The two leaders agreed to conduct joint naval patrols in the waters separating Indonesia and Mindanao in an effort to curb cross-border arms smuggling which has also been fueling terrorism in both countries.
"Indonesia and the Phi-lippines have found a common goal in strengthening a peaceful world, fighting global terrorism and building stronger security. Our stance on terrorism is unshakable," Mrs. Arroyo said at a news conference on her arrival here.
"President Megawati and I have agreed to strengthen the proposal discussed at the (Association of Southeast Asian Nations) summit to share intelligence information on transnational crimes and to keep tighter controls over our borders," the President said.
The two leaders conducted bilateral talks at the Jepara Room of the Istana Merdeka, the presidential palace, to discuss a proposed regional coalition against terrorism and the issue of arms smuggling.
Mrs. Arroyo, who received state honors upon her arrival here at around 10 a.m., said all countries in the region must prevent terrorism to allow trade and investment to flourish.
"In this time of crisis and opportunity, there is nothing more natural and more correct than for regions to get together for common defense and action," she said.
Megawati described her talks with the President as "satisfying" but made no specific mention of the proposed regional coalition against terrorism.
Indonesian Foreign Minister Hassan Wirayuda said the task of eliminating terrorism would be complex in a region where people and arms smuggling are rife. Financial support for terrorist groups must also be curbed, he said.
But a meeting would be held in Manila among Indonesia, the Philippines, Malaysia, Singapore and Thailand on efforts to combat terrorism but Wirayuda gave no details.
Indonesia, the largest Muslim nation in the world, is an influential member of the Organization of Islamic Conference (OIC) and has condemned international terrorism after the Sept. 11 attack on Washington DC and New York.
However, Jakarta has also been critical of the ongoing US military operations in Afghanistan which is harboring international terrorist suspect Osama bin Laden, who is believed responsible for the Sept. 11 attacks.
Jakarta had earlier claimed during Megawati’s state visit to Manila in August that arms from the Philippines were going to separatist rebels in Aceh and Irian Jaya regions.
Wirayuda said the two nations would work together to curb arms smuggling and would soon meet to delineate borders.
"It has been agreed to that negotiating teams from both countries will immediately hold meetings to settle the borderline.. without having to wait for the meeting at ministerial level which has been delayed for the past two years," he said.
Aside from the two issues, Mrs. Arroyo and Megawati also witnessed the signing of four bilateral agreements on energy, fisheries, financial investments, culture and tourism, according to the Indonesian foreign ministry.
The two leaders agreed during bilateral talks at the Istana Merdeka to "promote (a) stable (and) long-term supply" of coal to the Philippines from Indonesian Kalimantan and Sumatra and had also discussed gas supplies and geothermal power.
Indonesian Mines and Energy Minister Purnomo Yusgiantoro said Jakarta expects to increase coal exports to the Philippines from the 2.76 million tons a year.
"The Philippines is a big consumer of coal. Indonesia expects to increase its coal exports to the Philippines in the future," Purnomo said.
The agreement on energy also included the faster development of the ASEAN natural gas grid and the development of liquefied natural gas (LNG) supplies, including Indonesia’s Tangguh gas field in Irian Jaya.
Indonesia was instrumental in the 1996 peace accord between the government and the separatist Moro National Liberation Front (MNLF), ending a 30-year armed rebellion.
Mrs. Arroyo’s state visit is seen as a preface to a trilateral agreement with Indonesia and Malaysia on border intelligence, patrols and even peacekeeping. Jakarta, however, wants the agreement to include Thailand and Singapore.
The proposal to forge a regional coalition against terrorism was formally presented by Foreign Affairs Undersecretary Lauro Baja during the ASEAN Ministerial Meetings earlier this month.
The President herself took up the matter with Thailand Prime Minister Thaksin Shinawatra during his state visit to Manila in October and the Thai leader had agreed to join but no agreement has been signed.
She also took up the reactivation of the Brunei-Indonesia-Malaysia-Philippines East Asia Growth Area (BIMP-EAGA) and the resumption of transport services between Mindanao and Sulawesi, both sidetracked by the 1997 Asian financial crisis.
In a pre-departure statement issued at the Lumbia Airport in Cagayan de Oro, the President stressed the productive relations with Indonesia, especially regarding the peace and order situation in Mindanao.
President Arroyo arrived at the Halim Perdanakusuma Airport in Jakarta before 10 a.m. with First Gentleman Joe Miguel Arroyo. They were received by Indonesian Minister of Energy and Mineral Resources Purnomo Yusgiantoro.
From the airport, the President proceeded for Istana Merdeka where she was officially received and accorded state honors by Megawati.