JAKARTA: Indonesia has cleared obstacles to foreign investment in a private coal railway in East Kalimantan province, part of a five-billion-dollar infrastructure project, an official said.

Dubai-based Trimex Group’s MEC Holdings and the Gulf emirate of Ras al-Khaimah are joining forces to build the 130-kilometre railway at a cost of a billion dollars, MEC said in a statement yesterday.

The railway from the Muara Wahau coal mine to Bengalon on the East Kalimantan coast is key to plans for a five-billion-dollar integrated development including a new port, power plant and aluminium smelter.

Indonesia Investment Coordinating Board deputy chairman Luky Eko Wuryanto said he hoped the project would encourage more foreign investment in line with the government’s vow to cut red tape and regulatory bottlenecks.

“We need more investment in the infrastructure sector, especially outside densely populated Java island,” he said.

Indonesian President Susilo Bambang Yudhoyono was quoted in the MEC statement as saying the project would “create multiple benefits to the development of the local economy in East Kalimantan.” “It sets a positive tone for future investments from the Middle East,” he added.

The deputy ruler of Ras al-Khaimah, Crown Prince Sheikh Saud Bin Saqr Al Qasimi, said the railway would also help to “meet energy challenges in Asia, particularly India and China.” “This type of public-private, Middle Eastern-Indonesian initiative is a

fantastic example of what can be accomplished when the fundamentals make sense for all parties involved,” he said.