Australian Army chief Angus Campbell visited Indonesian armed forces chief Gatot Nurmantyo on Wednesday (Feb 8) and apologised for having hurt the sentiments of the latter by using training material disparaging Indonesia's national ideology, Pancasila.
Gen Gatot accepted the apology but has not announced a resumption of the military cooperation yet.
It was in December an Indonesian soldier discovered the materials during a joint exercise in Perth, and on Dec 29, General Gatot had suspended all military cooperation with the Australian Defence Force (ADF).
Gen Campbell told Gen Gatot on Wednesday that the ADF has since suspended its training modules related to Indonesia and is in the process of reviewing the staff member involved.
The Indonesian military (TNI) said in a statement released on Wednesday night that the ADF has also punished the personnel responsible for the incident.
Indonesian military said Gen Gatot will discuss the matter with Defence Minister Ryamizard Ryacudu and Foreign Affairs Minister Retno Marsudi, before updating President Joko Widodo.
Indonesia's Defence Minister Ryamizard Ryacudu in a statement earlier last month had played down the incident, saying the insult to the Pancasila was made by a low-ranking Lieutenant in the Australian Defence Force who had since been punished and reprimanded.
The Indonesian Special Forces train regularly with the Australian Special Air Service Regiment, based at Campbell Barracks in Perth.
According to The Australian an instructor from the Indonesian special forces unit Kopassus, went to the Perth base for training but felt uneasy at some of the topics discussed in class, which allegedly included how the Indonesian military was involved in war crimes and human-rights violations during Indonesia's occupation of East Timor.
He then went to the academy's head office to complain and reportedly found a play on words referencing Pancasila, but ending the word with "gila" which means crazy or mad in Indonesian.
Australia-Indonesia Military Relations
The ADF and TNI have been cooperating closely on counter-terrorism but Australia's involvement in the East Timor issue that finally led to Indonesia's withdrawal from the region had troubled the relations.
Then the disputes over boat people and the live cattle trade and the scandal related to attempts by Australia's spy agency to wiretap then-president Susilo Bambang Yudhoyono in 2013 kept the ties testy.
But with the Australian Prime Minister Turnbull's visit to the Indonesian President Joko last year had improved the ties, prompting both the governments to quickly play down the incident soon after it surfaced.
Why Is Pancasila So Important for Indonesia
"Pancasila", a word that embodies the Indonesian national philosophy, is made up of two Old Javanese words, "panca" meaning five, and "sila" meaning principles.
It was the Indonesian nationalist leader Sukarno first used the word in 1945, just before the country's independence. He said Indonesia should be based on five principles, which were later slightly altered and referenced in the constitution.
Every Indonesian including school children are aware of the five principles as they are thoroughly ingrained and taught in the education system. Experts say that for a strongly nationalistic military officer, the Pancasila has an almost sacred status.
The five principles are:
1. Belief in one God
2. Just and civilised humanity
3. Indonesian unity
4. Democracy under the wise guidance of representative consultations
5. Social justice for all the peoples of Indonesia.
Indonesians celebrate Pancasila Day on June 1 and country's coat of arms also features a shield with five symbols reflecting the principles of Pancasila.