The comments by Indonesian Foreign Minister Marty Natalegawa came after he agreed to meet his Australian counterpart Stephen Smith, who was trying to garner regional support for the controversial centre.
Natalegawa was non-committal on the proposal, saying merely that a processing centre could be a "potential component" of a regional approach to the problem.
"We are not simply focusing on what we call the regional processing centre but we are having a broader thought process there in terms of a regional framework," he said.
"We are actually precisely trying to develop a regional framework, a regional approach in dealing with the whole issue of people smuggling and trafficking," Natalegawa said, adding that further talks were needed.
New Australian Prime Minister Julia Gillard has announced a return to harsh offshore detention policies, with immigration a key issue ahead of elections expected to be called in the coming days.
Smith said Australia and Indonesia would convene a ministerial-level meeting this year to discuss the matter.
"And I think we are now both of the view that given this proposal and the need to discuss it throughout the region, we should do that sooner rather than later, and that is a good thing," Smith said.
East Timorese Deputy Prime Minister Mario Viegas Carrascalao on Wednesday rejected the Australian proposal, saying Dili was nobody's "puppet".
Australia processes asylum-seekers -- mainly from Afghanistan and Sri Lanka -- at Christmas Island in the Indian Ocean, but a steady flow of refugees has overwhelmed facilities and forced the reopening of centres on the mainland.
Some 2,982 asylum-seekers were intercepted this year until May 19, official figures from Australia show, putting 2010 on course to beat the 2001 record of 5,516 arrivals.
He was forced to issue a statement insisting he had been referring to policies under Rudd and that the "debate has changed substantially since Julia Gillard became prime minister."
Strengthening border protection is a key plank of Gillard's election platform, and Smith previously said that Australian officials had productive negotiations with authorities in East Timor, admitting it was a "big project".
"We need to ensure that not only is there regional support ... we've also got to get support from settlement and resettlement countries.
"So this is an extensive conversation, which is why it's not going to be solved in one day, or one week, or in one meeting with officials," he added.