Southeast Asia from Scott Circle: Recalibrating the Islamic State Threat in Southeast Asia

By Phuong Nguyen (@PNguyen_DC), Associate Fellow, and Conor Cronin (@ConorCroninDC), Research Associate, Southeast Asia Program (@SoutheastAsiaDC), CSIS

For many Southeast Asian governments, terrorism threats rank among their top security concerns. Indonesia, Malaysia, and Singapore—no strangers to dealing with violent Islamist threats—have been on heightened alert for the past two years over concern that attacks linked to the Islamic State in Iraq and Syria (ISIS) militant group could take place in their territories.

An Indonesian suicide bomber believed to be a supporter of ISIS on July 5 attacked a police station in the city of Solo in Central Java Province, killing himself and injuring a police officer. Earlier this year, in January, bombing attacks targeting a police station and shopping district in central Jakarta in broad daylight, masterminded by an Indonesian ISIS fighter based in Syria, marked the first successful attack by the militant group on Indonesian soil.

Meanwhile, Malaysian police on July 4 confirmed the first successful ISIS attack on Malaysian soil, after having foiled numerous plots being planned by ISIS-linked suspects to attack public targets deemed as un-Islamic. According to Malaysian authorities, a Malaysian ISIS fighter in Syria had ordered the June 28 grenade attack on a bar outside the capital city of Kuala Lumpur in which two of the locals suspected of being involved were police officers.

These attacks suggest that similar ISIS-linked attacks can reasonably be expected in Southeast Asia in the future, despite the best attempts by regional governments to preempt them. As ISIS fights to cling to its territory in Iraq and Syria, the group is said to have recently expanded its sights to Southeast Asia—a prospect long feared by governments and security experts—in an effort to maintain its influence.

A propaganda video released by ISIS on June 22 in five languages—Arabic, Bahasa Indonesia, English, Malay, and Tagalog—called on its supporters in Indonesia, Malaysia, and the Philippines who cannot join the group in Syria to “join the mujahideen in the Philippines” instead. This is due to the fact that Indonesian, Malaysian, and Singapore authorities have been intensifying arrests of local suspects as they attempt to leave for Syria, as well as of Southeast Asian ISIS fighters returning through the Middle East before they reach home.

These latest developments are concerning for several reasons. Up until now, ISIS’s reach—to the extent that it was organized—was attributed to several local militant groups in Indonesia and the southern Philippines claiming allegiance to the group. In Indonesia, this takes the form of the East Indonesia Mujahidin group, or MIT, based in the jungles of Central Sulawesi Province. Santoso, MIT’s head and a U.S.-designated terrorist, has been on the run from Indonesian police and military forces for months.

In the Philippines, factions of the militant group Abu Sayyaf, which now makes its living from criminal activities, have pledged allegiance to ISIS in recent months. In a video released last month, Abu Sayyaf leader and U.S.-designated terrorist Isnilon Hapilon was named the leader of ISIS forces in the Philippines.

But the latest call could empower Southeast Asian fighters in the Middle East, many of whom are disillusioned with their conditions or the menial non-combat tasks given to them, to return and potentially regroup in the southern Philippines, where protracted Muslim insurgencies and weak government control over the years have bred ungoverned spaces and a weak rule of law.

Estimates of the number of Southeast Asians who have joined ISIS in the Middle East vary between 700 and 1,000, a miniscule figure in a region of over 600 million people. Yet should they choose to head for the southern Philippines instead of their home countries, this could present a shift from existing patterns to which regional governments have become accustomed and pose greater challenges for the overstretched Philippine armed forces.

The Philippine government has already seen a growing threat of ISIS affiliates in Mindanao and the Sulu archipelago, where Abu Sayyaf kidnappings and the execution of foreign hostages have underscored the lack of control the Philippine government has over its southern reaches. For 13 years as part of Operation Enduring Freedom, U.S. forces advised and assisted the Philippine military in the fight against militants with the Joint Special Operations Task Force-Philippines. Officials declared the joint task force a success, as numbers of Abu Sayyaf fighters dwindled and a peace agreement was negotiated with the Moro Islamic Liberation Front, one of the largest separatist groups in the southern Philippines.

