Indonesia's parliament on Thursday passed a long-awaited law criminalizing people smuggling which aims to stem the flow of asylum seekers moving through the country to Australia.

"We ratified today an amended law on immigration which includes criminalizing people smugglers," said Benny Harman, a Democrat Party lawmaker overseeing the immigration commission. "This is a big step forward for us," he added.

Indonesia previously had no law against people smuggling although it serves as a major transit route for migrants wanting to reach Australia illegally.

Under the new law, convicted people smugglers could be jailed for up to 15 years and officials who receive bribes from them could receive five-year prison terms.

Representatives from dozens of Asia-Pacific countries met on the Indonesian resort island of Bali late last month and endorsed a regional framework to prevent people smuggling.

The framework provides options for action, such as the development of bilateral arrangements to curb people smuggling and suggests participating countries strengthen intelligence sharing.

Thousands of asylum seekers pass through Southeast Asian countries on their way to Australia every year and many link up with people smugglers in Indonesia for the voyage.

Canberra aims to set up a regional processing centre in East Timor in an attempt to reduce the flow of asylum seekers heading to Australia but has received opposition from several East Timorese officials.