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US Secretary of State Hillary Clinton on Sunday urged Indonesia to cut tariffs, saying trade between the two countries lagged behind others in Southeast Asia.

She said the country of 240 million people was the biggest economy in the 10-member Association of Southeast Asian Nations but its trade with the United States was well short of where it could be.

"While Indonesia is the largest economy in Asean, trade between our two countries lags behind others in the region," she said during a meeting with Indonesian Foreign Minister Marty Natalegawa and other officials.

"Last year America?s trade with Indonesia surpassed $20 billion, but it hit $40 billion with Malaysia. So we want to collaborate on ways to reduce tariffs and other barriers."

Clinton on Saturday attended a gathering of Southeast Asian entrepreneurs alongside Indonesian Trade Minister Mari Elka Pangestu, at the end of a hectic week of regional diplomacy on the resort island of Bali.

She said Indonesia was a "natural choice" for a summit of young entrepreneurs, as a major democracy in a "dynamic region that is increasingly at the heart of global commerce and growth".

But she said its potential was being tied down by red tape and legal uncertainty.

"The United States wants to work with you to bring down these barriers," she said.

"That means reducing the time it takes to open a business here in this region... Improving the business climate by protecting intellectual property rights."

She cited rampant copyright piracy as a clear deterrent to innovation in Indonesia, a member of the G20 group of rich and developing nations.

"If you come up with a good idea, it should be protected so that you can then make the most of it and spin it off into who knows where it might go," she said.

At her meeting with Natalegawa, she noted Indonesian commitments to reduce its carbon emissions and said the United States wanted to work with Jakarta to "spur sustainable growth".

She also looked ahead to President Barack Obama's visit to Indonesia -- his childhood home for four years in the late 1960s -- for the East Asia Summit in November.

Washington and Jakarta could use the summit to advance their "most important shared concerns" such as maritime security, disaster readiness and nonproliferation, "including working toward a denuclearised Korean peninsula".

Clinton arrived in Bali on Thursday to attend a series of meetings culminating in the Asean Regional Forum security dialogue on Saturday. She leaves for Hong Kong later Sunday.

Agence France-Presse