Indonesia president guarantees security after blasts

By Sara Webb and Andreas Ismar

JAKARTA (Reuters) – Indonesian President Susilo Bambang Yudhoyono said on Tuesday his country could guarantee security following deadly suicide bomb attacks on two luxury hotels in Jakarta last week.

The attacks at the JW Marriott and Ritz-Carlton hotels killed nine people and wounded 53, including foreigners and Indonesians. The bombings were the first such attacks in the country in four years.

"My message to the world is that Indonesia can overcome this problem and will continue to guarantee even greater security in the future," Yudhoyono said in a speech to inaugurate a new museum in the capital.

"In terms of the investigation, the police are being assisted by the military and the intelligence agency and I am monitoring their efforts," he added. "I am certain that we will be able to immediately resolve last Friday's incident."

The hotel bombings bear the hallmarks of Jemaah Islamiah (JI), the Southeast Asian militant Muslim group, in that they targeted Western hotels and foreign nationals. The group was responsible for several previous attacks in Indonesia, including the 2002 bomb blasts in Bali which killed 202 people.

Police said they have taken DNA samples from the families of two Indonesian men who may be the suicide bombers. One of them, Nurhasbi, had school links to members of JI. The other, Ibrahim, worked at the florist in the Ritz-Carlton hotel, police said. The bombers checked in to the Marriott as paying guests on Wednesday and assembled the bombs in their room, 1808 on the 18th floor, according to the police. A third bomb was found and defused in a laptop computer bag in room 1808.

A police source told Reuters on Monday that one theory the police are working on is that the bombers planned to detonate the bomb on the 18th floor first, sending panicking guests rushing down to the lobby where one of the suicide bombers would detonate a second bomb, potentially killing and wounding many more guests.

Security has been raised in Indonesia since Friday's attacks. Experts from the bomb squad searched an office block near the Australian embassy on Tuesday after a caller telephoned to say a bomb had been planted in the building.

Several bomb threats have been reported since Friday. State oil and gas firm Pertamina said it had stepped up security at its refineries and oil depots.

Banks including Royal Bank of Scotland and Singapore's DBS have temporarily banned staff from visiting Indonesia, the world's most populous Muslim country, while Citigroup Inc and other banks have imposed restrictions on staff travel.

"If you are the regional director of a big firm, will you send your staff today or tell them to wait a few weeks? I think the latter," said Hans Vriens, a Singapore-based consultant, adding that this was likely to be a temporary setback.

But such measures are unlikely to have much impact on Indonesia's economy provided Friday's attacks are not the start of a new wave of bombings, analysts said.

SOLID ECONOMIC OUTLOOK

Investor interest in emerging market Indonesia has picked up in recent months, thanks to this month's re-election of reform-minded Yudhoyono and the prospect of economic growth.

The central bank has forecast growth of between 3-4 percent this year, making Indonesia one of the few bright spots in Asia thanks to strong consumer demand in a country of 226 million people with a growing middle class.

"There's not much GDP impact from this. Improving global fundamentals outweigh this country-specific impact, the world is repositioning for a stronger growth outlook and that's very bullish for Indonesia," said Tim Condon, economist at ING in Singapore.

"Indonesia was a darling, everyone was doing business there."

Volkswagen AG, Europe's largest carmaker, and British American Tobacco Plc, the world's No. 2 cigarette maker, have invested in Indonesia, and firms ranging from toothpaste makers to oil and gas giants are lining up.

"The rest of the neighborhood looks bad and that has helped Indonesia," said consultant Vriens. "Indonesia has an emerging middle class, it's a serious country, you have to be there."

But Yudhoyono must still restore confidence, analysts said.

"As a security challenge, the threat of Islamist terrorism is likely to linger and the government will need to invest substantial resources to keep the threat under control," David Kiu, of political risk group Eurasia, wrote in a report.

"The bombings will shore up domestic public and international support for Yudhoyono to take a harsher stance toward radical Islamism and terrorist-linked activities."