The signing of Indonesian-Australian defence agreement in an effort to encourage more harmonious relations between the two countries would significantly reduce Indonesia`s defence budget,

House of Representatives (DPR) Commission Deputy Chairman, Yusron Ihza, said in Indonesia on Sunday. "The Indonesian and Australian governments ratified the defence agreement between the two countries two months ago, and it is a right measure to reduce defence budget and to improve regional peace and security,"

Mr Yusron said. He pointed out that the agreement would lessen the country`s defence tax expenditure because the budget allocated this year was only $1,045,054,358 AUD from the proposed $2,902,932,693 AUD).

The Armed Forces of Indonesia TNI comprises approximately 400,000 personnel. including the Army (TNI-AD), Navy (including marines) (TNI-AL) , and Air Force (TNI-AU).

The army is by far the largest, with about 300.000 active uniformed personnel, compared to around 71.000 in the Navy and 29,000 in the Air Force.

Defence spending in the national budget is less than 1% of GDP, but is supplemented by revenue from many military-run businesses and foundations.