Malaysian Foreign Minister Syed Hamid Albar was scheduled to depart for Jakarta on Wednesday for three days of talks with Indonesian counterpart Hassan Wirajuda on the issue.
The crisis prompted both sides to deploy warships in
recent days and accuse each other of trespassing.
Indonesian President Susilo Bambang Yudhoyono, currently touring islands near the disputed area, told journalists on Tuesday that the two countries would 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," Susilo said.
Outraged Indonesians have
protested against Malaysia
"I think we are in a friendly, neighbourly situation and not in
a confrontational atmosphere, not in a condition of enmity against Malaysia," he added.
In return, Syed Hamid said his country would protect its sovereignty in the dispute with Indonesia.
"We will protect our interest and our sovereignty, but that does not mean that we want to be confrontational. We will not make the situation worse," he said.
He added that he had some proposals on how to resolve the conflict, but did not elaborate.
The territorial row has raised anger among ordinary Indonesians and sparked noisy protests against Malaysia.
On Tuesday, about 50 protesters gathered outside the Malaysian embassy in Jakarta for a second day of noisy protests to voice outrage.
"Bilateral ties have not undergone drastic changes"
Susilo Bambang Yudhoyono, Indonesian president
A move by Malaysia last month to grant oil exploration rights in the Sulawesi Sea off Borneo's eastern coast has prompted a military escalation in the area, with both sides accusing each other's boats and planes of territorial incursions.
Indonesia says the oil blocks are within its borders.
Relations were also soured over Malaysia's expulsion of hundreds of thousands of illegal Indonesian workers.