Indonesia's police chief Tito Karnavian said terrorist arrests and raids in the country this year have risen as extremist group Islamic State of Iraq and Syria (ISIS) has been losing battles in the Middle East, prompting it to intensify operations overseas.

This happened even as Indonesia saw its conventional crime rates going down compared with the previous year, he said in a presentation marking the end of 2016.

Police raids this year netted 170 terrorists, of whom 33 were killed and the rest were arrested.

This figure is more than double the 75 terrorists arrested in 2015. Last year, seven Indonesian militants were killed by security agencies.

ISIS had expanded its area in the Middle East gradually over the last few years, but its footprint became smaller this year as it was attacked by Western powers and Russia, General Tito explained.

"This prompted it to shift, activating its network overseas. This explains the attacks in France, Turkey, Africa, and Indonesia is not excluded," Gen Tito said. "As long as ISIS exists in Syria, the potential threat will still remain, not only for Indonesia."

The fight against ISIS and its Indonesian sympathisers intensified in the last few weeks with about a dozen people arrested and killed, including several women who were being prepared to carry out suicide bombings.

Security officials in the region have said that ISIS is now looking to the Asean region as its next terror base instead of the Middle East, with southern Philippines seen as an area ripe for expansion.

Malaysian Defence Minister Hishammuddin Hussein said on Dec 18: "If they (ISIS fighters) flee from Iraq and Syria - as what is happening now in Aleppo, Mosul and Raqqa - I hope the cooperation between Asean countries can be increased as there is a possibility that they might create an Islamic caliphate in our region."

Gen Tito said yesterday that the fight against Indonesian militants has led to the loss of police officers. This year, one officer was killed and 11 were injured.

He said that conventional crime this year declined to 262,089, compared with 324,783 last year.

Meanwhile, in another terror scare, a resident of Magelang in Central Java yesterday found a homemade bomb under his hawker cart as he was about to prepare satay.

The bomb, packed inside a brown women's handbag, contained ammunition powder, a circuit, cables and a watch, which were all wrapped with brown tape. The police have destroyed the package, The Jakarta Post reported yesterday.

The resident, Mr Arif Rohman, found the homemade bomb at 4.30am when he was about to start making satay to sell. He took the bag from under the cart and put it on a wooden chair, and inspected it only later.

"It's a bomb circuit. There was ammunition powder weighing around two ounces (57g)," Central Java police spokesman Djarod Padakova said in Semarang on Tuesday.