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I am enamored with Indonesia.

I've never been there. I've never met anyone from there. And it's not a country we hear much about. But it's the world's third-largest democracy (the current president got more votes than U.S. President Barack Obama). And it's one of the few Muslim countries - along with Turkey - that doesn't hate the United States as a matter of public policy.

And those are just a few of the reasons that it's time to invest in Indonesia.

Indonesia is a country that is blessed with incredible mineral riches, including some of the largest copper and gold mines in the world - not to mention plenty of rubber plantations and food. Literacy rates are high, the middle class is large and growing, and there is a ton of potential in the domestic economy. Think of Indonesia as a South Seas version of Brazil, but without Mardi Gras.

President Obama is scheduled to visit Indonesia and Australia in June, and while the president will visit the neighborhood in which he grew up, trade and military issues will naturally be on the table. That's not necessarily the reason I find the Market Vectors Indonesia Index (NYSE: IDX) exchange-traded fund (ETF) appealing, but the higher level of news exposure won't hurt companies in the fund either.

The United States has ignored Indonesia for years, but interest is picking up. According to analysts at Stratfor, several officers of that country's elite Special Forces Command - called Kopassus - were in Washington two weeks ago to discuss the resumption of military training. U.S. training of Kopassus units was canceled in the late 1990s amid the chaotic end of the Suharto regime and accusations of human rights abuses by the force in the East Timor independence struggle.

The Pentagon, U.S. State Department and White House are now reportedly working with Congress and the Indonesian government to lift the training ban. The aim is to re-engage Indonesia after decades of neglect, with an eye toward help in the battle against jihadist terrorism and as a constraint against the strategic expansionism of China. A quick look at the map also shows that the archipelago nation separates Australia from the rest of Asia.

The attention is paying off already. Indonesian President Susilo Bambang Yudhoyono said last week that Dulmatin, one of the masterminds behind the 2002 bombings in Bali that killed more than 200 people, was among three terrorist suspects shot and killed near Jakarta this week while they were in the process of establishing a new terrorist cell.

Indonesian companies are well run and very cheap as foreign companies go. The average Price/Earnings (P/E) ratio of stocks in the IDX ETF is less than 12.5, compared to an average P/E ratio of 14.5 for large Chinese stocks and 13.5 for Brazilian stocks. For U.S. stocks, the average P/E is 15, while the average for stocks in the Nasdaq 100 is about 20.

Stocks in the IDX are pretty well balanced across the industrial spectrum: 24% financials; 22% materials; 14% energy; 14% consumer goods; 10% telecom; 8% retail. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) runs the largest gold-and-copper mine in the world in Papua, which is on the western half of the island of New Guinea.

Like Lumber Chart

Investors who make the move into Indonesia will be reminded a lot of how Brazil looked a decade ago (and we all know how well Brazil has done). Although Indonesia is up quite a bit in the past year, it's really just getting started off a very low base.

Trust me, this is not an overdone story.

Earlier this month, Indonesia's sovereign-debt rating was lifted to its highest level in 12 years after Bank Indonesia (BI), the country's central bank, raised its growth forecast for 2010 gross domestic product (GDP) to a rate of 5.5%-6.0%. The rating was last raised in 2006, and is now just two levels below investment grade - on par with Turkey. The central bank maintains an economic growth forecast of 6.0%-6.5% for 2011.

Indonesia's economy performed better than its neighbors in the past two years, largely because it is less reliant on exports. Now, as long as companies and government officials stay on their current course, they can expect Indonesia's debt ratings to keep rising toward investment grade well into next year, a reality that greatly lowers the cost of funds. Fitch Ratings Inc. already has placed Indonesia's credit rating at BB+, which is one level below investment grade.

What's different in Indonesia now is much greater political stability than it has ever enjoyed, giving companies the ability to expand credit to private industry in quantities large enough to matter. Bloomberg reported that PT Bank Mandiri, Indonesia's largest lender by assets, posted profit of $734 million (6.72 trillion rupiah) in 2009, as loan demand by consumers and private industry grew.

Consumer confidence in the $514 billion economy improved after President Yudhoyono was elected to a second term. He pledged to double spending on roads, seaports and airports to $140 billion over the next five years as part of his push to deliver economic growth of at least 6.6% by the end of 2014. Apparently it's working.

"We are seeing a lot of flow in terms of merger and acquisition interest or off-take interest from India into both Indonesia and Australia," Glenn Porritt, head of mergers and acquisitions in Asia at Australia & New Zealand Banking Group Ltd. told Bloomberg.

Another key driver of Indonesian growth has come from the desire of many U.S. companies to diversify away from China in the manufacturing of footwear, textiles, clothing and furniture. The IDX ETF tracking Indonesia contains shares of 28 companies that are either based in - or generate half their revenue in - that country. Leading sectors are financial services, materials, telecom, energy and retail. At 0.7%, the expense ratio is low for an emerging market fund.

[Editor's Note: As this article underscores, Money Morning Contributing Writer Jon D. Markman uncovers significant new profit opportunities well ahead of the crowd. That's because Markman's experiences have provided him with a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.

It will take a seasoned guide to uncover those opportunities.

Markman is that guide.

In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.

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