Denpasar – Australia and Indonesia have agreed to launch a feasibility study on a free trade pact, their leaders said Friday after meeting on the Indonesian resort island of Bali.
Australian Prime Minister John Howard held talks with Indonesia's President Susilo Bambang Yudhoyono for about 45 minutes during his seven-hour visit, during which he opened an eye clinic and a new consulate.
Howard told a press briefing they had discussed the countries' economic relations. "I welcomed during that the fact that we have agreed to do a joint study about the feasibility of a free trade agreement between our two countries," he said.
"The more that we can develop those investment links, the closer will become the bonds between our two societies," he added.
Yudhoyono also said Indonesia had agreed to the study, proposed after a visit by Australia's trade minister here last month. Indonesia, the world's fourth most populous nation, is Australia's 10th most important export market.
The study is to commence next month and is expected to be completed by the middle of 2008.
Howard also congratulated Indonesia's police on the capture of two senior Jemaah Islamiyah members last month, seen as a major blow to the organisation.
The JI Islamic extremist network is blamed for bombings on the resort island in 2002 which left 202 people dead, including 88 Australians, as well as suicide bombings in 2005 that left a further four Australians dead.
The Australian premier's visit comes just weeks after Canberra warned that a terrorist attack may again be imminent in the sprawling archipelago nation.
During his 13th trip to Indonesia in 11 years as prime minister, Howard opened the Australia-Bali Memorial Eye Centre, built from assistance provided by Australia in the wake of the 2002 attacks.
"This is a gift from the Australian people to the future health and well-being of the people of Bali and Indonesia," Howard said.
"It is a practical memorial to those who died in the attack on 12 October, 2002, and also a practical expression of the ongoing affection of the people of Australia towards the people of the island of Bali."
Yudhoyono said the multi-million dollar centre was a monument to "the enduring and growing friendships between the government and people of Indonesia and Australia."
The centre will provide mostly free treatment to blind Indonesians as well as training facilities for Indonesian eye specialists.
Howard also opened Australia's new consulate-general on the island. The former office was closed for security reasons after the Australian embassy in Jakarta was bombed in September 2004.
Coinciding with the visit, Australia announced a 100 million Australian dollar (86 million US dollar) partnership programme to help combat HIV in Indonesia, the embassy announced.
Australia and Indonesia share an occasionally tempestuous relationship.
The most recent incident saw Jakarta's infuriated governor receive a flurry of apologies from senior Australian officials over his alleged ill-treatment by police during a visit to Sydney.
Police had entered his hotel room using a master key and urged him to give evidence at an inquest into the death of five Australian-based journalists in East Timor in 1975.
Relations have also been tarnished by six Australian drug traffickers receiving death sentences for attempting to smuggle heroin out of Bali.