Jakarta – Still smarting from the loss of Sipadan and Ligitan islands, the government plans to resettle people from densely populated areas to 88 uninhabited islands on borders with neighbouring countries.

With incentives such as subsidies to start fishing and palm oil businesses, Jakarta hopes to persuade 300,000 people over a period of five years to make the move.

"We will relocate people to these islands for the sake of our sovereignty," said Mr Djoko Sidik Pramono, a director-general in the Ministry of Manpower and Transmigration.

He said the focus in the coming months will be on Natuna, an island located in the South China Sea near Vietnam and which sits above rich undersea oil and gas fields. "We have resettled 960 families there and we are planning to move more than 1,000 families," he said.

Hefty subsidies will be allocated to those who move to Natuna. The island has started up oil and gas production activities there and at least three local investors are interested in sinking their money into the oil palm plantation business, he said.

In December, the World Court awarded the islands of Sipadan and Ligitan to Malaysia after a 33-year dispute over ownership. The decision sparked months of nationalist hand-wringing in Jakarta.