Indonesian President Joko Widodo on Thursday emphasised the importance of military hardware modernisation but warned any spending should be done wisely as the state budget was limited.

The archipelago nation of 270 million people, Southeast Asia's biggest economy, is seeking to modernise its military but has lagged its regional peers in recent years.

"Spending for military hardware must be done wisely, in terms of the amount or allocation," Jokowi, as the president is known, said during an armed forces parade.

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