Jakarta. President Joko "Jokowi" Widodo announced on Monday that Indonesia's new capital would be located in parts of North Penajam Paser and Kutai Kartanegara districts in East Kalimantan.

Jokowi said he had sent a proposal to the House of the Representatives earlier on Monday and that he would soon submit a new bill in support of the plan. 

"Why is it urgent now? We cannot let the burden on Jakarta and Java get heavier in terms of population, severe congestion, pollution and water shortages. These are all getting worse," the president said in a live broadcast from the State Palace in Central Jakarta. 

"This is not the fault of the Jakarta provincial government, but the burden that has been placed on Jakarta," he said.

Jokowi, who is a former Jakarta governor, said the government decided on North Penajam Paser and Kutai Kartanegara districts because the area is near two established cities – Samarinda and Balikpapan – which means there is sufficient infrastructure to support the development of a new capital city.

The government also already owns 180,000 hectares, or about two-thirds of the expected area of the new capital, in the area, which lowers land acquisition costs. Jokowi said the location is geographically at the center of Indonesia and relatively free from forest fires, earthquakes, flooding, volcanic eruptions and landslides.

The president said it would cost Rp 466 trillion ($33 billion) to relocate the head offices of the three branches of government to the new capital. However, this is lower than an estimate National Development Planning Minister Bambang Brodjonegoro announced last week. 

Jokowi said the government expects about 19 percent of the state budget to go toward the capital relocation project.

The country's financial authorities, such as Bank Indonesia and the Financial Services Authority (OJK), as well as the Indonesia Stock Exchange (IDX) will remain in Jakarta, as the city "will continue to develop into a regional and global hub for finance and trade," Jokowi said.

He said Jakarta would continue to receive financial support from the state budget for its development over the next decade.

"The Jakarta provincial government's plan, which is budgeted at Rp 571 trillion, will continue to be carried out and the discussion is at the technical level and ready to be implemented," Jokowi said.

Jokowi asked lawmakers' permission to relocate the capital to Kalimantan during his state of the nation address in the People's Consultative Assembly (MPR) two week ago.

"The capital city is not only a symbol of national identity, but also a representation of the progress of the nation, and to realize equality and economic justice," he said.

Add as a preferred source on Google +