Japanese firms invest in Australia because of a decades-long relationship built on trust, Prime Minister Tony Abbott says.
"Based on investment figures, after the US and UK, no one trusts Australia more than Japan," Mr Abbott told a formal dinner in Canberra on Tuesday.
"And that trust is amply reciprocated."
The prime minister's comments came after he and visiting Japanese counterpart Shinzo Abe signed agreements to boost trade and defence ties.
The signing of the Japan-Australia Economic Partnership Agreement comes close to the anniversary of Australia's 1957 commerce agreement with Japan.
The pact was the springboard for the strong trade ties that now exist, and without it, Australia would not have the strong iron ore and gas industries it currently boasts, Mr Abbott said.
Mr Abe continued the charm offensive after a much-lauded speech to parliament earlier in the day, complimenting the Australian wine at the dinner held in his honour.
"I told myself I shouldn't drink too much wine. But I couldn't beat out with the greatest wine from Australia," he told the gathering, adding the trade pact would now allow his country access to cheaper Australian wine and beef.
Mr Abe also touched on political issues, arguing the two countries should work together towards regional peace efforts.
Opposition Leader Bill Shorten praised Japan's post-World War II recovery to become an economic powerhouse.
Australia had much to learn from Japan's experience going from an industrial to a more developed economy, he said.
Mr Abbott is expected to accompany Mr Abe on a tour of the Pilbara region on Wednesday, with a visit to mining giant Rio Tinto's West Angelas mine.
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