The largest city and capital of Indonesia , Jakarta is a major trade and financial center . formerly ( until 1949 ) Batavia or ( 1949-72 ) Djakarta largest city and capital of Indonesia . The largest city and capital of Indonesia , Jakarta is a major trade and financial center . The city has long been a major trade and financial centre . It is also an important city for manufacturing and a center for education . It has also become an important industrial city and a centre for education . The Dutch , who ruled Indonesia until 1949 , called the city Batavia . formerly ( until 1949 ) Batavia or ( 1949-72 ) Djakarta largest city and capital of Indonesia . Jakarta lies at the mouth of the Ciliwung ( Liwung River ) on the northwest coast of the island of Java . Coextensive with the metropolitan district of Jakarta Raya , it lies at the mouth of the Ciliwung ( Liwung River ) on the northwest coast of Java . The city has an area of 228 square miles ( 590 square kilometers ) and lies on a low , flat plain with large swampy areas . Jakarta lies on a low , flat alluvial plain with historically extensive swampy areas; the parts of the city farther inland are slightly higher . It floods easily during the rainy season . It is easily flooded during the rainy season . The parts of the city away from the coast are on slightly higher land . Jakarta lies on a low , flat alluvial plain with historically extensive swampy areas; the parts of the city farther inland are slightly higher . Also in the square is the Istiqlal Mosque , one of the largest in Southeast Asia . The Istiqlal Mosque , in the northeast corner of Medan Merdeka opposite Lapangan Banteng , is one of the largest mosques in Southeast Asia . The presidential palace lies to the north of the square . The Presidential Palace , north of Medan Merdeka , faces the Monas , or Monumen Nasional ( National Monument ) , at 360 feet ( 110 metres ) the highest building in Jakarta . It is the country's business center . The Kota ( "Fort" ) , or Old City , for example , sometimes called the downtown section , is the central business district and Indonesia's financial capital . In the Old City are the old port , the Dutch town hall , and a square . Some of the buildings around the city square in the Kota also date from colonial times , including the old city hall ( 1710 ) , which has been restored and now serves as the municipal museum . These have been restored . Some of the buildings around the city square in the Kota also date from colonial times , including the old city hall ( 1710 ) , which has been restored and now serves as the municipal museum . The town hall is a museum now . Some of the buildings around the city square in the Kota also date from colonial times , including the old city hall ( 1710 ) , which has been restored and now serves as the municipal museum . Gamelan music , in which percussion instruments are key , and shadow-puppet shows are popular in Jakarta . Traditional performances include wayang dance and drama , gamelan music , and wayang puppet shows . The Taman Ismail Marzuki , a cultural center , presents these and other traditional art performances , such as dances and plays . Among other cultural activities , the Taman Ismail Marzuki centre has facilities for traditional or classical art performances as well as theatres for presenting modern plays and concerts; the centre also has a planetarium . The center also has theaters for presenting modern plays and concerts . Among other cultural activities , the Taman Ismail Marzuki centre has facilities for traditional or classical art performances as well as theatres for presenting modern plays and concerts; the centre also has a planetarium . The city is a center of finance and banking . The city has long been a major trade and financial centre . Its factories produce such goods as margarine , soap , leather , textiles , food , machines , cigarettes , paper , glass items , wire cable , aluminum , and , more recently , products for cars . There are several iron foundries and repair shops , margarine and soap factories , and printing works . Its factories produce such goods as margarine , soap , leather , textiles , food , machines , cigarettes , paper , glass items , wire cable , aluminum , and , more recently , products for cars . Machinery , cigarettes , paper , glassware , and wire cable -- as well as aluminum and asbestos and , more recently , automotive products -- are manufactured . Movies are also made in the city . There are also tanneries , sawmills , textile mills , food-processing plants , breweries , and a film industry . The first settlements on the site of Jakarta were established as early as the 5th century AD . The first settlements on the site of Jakarta were established at the mouth of the Ciliwung , perhaps as early as the 5th century AD . The city's official history starts in 1527 , when a local ruler defeated the Portuguese there and called the place Jayakerta . The city's official history , however , starts in 1527 , when the sultan of Bantam defeated the Portuguese there and called the place Jayakerta ( Sundanese: "Glorious Fortress") . The Dutch captured and destroyed the city in 1619 . The Dutch , under the leadership of Jan Pieterszoon Coen , captured and razed the city in 1619 , after which the capital of the Dutch East Indies -- a walled township named Batavia -- was established on the site . They then constructed a new town and named it Batavia . The Dutch , under the leadership of Jan Pieterszoon Coen , captured and razed the city in 1619 , after which the capital of the Dutch East Indies -- a walled township named Batavia -- was established on the site . During World War II , Indonesia was taken over by Japanese forces . The colonial era ended when Indonesia was occupied by Japanese forces in World War II . After the war , the city was returned to the Dutch . After the war the city was briefly occupied by the Allies and then was returned to the Dutch . Indonesia gained independence in 1949 , and the name of the city was changed to Djakarta . The Dutch name Batavia remained the internationally recognized name until full Indonesian independence was achieved and Djakarta was officially proclaimed the national capital ( and its present name recognized ) on December 27 , 1949 . Indonesia gained independence in 1949 , and the name of the city was changed to Djakarta . formerly ( until 1949 ) Batavia or ( 1949-72 ) Djakarta largest city and capital of Indonesia .