This chapter briefly reviews the origins of the unitary Indonesian state, the attitudes and policies towards decentralization, the developments with regard to intergovernmental relations during the first two decades of independence and the changes in intergovernmental fiscal relations under the New Order government. It also speculates about what may be required as Indonesia contemplates substantial reform to its governance structures and explores the tolerance for asymmetry in intergovernmental fiscal relations. © International Bank for Reconstruction and Development / The World Bank 2007. All rights reserved.