UPDATE 1-Indonesia's Widodo faces test on reform credentials in second term

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(Adds quotes, context)

* Widodo sworn in for second term under tight security

* President says to name new cabinet on Monday

* Widodo has pledged to create more jobs for youthful population

By Tabita Diela and Agustinus Beo Da Costa

JAKARTA, Oct 20 (Reuters) - Indonesian President Joko Widodo was sworn in on Sunday for a second five-year term leading the world's third-biggest democracy, after an election dominated by economic issues but also the growing influence of conservative Islam.

Widodo, 58, has pledged to cut red tape and keep building infrastructure to underpin growth in southeast Asia's largest economy, but made improving education a top priority to encourage investment and create jobs for a youthful population of 260 million people.

"This will be a big problem if we fail to create enough job opportunities," Widodo told parliament after his inauguration, where he cited his dream of Indonesia becoming one of the world's top five economies by 2045 with a GDP worth $7 trillion.

The president said he would push two bills to replace laws that have hampered job creation, as well as warning he could sack underperforming civil servants.

He earlier told reporters he would name his cabinet on Monday morning.

There was tight security at parliament for his swearing in alongside his vice president, Islamic cleric Ma'ruf Amin.

More than 30,000 security personnel were deployed in Jakarta following recent student demonstrations and after the country's security minister was stabbed by a suspected Islamic militant earlier this month.

The inauguration was attended by regional leaders including Australian Prime Minister Scott Morrison, Malaysia's Mahathir Mohamad and Singapore's Lee Hsien Loong.

Widodo grew up in a riverside slum and was the first national leader to come from outside the political and military elite.

Popularly known as Jokowi, his everyman image has resonated with ordinary voters, though he has been criticised for being too beholden to powerful party backers and surrounding himself with former generals from the era of late strongman leader Suharto.

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APPROVAL RATING

Last month, Indonesia saw the biggest student demonstrations since Suharto stepped down in 1998 amid anger over bills parliament had tried to push through that critics say threaten democracy, intrude into privacy and hurt the fight against graft.

Still, so far Widodo's popularity appears to be holding up, and a survey published last week by Indonesia's biggest newspaper Kompas showed his approval rating dipping only slightly to 58.8%.

In April's election, Widodo defeated former general Prabowo Subianto by a double-digit margin, but the poll revealed a split with more moderate Muslims and minorities backing Widodo and conservative Muslim regions backing his rival.

Violent rioting broke out in Jakarta when Prabowo contested the poll results over claims of cheating, but the Constitutional Court upheld Widodo's victory and there have since been talks to bring some opposition figures into the government.

The make-up of Widodo's cabinet is being closely watched to see the proporation of technocrats versus party affiliated posts and there has been speculation that Prabowo or other members of the opposition could join the cabinet.

Ahead of the start of his new term, Widodo has also faced an upsurge in bloody unrest in the region of Papua, where there has been a low-level separatist insurgency for decades.

The president's $33 billion plan to relocate Indonesia's capital from sinking, congested Jakarta on Java island to the island of Borneo has grabbed headlines, but has raised questions about how it would be financed and its environmental impact.

Widodo has also promised to cut corporate taxes, relax labour rules and open up foreign ownership to attract investment.

Indonesia's economic growth is forecast to slow for the first time in four years in 2019 and some independent observers warn of a further slowdown amid a global economic downturn.

(Additional reporting by Stanley Widianto, Gayatri Suroyo, Fransiska Nangoy and Ed Davies Editing by David Holmes)

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