Indonesia announces new capital

Indonesian President Joko Widodo on Monday announced the relocation of the new national capital to replace sinking and traffic-clogged Jakarta.

Widodo said the country’s new administrative centre will be built in a forested area that straddles the border between the districts of Kutai Katanegara and North Penajam Paser in East Kalimantan province near the city of Balikpapan.

“The location is strategic because it’s in the centre of Indonesia,’’ he said.

Risks of disasters such as flooding, earthquakes, tsunamis and volcanic eruptions are minimal, he added.

He said a draft law on the new capital would be submitted to the legislature on Tuesday.

The president said Jakarta was bursting at its seams because of its status as the administrative and commercial centre of the country and Java Island.

The government wants to start moving to a new capital by 2024, at the end of Widodo’s second five-year term in office.

Officials said the move is expected to cost up to $33 billion.

Funding will involve allowing developers to manage government-owned property in Jakarta in return for helping build the new city, the government said.

A study by the Bandung Institute of Technology found that as much as 36 per cent of Jakarta could be lost underwater by 2050.

Mass extraction of groundwater by office buildings, shopping, apartment complexes and residents are to blame, experts say.

About 630 million cubic metres of water are pumped from the ground each year, according to the city government.

The government has said economic losses caused by the city’s traffic jams are estimated at 100 trillion rupiahs ($7 billion) a year.

Some environmental activists have criticised the planned move, warning that building a new city in the middle of a forest could harm the environment.