Indonesian authorities arrested six suspected militants on Batam island on Friday who were believed to be linked to the Islamic State group and plotting an attack on nearby Singapore, a police spokesman said.
Singapore said it had stepped up security in response.
Indonesian police spokesman Agus Rianto told reporters the suspects had been plotting with a member of the Islamic State militant group in Syria to attack the wealthy city-state via Batam, which is about 15 km (10 miles) to the south.
"What we understand so far is that they were planning to attack vital objects, busy areas including police offices," Rianto said.
The six arrested were suspected of having links to Bahrun Naim, an Indonesian fighting with Islamic State in Syria, police said.
Indonesian investigators believe that Naim was one of the masterminds behind an attack in January in the Indonesian capital of Jakarta, in which eight people were killed including the four attackers.
"There's a link to Bahrun Naim because there was communication with Bahrun Naim - but whether they were affiliated with Bahrun Naim's group or not - this is what we're investigating now," Rianto said.
The Batam Pos newspaper quoted police as saying the six suspects were mostly factory workers aged between 19 and 46.
Some media reported that the suspects had been plotting a rocket attack on Singapore, but that was not confirmed by Indonesian authorities. National police spokesman Martinu Sitompul said police and an anti-terrorist unit were in the early stages of their investigation.
Batam is linked to Singapore by frequent ferries and its beach resorts and golf courses are a popular weekend getaway destination.
Singapore said it had stepped up its internal and border security.
"This development highlights the seriousness of the terrorism threat to Singapore," a spokesman for Singapore's interior ministry said in a statement. "The public are advised to remain vigilant."
Attacks at home
Authorities in Indonesia and neighbouring Malaysia say dozens of men have gone from those countries to join IS in the Middle East, while Singapore has detained several people suspected of supporting the group.
Security officials fear that Naim and other Islamic State leaders were now asking supporters in Indonesia and other countries to launch attacks at home, instead of being drawn to the fight in the Middle East.
Part of the illuminated circuit is seen during the third practice session of the Singapore F1 Grand Prix at the Marina Bay circuit September 25, 2010.
Southeast Asian militants fighting for Islamic State in the Middle East have said they have chosen one of the most wanted men in the Philippines to head a regional faction of the radical group, security officials said last month.
Jakarta-based security analyst Sidney Jones said it would be a departure for Naim and his supporters if they were thinking of attacking targets outside Indonesia.
"One thing I think is clear is Bahrun Naim has been able to establish a lot of communication with a lot of people through his social media network," Jones said.
Multi-ethnic Singapore has never seen a successful attack by Islamist militants, though authorities did break up a plot to bomb several embassies soon after the Sept. 11, 2001, attacks on the United States.
But Singapore's Prime Minister Lee Hsien Loong said this week that the financial centre was a target for IS as they saw it as "a rational, open, cosmopolitan country", even though it was not involved in the U.S.-led campaign against the militant group in the Middle East.
"So do not think that by lying low, we are not going to be a target," Lee told reporters while on a visit to the United States, the Straits Times newspaper reported.
Indonesian forces have been on heightened alert following the killing of the country's most-wanted militant last month.
Santoso, among the first Indonesians to pledge loyalty to Islamic State, was killed in a gun battle with security forces on the island of Sulawesi.