Indonesia will build a new capital city on a 180,000-hectare site on the island of Borneo, in a $40 billion-plus move that will replace the crowded mega-city of Jakarta.
The relocation plans of the capital city could physically begin by 2024, with Indonesian President Joko Widodo revealing the location of Indonesia's new capital this week as the East Kalimantan province in Borneo.
Including its metropolitan area Jakarta is currently home to more than 30 million people, and is prone to natural disasters such as earthquakes and floods. It’s also sinking with two-fifths of the city now below sea level.
Widodo said Jakarta would remain the “top priority for development and continue to develop as a business and finance city”.
The new capital is in an area considered relatively free of earthquakes and other natural disasters, as well as being situated in a strategic location at the centre of Indonesia.
“We cannot continue to allow the burdens of Jakarta and the burdens of the island of Java to increase,” Widodo said in his announcement on Monday.
“In terms of population density, traffic, congestion which is already severe, with air and water pollution that we must deal with.
“And this is not the fault of Jakarta’s provincial government no, but mainly because of the huge burden of the Indonesian economy on Java and Jakarta.”
Currently, more than half of the country’s population, estimated at 270 million, live on the island of Java, home to Jakarta located on its northwest coast.
Critics of the plan say the new capital will have harsh environmental impacts on tropical rainforests in the proposed region.
Widodo said the move is expected to cost 466 trillion rupiah (more than A$40 billion).
The state will fund approximately 19 per cent of this figure, while the remainder is expected to come from partnerships and private investment.
“The development of this new capital city is not the only effort by the government to reduce the disparity between Java and outside of it, but the government will develop industrialisation outside of Java based on the down streaming of natural resources as well,” Widodo said.