UPDATE 2-Singapore, shippers raise security over Malacca threat

* Singapore says beefs up security at airport, resorts

* Shippers say Malacca cargoes flow as normal, but on alert

* Security source says Indonesians not involved

* Jemaah Islamiah or Aceh group possible suspects

By Neil Chatterjee

Defense News ~ SINGAPORE, March 5 (Reuters) - Singapore raised alert levels on Friday in the Asian financial centre and beefed up security at its airport and new casinos after a warning by its navy of possible attacks on oil tankers in a key shipping lane.

Singapore, Malaysia and Indonesia have already stepped up sea patrols in the Strait of Malacca after Singapore's navy said on Thursday it had received indications a terror group is planning attacks on oil tankers.

"We should not be in denial. The threat is real and we are not immune from it ... we must recognise that no security system can be completely foolproof," Singapore's Home Affairs Minister Wong Kan Seng told parliament.

"We received intelligence from our liaison partners about this possible plot to go and attack vessels coming through Singapore waters through the Strait of Malacca," Wong said in the Singapore government's first comments on the threat.

He said Singapore had hardened security, including at new casino resorts owned by Genting Singapore (GENS.SI) and Las Vegas Sands (LVS.N), which the government hopes will significantly boost tourism. [ID:nSGE62404X]

Any attack could have a disproportionate effect on the global economy as well as on Singapore because the nearby and narrow Malacca waterway carries about 40 percent of world trade.

Singapore is home to the world's top container shipping port and is favoured by many multinationals as a base, from Citigroup (C.N) to GlaxoSmithKline (GSK.L) and ExxonMobil (XOM.N). <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on Malacca Strait here Factbox on the strait [ID:nSGE6240A5] Q+A story on maritime terrorism [ID:nSGE6240AU] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Wong did not give any indication of who the threat was from but militants have long had Singapore in their sights.

"So long as radicalisation and self-radicalisation of individuals continues to occur, terror groups remain capable of recouping their losses with new recruits," he said, adding the recent capture or death of militant leaders in Indonesia had not discouraged recruits from terror acts.

USUAL SUSPECTS

A security source briefed by Singaporean authorities said Indonesian citizens were not involved but added the authorities had not indicated the nationalities of those who were.

The source, who did not want to be identified because of the sensitivity of the information, declined to rule out Jemaah Islamiah (JI), a regional al Qaeda-linked militant Islamist group with mostly Indonesian members.

Some of its members have been Malaysians and Singaporeans.

JI has been responsible for a string of deadly attacks in Jakarta and the resort island of Bali.

A Jemaah Islamiah plot for multiple attacks in Singapore was uncovered in December 2001. Internal security and policing in Singapore are far ahead of neighbouring states, but the escape of a JI-linked militant, Mas Selamat Kastari, from prison in 2008 was a lapse that showed security is not infallible.

Malaysia re-captured Mas Selamat, a Singaporean, last year.

Other experts pointed to the possible involvement of militants in Indonesia's Aceh, at the northern end of the strait. Indonesia said on Wednesday it had detained 13 suspects from a group taking part in a militant training camp in the province.

"If indeed there was a terrorist group in Aceh, Aceh is indeed a safe haven ... it is a conflict area, and in conflict areas they have easy access to training camps, hiding places, weapons, and recruitment, plus the location is close to the Malacca strait," said an Indonesian government source.

KEEPING LOOKOUT

The rare terror threat announced by Singapore could raise insurance costs for shippers plying the 900-km long strait that links Asia with the Middle East and Europe. [ID:nLDE6231MC]

However, shippers and analysts say pulling off a terror attack at sea would be more difficult than bombing a hotel.

"This has never happened (in the Malacca Strait). As far as I see, the possibility is quite slim. To do it on the sea and to do it on land is very different," said Widihardja Tanudjaja, CEO of Indonesian tanker firm Berlian Laju Tankers (BLTA.JK).

Still, he said Berlian's crews were on high alert.

"The watch is improved, the night patrol and day patrol are circulating more often and on full alert. We will stay in communication every 10 minutes with the joint patrol forces," he told Reuters. "Our trade schedule remains as normal."

The strait is more heavily patrolled compared to the open area off Somalia, where pirates have been able to board and hijack large vessels, including an oil supertanker in 2008.

"It's not bandit country in the same sense as Yemen and Somalia. The security architecture now is far more robust, in terms of patrols, law enforcement, naval development," said Jason Alderwick, maritime analyst at Britain's International Institute for Strategic Studies.

(Additional reporting by Nopporn Wong-Anan, Fabian Ng and Harry Suhartono in SINGAPORE; Muklis Ali, Olivia Rondonuwu and Sunanda Creagh in JAKARTA; and Willian Maclean in LONDON)