The U.S. Pacific Command in 2015 decided to wind down the task force’s operations, leaving just a small team of advisers to continue assisting the Philippine military. But the Philippine Congress’s failure to follow through with the peace agreement and the concurrent spread of ISIS’s message on social media have given Abu Sayyaf the opportunity to attract dissatisfied radicals and increase its foothold in the area.

The national security team of newly inaugurated president Rodrigo Duterte has declared the eradication of Abu Sayyaf its first priority. But without a concrete plan to renew the peace process in the southern Philippines, the remote islands of the Sulu archipelago will continue to provide a safe hideout for ISIS-inspired militants.

Now that the militant group has publicized messages aimed at Southeast Asia, it remains to be seen whether this will translate into greater resources and better organization for local pro-ISIS groups, most of which have had difficulty recruiting and obtaining training and resources due to stepped-up policing efforts. In March, for example, a small network of ISIS supporters who were trying to sneak two foreign terror suspects out of Malaysia to another Southeast Asian country and channel funds to a group in the southern Philippines were arrested by Malaysian police before they could cause real damage.

In addition to the southern Philippines, Poso in Indonesia’s Central Sulawesi has emerged as a training ground for foreign fighters hoping to travel to join ISIS. How this network will factor into the group’s and its returnees’ potential plans to establish a foothold in Southeast Asia should be seriously considered. Already Uighurs from China were found among MIT militants during clashes between MIT and Indonesian police in Poso earlier this year. Meanwhile, ISIS’s ability to infiltrate the police in Malaysia—a trend concerning in itself—can be made worse by the group’s supporters’ improved ability to organize and disseminate information.

These developments add yet another layer of concern for regional governments and the United States, which has expanded counterterrorism intelligence sharing efforts with Malaysia and Singapore over the past year. ISIS’s message ultimately has limited appeal in most of Southeast Asia, but the group’s ability to evolve, adapt, and exploit cracks in a region with porous borders, and, in some cases, limited state capacity, should be a legitimate cause for concern.

Biweekly Update

Philippines

President Duterte takes office. Rodrigo Duterte on June 30 was officially sworn in as president of the Philippines in a simple ceremony at the presidential palace in the capital city of Manila. Duterte said during his inauguration speech that he will adhere to due process and the rule of law in his crime-fighting and anti-corruption methods. The new president also stressed the need to restore the Philippine people’s trust in government and asked the public to help him bring about change.

Foreign secretary asks international community to help enforce South China Sea ruling. New Philippine foreign secretary Perfecto Yasay asked the international community to come together to help enforce the July 12 ruling by the Permanent Court of Arbitration on the case filed by the Philippines against China, according to a June 28 report by the Philippine Inquirer. Yasay asked countries to help convince China to respect the outcome of the arbitration should the court’s ruling push back on China’s claims in the South China Sea. He also said in a June 23 TV interview that the Philippines is ready to respect a decision in favor of China.

ISIS releases propaganda video targeting the Philippines. The Islamic State in Iraq and Syria (ISIS) on June 22 released a propaganda video urging ISIS supporters who cannot join the fight in Syria to join militants in the southern Philippines instead. Authorities in Indonesia, Malaysia, and Singapore since last year have stepped up arrests of suspected ISIS supporters attempting to travel to the Middle East to join the militant group. While some Islamist militants based in the Philippines have pledged allegiance to ISIS, local security officials have denied the presence of ISIS fighters in the country.

Indonesia

President holds cabinet meeting on warship visit to Natuna; orders expansion of commercial activities in South China Sea. President Joko Widodo on June 23 held a cabinet meeting on board the warship KRI Imam Bonjol 383, during which he instructed his ministers to oversee the expansion of Indonesia’s fishing and energy sectors and stepped-up military presence in the Natuna Islands in Riau Province. Widodo’s visit to Natuna was designed to send a strong signal that Indonesia is committed to safeguarding its sovereignty over the waters off Natuna that lie within its exclusive economic zone, but which China recently said are part of its “traditional fishing grounds.”

Parliament approves tax amnesty bill, defense budget hike. The Indonesian parliament on June 28 approved a tax amnesty bill that aims to entice wealthy Indonesians to repatriate billions of dollars of funds from overseas. The government estimates the tax amnesty may result in more than $12 billion in government revenue. Lawmakers also agreed to increase Indonesia’s 2017 defense budget by 10 percent to $11 billion, with a large portion allocated to the upgrading of military assets in border areas such as Kalimantan, East Nusa Tenggara Province, and the Natuna Islands.

