Chancellor Angela Merkel of Germany is on a two-day trip to Indonesia for talks with President Susilo Bambang Yudhoyono on a range of issues including defence, the economy and the environment.
The two leaders signed a Jakarta Declaration on Tuesday.
Deutsche Welle reports defense cooperation will be strengthened, although no concrete deals were included in the declaration.
However, President Yudhoyono expressed an interest in Leopard 2 tanks, made by Krauss-Maffei Wegmann.
He said Indonesia's military equipment needed updating and that Germany was one of the countries Indonesia could turn to for supplies.
The Jakarta Declaration also aims to strengthen trade ties. Recently, bilateral trade grew by 7% to more than $US7 billion. German delegates estimate that figure could go up to $US15 million by 2015.
Also on Tuesday, Mrs Merkel visited the Protestant Immanuel Church as well as Istiqlal Mosque, the biggest in the region.
Before returning to Germany on Wednesday, she will visit the site of Indonesia's tsunami early-warning system built with German assistance.