Indonesia's President has decided to move the capital of the world's fourth most populous country away from the crowded main island of Java but has yet to finalise a new location, Planning Minister Bambang Brodjonegor says.

Key points: Plans to move the capital stem from Indonesia's Sukarno era

Plans to move the capital stem from Indonesia's Sukarno era Jakarta is a low-lying coastal city that is sinking and suffers from traffic gridlock

Jakarta is a low-lying coastal city that is sinking and suffers from traffic gridlock The Widodo Government released no detail about the capital's new location

Plans to move the capital have been touted since former president Sukarno's rule, but President Joko Widodo is now the first to seriously consider the idea.

"The idea to move the capital city appeared long ago," he said.

"But it has never been decided or discussed in a planned and mature manner."

Mr Widodo's decision came less than two weeks after private pollsters said he had won an April 17 presidential election, although official results are not due until May 22.

His challenger, Prabowo Subianto, has also claimed victory.

Jakarta has long been a centre of trade within the Indonesian archipelago. ( ABC News )

Mr Subianto previously challenged for the presidency in 2014, which was subsequently defeated unanimously by the Indonesian Constitutional Court.

"The President chose to relocate the capital city to outside of Java, an important decision," Mr Brodjonegoro told a news conference after a cabinet meeting.

Mr Brodjonegoro said the administration had yet to pick a new location, but was looking at the eastern side of the sprawling archipelago.

Jakarta holds centuries of history

Map of the castle and city of Batavia, on the island of Java (now Jakarta, Indonesia). ( TU Delft: Jan Janssonius )

Jakarta stretches back at least 500 years, beginning as the port of Sunda Kalapa within the Hindu Kingdom of Pajajaran that ruled the western half of Java from the 670s.

In the centuries afterward, the port formed a link between the Indonesian archipelago and European traders alongside other ports such as Aceh and Makassar.

"People think of South-East Asia as a late urbaniser, but before the colonial period it was very urban, where they hosted populations higher than comparable European cities during the 1500s to the 1750s," said Dr Scott Hawken, an urban designer and researcher in Asian urbanism at the University of New South Wales (UNSW).

"It was one of the most urbanised regions in the world, and it was only until European colonisation that rapid deurbanisation occurred."

Deurbanisation however, was not the fate of Jakarta under Dutch rule, which was known as Batavia — the capital of the Dutch East Indies from 1621.

At the time, the low-lying city mirrored the ecology of the Dutch capital, Amsterdam, being flood-prone and home to a variety of swamplands, which spurred the creation of canals that are still found within the city today.

Canals built by Dutch authorities still line parts of Jakarta today. ( Rijksmuseum: Oudheidkundige dienst )

In the decades after Indonesia was granted independence in 1949, Jakarta has grown to become Indonesia's economic capital, and one of the world's largest metropolitan regions.

In making his decision, Mr Widodo had also taken into account the fact that nearly 60 per cent of Indonesia's 260 million people live in Java and economic activities were concentrated there, Mr Brodjonegoro said.

"Capitals that were designed in emerging economies such as India and Brazil were done with modernist superlative visions of clean, efficient cities, but they didn't really deliver for the people," Dr Hawken said.

Brazil's purpose-built capital of Brasília is home to many award-winning designs, but remains inaccessible to many. ( Flickr: Jens Kristian Seier )

"A lot of the people who built those cities couldn't afford to live in them after they were constructed.

"So I just question whether building [Indonesia's] new capital will actually resolve some of the housing and infrastructure challenges that Jakarta has."

Beyond housing and infrastructure, the region's precarious ecological context will compound Jakarta's urban stresses, as a World Bank report found that the city would be 40 to 60 centimetres lower in 2025 compared to 2008 levels.

Without adequate adaptation strategies, the report said that the sea would reach the Presidential Palace which lies 5 kilometres inland.

Currently, only 4 per cent of Jakarta's waste water is treated according to the government, causing massive pollution to rivers and contaminating the ground water used by the majority of the city's inhabitants.

The city's sinking woes have been exacerbated by decades of wealthier Indonesians boring holes throughout Jakarta to bypass the city's water grid.

Gridlock costs Indonesia $10bn annually

The Indonesian capital has long been plagued by traffic gridlock. ( Flickr: Fakhri Anindita )

At the opening of his cabinet meeting, Mr Widodo stressed the need for new thinking about the future.

"We want to think in a visionary way for the progress of this country and moving the capital requires thorough and detailed preparation," he said.

The current capital, Jakarta, is home to more than 10 million people, but around three times that many people live in the surrounding towns adding to the area's severe congestion.

Jakarta's greater metropolitan area is two times smaller than greater Sydney, but it hosts a population of around 30 million people.

Mr Brodjonegoro put the annual economic loss due to traffic congestion in Jakarta at 100 trillion rupiah ($10 billion).

During the recent election campaign, Mr Widodo promised to spread economic development more evenly outside Java, but Dr Hawken told the ABC that the island is the "natural home of Indonesia's wealth".

"Almost all of South-East Asia's countries have this phenomenon where they may have a megacity of more than 10 million people and then a raft of second-tier cities — so I wonder if [Widodo] will be able to challenge that pattern.

"I don't see the population moving that easily."

Traffic in Jakarta costs the Indonesian economy about $10 billion per year. ( Flickr: Seika )

The Planning Minister did not estimate the cost of moving the capital but said the president had ordered the finance ministry to come up with a financing scheme that allowed participation of private investors.

He said moving the capital could take up to 10 years, citing examples in Brazil (Brasília) and Kazakhstan (Nur-Sultan).

One of the contenders for the new capital city is Palangkaraya in the Central Kalimantan province on the island of Borneo, state news agency Antara reported this year.

Authorities there had prepared 300,000 hectares of land in case it is chosen as a new government hub, Antara said.

ABC/wires