* Expects to sign deal for $1 bln Disney park in Java next yr
* Bakrieland owns lands at proposed site (Updates with details)
JAKARTA, Nov 11 (Reuters) - Indonesian developer Bakrieland (ELTY.JK) is in talks with Walt Disney Company (DIS.N) to build a $1 billion theme park in the country’s main Java island, a source with knowledge of the matter told Reuters on Thursday.
Strong consumer demand and a youthful population are driving growth in Southeast Asia’s biggest economy, which is now attracting increased foreign portfolio and direct investment, though Western firms are often put off by rampant corruption.
Bakrieland expects to sign a deal next year for the park in Sukabumi, West Java, said the source, who declined to be identified because the talks were not public and ongoing.
“Bakrieland is currently in intense talks with Disney to build Disneyland in Indonesia,” the source told Reuters. “The exact total project value is still under discussion but it’s more than $1 billion.”
A Bakrieland spokesman declined to comment. Disney was not immediately available for comment.
Disney is building a theme park near Shanghai and already has a Disneyland in Hong Kong, which made a net loss last year.
Land acquisition is often a major challenge for foreign and local firms involved in infrastructure projects in Indonesia, but Bakrieland owns land in Sukabumi.
Bakrieland is part of the politically connected Bakrie Group that has interests in coal mining, telecoms and plantations.
Indonesian President Susilo Bambang Yudhoyono said after a meeting with U.S. President Barack Obama in Jakarta this week that he expected U.S. investment in Indonesia will rise significantly.
Graft, red tape and inadequate infrastructure are still hurdles, though the country expects overall foreign direct investment in 2010 to pick up a third from last year and is keen to attract more to provide stable longer-term capital inflows. (Reporting by Janeman Latul; Writing by Neil Chatterjee; Editing by Lincoln Feast)