Dion Bisara – Despite seeing Indonesia as a potential investment destination, British businesses appear still concerned with the country's bureaucratic hindrances.

Indonesian Industry Minister M.S. Hidayat said investors have come to understand the challenges they face, "but there are some complaints about regulations here."

Hidayat's remark came after a delegation of 30 British companies, accompanied by British Prime Minister David Cameron, met with President Susilo Bambang Yudhoyono at the State Palace in Jakarta on Thursday.

Hidayat said British companies want to put money into the infrastructure, airspace, information technology, capital goods and pharmaceutical industries, but they faced hurdles.

Indonesia recently took investors by surprise with its plan to impose a 25 percent export tax on coal and base metals this year, a move that analysts say is a sign of inconsistency that hurts growth prospects in Indonesia, Southeast Asia's largest economy.

Chris Wren, executive director of the British Chamber of Commerce in Indonesia, said that red tape was as much of a concern as corruption in Indonesia. British companies, he said, want their operations around the world to be free of corruption.

United Kingdom's Bribery Act, which went into effect last year, allows individuals or companies with links to the country to be prosecuted in Britain for committing bribery, being bribed, or failing to prevent bribery. "This law could slow down investment here," Wren said, "but on the bright side it also means that working with British companies can improve."

A study from the Indonesian Chamber of Commerce and Industry (Kadin) last month showed that businesses in Indonesia need to set aside up to 17.4 percent of their investment for illegal fees.

The World Economic Forum Global Competitiveness Report last September ranked Indonesia 103rd in terms of irregular payments and bribes, just ahead of other emerging countries Vietnam [104th] and Russia [115th].

Regardless, Lord Green, British minister of state for trade and investment, said that with fourth-largest population in the world, and 6.5 percent growth, Indonesia is too big to be ignored. "Our market share in the Indonesian import market is less than one percent," he said.