The plan is based on legislation passed in 1999, during the government of President BJ Habibie. Correspondents say that the fact it was passed so quickly after the fall of former President Suharto in 1997 indicates how much the new government was concerned by separatist anger in the regions. Under the highly-centralised Suharto regime, all major decisions were made in the capital and the huge natural wealth of the outer islands was channelled back to the central government's coffers in Jakarta. They will also have more autonomy in administering health, education, land rights and investment. In May even greater autonomy will be offered to Aceh and Irian Jaya.
Investors maintain there is a potential for much mismanagement under the laws.
Hundreds of thousands have rallied for independence in Aceh Supplementary legislation on the implementation of the plan and the new relationship between Jakarta and its provinces has yet to be drawn up. Numerous loopholes could also encourage corruption among local officials competing for a share of Indonesia's wealth. But President Abdurrahman Wahid has said decentralisation is the only option to holding the country together. A senior official who helped draw up the laws, Andi Mallarangeng, said in Tempo magazine that Indonesia could not delay the plan because it was integral to the transition to democracy. Links to more Asia-Pacific stories are at the foot of the page.