JAKARTA, Indonesia—Indonesian police said a suspected Islamic militant arrested earlier this week was making explosives more powerful than those used in the 2002 Bali bombings that killed 202 people.

National Police spokesman Rikwanto said Saturday that Rio Priatna Wibawa, 23, was linked to Bahrun Naim, an Indonesian militant fighting with Islamic State group in Syria who is believed to have inspired attacks at home including a January attack in the capital Jakarta that killed eight people.

Mr. Rikwanto, who goes by one name, said bomb-making explosives were recovered from a laboratory in Mr. Wibawa’s home in Majalengka town, West Java province. With his ability, Mr. Wibawa was making bombs three times as powerful as the Bali bombs, Mr. Rikwanto said.

A security crackdown since the 2002 Bali bombings that were carried out by the al-Qaeda-linked Jemaah Islamiyah militant group has netted hundreds of radicals and reduced their capacity for large attacks. But a new threat has emerged from the hundreds of Indonesians who have traveled abroad to fight with IS and their supporters in Indonesia.

Mr. Rikwanto said Mr. Wibawa, a dropout from an agricultural university who was radicalized by the writings of firebrand clericAman Abdurahman, received funds from radicalized Indonesians working in Saudi Arabia, Malaysia and Taiwan, and was operating under the direction of Mr. Naim.

Several other suspected militants were involved in the bomb-making and police are searching for them, Mr. Rikwanto said. Police, from their interrogation of Mr. Wibawa, believe he obtained bomb-making materials from contacts in Java, Sumatra and East Nusatenggara in Indonesia as well as the Philippines.

Possible targets for attack were parliament building, police headquarters, embassies, television stations, places of worship and cafes, according to Mr. Rikwanto.

Chemicals seized from Mr. Wibawa’s laboratory included RDX, which is a component in plastic explosives, TNT, high explosive peroxide HMTD and gunpowder.

—Copyright 2016 The Associated Press