Australia says Indonesia no threat

"There is no political or strategic reason why Indonesia should in any way be a threat to Australia and inevitably a country with 230 million people is going to have a defence force, probably over time a defence force of substance," he was quoted by AFP as telling Australian radio.

"It has been, in terms of its equipment, very run-down. The extent to which they will be able to make all these purchases any time soon I suspect is rather doubtful because of the cost involved."

Indonesia on Thursday signed a billion US dollar deal with Russia to buy military equipment on credit over a 15-year period, including two Kilo class submarines which analysts said could ultimately challenge Australian naval dominance in the region.

"Over time it is inevitable that they will start to rebuild the equipment in their defence force and they are obviously going to get it from the Russians, the Europeans perhaps or Americans," Downer said.