Indonesia plans to move its capital to Borneo island from Jakarta, a crowded, polluted city on the north coast of Java island which is slowly sinking, the president said on Monday.

President Joko Widodo said it was urgent that relocation plans commence, although the capital would not physically begin to be relocated until 2024.

The new capital, which does not yet have a name, would be located in Borneo's East Kalimantan province, near the existing Samarinda City and the port city of Balikpapan, important for coal and oil shipments.

"It is a strategic location at the centre of Indonesia, close to growing urban area," Widodo told a news conference at the Jakarta state palace.

Widodo said moving the capital would cost 466 trillion rupiah ($32.79 billion), of which the state would fund 19%, with the rest from public-private partnerships and private investment. The price tag includes new government offices and homes for about 1.5 million civil servants.