At last it is official. Indonesia is to get a new capital.

Indonesian President Joko Widodo made the announcement in a speech to Parliament on Friday, ending months of speculation.

The new capital will be relocated to Kalimantan on the island of Borneo, which Indonesia shares with Malaysia and Brunei.

Jakarta is one of the world's fastest sinking cities, with some estimates suggesting one-third of the city's landmass could be submerged by 2050.

Already regarded as one of the world's most polluted cities, Jakarta, a city of more than 10 million people, is also one of the most congested.

In his address to parliament, Jokowi said: "A capital city is not just a symbol of national identity, but also a representation of the progress of the nation."

He did not give the exact location in Kalimantan for the new city. It is a region with a population of just over 16 million people and known for rainforests and orangutans.

Widodo toured Kalimantan in May to survey potential sites.

Kyle Springer, a senior analyst with the Perth USAsia Centre at the University of Western Australia, said from an infrastructure perspective, Jokowi's push to move the national capital to Kalimantan is "interesting".

"It is a less developed part of Indonesia where there are a number of infrastructure gaps," the analyst said.

An archipelago comprising nearly 17,000 islands, Indonesia has a population of more than 270 million, mostly concentrated on the islands of Java and Sumatra.

A question mark has been hanging over the future of Jakarta as the nation's capital for decades.

Heri Andreas, a lecturer and researcher with the faculty of Earth Science and Technology and the Institute of Technology Bandung, Indonesia, said Kalimantan was chosen because of its central location in the archipelago.

He said the new capital will probably be the political capital of the country while the economic and commercial activities will remain on Java, at least for the time being.

He said Jakarta will be the "central economic city" of Indonesia.

"I don't see Jakarta being left behind after the new capital is established," he said.

"The magnet of Jakarta is strong and all of the elements that built up Jakarta including the people will still remain."

Apart from the obvious reasons to relocate it, "Jokowi's reasoning for the move could be diversifying development in a different part of the archipelago", Springer said.

He said the move to Kalimantan will require significant investment in infrastructure.

"However, moving the seat of the government and bureaucracy out of Jakarta (won't alone) solve the city's problems with pollution, traffic and flooding," he said.

As an archipelago stretching 5,000 kilometers from east to west, Indonesia is on the Pacific Ocean basin's so-called Ring of Fire, a 40,000-km horseshoe-shaped arc which is prone to earthquakes and volcanic eruptions.

Kalimantan sits outside the risk area.

North Kalimantan is one of the four economic corridors where Indonesia has proposed China direct its Belt and Road Initiative (BRI) investments in the country.

"This came out of the Coordinating Minister for Maritime Affairs Luhut Pandjaitan's visit to China in 2018," said Springer.

"I can identify at least two BRI projects in this province: the Kayan (River) hydropower project and the Tanah Kuning Industrial Park.

"There could be more, but the BRI does not maintain a public, official list of active and proposed projects in Indonesia."

He said the other provinces or "economic corridors" that Indonesia has sought BRI investment in are Bali, North Sumatra and North Sulawesi.

Yayat Supriyatna, an urban planner at Trisakti University in Jakarta, said a number of factors favored Kalimantan.

While Java is Indonesia's fourth-biggest island, it is home to more than half of the nation's population. Borneo, on the other hand, is the country's third-biggest island but has less than 6 percent of the population.

"It is ideally situated to be the new capital," Supriyatna said.

"It is strategically located in the middle of Indonesia and a great deal of the land is already owned by the government or state-owned companies. This would reduce investment costs for infrastructure and relocation," he added.

He said existing cities on the island already have airports, ports and roads; good drinking water, electricity, sanitation and communication network services.

Moving the capital to a safer, less congested location would cost up to $33 billion, according to Bambang Brodjonegoro, the country's planning minister.

The price tag includes new government offices and homes for about 1.5 million civil servants expected to pack up and start moving in 2024.