Newmont to sell Indonesian mine for $1.3 billion. U.S.-based mining company Newmont on June 30 said it will sell its 48.5 percent stake in its Indonesia mine to PT Amman Mineral Internasional, an Indonesian company backed by three state-owned banks, for $1.3 billion. Japan’s Sumitomo, Newmont’s operating partner in the mine, also agreed to sell its stake to the same local group. The arrangement ends months of negotiations between Newmont and the Indonesian government, after Jakarta in 2014 put in place an export ban on unrefined mineral ores.

Vietnam

China’s state councilor visits Vietnam, calls for greater maritime cooperation. Chinese state councilor Yang Jiechi on June 27 met with Vietnamese deputy prime minister and minister of foreign affairs Pham Binh Minh to discuss boosting maritime cooperation. Yang stressed the importance of mutual restraint and peaceful negotiation in settling the South China Sea disputes. The two oversaw the signing of a memorandum of cooperation between the Vietnamese and Chinese coast guards. Yang also met other top Vietnamese leaders, including President Tran Dai Quang and General Secretary of the Vietnamese Communist Party Nguyen Phu Trong, to discuss other aspects of China-Vietnam relations.

Numerous errors prompt legislature to delay revised penal code. Vietnamese president Tran Dai Quang on June 30 announced the postponement of the country’s revised penal code, originally scheduled to come into effect on July 1. The National Assembly had convened on June 27 to vote on the postponement after the revised code, passed in November 2015, was found to contain more than 90 errors and significant loopholes. The implementation date is now set for July 2017. The newly elected National Assembly will oversee its revision.

Government blames Taiwanese-owned steel mill for mass fish death. The Vietnamese government on June 30 said Taiwanese-owned Formosa Ha Tinh Steel Corporation was responsible for the 70 tons of dead fish that washed up on the shores of four central Vietnamese provinces in April. Formosa promised to pay a $500 million fine, the highest ever demanded of a single firm in Vietnam. The company is working with government agencies to mitigate damage and has pledged to prioritize environmental protection going forward. The fish kill has adversely affected the economy and sparked domestic political tensions in recent months.

Myanmar

Myanmar removed from money laundering watch list. The Financial Action Task Force (FATF), an intergovernmental body that includes China and the United States, on June 24 removed Myanmar from its money laundering watch list. The decision came after a FATF team made an on-site visit to assess Myanmar’s anti-money laundering and counterterrorism financing frameworks, and noted a significant improvement in its supporting laws and regulations. The removal is expected to facilitate the ease of doing business in Myanmar for financial institutions from other countries.

21st-Century Panglong Conference set for August. President’s Office spokesperson Zaw Htay on June 28 said State Counselor Aung San Suu Kyi and representatives from the eight ethnic armed groups that signed a cease-fire last October agreed to hold the 21st-Century Panglong Conference no later than the last week of August. The conference is intended to hammer out a framework for national reconciliation with various ethnic armed groups. Participation of the United Nationalities Federal Council, a group of armed groups that did not sign the cease-fire, remains in doubt. The government has said ethnic rebels do not need to sign the cease-fire agreement in order to take part in the new peace process.

Communal violence flares in Bago Region, Kachin State. Communal violence flared in Bago Region in southcentral Myanmar on June 23 as a 200-strong Buddhist mob destroyed a mosque in the region’s Waw Township, following a dispute between local Buddhists and Muslims over a construction project. Authorities decided not to file charges against the perpetrators. Separately, another mob on July 1 burned down a Muslim prayer hall in Hpakant Township in northern Myanmar’s Kachin State over another construction dispute. Police have arrested four men and a woman in connection to the incident in Hpakant.

Malaysia

Najib announces cabinet reshuffle. Prime Minister Najib Razak on June 27 announced the third cabinet reshuffle since 2009 in an effort to further consolidate his control within the ruling United Malay National Organization (UMNO). Najib appointed two new ministers—Mah Siew Keong as the new minister in charge of plantations and commodities, and Johari Abdul Ghani as second finance minister. UMNO vice president Shafie Apdal on July 4 became the latest political figure to leave the party in a show of dissent against Najib—following in the footsteps of Muhyiddin Yassin, Najib’s former deputy, and Mukhriz Mahathir, son of former prime minister Mahathir Mohamad.

