You seem quite well versed on what's going on in Indonesia and you may know this already but here's a comment on an article in the Economist from a few months ago that explains things very well...
From:
http://www.economist.com/displayStory.cfm?story_id=12601860&mode=comment&intent=readBottom"I am an American who has lived in Indonesia for the past thirteen years. It's not at all surprising to me that militant Islam is on the rise. It is the social, political and economic condition of this country that has made militant Islam attractive. And I understand why.
Poverty here is appalling, as is economic inequality. Corruption is even more rampant now than it was under the Soeharto regime. Absolutely everything involves corruption. The Government does not govern, it simply does not function. There is no rule of law. Judgements can be bought. Law enforcement is almost nonexistent. Education and health care here are truly awful. Public services are equally awful. The roads, sanitation, health care, power supply, waste management, urban planning, environmental protection and other basic functions of government here are appalling.
Meanwhile, a tiny minority of Indonesians enjoy tremendous wealth (often the fruits of corruption, collusion and nepotism), and frequently seen getting off almost scot-free when they commit abhorrent crimes (Tommy Soeharto's gang-style murder of a high court judge as a case in point). The media here broadcast absolute trash, much of it celebrating the consumptive lifestyle of the wealthy few. And finally, democracy really does not work yet in Indonesia. It cannot work when the level of education is so poor, and corruption is so rampant. Democracy is not even understood here, neither by the voters, nor by the elected.
The extreme frustration felt by the vast majority of Indonesians in facing the day to day realities of living under such conditions makes militant Islam very attractive. They find a sense of power, a sense of order, security, and something akin to rule of law within its doctrines. There is leadership, there is hope, there is a reason to continue living.
I am therefore not at all surprised at the rise of militant Islam. Unless the most basic problems of Indonesia as a nation are addressed, this trend is bound to continue, and to increase in strength."