Malaysia today said it would seek to avoid a confrontation with Indonesia over a growing border dispute in the Sulawesi Sea but stressed it would not compromise on its territorial interest and sovereignty.

Foreign Minister Syed Hamid Albar said Malaysia regarded its relationship with Indonesia as very important and one that was crucial to the overall well-being of the region.

But at the same time, Syed Hamid said, Malaysia had to protect its territorial integrity.

"We will protect our interest, we will protect our sovereignty," he said.

Claims by both countries to an area of the Sulawesi sea, near the land border between Indonesia's East Kalimantan province and Malaysia's Sabah state were recently unbalanced by Kuala Lumpur's granting of oil exploration rights.

Warships from both countries have come into close contact in the area several times since Feb 16 when energy giant Shell was given a concession in the area by Malaysia's state oil company Petronas.

Indonesia has seven warships and four F-16 fighter airplane stations in the area. It has also beefed up military presence in both East Kalimantan and North Sulawesi, the two provinces closest to the disputed territory.

Both sides have accused each other's boats and airplanes of incursions into their territories.

"We will make sure that Malaysia's position will be conveyed to them but this does not mean that we want to be in confrontation (with Indonesia)," Syed Hamid was quoted as saying by the official Bernama news agency.

"Bilateral relations should not be oriented by a particular issue. I think our relationship goes deeper than that."

Not a negotiation

Asked if he would make any proposals when he meets his Indonesian counterpart Hasan Wirayuda in Jakarta on Wednesday and Thursday to discuss the border problem, Syed Hamid said: "This is not a negotiation. I am just going to meet him."

On Tuesday about 50 protestors gathered outside the Malaysian embassy in Jakarta for a second day of noisy protests. In at least two Indonesian cities, activists have opened registration centres for volunteers willing to fight if armed conflict breaks out.

He blamed the Indonesian media for blowing the issue out of proportion and generating ill-feelings towards Malaysia, and urged both sides to act responsibly to find an amicable solution.

"For Malaysia, I think we should stay calm and we should hold to our belief that differences can be resolved through negotiations and dialogue," he added.

Earlier Tuesday, Indonesian President Susilo Bambang Yudhoyono said the border dispute had not affected friendly relations between the two countries and expressed optimism that they would be able to weather the row.

"Bilateral ties have not undergone drastic changes. Do not picture this relationship as in a bad state. It has not worsened in a relatively brief time," said Yudhoyno who is currently touring islands near the disputed area off the eastern coast of Borneo island.

"I think we are in a friendly, neighbourly situation and not in a confrontative atmosphere, not in a condition of enmity against Malaysia."

Indonesia and Malaysia previously disputed the ownership of two small islands east of Sebatik. But in December 2002, the International Court of Justice ruled that the islands - Ligitan and Sipadan - belong to Malaysia.

Indonesia in 1963 declared war against Malaysia following sporadic tensions over the future of Borneo island after the British relinquished control but it ended in 1966.