Indonesia pulled out all the stops this week to welcome Malaysian Prime Minister Mahathir Mohamad, as the 92-year-old premier made his first visit to an Asean neighbour since returning to power last month.

"Indeed, our overseas tour begins in Indonesia because it is the closest country and one with familial relations," Tun Dr Mahathir said yesterday, following bilateral talks with President Joko Widodo at Istana Bogor in West Java.

"Malaysians are not foreigners to Indonesians. In fact, many Malaysians are originally from Indonesia, including my in-laws."

Dr Mahathir, who has yet to appoint a foreign affairs minister, arrived in Jakarta on Thursday night for a two-day visit to Indonesia. He was accompanied by his wife, Tun Dr Siti Hasmah Mohamad Ali, and several government officials.

Mr Joko and First Lady Iriana were at Halim Perdanakusuma International Airport in East Jakarta to receive the elder statesman.

The two leaders met again yesterday morning at Istana Bogor, where Dr Mahathir inspected a guard of honour and was greeted by hundreds of schoolchildren waving the Indonesian and Malaysian flags.

He and Mr Joko also planted a tree in the compound of the presidential palace to commemorate the visit before they held talks.

"I was very impressed with the ceremony, it was extraordinary," said Dr Mahathir. "And I was very happy to be greeted by so many little children gathered here."

President Joko, in his opening remarks at the joint press conference, said it was an honour for Indonesia to be the first Asean member-state Dr Mahathir chose to visit after he won the May 9 general election.

He also recounted his own visit to Kuala Lumpur in 2015 when Dr Mahathir, who was then chairman of Proton Holdings, invited him for a test-drive in a Proton.

Dr Mahathir purportedly drove the Malaysia-made vehicle at about 180kmh.

"But I was not afraid, I was not worried because the driver was Bapak Tun Mahathir; if it was not him, I think I would be afraid," said Mr Joko.

Dr Mahathir said Malaysia was eager to revive a shelved project between the two countries to produce an Asean car that failed to materialise after it was mooted in 2015.

His comments were similar to the remarks he made at a conference in Tokyo earlier this month, when he said he hopes to see a new national car company in Malaysia, given that Chinese automaker Geely had acquired a stake in Proton.

Dr Mahathir and Mr Joko also pledged to follow up on an agreement between Malaysia and Indonesia last year to resolve their maritime and land border issues.

These include overlapping claims over Ambalat, located between Indonesia's Sulawesi Island and Sabah, Malaysia, which escalated in 2002 due to differences in boundary maps used by both countries.

"We decided that this problem cannot be (resolved) alone, but we have already started the approach and we need to accept that Indonesia and Malaysia must cooperate, like how Malaysia is cooperating with Thailand, where we have a joint development area," said Dr Mahathir.

After the talks, Mr Joko and Dr Mahathir attended Friday prayers at the Baitussalam Mosque before the President hosted the Malaysian delegation to a luncheon.

Dr Mahathir had held a dialogue with members of the Malaysian community at his country's embassy in Jakarta on Thursday.

He also met the Malaysia-Indonesia Business Council, as well as the Malaysian media, before returning to Kuala Lumpur last night.