Indonesian President Susilo Bambang Yudhoyono has arrived in Australia for bilateral talks.
Australian Prime Minster Julia Gillard met the president in Darwin ahead of the second annual Indonesia-Australia Leaders' Meeting.
A joint Memorandum of Understanding was also signed by both nation's defence ministries.
Australia has given four C 130 H class planes to Indonesia.
SOUNDBITE: INDONESIAN DEFENCE MINISTER PURNOMO YUSIANTORO, SAYING (English):
"Those aircraft will be used, very useful for us, especially because Indonesia has challenges in military operations other than war."
The talks, held over two days, will cover trade, regional security and issues such as asylum seekers.
A route between Indonesia and Australian territory is popular with people seeking refuge.
So far this year, more than 50 boats carrying more than 4,000 asylum seekers have been detected by Australian authorities.