The government says it wants to diversify Indonesia's centres of economic and political power.
"The relocation (of the capital) is for distribution, for fairness," Widodo said in March.
"We have 17,000 islands but 56 percent of the population are in Java. There are 156 million people in Java."
By comparison, East Kalimantan province -- where the new capital Nusantara will be built -- has fewer than four million people.
The government has prepared 56,180 hectares (216 square miles) in East Kalimantan province on the Indonesian part of Borneo, which the country shares with Malaysia and Brunei.
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Another reason for the capital relocation cited by the government is disaster mitigation.
According to the Meteorology, Climatology and Geophysics Agency, Jakarta is surrounded by active fault lines, making it perilously vulnerable to earthquakes.
Borneo has the lowest possibility for earthquakes compared to other major Indonesian islands because it is further from active fault lines, the agency said.
Jakarta also deals with frequent flooding because it sits on swamp land.
Researchers believe water supplies may dry out for many in Jakarta and wider Java if Indonesia does not relieve pressure on the megalopolis.
"Jakarta and Java Island are heading towards a clean water crisis, we projected the crisis might happen in 2050," the earth scientist Andreas said, blaming rapid population and industrial growth.