Indonesia owns about 75 per cent of the island of Borneo, which it calls Kalimantan, and it has five provinces on the island. "Why East Kalimantan?" Joko asked at the announcement. "First, it has fewer earthquakes, floods and forest fires. Second, it is strategically located as it lies right in the centre of the country. Third, it is located near developed cities including Balikpapan and Samarinda. Fourth, it has sufficient infrastructure and fifth, some 180,000 hectares of government land is available." "Jakarta will remain the centre of business, finance, trade and services at a regional and global level," Joko said. The President said that about 19 per cent of the cost of financing the new capital - estimated to be at least $45 billion - will come from the state budget and the rest will be paid for by "asset management".

That means, in practice, that revenue from former government buildings in Jakarta that are rented out or sold will help finance the development of new capital city. The government will also look to public-private partnerships to help pay for the project. But the move will likely cost the private sector and the diplomatic community in Jakarta billions. Loading Replay Replay video Play video Play video A target date of 2024 has been set for the first residents to move to the new city. This is the last year of the President’s second and final five-year term. The population of the new capital is expected to grow rapidly to 1.5 million people. Bandung Institute of Technology experts have warned as much as 95 per cent of north Jakarta could be under water by 2050. "Many have asked why should we move now. The answer is that the burden on Jakarta and Java is becoming bigger. In Jakarta we often suffer traffic jams and flood," Joko said. Fifty-four per cent of Indonesia's population is on Java, which also generates 58 per cent of Indonesia's gross national product, which makes the move part of a broader strategy to decentralise the country's economic growth.

Indonesia's first president, Soekarno, flagged the idea of moving the nation's capital to Kalimantan in 1957. "The plan to move the capital started a long time ago ... after 74 years of independence Indonesia has never designed its own capital," Joko said. But much of the island of Borneo is home to huge swathes of forests and endangered species such as orangutans, and environmental groups will not be pleased that some of these forests will be cleared for the development of the new capital. They have already flagged concerns about the impact the move will have on the local environment and fauna. An orangutan with a cub in Borneo, one of its few remaining natural habitats. Credit:Alamy However, while Indonesia's leaders get on with planning a new capital, the current capital of Jakarta will remain mired in problems that the shift will not fix, and some sections of Joko's government have privately fought the move, arguing it is simply too costly.