South Korean President Lee Myung-bak and Indonesian President Susilo Bambang Yudhoyono pledged Thursday to cooperate closely to conclude free trade negotiations between the two countries at an early date, the presidential office said.

Lee and Yudhoyono reached the agreement when they met bilaterally on the Indonesian resort island of Bali on the sidelines of the Bali Democracy Forum, an annual high-level conference aimed at promoting democracy in the Asia-Pacific region, the office said.

In July, South Korea and Indonesia held the first round of negotiations to forge a comprehensive economic partnership agreement, which is a free trade deal, in an effort to further bolster the sharply expanding trade between the two countries.

Yudhoyono is one of the foreign leaders Lee has developed a close friendship with. Thanks in part to their ties, South Korea and Indonesia have been drawn much closer to each other, with two-way trade volume more than doubling to US$30.7 billion last year from just $14.9 billion in 2007.

In addition, South Korea's investment in Indonesia totaled $4.4 billion between 2008 and 2011, a sharp increase that accounts for about half the total investment, $9.9 billion, South Korea has made in the Southeast Asian nation since the late 1960s.

Lee and Yudhoyono welcomed the doubling of the bilateral trade volume in the last five years, and agreed to work closely together to reach the goal of expanding trade to $50 billion in 2015 and $100 billion in 2020, the office said in a statement.

The leaders also agreed to provide active cooperation for South Korean firms undertaking large-scale investment projects in the Southeast Asian nation so that the projects can smoothly move forward.

They also pledged to work together in green growth and agreed to seek joint development of environment-friendly "green" cars.

After the summit, the two governments signed a memorandum of understanding on green car development cooperation.

The leaders agreed to move forward defense industry cooperation as well, the office said.

Indonesia is the biggest Southeast Asian buyer for South Korea's defense industry. Last year, the country awarded two massive contracts to South Korea, one of them to purchase submarines and the other to purchase T-50 Golden Eagle supersonic trainer jets.

Yudhoyono congratulated South Korea on winning the right to host the secretariat of the U.N. Green Climate Fund as well as its election as a non-permanent member of the U.N. Security Council.

The two sides also pledged cooperation for Indonesia's successful hosting of next year's summit of the Asia-Pacific Economic Cooperation forum.

Right after the meeting, Yudhoyono decorated Lee with Indonesia's highest state medal, "Bintang Republik Indonesia Adipurna," which means "Star of the Republic of Indonesia," in recognition of his contribution to relations between the two countries.

Indonesia is one of the two stops in Lee's six-day Southeast Asian trip.

On Friday, he plans to head to Thailand for summit talks with Prime Minister Yingluck Shinawatra. (Yonhap News)