Relations between Indonesia and Australia are going through another testing time following the bomb attack outside the Australian Embassy in Jakarta on Thursday. There is no doubt that the perpetrators were targeting Australia, either the property or the people inside it. No one inside was hurt thanks to the heavily fortified structure designed to withstand precisely that kind of attack. Still, among the nine victims outside were a gardener and security guards of the embassy. Among the critically injured is a five-year-old girl of Australian nationality.

While this was clearly an attack on Australian interests that took place on our soil, Indonesia took the brunt of the impact. We are not talking solely about the deaths and the injured. Beyond the personal tragedy that these victims and their families are experiencing, the rest of the nation will also suffer.

Going by past experiences with similar bomb attacks – in two nightclubs in Bali in October 2002, and at the JW Marriott hotel in Jakarta in August 2003 – Indonesia will lose its reputation and credibility as a state. The failure to prevent the latest terrorist attack once again raises questions about the ability of the state to protect lives and property.

While Indonesia is not yet a failed state, it will be increasingly perceived by many as one if this kind of attack keeps happening. This has many implications in terms of Indonesia's international standing, most importantly in terms of investor confidence and tourism.

Most Indonesians will likely return to their routine activities in a matter of days, but Australians and foreigners have the option of leaving the country. After Thursday, many Australians, and probably other expatriates, are rethinking their stay in Indonesia.

There are already talks about Australian expatriates leaving the country. Many might decide to stay because they are either financially or emotionally connected to this country. This does not bode well for future ties between Indonesia and Australia.

Ties between the two countries have not solely depended upon the relations between governments. Our relations over the years have expanded into many non-government sectors. These have helped to smooth frequent frictions between our two governments. When they quarreled over the East Timor issue in 1999, relations in other sectors, like education, continued unaffected.

If Australians abandon Indonesia as many fear, then the scope of relations would be reduced to strictly government-to-government, with all its consequences. But there are some positive signs that should make us optimistic.

Contrary to the wishes of the terrorists, Thursday's tragedy brought the two nations closer rather than pushing us apart. Australia has offered to help investigate the attack and hunt down the terrorists. Besides its symbolic importance, such cooperation in the past brought quick results. Indonesia put together a team of international investigators, including from the Australian Federal Police, in the wake of the Bali bombing. The team was able to identify the perpetrators and caught most of them within less than a week after the attack.

Prime Minister John Howard announced on Friday a fund to help the victims of Thursday's attack, with the first A$1 million (US$700,000) contributed by his government. This is a positive gesture that should be seen not only in terms of the sum it represents, but also as a token of friendship between the two governments and the two countries.

Like all relationships, nothing should be taken for granted. Indonesia and Australia must continue to nurture these relations, especially now when the going is rough. It is the goal of the terrorists to sow mutual enmity and hatred into these relations. Let's not give them any satisfaction.

For Indonesia, the most immediate task should be to restore international confidence so that the many well-meaning expatriates, including Australians, who have contributed to the nation's development in the past, will remain in the country.