Islamic State claims responsibility for deadly Jakarta attack

[JAKARTA] A team of suspected Islamic State militants staged a gun-and-suicide bomb assault on a Starbucks and police post in central Jakarta, killing at least two in the worst attack in the Indonesian capital since 2009. Five attackers were also killed.

The assault began mid-morning when a suicide bomber blew himself up inside the Starbucks near the Sarinah shopping center, close to the United Nations office, military chief Gatot Nurmantyo told reporters. Militants then opened fire and detonated further bombs, including one outside a nearby police post, he said.

One of the dead was a Canadian citizen, the other an Indonesian, he said, adding at least 20 others were injured, including five police. The attack was "very likely" linked to Islamic State or its members who had returned home, said Sutiyoso, head of the country's intelligence agency. The Islamic State claimed the attack, saying it targeted foreign nationals and security forces, jihadist monitoring group SITE Intel said on Twitter, citing an Islamic State-affiliated news agency.

Concerns about terrorist attacks in Southeast Asia have grown as Islamic State's call for global jihad attracts extremists from the region to Syria and Iraq, fueling fears they would return to their homelands trained and radicalized. The bombings came amid a wave of violence in recent months linked to Islamic State from Beirut, to San Bernadino and Paris that are demonstrating the global reach and appeal of the militant group.

The rupiah was down 0.6 per cent after falling as much as 1 per cent against the dollar, while the Jakarta Composite Index of shares closed 0.5 per cent lower after dropping as much as 1.8 per cent."This may have been influenced by Islamic State, but perhaps not organized by it," said Clive Williams, a former military intelligence officer and visiting professor at the Australian National University's College of Law. "It doesn't seem very well organized. There were multiple bombings but so far the casualty rate seems pretty low for the amount of effort."

President Joko Widodo condemned the attack and cut short a trip to west Java to return to the capital and said the Indonesian people must rise above "this act of terror.""We are all certainly saddened by the fallen victims from this incident," Mr Joko, better known as Jokowi, told reporters. "But we are all condemning this act that disturbs public security, that disturbs public peace and spreads terror among people," he said . "The country, the nation and the people, all of us, must not fear, must not be defeated by this act of terror."

Starbucks said that one customer was injured in the blast at its store near the Skyline building, and all its employees were safe. Starbucks outlets in Jakarta will remain closed "out of an abundance of caution," the company said in a statement. Hotels in Jakarta stepped up security and said authorities had stationed police and police dogs there.

Policymakers at the central bank, located near the explosion site, continued with a scheduled meeting, before announcing that it cut its reference rate to 7.25 per cent from 7.5 per cent. Police reopened the main thoroughfare by late afternoon, while Asiana Airlines Inc and China Southern Airlines Co said their flights to Jakarta operated normally.

The head of the parliamentary defense commission, Mahfuz Sidik, said the primary targets appeared to have been police.

"We need to investigate whether this is a retaliation against a number of arrests done by national police of several people suspected of being involved in terrorism, or if there are other motives," he said.

Nearly two dozen suspected militants have been detained in recent weeks, including a number of ethnic Uighurs from China, with explosives, weapons and a suicide vest found, said Keith Loveard, head of political risk at Jakarta-based security company Concord Consulting.

Indonesia is the world's most-populous Muslim nation and has been battling Islamic extremists since independence. The last major attack was in 2009 when twin suicide bombings killed seven people at two luxury Jakarta hotels. The deadliest terrorist attack was in 2002 on the tourist island of Bali, when Jemaah Islamiyah bombed bars and night clubs, killing 202 people, including 88 Australians. That attack led to a broader crackdown that largely curtailed the group.

"The main worry is that Indonesian fighters suspected of having traveled to Syria and Iraq, may have already returned to the country and begun to organize," Bob Herrera-Lim, managing director of Teneo Intelligence said in a note. "The problem is that there is no strong data on how many Indonesians have fought in the Middle East - estimates vary widely from several hundred to a few dozen."

"This attack was long-awaited," he said. "While the counter-terrorism unit Detachment 88 has done a very good job of rounding up suspects, it was almost inevitable that some would slip through the net."

BLOOMBERG