In Indonesia, the policy of decentralization implemented in 2001 has become a key policy aimed at facilitating democratization at the local level. Through Law 22/1999 on Regional Governance, the central government transferred power and financial resources as well as personnel to local governments. Within decentralization, local governments had rights to manage locally formulated development programs. The law mandated that development programs to be executed based on principles of diversity, participation, genuine autonomy, and community empowerment. Decentralization is expected to improve community participation, local capacity, transparency, accountability, responsiveness, and the targeting accuracy of government programs. Nevertheless, it is imperative to note that decentralization is not an end in itself, but only a way to pursue balanced economic development. Wider public involvement in local decision-making should not only increase legitimacy and grassroots support, but also accelerate economic growth and poverty alleviation throughout the country. In this regard, several macroeconomic indicators present that Indonesian governmental decentralization has not been completely successful in the abovementioned economic development. Economic growth and the decline in the poverty rate have slowed after decentralization. Some indicators, like the primary school enrollment rate, improved, but many others like infant (children under 5 years old) and maternal mortality rates, access to water, energy and sanitation services were improved only slightly or not at all.