Mr Primrose, 61, was kidnapped at gunpoint earlier this week by six men who intercepted his car as they brandished rifles and a pistol.
According to police early today the kidnappers had contacted family members and asked for the equivalent of £320,000 for his safe release.
Relief: Malcolm Primrose is pictured today being
reunited with his wife (pictured in yellow) following his release after
being taken captive by a group of armed men on June 11
Mr Primrose, who works for an Indonesian company in the northern province of Aceh, was snatched by the armed group on Tuesday when they ambushed his car as he was heading home.
Safe and well: Oil worker Malcolm Primrose, 61, has been found in Indonesia after being kidnapped by gunman who wanted £320,000
A huge manhunt was launched, but police conceded the Scotsman could have been held prisoner anywhere in the jungle region of the province.
They anticipated a long-drawn out search - but were surprised when he was found at a security post in a palm oil plantation early today.
He told police that he was 'a bit shaken' but it is understood he did not need hospital treatment.
Police Senior Commander Muhajir told the Jakarta Globe: 'We're taking him to Ranto Panjang police station to be questioned.'
Police have yet to release details of how and when the kidnappers made contact with Mr Primrose's family, but it is believed that the Scot had, under pressure, given them details of someone to call.
'When they (the kidnappers) contacted his family, they asked for a 5 billion rupiah ransom,' said Commander Muhajir, who uses only one name.
But the police officer said no ransom was paid and, expecting a long drawn out period of negotiation, searching officers and troops were surprised to hear he had been found at a security post.
Investigation: An Indonesian policeman walks past a car used by Malcolm Primrose who was kidnapped in Peureulak, East Aceh
Hunt: Armed police went out in several vehicles to try to find the missing Briton yesterday
'I don't know of a precise reason for the kidnappers' decision to release Mr Primrose,' said Commander Muhajir.
'It's probably because of the size of the police operation with the help of soldiers,' he said.
The search operation had involved more than 100 police officers as well as soldiers.
The safe return of Mr Primrose does not put an end to the search for the kidnappers.
'We are still looking for them and will keep up the pressure until we find them,' said Commander Muhajir.
'It is very rare for people to be kidnapped in Aceh these days,' he added.
Scene: Mr Primrose was kidnapped in Indonesia's Aceh province by at least six armed men, police said
Relief: Police and troops had spread out in the region but there was no sign of Mr Primrose or his attackers until earlier today
'We were very surprised to hear that a foreigner had been kidnapped, but it is good news we have got him back.'
The British Embassy in Jakarta said that it was grateful for the work put in by the Indonesian authorities in searching for Mr Primrose.
'We are delighted to confirm that Malcolm Primrose has been released,' the Embassy said in a statement.
'Embassy officials are with Mr Primrose and are providing consular assistance.
'We would like to place on record our warm thanks for the support we have received from the Indonesian authorities, as well as from the Governor of Aceh and his staff, the Chief of Aceh police and his team, and the many others who have worked so hard to secure his release.'
The Government's Foreign and Commonwealth Office warned that there is a high threat from terrorism in Indonesia.
It says: 'Terrorist groups continue to plan attacks and have the capacity and intent to carry out these attacks at anytime and anywhere in the country.'
It advises visitors to 'exercise caution when travelling to Aceh, Central Sulawesi Province (especially Palu, Poso and Tentena), Maluku Province (especially Ambon), Papua and West Papua Province.'
The western coast of Aceh was devastated by a tsunami in December 2004.
The tsunami, caused by the Indian Ocean earthquake., killed an estimated 170,000 people in Aceh and left about 500,000 homeless.
Just months later, in March 2005, a second off-shore earthquake measuring 9.1 on the Richter scale struck the sea bed near Aceh, killing a further 905 people and displacing f thousands more.
DAILYMAIL
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