Papua New Guinea and Fiji have agreed with Indonesia to start negotiations over a preferential trade deal among the nations.
Xinhua reports that the agreement was reached in Jakarta during the Indonesia South Pacific Forum.
Indonesia's Foreign Minister Retno Marsudi said the planned trade agreement was expected to drive up trade volume and ease barriers in trade and investment
She said that Indonesia and countries in the South Pacific region faced common challenges particularly in finding balance between pursuing higher economic growth and preserving the environment.
Meanwhile, the minister has written an opinion piece in the Jakarta Post in which she heralded a "new era" in relations between Indonesia and South Pacific countries.
She said the basis for Indonesia's future engagement with Pacific countries would be aligning interests to cope with growing, common challenges ranging from the rising of sea levels to the pursuit of welfare through economic development.
Under President Joko Widodo, Indonesia's government has looked to strengthen its cooperation with South Pacific economies on bilateral levels.
The minister said that maximising on Indonesia's, the president stressed the need to invest in international development programmes, including in the South Pacific.
Ms Marsudi said technical cooperation and capacity building programmes which Indonesia offered to Pacific countries would grow more significantly in the years to come.
"At the same time, there is tremendous untapped potential on the economic front between the two economies," she wrote.
"Indeed, trade relations remain relatively small at $US450 million and there are factors challenging increased investment cooperation.
"However, as a family, we must unlock this potential. Indonesia and the South Pacific must redouble our efforts to overcome hurdles, most notably the tyranny of distance."
Noting emerging geopolitical trends in the region, including the Indo-Pacific cooperation, the minister identified it as an opportunity for Indonesia and the South Pacific to seize.
Ms Marsudi stressed the importance of building connectivity, saying Indonesia's Global Maritime Fulcrum initiative will see expanded and upgraded strategic ports in the eastern part of the country (Papua).
"Our aim is to establish greater sea connectivity, which will bring Indonesia closer to the South Pacific," she said.
"More platforms for dialogue between Indonesia and the South Pacific are needed. Currently, there are a number of those outside of the United Nations, such as the Pacific Islands Forum, the Pacific Islands Development Forum and the Melanesian Spearhead Group.
"While these forums have provided a vibrant platform for dialogue between Indonesia and the South Pacific, there is an urgent need for a framework of cooperation that will allow Indonesia to have a more meaningful dialogue with the South Pacific," she explained.
According to Ms Marsudi, the Indonesia South Pacific Forum was a timely initiative to fill that need.