Indonesian President Joko Widodo has decided to move the capital of Southeast Asia's largest economy away from the crowded main island of Java, the planning minister has said.

"The president chose to relocate the capital city to outside of Java, an important decision," Minister Bambang Brodjonegoro told a news conference after a cabinet meeting, adding that the administration had yet to pick a new location.

He said moving the capital from the coastal city of Jakarta, on the north coast of Java, could take up to 10 years, citing examples such as Brazil, Malaysia and Kazakhstan.

Jakarta was absorbed as the de facto capital by nationalist leaders in the 1940s when Indonesia declared independence. But since then it has been an unending logistical nightmare.

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The world's second-largest metropolitan region is sinking up to 18cm per year. Its road coverage is much lower than that of other big cities, creating a near-permanent traffic jam.

The "price" of this congestion has been estimated to be $11 billion by the Jakarta Transportation Agency.

In 2017 Widodo commissioned a survey from the National Development Planning Agency, or BAPPENAS, to look into sites in Central Kalimantan province on Borneo island.

The chief candidate for a new capital is Palangkaraya, a Kalimantan city that even founding president Sukarno once hoped could replace Jakarta as the capital.