Chief of anti-corruption body investigating 1MDB steps down. The Malaysian Anti-Corruption Commission on June 23 announced that its head, Kassim Mohamed, will step down from his position on August 1, more than two years before the scheduled end of his term. Kassim, who took office in 2010, has been spearheading an investigation into allegations of graft and financial mismanagement at state investment fund 1Malaysia Development Bhd (1MDB) and the transfer of an alleged $647 million donation to 1MDB into Prime Minister Najib Razak’s bank account.

Malaysia signs port alliance agreement with China under One Belt One Road initiative. A memorandum of understanding was signed on June 25 in Huizhou between Kuantan Port and the Port of Huizhou in southern China as part of Beijing’s One Belt One Road initiative, which aims to boost trade and infrastructure connectivity between China and its neighboring countries. Malaysian transport minister Liow Tiong Lai said at the signing ceremony that Malaysia and China plan to strengthen their partnership on human capacity training as part of the agreement.

Thailand

Prayuth says he will not resign regardless of August referendum outcome. Prime Minister Prayuth Chan-o-cha on June 27 said that he would not step down even if voters reject a draft constitution in the country’s August 7 referendum. The referendum is Thailand’s first national vote since the 2014 coup and will determine if the Thai population will accept the new constitution. The military government has banned criticism of the charter ahead of the referendum. Prayuth’s statement was made in light of British prime minister David Cameron’s resignation following Britain’s referendum to quit the European Union.

Thailand loses bid for UNSC seat to Kazakhstan. Kazakhstan on June 28 defeated Thailand in the second round of voting for a non-permanent seat on the United Nations’ Security Council. Thailand received 55 votes to Kazakhstan’s 138 votes. Non-permanent members are elected for a two-year term by the UN’s General Assembly and the newly elected countries will begin their terms on January 1, 2017. Kazakhstan will be joined by Bolivia, Ethiopia, and Sweden, while Italy and the Netherlands will share the final seat.

Singapore

Blogger sentenced to eight months in jail over “seditious” anti-foreigner posts. Yang Kaiheng, owner of the website “The Real Singapore,” on June 28 pleaded guilty to sedition charges and was sentenced to eight months in jail. Yang and his wife, Ai Takagi, published a series of xenophobic articles that “sowed discord” and provoked hatred toward foreigners living in Singapore, according to the court. Prosecutors argued that Yang allowed Takagi to write the posts to generate increased advertising revenue on their website, with bank statements showing over $500,000 in revenue over three years.

Three U.S. guided-missile destroyers visit Singapore. The U.S. Pacific Surface Action Group, consisting of the guided-missile destroyers USS Decatur, USS Momsen, and USS Spruance, made a port call to Singapore July 2-5. Along with two detachments from the Helicopter Maritime Strike Squadron 49, the ships are conducting activities with regional counterparts and maritime security operations in order to contribute to freedom of navigation and lawful use of the sea. The Decatur and Momsen previously participated in exercises with forces from Japan and South Korea.

Cambodia

Hun Sen accuses foreign critics of “bullying,” denies political crisis. Prime Minister Hun Sen on June 28 accused foreign powers of bullying, following accusations that Cambodia helped Beijing block a recent joint ASEAN press statement on the South China Sea dispute. Hun Sen accused critics of “collusion” and attempting to exploit ASEAN as a pawn against China. He also dismissed claims of a political crisis in Cambodia as “fabrications” by scaremongers. One day earlier, the ruling Cambodian People’s Party threatened lawmakers from the opposition Cambodia National Rescue Party with a salary freeze as punishment for their ongoing boycott of the parliament.

Laos

Prime minister visits Cambodia, discusses opening of new border checkpoints. Prime Minister Thongloun Sisoulith on June 27 met Cambodian premier Hun Sen in Phnom Penh, where they vowed to strengthen bilateral economic and security cooperation by opening more checkpoints along the Laos-Cambodia border. The agreement was part of the two nations’ attempt to boost trade, promote tourism, and prevent illegal border-crossing. The new checkpoints will supplement the route through the Voeung Kam-Dom Kralor post, currently the sole overland route linking the two countries.

