Since the 1990’s, decentralization reform has been taken forward in various Southeast Asian countries. Especially, in Indonesia, the large scale decentralization reform named ‘big bang’ was started after the collapse of Soeharto regime in 1998.

Therefore, in this paper, after explaining the outline of local governments in Indonesia, the author examines the decentralization process, as well as objectives and contents of decentralization in Indonesia. The author also analyzes the achievements and challenges of decentralization in Indonesia, and discusses the characteristics of decentralization in Indonesia, comparing to the decentralization reform in Japan.