So far this year, there has been very little terrorist activity by Islamic radicals. There has been only one terror attack, and that was against a mosque used by police. Most of the violence appears to be occurring within the Islamic groups, as the more radical try and coerce the less radical to embrace violence. More ominous is the growing Islamic radical propaganda and recruiting efforts. This is not illegal, and is often successful. It's also easy to monitor, and apparently the police are detecting a growing number of young men being groomed for more violent activities.
Counter-terror operations continue, and large scale Islamic terror attacks remain non-existent. But there is still a lot of popular support for Islamic radicalism, especially among the young. Jemaah Islamiah (JI, the local version of al Qaeda) has been broken up, but not entirely destroyed. The surviving JI members are either out of the country or operating solo or as part of a small group (often using another name, as JI still triggers a large response from the police). More students are becoming infatuated with Islamic radicalism. As was the case in other countries, Islam is seen by the young and ignorant as a sure cure for corruption and bad government. When this doesn't work out, some of the true believers switch to violence. But with college students, you end up with more educated and highly skilled (and therefore more dangerous) terrorists.
Islamic boarding schools are still a prime training ground for potential terrorists. It's been hard to handle this problem, since most students of these schools do not become radicalized. The police are have an easier time monitoring the Islamic college students, and have apparently infiltrated Islamic radical college student organizations. Most of these students are supporters of the Indonesian Islamic State (NII) movement. That is, they want to establish a religious dictatorship, something that the vast majority of Indonesians want no part of. But the NII has been around for over 70 years, and has acquired millions of followers. Most are passive, and those that try to be actively violent have not been very successful. But at the moment, NII is seen as a bigger threat than JI. For example, the failed plot to blow up a church on Easter was largely planned by NII radicals.
Undismayed, NII and other Islamic radical groups are trying to form an alliance with Indonesian nationalists (another popular group that is dismayed at all the corruption) to pressure the government to clean up the bad behavior. This sort of coalition is a long shot. But the Islamic radicals do get a lot of tacit support from non-radical Indonesians because of attacks on bars, night clubs and brothels. The police often ignore these attacks, as it saves them the trouble of harassing these operations (which generate a lot of citizen complaints because of the late-night noise and general bad behavior.)
So many terrorists have been imprisoned that large concentrations of them in prisons have become a problem. The terrorist convicts seek to convert non-radicalized prisoners. Corruption in prisons enabled some terrorist prisoners to get cell phones and continue their terrorist activities.
The defense budget has doubled in the last five years, to $5.2 billion a year. Most of the additional money has gone to replace aging, or useless (usually from lack of maintenance) aircraft and ships. That's expensive because modern combat ships and aircraft tend to be a lot more expensive than the older Cold War models Indonesia still has. China and Russia are competing to offer new weapons and equipment. Even if you include bribes, this means the military is getting lots of stuff at bargain prices. Although the government is fighting the corruption (that has been around for a long time), it is still there. The damage done is not just increasing prices, but often the purchase of the wrong weapons. That happens a lot.
While the armed forces is large, with 400,000 troops, an even larger force, the national police, has about 600,000 personnel. The police have little in the way of heavy weapons or special equipment. The police used to be (until 2000) controlled by the military. Since then, the number of police has nearly doubled (largely in response to the growth of Islamic terrorism, and various criminal gangs). One thing the police have been very good at is collecting intelligence. This is what hurt the Islamic terror groups the most, as the police always seemed to find the Islamic radicals eventually. For that reason, many Islamic terrorists have fled the country in the last five years.
May 1, 2011: Indonesian commandos killed four Somali pirates off the Somali coast. This happened as three Indonesia warships were present when a multi-million dollar ransom was paid for an Indonesian cargo ship, and its twenty man crew, seized by pirates on March 16th. The ship was carrying a cargo (worth $174 million) of nickel ore to the Netherlands. The seizure of the ship became a big issue in Indonesia. The navy has not been participating in the international anti-piracy patrol off Somalia, but popular opinion was aroused by the taking of the Indonesian crew and ship. After the ransom cash was dropped onto the cargo ship, and the pirates left, the Indonesian hostages were taken under the protection of Indonesian troops. The last group of four pirates to leave in a speedboat were pursued by an Indonesian helicopter, and killed. The pirates later complained, but they did have the money.
April 21, 2011: The navy finally test fired one of the Yakhont anti-ship missiles they bought from Russia four years ago. This was part of an exercise involving a dozen ships and over a thousand personnel. The missile test, supervised by Russian technical personnel, saw the missile travel 450 kilometers and hit the target ship (an elderly vessel, stripped of crew and equipment, that promptly sank). The Yakhonts replaced less capable U.S. Harpoons, and had the price cut to match that of Harpoons (about $1.2 million each).