The administration has yet to choose a new location and most probably it will be the eastern side of the sprawling archipelago that will accommodate the capital. Moving the capital requires thorough and detailed preparation and the financy ministry has been ordered to make an estimate of the cost and the financial scheme of moving the capital.
The decision was prompted by several factors, one of which is severe congestion in the area. Currently, about 10 million people reside in Jakarta and at least three times the same quantity lives in satellite towns nearby. Overpopulation of the area results in thick congestion which brings the country the annual economic loss of about 100 trillion rupiah ($7.04 billion).
Another importat point is that Jakarta sits quite low and thus is prone to flooding. The city is gradually sinking due to over-extraction of ground water.
Jakarta is located on Java, Indonesia's main island. Nearly 60 percent of Indonesia’s 260 million population live in Java. The major economic activities are concentrated there. Moving the capital away from Java will boost economic development in other areas of the country and will help spread economic activity more evenly.
One of the most probably contenders for accommodating the new capital is Palangkaraya in Central Kalimantan province on the island of Borneo.
Will Indonesia Move Its Capital Out of Java?
News in Asia
Indonesia’s president eyes feasibility of moving the country's capital from the main island of Java to a less crowded location. It is not yet decided, though, where exactly the new capital will be situated but according to the planning minister the relocation process can take up to 10 years.