US Defence Secretary Leon Panetta said Sunday that Washington will continue to develop military ties with Indonesia but keep a watchful eye on rights abuses, after over a decade of suspended cooperation.

He said closed-door talks with his Indonesia counterpart Purnomo Yusgiantoro focused on "Indonesia's growing importance as a global leader and the long-term commitment of the US to the security and prosperity of this region.

"This year alone the US is conducting more than 150 activities, exchanges and visits with the Indonesian military," Panetta told reporters on the resort island of Bali.

Panetta said the US was still monitoring possible rights abuses, noting last week's incident in Indonesia's easternmost Papua province where five people were found dead after security forces stormed a pro-independence assembly.

"We support Indonesia's efforts against separatism in that area but when it comes to any human rights abuses... we want to ensure that discipline is taken and exerted against anyone who violates human rights," Panetta said.

"We expressed concerns about the events that have occurred there and the MoD (minister of defence) made it clear that the matter is under investigation," Panetta added.

Relations with the Indonesian army had nearly screeched to a halt and remained frozen for 12 years over abuses during former dictator Suharto's 32-year rule, which ended in 1998.

Indonesia's Kopassus commando unit is accused of deadly abuses in Papua, East Timor and Aceh during that time. Bilateral cooperation was restarted in July 2010 by Panetta's predecessor Robert Gates.

A senior defence official travelling with Panetta said cooperation that was initially focused on the highest echelons of the army now extended to the operational level, including training in human rights.

In his first trip to the region since taking the helm in July at the Pentagon Panetta, the former CIA director, began his tour in Indonesia before heading to Japan on Monday and South Korea on Wednesday.

Panetta will meet Monday with Indonesian President Susilo Bambang Yudhoyono and defence ministers from the Association of Southeast Asian Nations (ASEAN) on the sidelines of the bloc's meeting in Bali.

"There's a clear message that I'm going to bring to the region... we will remain a strong Pacific force in the 21st century, and we will maintain a strong presence in the Pacific in the 21st century", Panetta told reporters.

Disputes between ASEAN members and China over the resource-rich South China Sea are likely to feature high on the agenda.

Washington has called for a regional code of conduct and insisted on "freedom of navigation" through the crucial global shipping route despite Beijing's territorial claims.

In rare praise for China, Panetta commended Beijing for what he said was a restrained response to an arms sale to Taiwan, saying he hoped for improved military cooperation with Beijing.

"I guess I would commend them for the way that they've handled the news of that sale to Taiwan," Panetta said.

China had repeatedly condemned a $5.85 billion US deal to upgrade Taiwan's fleet of F-16 fighter jets, and after the deal in September Beijing warned it would damage military ties with Washington and impact military exchanges.

"My hope is to improve our military to military relationship with the Chinese," Panetta said.

His trip coincides with sensitive direct talks between the United States and North Korea in Geneva on Monday to try to lay the ground for reviving long-stalled nuclear disarmament negotiations.

Before any broader discussions, the US and South Korea are insisting the North take concrete steps to demonstrate it is sincere about resuming full six-party nuclear talks which also include Japan, Russia and China.