Deputy Foreign Minister Richard Riot said both countries erred in the latest incident which saw Malaysian fishermen and Indonesian officials detained.
In the ensuing protest human faeces were flung at its embassy in Jakarta.
Riot said the neighbours had met on a regular basis to try to resolve the maritime border dispute but that there was still no agreement on demarcation.
“I don’t think it will be quick. After 16 meetings it has not been resolved so I don’t think it can be solved that fast,” he said.
“If it comes to the breaking point, the International Court of Justice will be the place where the claims are resolved as the last resort,” he said, referring to the United Nations’ highest court, in The Hague.
Last month, seven Malaysian fishermen were detained in disputed waters off southern Malaysia by Indonesian authorities who accused them of encroaching into their territory.
Three of the Indonesian officials were detained by Malaysian maritime authorities who intercepted the group as they were being taken back to Indonesia.
All those involved have been released but the incident provoked an angry response in Indonesia, forcing security at the Malaysian mission in Jakarta to be stepped up.
Riot said the latest spat between the neighbours, who have a history of squabbles, was a result of “mistakes” by both sides.
“Both sides are wrong. They came into our waters to tow away our fishermen and we stopped them in their waters, while they were towing our fishermen to Indonesia. We have both made mistakes but we must move on,” he said.
The deputy minister said the two nations would meet again on September 6 in Malaysia to try to soothe tempers and work out a way to move on.
“Despite the protests in Indonesia, we will not issue a travel advisory as things have calmed down and it is only a small group that is instigating things,” he said, referring to the protest in Jakarta.
“We want good relations with Indonesia, we cannot allow things to get out of hand,” he added.