JAKARTA (REUTERS) - Indonesia aims to finish the first phase of construction of a multi-billion dollar rail project linking the capital Jakarta to the country's second-biggest city of Surabaya by 2019, transport minister Budi Karya Sumadi said.

In a message on his Twitter account, Sumadi said the government wanted construction of the "semi-fast" rail link connecting Jakarta to Semarang, the capital of Central Java, to be completed by 2019 and track work on to Surabaya to be finished by 2021.

Indonesia and Japan agreed to initial discussions on the project in January during Japanese Prime Minister Shinzo Abe's visit to Jakarta, but it was not clear if a Japanese company would be involved in building the railway. Japan has historically been one of Indonesia's biggest investors.

However, President Joko Widodo awarded China a fast-train link project connecting Jakarta to Bandung, the capital of West Java, in 2015.

The Jakarta-Surabaya rail project, which aims to more than halve journey times on the 600km route to around five hours, would mostly involve upgrading an existing line, Sumadi said. That could cut the investment needed to below 60 trillion rupiah (S$6.1 billion) from an initial estimate of 80 trillion rupiah, he added.

When contacted by Reuters, Sumadi declined to say who would build the project, but in an interview last year, he said Japan could provide a loan and construction could be carried out by a partnership of Japanese and Indonesian companies.

Meanwhile, progress on the 150km Jakarta-Bandung rail link has been slow. A consortium of Indonesian and Chinese companies building the railway signed a US$4.5 billion loan with China Development Bank on the sideline of the Belt and Road Forum for International Cooperation in Beijing in May, nearly two years after the project was awarded. The disbursement of that loan should begin in November, state-owned enterprises minister Rini Soemarno was quoted by media as saying.