Jakarta – The Indonesian government is to open its railways sector to outside capital, allowing foreign investors to hold up to 95 percent stakes in new rail lines, a report said Thursday.

"They [the foreign investors] can own up to 95 percent of the assets as long as they are dealing with new railway networks," the transportation and telecommunication ministry's secretary general, Anwar Supriyadi was quoted by the Republika daily as saying. But he added that the stakes for foreign investors would be limited to 49 percent for expanding existing rail networks, such as in Java.

Supriyadi did not say when the new regulation would come into effect, but added that it was designed to encourage the development of railway services in the islands of Sumatra and Kalimantan. "There are practically no [railway] networks there, they can also open up a trans-Sumatra or trans-Kalimantan network," Supriyadi said.

Sumatra has only short, unconnected stretches of rail tracks in a few of the eight provinces on the island. There are no railways in Kalimantan, the Indonesian part of Borneo island. In the past Indonesia's railways has been monopolized by state railway company PT Kerata Api (KA).