British Prime Minister David Cameron said on Monday his government would make available loans of up to 1 billion pounds to Indonesia to help finance infrastructure projects.
Indonesia is Cameron's first stop on a four-day trade mission to Southeast Asia to spur lucrative business deals and to forge new political alliances to counter Islamist extremism.
The British government said the financing for Southeast Asia's largest economy could pave the way for 200 million pounds worth of Indonesian exports to Britain.
Possible projects include a 400-million-pound sewage treatment system in the capital, Jakarta, and geothermal power projects worth 66 million pounds.
Cameron, who met Indonesian President Joko Widodo, wants to expand British trade links with the rest of the world to compensate for its dependence on trade with Europe, parts of which remain mired in an economic funk.
"There's a great opportunity for a free trade agreement, but we shouldn't wait for that," Cameron told reporters before meeting Widodo. "There are great opportunities to work together in insurance, infrastructure, Internet services ... and in many other areas as well."
During his Southeast Asia trip, the prime minister is expected to seal trade deals worth more than 750 million pounds.
Cameron also was expected to discuss the threat from Islamist militants with Widodo, and later with Prime Minister Najib Razak of Malaysia.
About 500 people from Indonesia, which has the world's largest Muslim population, and 200 from Malaysia are believed to have joined the extremists in Iraq and Syria.