South China Sea

Permanent Court of Arbitration announces date for Philippines v. China decision. The Permanent Court of Arbitration at The Hague on June 29 said that it would issue the long-anticipated ruling on the Philippines’ case against China’s extensive maritime claims on July 12. The arbitration case was launched by Manila in 2013 to contest Beijing’s “nine-dash-line,” which covers up to 85 percent of the South China Sea. Beijing has refused to acknowledge the court’s jurisdiction over the case and embarked on a public relations blitz to garner international support ahead of the ruling, which analysts expect will favor the Philippines.

China identifies “combustible ice” reserves in South China Sea. The China Geological Survey has discovered a new reserve of methane hydrate—a gas-trapping ice compound—west of the Pearl River Basin in the South China Sea, according to a June 26 report by the Guangzhou Daily. A 135-square-mile belt of the compound, also called “combustible ice,” was found approximately one mile below the sea surface. Authorities did not specify the amount of natural gas the belt might contain. Given the ice’s high energy density, many expect the discovery to fuel further energy exploration in the area.

Trans-Pacific Partnership

Trump vows to cancel TPP if he becomes president. Presumptive Republican presidential nominee Donald Trump said during a campaign stop at a metals recycling facility in Pennsylvania on June 28 that if elected he will cancel the Trans-Pacific Partnership (TPP) trade deal, signed in February between the administration of President Barack Obama and 11 Asia-Pacific countries. Trump also said he would reopen the North America Free Trade Agreement (NAFTA) with neighboring Mexico and Canada, and force them to accept changes to NAFTA. Trump called the TPP “another disaster done and pushed by special interests.”

ASEAN

ASEAN wants RCEP to eliminate tariffs on over 90 percent of goods. The 10 ASEAN member countries are expected to propose a 92 percent tariff reduction on trade in goods as part of the ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP) in August with eight non-ASEAN economies, according to a June 27 report in the Thai newspaper The Nation. RCEP countries had previously agreed to an immediate 65 percent reduction in tariffs, with another 20 percent to be reduced within 10 years, and the remaining 15 percent covering sensitive products to be negotiated in the future.

Myanmar downgraded in annual Trafficking in Persons report; Thailand, Philippines, Cambodia upgraded. The U.S. State Department’s Trafficking in Persons Report 2016 has downgraded Myanmar to Tier 3 from the Tier 2 watch list due to the persistence of recruitment of child soldiers and forced labor. The annual report ranks governments based on their efforts to combat human trafficking. Among ASEAN countries, Thailand was upgraded from last year’s Tier 3—the lowest ranking—to the Tier 2 watch list in the report, released on June 30. The Philippines and Cambodia also received upgrades in their tier rankings, based on efforts by their governments to eliminate forced labor, the sex trade, and child sex trafficking.

Looking Ahead

CSIS Sixth Annual South China Sea Conference. The Southeast Asia Program at CSIS on July 12 will host the 6th Annual CSIS South China Sea Conference to examine both longstanding and emerging issues in the South China Sea. The conference will feature speakers from throughout the region, including from claimant countries. Panelists will review recent developments, engage on legal and military issues, and discuss the wider geostrategic implications. Senator Dan Sullivan, member of the Senate Committee on Armed Services, will deliver the keynote address. The event will take place from 9:00 a.m. to 4:30 p.m., 1616 Rhode Island Ave, NW. Click here to RSVP.

Financing China’s Expanding Role in Global Energy. The Energy and National Security Program and the Freeman Chair in China Studies at CSIS on July 13 will host a discussion with Kevin Gallaghar and Bo Kong on the role of Chinese state financing in global energy development, and to present findings from two of their recently published studies from the Global Economic Governance Initiative at Boston University. The event will take place from 2:00 p.m. to 3.30 p.m., 1616 Rhode Island Ave, NW. Click here to RSVP.

USINDO DC Open Forum on “Disengaging Indonesian Jihadists: What Works”. The United States–Indonesia Society on July 20 will host an open forum with Dr. Julie Chernov Hwang, associate professor and chair of the Department of Political Science and International Relations at Goucher College, to discuss the process of reintegrating Islamist extremists back into society in Indonesia. The event will take place from 2:30 p.m. to 4:00 p.m., 1625 Massachusetts Ave, NW, Suite 550. Click here to RSVP.