Vessel was carrying 277 people from Tanjung Perak port in East Java’s Surabaya when it caught fire late on Thursday.
The proposed location, near the regional cities of Balikpapan and Samarinda, is situated in the geographical centre of the Southeast Asian archipelago – an area where the government owns some 180,000 hectares of land.
“It is a strategic location at the centre of Indonesia, close to growing urban area,” President Widodo told a news conference in Jakarta.
The physical relocation of the capital would not begin until 2024, Widodo added.
The president said moving the capital from Jakarta would cost $32.79bn, of which the state would fund 19 percent, with the rest to come from public-private partnerships and private investment.
The cost includes new government offices and homes for about 1.5 million civil servants.
Widodo formally proposed the move to the Kalimantan region on August 16, during his state of the union speech in parliament. He justified the move as a “realisation of economic equality and justice”.
“A capital city is not just a symbol of national identity, but also a representation of the progress of the nation,” he added.
Jakarta is one of the world’s most densely populated cities, home to more than 10 million people – a figure which increases to 30 million when counting those living in the surrounding areas.
Widodo said in his televised speech that the burden on Jakarta and Java island was already too heavy, with the island home to 54 percent of the 260 million population and generating 58 percent of Indonesia’s gross domestic product.
The city is prone to floods and is sinking due to subsidence, caused by millions of residents using up groundwater.
Only four percent of Jakarta’s wastewater is treated, according to the government, polluting rivers and contaminating the groundwater that supplies the city. Congestion is estimated to cost the economy $6.5bn a year.
Environmentalist groups, however, have expressed fears that building a new capital amid swaths of forests in Borneo could compromise the habitats of endangered wildlife.
Borneo is a region known for its rainforests, coal mines, orangutans, sun bears, pangolins, sambar deers – and is home to just over 16 million people.
However, the decision to relocate the capital has found support in neighbouring Malaysia. Two of the country’s 13 states, Sabah and Sarawak, are located on Borneo.
The tourism minister of Sarawak, the Malaysian state located on Borneo, Datuk Abdul Karim Rahman Hamzah, welcomed Widodo’s proposal earlier this month, asserting that that move “will bring a lot of spillover to Sarawak and Sabah since we are the neighbouring states to Kalimantan”.