Japan and Indonesia agreed on a wide-ranging ¥3.4 trillion plan Tuesday to develop an urban railway, thermal power plants and other infrastructure in Jakarta by 2020, in a bid to lure investments into the capital.
Tokyo hopes the project will offer firms a chance to expand their investments in Indonesia, where infrastructure development is urgently needed due to rapid economic growth.
The government also wants the project to serve as a model of the so-called "package infrastructure export" projects pursued by Japanese businesses.
Officials including Foreign Minister Koichiro Genba, industry minister Yukio Edano and Hatta Rajasa, Indonesia's coordinating minister in charge of economic affairs, approved the plan at a meeting in Tokyo.
The plan identifies 45 priority projects to be completed by 2020. Construction is expected to start by the end of 2013 on 18 of the projects, including a new corridor in Jakarta's mass rapid transit system and a new seaport outside the capital.
The early phase projects also include a railway connecting Jakarta Soekarno-Hatta International Airport and the capital.
Japan and Indonesia agreed to the infrastructure development plan in December 2010.