The loans are part of a project co-financed by the World bank and the Asian Development Bank aiming at ensuring stability in the Indonesian economy, a ministry statement said on Tuesday.

Indonesia is expected to repay the amount in 15 years, it said.

Japan, which has focused on building relations with South-east Asia, last year signed a wide-ranging free-trade agreement with Indonesia that calls for more investment from the world's second largest economy.

Tokyo decided on the loans as 'further improvement of Indonesia's domestic investment environment is essential in order to bring investment from Japan', the statement said. -- AFP