Considering people who live in Malaysia say it's based in Malaysia, and people who live in Indonesia say it's based in Indonesia, I think they mixed in a whole bunch of different things that would be familiar to people in various countries.
So far we've had people from the Philippines, Malaysia and Indonesia all claim Panau is part of their country due to things like language and architecture. Which leads me to the conclusion... no it's not. It's a fictional island with a bunch of different countries mixed in. Nice to know which countries though.
GFAQs - Where anything is grounds for moderation, courtesy of selective wordplay. XBL: DDR Midian / PSN: MidianGTX