Jakarta blasts signal new form of terrorist attacks in Indonesia
The recent bomb and gun attacks aimed at foreigners in Jakarta, Indonesia marks a first ISIS attack in the region, and signals that a new form of terrorist activities might be on the rise in the country. The attacks’ long term implications depend on the government’s ability to mitigate the rising threat of ISIS activities in the country.
Last week’s bomb and gun attacks in Indonesia’s capital, Jakarta, resulted in seven deaths, including two civilians and five Islamic State-linked assailants, and 30 injuries. The event marks the first Islamic State (ISIS) attack in the region. The method of attack demonstrates a shift away from low level strikes aimed at police and security forces, towards a combination of bombs and guns aimed at foreigners. While the incident will have a short term impact on the fourth largest Southeast Asian economy, its long term implication depends on how well the Indonesian government is able to mitigate the rise of ISIS-related activities in the most populous Muslim nation.
New forms of terror
Indonesia has traditionally experienced attacks from radical groups with small arms and improvised explosive devices, aimed at law enforcement and security forces in retaliation for arresting and killing jihadists. But Thursday’s blasts suggest extremists are introducing a new form of terror in the region that emulates the attacks in Paris on 13 November, 2015. While the scale of casualties is low when compare to the brutal Paris attack, the series of attacks in Jakarta, using a combination of explosives and guns, signals there were multiple targets. It also shows an increase in the level of coordination and operational skills among the militants.
It is unclear to what extent foreigners were the main target, because one of the explosions took place near a police post. However, the attacks happened in a public setting that includes a UN office, embassies, and many foreign chain restaurants including Starbucks. Additionally, the pro-ISIS Aamaq news agency has claimed its group carried out the attack targeting “foreigners and the security forces tasked with protecting them in the Indonesian capital”. This is an indication that there was a willingness, if not intent, to target foreigners.
Short term growth will be hit
Indonesia has recently been growing at its slowest rate in seven years. After a disappointing first half of 2015 due to low government spending, a drop in commodity prices, and slow growth in China, the cabinet reshuffle in August catalyzed some growth. However, Indonesia was still unable to meet its initial prediction of 5.7% growth. The Finance Ministry expected Indonesia to grow 4.73% in 2015.
The attack is likely to have a short term impact on the economy, with the tourism industry taking the biggest hit. Following the attack, tourism ministry spokesman Noviendi Makalam expected tourism in Jakarta to drop over the next 2-3 months. He estimated the capital accounts for 30% of the country’s overall foreign visitors.
So far business has regarded the attacks as an isolated incident. Indonesian shares plunged after the report of the attacks, but shares rebounded slightly the next day. Starbucks also reopened after one day closure. The Indonesian government’s quick reaction to mobilise forces and take control of the situation helped to alleviate market uncertainties.
Government must mitigate ISIS threat
In the long term, investor confidence will depend on how well the Indonesian government is able to counter the rising risk of ISIS activities and restore internal security in the country.
Indonesia has long struggled with separatist and terrorists movements. The Muslim-majority nation was the frequent victim of attacks linked to Al Qaeda in the 2000s. However, the country has enjoyed a relatively high level of security over the last six years due to the success of country’s counterterrorism agency, Detachment 88, in pursuing terrorists and breaking up their networks.
However, there is an increasing fear that the weakened home-grown terrorist networks could regain momentum with the rise of ISIS. It is estimated as many as 700 Indonesians could have travelled to Syria to join the terror group and might attempt to stage attacks upon their return home. Home-grown jihadist groups and ISIS networks are becoming indistinguishable. Indonesia needs to demonstrate its ability to mitigate terrorist risks to keep foreign investors in the country.