National models constrain the range of choices for institutional change. Institutional change that most directly affects the existing national model is likely to create revolutionary changes. Fung and Wright (2003) pointed out that the institutional forms of liberal democracy developed in the nineteenth century-representative democracy plus local good governance-seem increasingly ill suited to the novel problems we face in the twenty-first century. In the euphoria of reform after the fall of the New Order, Indonesia embarked on a radical attempt to devolve centralized power to the regions. Growing attention is being paid to the experiment of democratic decentralization, which, in essence, suggests devolving authority to lower levels of government and providing space for citizen participation in the decision-making process of key issues.
In the case of Indonesia, changes from centralization to decentralization would most likely be accompanied by a new way of thinking about how the policy in localities can best serve the development of localities themselves. With local autonomy, municipalities/regencies now have a more prominent role in how they finance, regulate, and interact with the front-line. Salient differences in governance and service delivery may not only be evident across regions, but also within regions in term of how regencies and municipalities level institutions interact with local facilities and villages/neighborhoods. Decentralization may also allow for more efficient process of discovery of best policies. By increasing the number of decision-making units, different policy options can be tried simultaneously in a natural experiment setting. In the competition atmosphere created by decentralization process, local governments compare their performance and learn from each other in order to choose the best policy without neglecting its uniqueness.
Indonesia has been implementing extreme decentralization for more than five years. There are many fundamental changes occurring during the implementation: intergovernmental relations, the decision-making process in the regions, economy-based community empowerment, and relations between citizens and the nation-state. More importantly, local initiatives regarding law institutions and the best policies are created to serve local development. In addition, strategies for tailoring approaches to local conditions vary according to the area of policy intervention. They may involve developing simpler rules with less discretion, relying more heavily on transparency, competition, and reinforcing local institutional safeguards. These strategies need to be complemented by efforts to strengthen local government capabilities.
Conservatives within the central government and experts on democratic theory insists that Indonesian people (let alone people in the regions) are “not yet ready for democracy.” Contrary to the statement, quite a few innovations in local governance have appeared during the process of Indonesia’s democratic decentralization. Thus, the onset of decentralization in Indonesia gives chances for local governments in Indonesia to improve local good governance and make chance to its consolidation.