THERE could be bargains a plenty for selective stock-pickers in the Indonesian market, according to a new report from Smith New Court. The stockbroker's report, to be released next week, says the market, which has been battered during the past six months after performing very strongly last year, is set for a revival. Geoff Lewis, regional economist for Smith New Court, said: ''Longer term we are very positive on the prospects for the Indonesian economy. Indonesia, with its ample supplies of cheap labour, is the only Southeast Asian country where the long-term growth rate over the next 10 years is likely to accelerate, and comfortably exceed the average of six per cent since 1980.'' However, the past six months has been tough for investors in the Indonesian market. According to Micropal, the statistic's company, investors would have lost money in seven of the eight mutual funds authorised by the Securities and Futures Commission over the past six months. The value of US$1,000 invested in the worst performing, Thornton New Tiger Indonesia, would have fallen by $386 on an offer-to-bid basis with net dividends reinvested over that period. The average performing fund in this category has lost $254. But during the past week, market sentiment has remained firm with Indonesian investors and foreign buyers - who account for more than 70 per cent of daily transactions - speculating on a general resurgence. Indonesia is governed by the 25-year-old New Order government of President Suharto. Annual gross domestic product growth has averaged six per cent for the past 20 years. According to the GT Guide to World Equity Markets, it has outperformed this average in recent years, growing 6.5 per cent in 1992 and around seven per cent last year. The country's investment regulator, the Capital Market Supervisory Agency, is considering a range of measures to encourage greater Indonesian involvement in the stock market. They range from encouraging the establishment of open-ended investment companies through to increasing the ceiling of portfolio investments made by pension funds from 10 per cent of total funds. Mr Lewis said: ''If Indonesia continues along its present growth path, it is well placed to become one of the largest and most significant of the new Asian consumer markets. ''Once certain income thresholds are passed, growth is likely to be explosive. Already there are signs of this happening in Indonesia, where sustained income growth in recent years and sharply falling interest rates have triggered a sharp recovery in auto demand, despite tariff levels on imported autos which approach 300 per cent. ''Overseas investors now look to Indonesia for a combination of political stability, low cost labour, and an increasingly favourable investment regime.'' Mr Lewis believed the market was ''not far away from a turn-around sentiment''. He added: ''I think it is fairly cheap compared to other markets in the region.''