In a report, the Jakarta-based Institute for Policy Analysis of Conflict (IPAC) also warned that Indonesian and Malaysian fighters who have joined IS in Syria appear to have formed a military unit there, likely strengthening militant networks in Southeast Asia.
After a series of attacks on foreigners in the last decade, Indonesian extremists have in recent years directed their violence at domestic "enemies of Islam", mostly police. There have been no attacks against foreigners since the 2009 twin hotel bombings in Jakarta which killed seven people.
IS spokesman Abu Mohamed al-Adnani in a video Monday called for Muslims to kill Westerners whose countries have joined the US-led coalition against IS -- in particular Americans and the French.
The US has carried out air strikes in both Syria and Iraq, while France has carried out strikes over Iraq.
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"The overall capacity of Indonesian extremists remains low, but their commitment to (IS) could prove deadly," said IPAC director Sidney Jones.
It has, however, generated outrage and rejection from the mainstream Muslim community.
Based on social-media monitoring and interviews, IPAC said an IS Indonesian-Malaysian military unit has been formed, reportedly aiming to establish an archipelagic Islamic State group in Southeast Asia.
Indonesia and Malaysia, among others in the region, are struggling to prevent nationals from going to Syria and Iraq as fighters and trying to monitor their return.
IPAC called for a strengthening of the country's prisons system. It described jailed radical cleric Aman Abdurrahman as the thread connecting all parts of Indonesia's pro-IS network despite being in a maximum security facility.