A proposal to move the Indonesian capital city from Jakarta to other locations has been discussed since the Sukarno presidency, and even earlier during the Dutch colonial era. In fact, in the early 20th century there was an effort by the Dutch East Indies government to relocate the capital from Batavia (colonial Jakarta) to Bandung. In the 2010s, the idea to relocate the national capital or administrative center has been revisited, mainly because of Jakarta's environmental degradation and overpopulation problems In 2017, Palangkaraya was mentioned as a potential alternative.
The business sector however, has expressed some mixed reactions, with some business voiced against the move. However, is it possible to keep Jakarta as headquarter for both administration, commerce and as industrial/logistic center? In addition, in an area close to dynamic natural events like eruptions and earthquakes?

In some way, we can compare the Indonesian need for changes with Brazilian experience. Even if Brazil has failed to take care of its huge potential in natural and human resources, it can in some meaning serve as an example. 1960 Brazil moved the capital from Rio de Janeiro to the unhabited highland and call the new place Brasilia. As Jakarta, Rio de Janeiro has always been a commercial and logistic center, that time also including administration and as Jakarta, it is situated by the sea and has a hot tropical climate. However, the industrial center of Brazil was always located to the even bigger city São Paulo. Grand Rio has today about 8 million of habitants, São Paulo about 20 millions, so in population, Jakarta lays between these cities, and of course, they have all already grew too much and show up some of the same problems as any big city in the World.

Some facts:

1. Movement did not save Rio de Janeiro. Although all government moved to Brasilia, Rio de Janeiro has continued its fall to decadency and was soon after the Olympic Games 2016 declared to bankruptcy. Criminality and corruption make RJ to a dangerous and unpleasant city, very different 100 years ago, when it was one of the most pleasant cities in the World, in its tropical beauty imbedded between the bay of Guanabara and the characteristic hills decorated with the tropical forest.

2. Brasilia became a total disaster. When big part of Brazilians say the only good with Brasilia is that it can be nuked without disturbing the big population centers around the coast, can we then talk about a success? The people feel that politicians rule the country far from the reality, by far away Brasilia even geographically isolated. Brasilia was projected as a futuristic functional town; architect Oscar Niemeyer had learned by American and European architects, like Le Corbusier, how to project a functional city for people. He tried to put the theories in practice. And failed! Brasilia is today a violent and dangerous city, circulated by a ring of favelas (slum), containing more than 1 million habitants. Brazil just exported it´s social problems to another place.

3. The former Brazilian president Juscelino Kubitchek signed in the end of the 50-ies the agreement for Brasilia. He also assigned financial loans who kept Brasil in debth and nearly bankruptcy under decades. In the end of the Military Regim 1964 - 1984, the debth started finally to decrease. An Indonesian movement of the capital to a virgin place, or at least not prepared for the demand of being a capital, will include new infrastructure and relocation of millions of public servants, militars and their families. How will this be financed? Who will be an eventual  partner? China? Saudi Arabia? USA ? Russia ? And will Indonesian nationalist wishes of president Sukarnos wish to cut off all the ties from the Dutch exploration, represented by Kota Baru, spoken in clear Bahasa be the solution to the cost of....? Yes,  independence. Brazil never recuperated from it´s Portuguese senhores. English bankers took over and have still today, together with their American cumplices, Brazil in the grip. Brazil, forever submitted the International Finances.

However, Indonesia is a very different country from Brazil. You can only compare Brazil and Indonesia as both these countries have hot tropical climate and a multicultural population both more than 200 million habitants each and extensive territory rich by natural resources. Beyond these facts, the similarities are consumed and rest more big differences.

Indonesia has a rich culture, 1000 of 1000 years of interesting history; it owns a rich spectrum  of the oldest and most diversified cultures over the entire World. Indonesians know what suffering is, from the worst natural catastrophes in World, to War, hostile occupation The Indonesian people have guts and made armed upraise against the colonial power. Orang Indonesia learn respect and keep important family traditions. Indonesians care about spiritual life and put big importance in religious activities. Indonesians are in total majority Muslims, Islam influences the government, in that degree that civil order, and traditions are preserved, thus avoiding high criminality, keeping moral, and solidarity high.

Conclusive, it is from a national politic view a good idea to move out from Jakarta and Java and decentralize over the country. Kalimantan is far less populated and a safer island  and is geographically centralized in the archipelago. The island of Borneo is vast and far away from the Indonesian tectonic convergent boundary, which means it is relatively safe from earthquakes and volcanic eruptions. However, moving a capital to another place is expensive and will never follow the theory, how good it ever can be analyzed. Analyze should include study over errors from others, like Brazil and intensive analyze over the unique Indonesian possibilities, in social, commercial, logistic, administrative, productive and futuristic aspect. But, Jakarta will not be better just moving out the government. It must be fixed infrastructure, drainage and several other engineering task. Staying in Jakarta is also an option and using the money for modernization. Take Tokyo as example, it has many interesting solutions. And finally, we are living in an Era where things changes exponentially, is there maybe possible the Indonesian government could take a step forward and find new methods for administration? All country needs that but no one have the courage to make the necessary changes.

Some suggestions for places of new Indonesian capital:

Palangkaraya, Central Kalimantan. Since it was established as the capital of Central Kalimantan province in 1957, the first president of Indonesia, Sukarno, outlined a plan to develop Palangkaraya as the future capital of Indonesia. Nevertheless, sensible rainforests are in the surroundings….
Banjarmasin, South Kalimantan. Compared to Palangkaraya, Banjarmasin is located closer to the center of the country, has better access to the Java Sea and has better infrastructure. However, it is a very hot place and as it is build up on recent deposits, the soil is geotechnical not adequate for construction.

Kota Merdeka is a proposed planned city located north of Pangkalan Bun town, Central Kalimantan. Compared to inland Palangkaraya, Kota Merdeka has similar conditions, but is located nearer to coastal areas and has better access to Java Sea.

Pontianak, West Kalimantan. Located exactly on the equator and strategically located by the Karimata Strait and the South China Sea, in the same region with other ASEAN capitals such as Singapore, Kuala Lumpur, and Bandar Seri Begawan. Despite its strategic location, the proposal is criticized for its proximity to the Malaysian border and disputed areas in the South China Sea.
Between Balikpapan and Samarinda, East Kalimantan, located right in the center of Indonesia, by Makassar Strait which has become Indonesia's second main maritime passage, connecting Indonesia to East Malaysia, the Philippines, China, Japan and Australia. Endowed with rich natural resources, especially timber, coal, oil and liquid natural gas, East Kalimantan has natural and financial resources to build infrastructure befitting a new Indonesian capital.
Finally, outside the Kalimantan, one other alternative:

Palembang, South Sumatra. The city has historical significance, as the former capital of the Srivijaya maritime empire; which symbolize the return of the archipelago's former glory. It is also strategically located near the main maritime route of the Malacca Strait, near the other ASEAN capitals of Singapore and Kuala Lumpur. Nevertheless, the plan is criticized for its geographic location in the west that is not the center of the archipelago, and its proximity to Malaysian and Singaporean borders.

More about this issue:

http://www.globalindonesianvoices.com/31768/palangkaraya-indonesias-new-capital-city/

http://www.globalindonesianvoices.com/30830/why-moving-the-capital-out-of-jakarta-is-a-bad-idea/

https://www.voanews.com/a/indonesia-plans-to-relocate-capital/4201336.html

https://www.straitstimes.com/asia/se-asia/indonesia-studying-plan-to-relocate-capital