Suspected JI-linked groups have been selling magazines, VCDs, industrial items such as fertiliser and even everyday goods such as bread and coffee, an investigation by The Straits Times showed.

These businesses operate mostly in Indonesia.

Indonesian intelligence officials acknowledged the existence of a JI business network and its potential to fund the group's activities, including a violent campaign to set up a regional Islamic state. But no one can say for sure how extensive the network is.

Inspector-General Ansyaad Mbai, who heads Indonesia's Counter Terrorism Agency, revealed that suspected JI operative Abu Irsad, also known as Zarkasih, was caught last month while running a small bread distribution business.

But there was as yet not enough evidence to prove he had got his bread from a large Indonesian bakery that police believed was controlled by JI elements, the police chief said.

A senior Indonesian military official said a suspected JI militant who was arrested in Surabaya last month had been a distributor of herbal coffee for a Malaysian company.

'Their agents could be raking in huge profits because of the popularity of halal products (among Muslims),' said the security official, who added that several fertiliser suppliers had also come under the radar of security agencies for possible links to JI.

JI's apparent move towards business ventures is a marked departure for a group that had long relied on foreign sources of funds and criminal acts such as robbing banks to finance its activities.

Hambali, the former JI chief arrested in 2003, was said to have funded his terrorism campaign through money from unwitting donors around the world.

Leading regional terrorist expert Sidney Jones of the International Crisis Group, who is also researching JI-linked businesses, said: 'The big question is whether these JI-linked industries are contributing to jihad activities.

'But I think it is safe to assume that these people do not go into business because they want to get rich.'

Ms Jones also said this business network provides jobs for JI recruits. Their education at rural religious schools does not equip them with the skills to enter the mainstream job market.

Many usually end up as travelling preachers. Others make a living selling Muslim garb or fake perfumes and handicraft.

Several security analysts said that JI had operated on a shoestring budget, with its previous bomb attacks in Bali and Jakarta costing just over US$20,000 (S$30,400). This is why having a stream of income could make it more lethal.

Terrorism watchers remained concerned about the JI's activities, with Australia warning yesterday of possible imminent terrorist attacks in Indonesia, including in Bali.

But a lack of clear evidence had hampered action against the JI and the group's alleged businesses.

Inspector-General Mbai said: 'Unless we have proof that these businesses are helping terrorist activities, we cannot move on them.'

ljlopez@sph.com.sg

BE ALERT, ANYONE COULD BE A TERRORIST

'There is no such thing as a profile of a terrorist, going by the example of the arrests made in Glasgow or London...Who would have suspected a doctor would become a terrorist, just as in the case in Singapore, where you have a lawyer...So we must be careful not to fix the profile of a terrorist.'
DEPUTY PRIME MINISTER WONG KAN SENG.