BY FARIDA HUSNA AND ANDREAS ISMAR

JAKARTA—Indonesia's economy grew last year at its fastest pace since the 1997-98 Asian crisis, with the country's large domestic market helping to shield it from the global economic turmoil battering its more export-oriented neighbors.

Gross domestic product expanded 6.5% in 2011, affirming Indonesia's position as one of Asia's fastest-growing economies and highlighting its appeal to investors.

In recent years, some companies and investors have touted Indonesia as the next India or China, as strong growth and relative political stability boost confidence in its fortunes, although its growth has lagged well behind those regional giants.

Foreign direct investment in Indonesia grew ...