who's currently the Executive Director of the Partnership for Governance Reform in Indonesia – says any impact will be temporary because the macro-economic fundamentals are pretty good. But he notes that most would-be investors have a wait-and-see attitude any way ... due to presidential elections scheduled for next May.

Dillon: What is happening is only those companies who are here are coming up with the investment that is required actually to maintain their production level. But ... investments everybody has been holding until after the election, because there is so much uncertainty anyway and I think when we are going to see that the government is going to respond and demonstrate that it is firmly in control. I think it's very important for the government to demonstrate that they know what they are doing without over-reacting in terms of human rights. But if they demonstrate that they are in control, that would actually enhance confidence in the current administration.

Steele: Simon Flint, a senior currency strategist at Bank of America – says the impact of the Marriott bomb blast will be significant as far as foreign direct investors are concerned. But he says in a city where there have been several other bomb blasts this year – including at the parliament building, the police headquarters and the airport – there could well be a level of acceptance about the increased risks involved in doing business in Jakarta.

Flint: I think though to some extent people get habituated to a certain level of risk, and so it doesn't mean necessarily that they become more and more nervous. Maybe people just tighten up their security arrangements and accept it as a certain risk of doing business in a relatively high-risk area.