This article aims to scrutinise the phenomenon of proliferation of local government units in Indonesia in order to understand how identity politics has evolved within and through the process of decentralization. In doing so, there are several points to make. The numbers of districts and municipalities in Indonesia have doubled within six years. Local governments have proliferated in the sense that the numbers of local government units have multiplied rapidly in such a short period. There were 'only' a little bit more than 200 units when Suharto stepped down in 1998, and that had more than doubled to 466 units in 2006. Interestingly, this took place in an absence of a definite plan, as the state showed its enthusiasm for decentralisation and a bottom-up process of decision-making. First, the state can no longer maintain its hegemonic role. Under the regimes of Sukarno and Suharto, the state possessed relatively effective technocratic and bureaucratic apparatus that ensured effective control over its people and agenda. Through technocratically equipped bureaucracies the state mobilised certain kinds of discourse that, in turn, defined what was deemed proper under the banner of ethnic and religious solidarity. Second, local elites play critical roles in the process of proliferation. Moreover, in many cases their roles have reversed since the fall of the New Order. Previously, they were co-opted by the state but now, they are co-opting the state. Why is that so? The state is well aware of and even too sensitive to the potential of ethnic-based, race-motivated conflicts, as well as secession (Wellman 2005). Indeed, conflicts did take place quite extensively in Indonesia for that reason. As a result, the state opts to accomodate the interests of local elites instead of confronting them. In other words, proliferation of local government serves as a strategy for preventing political disintegration. Local autonomy is currently the best available solution to ethnic conflict in Indonesia (Bertrand 2004). Third, the proliferation of local governments confirms the importance of territoriality or territorial attachment (Kahler and Walter 2006). Territory serves as a basis for identity politics. By establishing a new set of local governments, the central government still retains territorial control and, at the same time, local activists also have an opportunity to do so.
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