In a televised address to parliament ahead of the country's 74th independence anniversary on Saturday, Widodo formally proposed the relocation of the capital to Kalimantan, Borneo, which Indonesia shares with Malaysia and Brunei, reports Efe news.
He said that a capital is not only a symbol of national identity but also represents the progress of the nation and added that this would help achieve economic equality.
Widodo did not specify exactly where in Borneo the capital would be relocated to, nor when, although the government had said earlier that the first phase is set to begin in 2024.
In May, he visited several of the possible candidates for the new capital, including Bukit Soeharto, located some 40 km from the provincial capital of East Kalimantan, Balikpapan.
The President promised to announce this year the name of the new capital, which will be the administrative centre of the country, while Jakarta will continue as the financial and business capital.
Nearly 30 million people live in the metropolitan region that forms Jakarta and its satellite cities.
It is one of the most polluted capitals of the world and its traffic jams have led to the state losing millions.
Floods also pose a danger due to soil subsidence, caused mainly by groundwater extraction which especially affects the north of the capital. There the average subsidence is between 15 and 20 centimeters per year.
The idea of relocating the capital has been under consideration by the Indonesian government since the first term of Sukarno who led Indonesia between 1945-1976.
( With inputs from IANS )