Indonesia and Australia have signed an agreement to enhance their defense cooperation. It allows both nations' militaries to operate from each other's territory.

Indonesian President-elect and current defense minister Prabowo Subianto and Australian defense minister Richard Marles signed the agreement on Thursday in Magelang, Central Java.

Australia's defense ministry says the agreement will include enhanced practical cooperation and interoperability between the defense forces in fields such as maritime security, humanitarian and disaster relief, education and training.

Prabowo hailed the new agreement as a historic milestone, but stressed Indonesia will maintain its own stance on a free and active foreign policy. He said that the agreement is not a military pact or alliance, "but military cooperation."

Australia says it respects Indonesia's position. Marles said the two countries can work much more closely on shared interests. He said the most significant of those is ''maintaining the global rules based order."

Observers say the agreement is expected to strengthen the bilateral relationship amid global threats and as China steps up maritime activity in the region.