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Economy

Stalled Indonesia rail project overcomes major hurdle

Jakarta accepts Japan's plan to upgrade existing lines, drops new rail construction

Rail lines lead into the Indonesian capital of Jakarta. A Japanese-backed upgrade would halve rail travel times between Indonesia's two largest cities.

JAKARTA -- Indonesia has agreed that a Tokyo-backed overhaul of the railway connecting the country's two largest cities will refurbish already existing lines, a breakthrough that could accelerate the stymied project.

The Indonesian government is negotiating with Japan to upgrade a roughly 750km rail line traversing the island of Java. Traveling the current state-run link between the capital city of Jakarta and Surabaya, the nation's second-biggest metropolis, takes about 11 hours. The project would slash the trip to five or six hours.

However, the two sides were at odds over how to proceed with the development. The original plan involved removing railroad crossings on extant lines to speed up the diesel-powered trains. But Indonesia later demanded construction of entirely new lines, and that the trains operate solely on electricity.

Hiroto Izumi, a special adviser to Japanese Prime Minister Shinzo Abe, met Wednesday with Indonesian Transportation Minister Budi Karya Sumadi in Jakarta. Indonesia wants the trains to run at 160kph, Izumi said, but the other sticking points were not brought up.

The leading proposal uses diesel trains already in operation, according to an Indonesian source familiar with the matter. Government agencies and the Japan International Cooperation Agency, a state-backed lender, will hammer out a detailed plan.

Izumi, speaking Tuesday with President Joko Widodo, asked Indonesia to decide swiftly on a railway plan. Senior Indonesian officials reportedly settled on using existing rail lines Wednesday after discussing the issue.

Indonesia had sought to underwrite the rail project through a private-public partnership that would not increase government debt. But now that costs will total billions of dollars, both governments are examining other ways to procure funds.

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