The Russian president, Vladimir Putin, is in Indonesia to sign a deal giving his host nation a state loan of $1bn (£495m) to buy Russian arms.

Putin will hold several meetings with his Indonesian counterpart, Susilo Bambang Yudhoyono, to strengthen military and economic co-operation.

More than 100 business leaders have travelled with Putin.

Correspondents say the visit is Russia's response to growing Chinese and American competition in the region.

Armed forces in Indonesia have been under-equipped due to years of sanctions from the European Union and the United States.

Indonesia has already bought several jets from Russia. The new deal will make Moscow its main foreign arms supplier.

Regional competition

The BBC's correspondent in Jakarta, Lucy Williamson, says the last time a Russian leader came to Indonesia was 50 years ago, before the break-up of the Soviet Union.

Moscow was then a key Indonesian ally and the country's main arms supplier.

Russia says it does not want to return to the past, and that its new relationship in Indonesia is not about ideology but about cementing Russia's presence in a region with growing importance, our correspondent adds.

"For us the primary objective in this region is collective security system based on multilateralism," Russian ambassador Alexander Ivanov told the BBC.

Putin is due to participate in a summit of the Asia Pacific Economic Co-operation (Apec), in Australia later this week.

PHOTO CAPTION

Russia's President Vladimir Putin (L) shakes hands with Indonesia's President Susilo Bambang Yudhoyono before their meeting at Merdeka Palace in Jakarta September 6, 2007. (REUTERS)

BBC