Japan and Indonesia agreed Thursday to begin talks on the transfer of defence technology to Jakarta and to help reduce tensions in the South China Sea, officials said.

The agreement, made during discussions between the defence and foreign ministers of the two countries, came as they expand traditionally strong commercial and business ties to the field of defence and security.

"We agreed to start negotiation on the transfer of defence technology, which is a great achievement" in ongoing efforts to boost defence cooperation, Japanese defence minister Gen Nakatani told reporters.

"I stressed the importance of cooperation in maritime security," Nakatani added, saying that Japan's military, known as the Self-Defence Forces, will next year join a multilateral maritime drill led by Indonesia.

The agreement comes as tensions mount over competing maritime claims in the South China Sea involving China and some of Indonesia's partners in the Association of Southeast Asian Nations including the Philippines and Vietnam.

Indonesian officials, meanwhile, hailed the accord with Japan and called on all claimants in the South China Sea to work to lower regional temperatures.

"We agreed to enhance stability in the South China Sea," Indonesian foreign minister Retno Marsudi said.

Japan's close ally the United States in October sent a warship near the disputed Spratly Islands chain, stressing the international right to freedom of navigation.

Indonesian defence chief Ryamizard Ryacudu emphasised the importance of maintaining freedom of navigation both at sea and in the air and called for joint exercises with countries, including China, in the South China Sea.

The Thursday gathering was Japan's first so-called 2+2 meeting involving foreign and defence chiefs from an ASEAN country, a Japanese foreign ministry official said.

Indonesia's Retno said earlier this week in an interview with the Japanese business daily Nikkei that any military procurement must "give added value to Indonesia," noting that that means augmenting both Indonesian military capacity and technology.

A Japanese foreign ministry official confirmed the report, adding defence cooperation requires a bilateral deal on intelligence protection and other prerequisites.