From Lombok to Sydney: A New Era for Indonesia–Australia Relations?

Indonesia’s President Prabowo Subianto and Australian Prime Minister Anthony Albanese aboard HMAS Canberra at Garden Island Naval Base in Sydney, where they announced a new security agreement on 12 November 2025.

When Indonesian President Prabowo Subianto arrived in Sydney this week, the symbolism was unmistakable. His early visit just months after taking office underscored Jakarta’s view of Canberra as a key partner in an increasingly uncertain Indo-Pacific.

The highlight was the announcement of a new bilateral security treaty, a landmark accord committing both nations to consult one another if either faces a threat and to hold regular high-level security dialogues. Standing alongside Prabowo, Australian Prime Minister Anthony Albanese hailed it as a “major extension” of earlier defence deals. Prabowo called it a reflection of “close cooperation” between two neighbours bound by geography, history, and shared regional interests.

For countries long marked by mistrust and misperception, this agreement signals confidence and maturity in their relationship. Yet it should be seen as a foundation, not a culmination—a platform to deepen cooperation as both nations confront a complex regional landscape shaped by great-power rivalry, economic volatility, and environmental strain.

The new treaty builds on the 2006 Lombok Treaty, which re-established modern defence cooperation after tensions over East Timor’s independence. That framework institutionalised counter-terrorism efforts, intelligence sharing, and military exchanges, restoring trust after a 1995 pact was withdrawn when Australia led peacekeeping operations in East Timor.

Over the past two decades, defence ties have quietly expanded. Joint exercises, education programs, and officer exchanges have fostered professional networks of trust beyond political cycles. Against this backdrop, the new agreement reflects mutual confidence: the once-improbable idea that Indonesia and Australia would consult each other in a security crisis now seems natural. The image of Prabowo and Albanese visiting an Australian naval base captured this shift—two neighbours no longer merely coexisting, but coordinating.

The timing of the treaty is significant. The Indo-Pacific is increasingly defined by strategic competition, economic fragmentation, and environmental stress. Rivalry between the United States and China, disputes in the South and East China Seas, and renewed instability on the Korean Peninsula are reshaping regional dynamics.

Both Indonesia and Australia are navigating this uncertainty from positions of middle-power pragmatism. Australia remains a close US ally through frameworks such as AUKUS, while Indonesia continues to champion non-alignment and ASEAN centrality. Despite different strategic orientations, both share an interest in maintaining a stable, inclusive regional order that favours dialogue over confrontation.

For Indonesia, closer engagement with Australia enhances its maritime security capacity and reinforces its standing as a leading regional actor. For Australia, Indonesia serves as both anchor and bridge, a northern bulwark and gateway to Southeast Asia. In this sense, the new treaty is not just about defence cooperation but about building collective resilience in an unpredictable era.

But to realise the full potential of this moment, cooperation must expand beyond the security realm to encompass economic, environmental, and societal priorities. A truly comprehensive Indonesia-Australia partnership will depend on translating shared frameworks into tangible outcomes that benefit both peoples and the wider region.

Economically, Indonesia and Australia remain under-trading partners despite proximity and potential. The Indonesia–Australia Comprehensive Economic Partnership Agreement (IA-CEPA), in force since 2020, offers a framework for deeper commercial engagement, but implementation has lagged and requires stronger improvements. Both governments should focus on bottom-up practical initiatives to boost trade, investment, and skills exchange.

Indonesia’s ambitions to become a manufacturing and industrial hub—particularly in electric vehicles and mineral processing—align closely with Australia’s strengths in critical minerals, renewable energy, and vocational training. Joint ventures in battery production, green hydrogen, and carbon capture could drive growth and accelerate the transition to cleaner energy systems.

Environmental cooperation is another natural pillar. Both nations face escalating climate risks, from sea-level rise to extreme weather. Joint initiatives in forest and peatland restoration, carbon markets, and adaptation planning could enhance resilience while signalling regional leadership in sustainable development. Australia’s support for Indonesia’s energy transition efforts could be deepened through joint research, policy coordination, and technical assistance, positioning both as credible advocates for green growth across the Indo-Pacific.

As archipelagic nations with vast coastlines, Indonesia and Australia share pressing maritime concerns: illegal fishing, transnational crime, and marine environmental degradation. Expanding joint patrols, coastguard training, and humanitarian assistance operations would enhance regional security while institutionalising habits of cooperation at sea. At the multilateral level, both nations should continue to champion inclusive, rules-based approaches through ASEAN-led forums or maybe other new frameworks of regional cooperation. 

Equally vital are people-to-people ties that underpin mutual understanding. Despite official warmth, public familiarity beyond the elites remains limited. Few Australians study Bahasa Indonesia, and many Indonesians have little exposure to Australian society. Expanding educational and cultural exchange is essential to sustain trust.

Programs such as the New Colombo Plan, along with Indonesian scholarship initiatives for Australians, play a vital role in strengthening mutual understanding and literacy between the two nations. Expanding university partnerships, think-tank collaborations, and civil-society exchanges can further foster shared perspectives and build a stronger public foundation for long-term cooperation. There is also a growing recognition on the Indonesian side of the need to deepen understanding of Australia’s strategic and cultural significance, ensuring that engagement is truly reciprocal.

Youth-led networks like CAUSINDY, the ASEAN–Australia Strategic Youth Partnership, and the Australia–Indonesia Youth Association already nurture cross-cultural understanding and leadership skills. Continued support for such initiatives will help transform goodwill into lasting collaboration.

Despite progress, obstacles remain. Strategic perspectives differ: Indonesia prizes strategic autonomy and sovereignty, while Australia’s security identity is shaped by its alliance system. Domestic politics and public sensitivities can also affect the pace and scope of collaboration. Economic asymmetries further complicate relations. 

Australia’s higher income and technological capacity can create perceptions of imbalance. Sustaining trust requires managing these differences transparently and ensuring cooperation feels genuinely mutual rather than hierarchical.

A related risk is that security cooperation could overshadow other dimensions of the relationship. Maintaining a balanced approach, linking defence with trade, innovation, education, and climate action will be crucial for long-term stability and public support.

The new security treaty is both a milestone and opportunity. It formalises a relationship that has matured over decades and sends a clear message: Indonesia and Australia are ready to act together in an era of uncertainty.

As President Prabowo and Prime Minister Albanese look ahead, their success will depend not only on shared interests but also on shared imagination, the ability to look beyond immediate security concerns toward a vision of two confident middle powers shaping a stable, sustainable, and inclusive Indo-Pacific together.

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This article was written by Genevieve Donnellon-May, Policy Monitoring Officer at Foreign Policy Talks and Noto Suoneto, Founder of Foreign Policy Talks.