Malaysia has declared high alert after Indonesian police claimed to have foiled a plot by IS-linked terrorists to set off bombs in Jakarta during the New Year celebrations.

"We are on alert. We are closely monitoring the situation," Inspector-General of Police Khalid Abu Bakar said yesterday.

He was commenting on the arrests of five members of an alleged extremist network in Indonesia and the seizure of chemicals, laboratory equipment and a flag inspired by the Islamic State group.

"Police personnel nationwide are on constant vigilance," said Khalid.

Those arrested included a 31-year-old teacher at an Islamic boarding school in Central Java and his 35-year-old pupil.