"Indonesia takes note cautiously of the Australian Government's decision to acquire nuclear-powered submarines", the ministry said in a statement, adding that it is "deeply concerned over the continuing arms race and power projection in the region".
Jakarta also urged Australia to uphold its commitment to regional peace under the 1976 Treaty of Amity and Cooperation in Southeast Asia.
"Indonesia encourages Australia and other parties concerned to advance dialogue in settling any differences peacefully. In this regard, Indonesia underscores the respect for international law, including UNCLOS 1982, in maintaining peace and security in the region", the ministry added.
Jakarta's statement is addressing the big announcement made on Wednesday, when Australia, the United Kingdom, and the United States created a defence partnership called AUKUS, with the initial task of the US and UK backing of Australia's bid to acquire nuclear-propelled submarines.
While the new trilateral partnership is ostensibly not aimed against anyone, China has expressed concern that AUKUS would undermine peace and security as well as intensify the arms race in the region.