Indonesia and Australia have mended a rift to restore full defence ties following formal talks between Malcolm Turnbull and visiting Indonesian President Joko Widodo.
The president's whirlwind two-day tour has also handed Australian exporters a sweet deal on sugar exports with lower tariffs and farmers longer cattle import quotas.
Indonesia had partially suspended ties early last month after an Indonesian officer took offence to apparently insulting materials found at an Australian military training facility.
The thawing in defence relations was confirmed by the prime minister at a joint statement with the president at Kirribilli House on Sunday.
"President Widodo and I have agreed to the full restoration of defence co-operation, training exchanges and activities," he told reporters.
The two leaders shared a private dinner at Mr Turnbull's Point Piper mansion on Saturday and an early morning walk through the Botanic Gardens on Sunday.
Formal bilateral talks then followed with Australian cabinet ministers at Kirribilli, where agreements were hatched out to boost ties on a range of areas including trade, counter-terrorism and maritime strategy.
They agreed to strengthen maritime security, including sharing information to combat transnational crime at sea.
Both emphasised the importance of freedom of navigation in the South China Sea, and pledged to wrap up a long-awaited bilateral trade agreement this year.
Before then, Australian exporters will have sugar tariffs in Indonesia reduced to five per cent, and in return Canberra has agreed to eliminate tariffs on pesticides and herbicides for Indonesian exporters.
Australia will also open a new consulate in Surabaya, Indonesia's second largest city, while three more Indonesian language institutes will be opened in Australia.
Mr Widodo said a robust relationship could only be established if both sides had respect for each others' territorial integrity.
"No interference into the domestic affairs of each other," he said through an translator.
The president later attended a concert for the local Indonesian community at the Sydney Convention and Exhibition Centre, where he was mobbed by adoring crowds keen to get a photo with the popular leader.
Mr Widodo spoke to the 2500-strong audience for almost an hour about the need for them to return their knowledge and expertise back home, and contribute to the development of Indonesia.
He was due to fly out on Sunday evening.
