Indonesian Foreign Minister Marty Natalegawa has asked the Australian ambassador Greg Moriarty to immediately explain the news that the Australian embassy in Jakarta was used as a post to spy on Indonesia.

"I don't get it" ... Indonesian foreign minister Marty Natalegawa on Tony Abbott's response to the spying scandal. Photo: Andrew Meares

The Indonesian national police and immigration departments are readying themselves to stop all cooperation with Australia as soon as an order comes from President Susilo Bambang Yudhoyono.

Indonesia's police chief General Sutarman said he was preparing to halt all joint programs including those addressing trans-national crime, people smuggling, trafficking in persons and terrorism if the president made the order in response to phone tapping revelations.

I believe the embarrassment should belong to the government of Australia 

And the Law and Human Rights ministry, which oversees Indonesia's immigration department is also preparing to withdraw its support for people smuggling programs.

However, a spokesman for the Corrections ministry told Fairfax Media that the boycott would not affect the much-delayed parole application of Schapelle Corby, which is currently mired in red tape within the department and awaiting approval.

"I believe there's no effect. The law is the law, and politics is politics," said department spokesman Ayub Suratman.

The news comes as it's revealed that three members of Indonesia's navy were caught red-handed on the weekend helping transport a group of 106 asylum seekers towards a wooden vessel bound for Australia.

It's a reminder that corrupt Indonesian officials are often involved in people smuggling syndicates, but also that an increasing proportion of attempts by such syndicates to reach the coast are being intercepted by police.

However, this could be put at risk if Indonesia carries through a threat to withdraw from joint activities.

Indonesian foreign minister Marty Natalegawa said all joint activities with Australia were under review because of revelations of Australian spying in 2009 and what he describes as the "dismissive" response of the Abbott Government in recent weeks.

Mr. Natalegawa also responded forcefully to Tony Abbott's statement of "regret" for any "embarrassment" caused to President Yudhoyono.

"I don't get it. Why would the President of Indonesia be embarrassed?" Mr Natalegawa told Channel News Asia. "I believe the embarrassment should belong to the government of Australia. They are the ones ... who have committed this unacceptable practice."

National police chief Sutarman said on Tuesday he was ready to stop all cooperation programs with Australia if ordered to do so.

"When asked to stop, we are ready to quit," he said.

The Australian Federal Police have a significant and growing presence in Indonesia, particularly geared to combatting people smuggling, trans-national crimes and terrorism. But they have no operational power, and all arrests and investigations must be conducted by the Indonesian police forces.

General Sutarman specifically threatened the operation of the jointly-run Jakarta Centre for Law Enforcement Cooperation (JCLEC), which was set up in 2008 and helps senior law enforcement officials from the region to hone their investigative skills.

Also on Tuesday a spokesman for the Law and Human Rights Ministry, Marolan J. Barimbing, told The Jakarta Post newspaper his department was preparing to review several programs designed to prevent asylum seekers heading for Australia.

"Once there are instructions, we are ready to lower the level of cooperation," said Marolan, who is a former top official with the immigration department.

"We are anticipating such an instruction … Our priority is our national interest. We're working based on regulations set up to protect the country from illegal immigrants, not to serve another country's interests," he said.

Meanwhile three members of Indonesia's navy have been caught with a group of 106 asylum seekers after apparently being hired by a people smuggling syndicate to provide safe passage.

The sailors, described in local media reports as enlisted men from the Cilandak base in Jakarta, were caught by police as they group towards a beach in South Garut, on the southern coast of Java.

They admitted they were hired by a people smuggler in Cisarua, where thousands of asylum seekers wait for legal or illegal entry to Australia.

The soldiers claimed they had been told that the job was to take "tourists" to the beach last Saturday night.

"They did not even have time to negotiate on wages with the people who hired them," said Bandung naval base commander Colonel Iswan.

"They believed they were going to get paid after they made their drive up the coast. It was their first experience. Maybe it's because they were freshly enlisted, they accepted this job without suspicion".

They were arrested by local police with the would-be asylum seekers who were predominantly members of the persecuted Rohingya muslim minority from Myanmar.