Mr Turnbull is in the country for the first-ever summit of leaders of the Indian Ocean Rim Association (IORA).
He says Indonesia is a great ally in the fight against terrorism, and has praised Indonesian president Joko Widodo for his belief in free trade in the face of a fresh rising tide of protectionism in some parts of the world.
Mr Turnbull says the economic relationship between Australia and Indonesia is very relevant to other forms of the co-operation between the two countries.
But he's also warned the relationship needs work.
"This economic relationship, of course, as it strengthens, also enhances and amplifies all the other dimensions- our strategic relationship, counter-terrorism, peace and security in our oceans, regional co-operation. This relationship between Australia and Indonesia is of fundamental importance for the future of both our nations. As I said at the outset, we have a shared destiny. But we can't take it for granted."
Mr Turnbull earlier ruled out Australia and Indonesia conducting joint-patrols in the South China Sea, after reports surfaced both countries were contemplating the idea.
“We are not going to undertake any actions which would increase tensions in the South China Sea,” he said.
Before his recent visit to Australia, President Joko Widodo hinted at joint patrols in the sea in the future, an issue he highlighted he planned to raise with Mr Turnbull.
Asked about their behind door discussions on Tuesday the prime minister said he was “being very careful” in discussing the complex issue, but said Australia was “certainly determined” to work more closely with Indonesia.
“Our commitment is to increase our cooperation with each other in terms of maritime security," he said.
"We talk about more collaboration, more coordination, but it has not been taken any further than that.
“But that is the limit of what I can say and that is the limit of any discussions.
