Indonesia will build a new capital city on the island of Borneo, home to some of the world's biggest coal reserves and orangutan habitats, as President Joko Widodo seeks to ease pressure on congested and sinking Jakarta.

The new administrative headquarters will be situated between North Penajam Paser and Kutai Kartanegara in East Kalimantan, Jokowi, as the president is commonly known, told reporters in Jakarta on Monday. The relocation of the capital, some 1,400 km from Jakarta, will help spread economic activity outside Java, the nation's most populous island, the president said.

Jokowi has displayed an urgency not shown by his predecessors in pressing on with the capital relocation plan, which has been periodically discussed for decades. With the greater Jakarta area, home to about 30 million people, nearing gridlock and pollution levels reaching unhealthy levels, efforts to decongest the city have made little progress with tens of thousands of cars getting added to the roads every year.