Yudhoyono confirms Dulmatin killed

The president, on a three-day visit to Australia, said a raid against militants hiding out in Jakarta had resulted in the death of the man believed to have been behind the 2002 bombings on the resort island of Bali.
   
"We can confirm that one of those that were killed was Mr Dulmatin, one of the top Southeast Asian terrorists that we have been looking for," Yudhoyono said through an interpreter in Canberra.

He was addressing a lunch held in his honour at Parliament House.

Later, addressing the Australian parliament, the leader praised Australia for its help in the aftermath of the 2006 tsunami and said bilateral relations had come a long way in the latest years.

Yudhoyono also said Aceh and Papuan separatism "a matter of national survival" and Australians should understand.

He also said people smuggling was a regional problem and needed a regional approach.

SBY annouced legislation will soon be introduced to make people smuggling a criminal offence, with up to five years jail.

Indonesia's partnership with Australia is now "solid amd strong", but challenges remain, the leader said. 

Dr Yudhoyono, addressing a joint meeting of parliament's both houses in Canberra on Wednesday, said there still needed to be a change in the mindset of some Indonesians and Australians.

"The most persistent problem in our relation is the persistence of age-old stereotypes ... that depicts the other side in a bad light," he said.

"There are Australians who still see Indonesia as a authoritarian country or a military dictatorship or as a hotbed of Islamic extremism, or even as an expansionist power."

On the other hand some Indonesians remained afflicted by "Australia-phobia". "Those who believe that the notion of White Australia still persists.

"That Australia harbours ill-intention towards Indonesia."

Earlier, Prime Minister Kevin Rudd said Australia has 'upgraded' its relationship with Indonesia,  during a joint address with Dr Yudhoyono.

Mr Rudd described Indonesia as a major partner for Australia's future in the region and the world at large, during a joint news conference with Indonesian President Susilo Bambang Yudhoyono.

Rudd announced that Yudhoyono and himself had signed a deal under which Indonesia would criminalise people smuggling and cooperate in prisoner transfers.

Dr Yudhoyono did not detail what new arrangements, if any, had been agreed upon.

He said the boat issue was complex, involving law, security and humanitarian concerns, and neither Australia nor Indonesia could go it alone.

"Australia as a destination country and Indonesia as a transit country cannot resolve this issue by ourselves," he said.

"Every country must be on board on this.

"(But) don't forget we already have a framework of co-operation, what is known as the Bali Process, which Indonesia and Australia initiated."

Prisoner transfer deal

Mr Rudd committed Australia to working closely with Indonesia on extradition matters, although he declined to detail specific cases.

"Our foreign ministers have spent a long time working through a range of extradition matters over a period of time," he said.

Foreign and defence ministers of the two countries would meet annually, just as those of Australia and the United States do, Rudd announced.

Rudd praised Indonesia's efforts to dismantle terror networks, congratulating the country on "excellent work in the last 24 hours". Indonesian security forces believe they have killed top Jemaah Islamiah militant Dulmatin yesterday.

Travel ban angers Indonesians

Mr Rudd was then quizzed by an Indonesian journalist about Australia's travel warning for Indonesia, which the reporter said created a 'bad image'.

The PM said altering travel warnings wasn't up to him.

"As for the current status of Australian travel warnings, these are assessed independently by agencies of the Australian government.

"They will continue to be executed that way in the future. The Australian government at a political level does not interfere."

Lavish lunch

Dr Yudhoyono was guest of honour at a lunch in Parliament House, attended by scores of dignitaries and officials.

He was warmly welcomed by Rudd and Opposition Leader Tony Abbott.

Abbott joked that the strength of Australia's relationship with Indonesia was the only thing on which he and Rudd agreed.

"I am not responsible for what happens after I leave," Yudhoyono quipped back, through a translator.

Later today, Dr Yudhoyono will become the first Indonesian leader to address a joint sitting of Australia's parliament today, and was appointed an honorary companion of the Order of Australia for his work after the 2002 Bali bombing after landing in Canberra yesterday.

Foreign Minister Stephen Smith on Tuesday acknowledged problems between the sprawling, mainly Muslim archipelago of 230 million, and his Western-focused country of 22 million, separated by just a couple of hundred miles (kilometres) of sea.
 
"Because we are such close neighbours there will always be issues," Smith told Sky News.
 
"But the strength of the relationship these days is that we can have issues which may well be difficult, whether it's issues of capital punishment, people smuggling or the Balibo Five for example."
 
Thorny issues

Australia has long complained over the transit of rickety people-smuggling boats via Indonesia, including dozens in recent months that have stretched Australia's main immigration centre to breaking point.
 
In September, Australia angered Jakarta by opening a war-crimes probe into the 1975 killing of the "Balibo Five" journalists by Indonesian troops in East Timor.
 
The countries have also clashed over death sentences handed to three of the "Bali Nine" drug-smugglers, while the Australian public was incensed at the 20-year term given to beautician Schapelle Corby for drug offences in 2005.
 
However, the two sides have enjoyed strong cooperation against extremism, including after the 2002 Bali blasts, which killed 88 Australians. Yudhoyono, as security minister, oversaw the investigation into the attack.
 
Three Australians were killed in bomb attacks on two luxury Jakarta hotels in July last year, while the Australian embassy in the city was car-bombed in 2004, killing nine.