Robert Go, Jakarta – Fed up with Indonesia's political paralysis and craving more stability, foreign investors are not only staying away from the country, but have also started taking their operations to other Asian countries and elsewhere.

As thousands stormed the parliamentary complex yesterday following a report implicating President Abdurrahman Wahid in two corruption scandals, several business analysts said that regardless of the outcome of this latest political skirmish, confidence in the government has reached a low point.

"Our expectations of the government are much lower now. Foreign investors have less faith in Indonesia and continue to stay away. Some have even moved their investments to other countries," said conglomerate owner Sofjan Wanandi, who previously chaired one of Mr Abdurrahman's now-defunct economic councils. "The manufacturing sector, including textiles, shoes and electronics, will be hit quite badly by the exodus. Once companies relocate, it will be very hard to get them back," he added.

Mr Arian Ardie, a business consultant associated with the American Chamber of Commerce in Indonesia, said the current street demonstrations – mostly aimed against Mr Abdurrahman – would raise additional question marks about the government's stability.

"From the foreign investors' standpoint, this is not good news. Many are tired of waiting around for a better condition; they have had enough. They may not see any potential for near-term improvement and can simply decide to go for Vietnam, or Venezuela, or other investment opportunities," he said. Other countries cited as possible beneficiaries of Indonesia's continuing troubles include China, India and Bangladesh.

Mr Raden Pardede, head of research at Danareksa Institute, also blames the government for failing to establish a political climate that is more conducive to business. "Our research shows a consistent decline in business confidence towards the government. And the government either doesn't seem to catch on quickly enough, or it is not interested in helping the economic situation," he said.

The government, he argues, is running out of time and unless it can stimulate confidence in the country, it will lose more investments in coming months.