The new leader is meeting Indonesian President Joko Widodo in Jakarta on Friday to conclude negotiations on a free trade deal.

"It's much more than a trade deal, we're talking about today. It's not just a transaction, it's a partnership," Mr Morrison told reporters in Jakarta on Friday.

Australia and Indonesia are two of the world's 20 largest economies and close neighbours, but neither are in each other's top 10 trading partners.

"That is the part of the relationship where we need to do some more heavy lifting, the economic relationship," Mr Morrison said.

"We are not realising the full potential."

The agreement will free up Indonesia's university sector for Australian investors, allowing up to 67 per cent foreign ownership.

Foreign investors are currently barred from majority ownership in an Indonesian university.

As well, 99 per cent of Australia's goods export by value to Indonesia will enter duty free or under significantly improved arrangements compared to previous conditions, according to Trade Minister Simon Birmingham.

The deal, which has been discussed since 2012 and was initially due to be completed last year, should be signed later this year after a legal vetting of documents.

"It is about using Australia's strengths to build in Indonesia but at the same time provide opportunities for Indonesia to tap into what's happening in Australia," Mr Morrison said.

Australia Indonesia Business Council president Phil Turtle said trade had been "under done" for many years.

"There is great opportunity now to have this agreement as a kickstart to try and do a lot better than we have been," he told reporters.

Mr Morrison and President Widodo will sign memorandums of understanding trade and strategic security.

It's understood the two countries are increasingly viewing regional security in the same way.

"We all live in this part of the world together," Mr Morrison said.

Australian Associated Press