The two nations have sought to boost security ties in the face of numerous flashpoints in the Asia-Pacific region including the contested South China Sea.

Australia and Indonesia cemented a landmark defense pact last year that includes provisions for joint drills and deployments to each country, with the neighbors pledging closer cooperation in the region.

Albanese made the Indonesian capital his first overseas stop after securing a second term in an election earlier this month, in what has become a traditional tour for new Australian premiers, AFP reported.

The Labor party leader said Thursday that Australia is seeking to build on the defense cooperation agreement signed with Indonesia in August.

"This treaty-level agreement, underpinned by the Lombok treaty, will enable new cooperation in maritime security, counterterrorism as well as humanitarian and disaster relief," Albanese said in a joint press conference with President Prabowo Subianto.

Albanese called the August deal "the most significant step" in Australia and Indonesia's security partnership for three decades.

"Let me be very clear, I do not see this agreement though, as the last step, just the next step," he added.

The earlier Lombok treaty, which entered into force in 2008, included agreements on joint military exercises, maritime security and military training.

Prabowo told journalists that Jakarta and Canberra would further discuss ways to improve defense ties, as well as forge closer economic cooperation.

"We also invite Australia to participate more in our economy," he said, calling on Australian businesses to invest in his country.

"It is important to strengthen this cooperation amid uncertainties in the current global economic situation."

Albanese said the strengthening of Australia's investments in Indonesia is "natural and vital but it is not inevitable", adding that greater engagement from government, business and civil society was needed.

"The growth of your nation and your region also speaks for the prosperity and opportunity created by free and fair trade," he added.

Indonesia has moved to bolster relations with Australia under Prabowo's administration.

In December, months after Prabowo took office, Jakarta returned the five remaining members of the "Bali Nine" drug ring to Australia under a deal between the two countries.

Following the signing of the defense deal last year, more than 2,000 soldiers from the two countries held joint military drills in November that included air, land, sea and cyber exercises.

Indonesia dismissed reports last month that Russia had requested to base military aircraft in the archipelago's easternmost province of Papua, about 1,200 kilometers north of the Australian city of Darwin, where a US Marine Corps rotational force is based for six months of the year, Reuters reported.

"Indonesia's answer is no, they've made it very clear," Albanese told reporters earlier on Thursday when asked about the matter, which had drawn attention during Australia's election campaign.

Russia will try to increase its influence in the region and Australia is responding by building ties with neighbors including Indonesia, Albanese added.

Australian Strategic Policy Institute senior analyst for defense, Euan Graham, said the Australia-Indonesia relationship has "avoided serious crisis for more than a decade, cooperation continues to move forward incrementally and there is greater stability than before".

Yet wide differences remain, he added.

"Jakarta sees China and Russia as vectors of opportunity more than threats and views the US and China primarily through the same lens of great power rivalry. That's largely at odds with Canberra's world view," Graham said.

Indonesia is projected to be the fifth largest economy in the world by the end of the next decade.