JAKARTA (Reuters) - Indonesia's President Susilo Bambang Yudhoyono has said he is concerned by growing religious intolerance in the country with world's largest Muslim population, which many analysts say his administration has failed to contain.

Indonesia has recently seen a series of increasingly violent attacks on religious minorities like Christians, Shia Muslims and members of Ahmadiyah, a small Islamic sect which is considered heretical by mainstream Muslims.

"I am very concerned about the continuing incidents of intolerance and communal conflict we see, which are often violent," Yudhoyono said in an annual address to parliament.

"We should always be able to prevent these if we prioritize dialogue and if the country's leaders, in government and religious institutions, take collective responsibility."

Yudhoyono, in office since 2004 and whose current term ends next year, has been criticized for failing to defend the rights of religious minorities.

"President Yudhoyono seems to say all the right words. But he does not talk about legal discrimination that his administration had created over the last nine years," Andreas Harsono, Indonesia director for Human Rights Watch, told Reuters in an email.

Human Rights Watch released a damning report this year that listed more than 260 violent incidents against religious minorities in 2012. It accused some cabinet members of fanning the violence.

Nearly 90 percent of Indonesia's population considers itself Muslim but the constitution guarantees freedom of worship in a country that was once home to powerful Buddhist and Hindu kingdoms.

Most Indonesians follow a moderate form of Islam but militants linked to al Qaeda have carried out several major attacks on foreign targets since 2002.

Indonesia has largely managed to root out militant networks though sporadic attacks continue.

Yudhoyono also said he would continue to battle corruption in one of the world's most graft-ridden countries and another key problem which many observers accuse his government doing little to counter.

Two days before his speech, a top energy official was arrested by the anti-corruption agency (KPK) over allegations he pocketed more than half a million dollars in bribes from an oil firm.

It is the latest in a string of corruption scandals that have also damaged many of the major political parties, including Yudhoyono's ruling Democratic Party whose popularity has been sliding ahead of next year's general and presidential elections.

But Yudhoyono made no mention of the latest arrest.

"We continue to try and prevent and eradicate corruption to strive for a 'Clean Indonesia'," he said. "And I continue to push law enforcement agencies like the police, attorney general's office, and even the KPK, to take effective steps to fight corruption."

(Editing by Jonathan Thatcher and Robert Birsel)