Lachlan Carmichael, Jakarta – US Secretary of State Hillary Clinton was cheered Thursday as she visited a slum in Indonesia's teeming capital at the end of her first trip to a Muslim-majority country since President Barack Obama promised to mend fences with the Islamic world.

Crowds clapped and smiled as Clinton, wearing a navy blue suit, visited projects funded with US aid money in the Petojo area of central Jakarta on the second day of her trip to Obama's former hometown. She told a group of craftswomen she was "proud" of their work and patted children on the head, to the delight of locals.

Obama spent four years of his childhood in the upmarket Menteng area of central Jakarta in the late 1960s and is hugely popular in Indonesia, the largest Muslim-majority country in the world.

Clinton said after her arrival on Wednesday that it was "no accident" she had come to the massive archipelago of 234 million people on her first trip abroad since taking office.

She met President Susilo Bambang Yudhoyono earlier Thursday and told journalists afterwards that Washington wanted Jakarta's "advice and counsel about how to reach out not only to the Muslim world but to Asia and beyond."

As a thriving democracy, Southeast Asia's largest economy and a moderate Muslim country, Indonesia was an obvious inclusion on her four-country swing through Asia, Clinton said.

Her first stop was Japan but Indonesia was second ahead of South Korea and regional powerhouse China, reflecting Obama's promise to reach out to the Muslim world and heal the rifts which opened under president George W. Bush.

Obama was known to his friends as Barry when he attended primary school in Jakarta from 1967 to 1971, after his American mother divorced his Kenyan father and married an Indonesian.

"Of course the personal relationship that President Obama has to Indonesia is very important to him," Clinton told reporters after meeting Yudhoyono, adding that his time here had helped to shape his world view.

By visiting Indonesia on her first trip abroad in her new job, Clinton said she wanted to show that the United States was not completely distracted by China and was ready to re-engage with Asia after years of neglect under Bush.

"I decided I wanted to come to Asia on my first trip because we concluded in the last several years we hadn't paid enough attention to many parts of Asia," she said. "Our interests aren't just focused on China."

She added that "when the United States is absent, people believe we are not interested – that creates a vacuum that destructive forces can fill."

A spokesman for Yudhoyono said Clinton had "praised the democratisation process in Indonesia, which is a model for Islam," referring to 10 years of reform since the ouster of dictator Suharto in 1998.

Clinton met Foreign Minister Hassan Wirajuda on Wednesday and said Indonesia – as a democratic and mainly Muslim country – would play a key role in the Obama administration's new commitment to "smart power."

"Certainly Indonesia, being the largest Muslim nation in the world, the third-largest democracy, will play a leading role in the promotion of that shared future," Clinton told a joint press conference.

The US looked forward to deepening cooperation with Indonesia on several "shared issues" such as the global economic crisis, climate change, security and human rights, she said. "Indonesia will be a good partner of the United States in reaching out to the Muslim world," Wirajuda said.

A spokesman said Wirajuda had asked the United States for a currency swap agreement and a standby loan facility to help it weather the global economic crisis, amid plunging demand for its commodities exports. Such assistance "will also bolster democracy not just in Indonesia but also in the region," he said.

Clinton also confirmed she would attend an international conference next month in Egypt to help rebuild Gaza after the Hamas-Israel war. She said Obama wanted to re-engage in the Middle East after the Bush administration had "not been as active in trying to bring the parties together."

Clinton left Indonesia on Thursday for Seoul, where the international effort to end North Korea's nuclear programme is expected to top her agenda.