Australia's chilly relations with Indonesia have thawed after Malcolm Turnbull was given a warm reception by Joko Widodo.
The prime minister and his wife Lucy were welcomed to Jakarta with a billboard to mark their visit, and an honour guard at the presidential palace.
Opening their first talks, the president, better known as Jokowi, alluded to the sensitivity of the relationship.
"The position of our two countries, Indonesia and Australia, is close to each other," he said.
"That's a fact that we can't change.
"The closer the position, the higher the intensity of our relationship.
"The higher also the potential for friction."
However, afterwards Jokowi hailed a "productive and warm meeting" in which he shared Indonesia's wishes for greater trade co-operation and intelligence sharing.
Mr Turnbull, too, said the talks proved "frank and exciting".
"Our two countries are brilliantly poised for a very exciting future," he said.
The talks focused on trade, investment and countering violent extremism.
Jokowi said his focus in terms of investment was on infrastructure, the cattle industry and making Indonesia an Asian hub for technology which had the potential to be a $120 billion industry.
After a lunch, the two leaders headed to the Tanah Abang markets - which translates to "brother land" - where they were greeted by thousands of shoppers and stallholders.
It was the first time the president had invited a leader onto his trademark "blusukan" walkabout.
As they took off their ties in the 30C-plus heat, Mr Turnbull quipped: "The temperature is warm but the warmth of the people towards the president is much warmer still."
Jokowi said he wanted to introduce Mr Turnbull to the Indonesian people "so that the people would know how Indonesia and Australia are close".
The visit comes just a week ahead of more than 340 business chiefs and four cabinet ministers taking part in Australia's largest-ever delegation to Indonesia.
The trade visit will take to 10 the number of cabinet members who have visited Jakarta since the April executions of Myuran Sukumaran and Andrew Chan.
Ministerial visits were suspended for almost four months, and the ambassador withdrawn, in the wake of the drug smugglers' executions.
The prime minister will head to Berlin after Jakarta to meet with Chancellor Angela Merkel, before joining world leaders at the G20 summit in Antalya, Turkey.
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