JAKARTA: Indonesia on Thursday urged Chinese ships not to enter its territorial waters, days after it protested against what it called a breach of its sovereignty by a Chinese coastguard ship.

Indonesia is not embroiled in rival claims with China over the South China Sea and has instead seen itself as an "honest broker" in disputes between China and the Philippines, Malaysia and Brunei.

But an incident last Saturday involving an Indonesian patrol boat, and a Chinese coastguard vessel and fishing boat in what Indonesia said was its waters has angered it and led to it questioning its work to promote peace.

Chief security minister Luhut Pandjaitan said Indonesia would maintain good relations with China but "without sacrificing Indonesia's sovereignty".

"We urge Chinese ships not to enter our exclusive economic zone, which can be disruptive," Pandjaitan told reporters, referring to Indonesia's maritime territory near the northern Natuna Islands, where Indonesia says the incident took place.

Foreign minister Retno Marsudi said on Thursday Indonesia was waiting for clarification from China over the incident, in the far south of the South China Sea.

China has said its vessels were operating in "traditional Chinese fishing grounds" and its coastguard vessel did not enter Indonesian waters.

It has also reiterated that it recognises Indonesia's sovereignty over the Natuna Islands.

Indonesia's finance minister, Bambang Brodjonegoro, said on Wednesday Indonesia's economic relations with China were unlikely to be affected by the dispute.