Robert Go – Kebumen and Semarang in Central Java are two places which have used their increased powers wisely.
Kebumen is a poor region in Central Java with 1.2 million people and a budget this year of 380 billion rupiah, run by Ms Rustriningsih, 36.
"Our budget is small," she said. "We make the most of it by cutting costs and being conscious that every rupiah goes towards something concrete." Thus, she has been cleaning up the bureaucracy and making sure that the people are involved in the decision-making process.
Since she took over in Kebumen in 2000, she has removed under-qualified or corrupt officials. About 100 civil servants have been asked to accept early retirement. Those who could not be pushed out have been transferred to less strategic jobs, "where their failings won't translate into major losses", she said.
Ms Rustriningsih has also made education a priority. She uses money saved from other budget sectors to fix school buildings and improve teachers' salaries. She also lives up to her reputation as an anti-corruption crusader.
Earlier this year, the police acted on reports that a village chief had swindled his own people through a land scheme. The man has since resigned from the job and his case is making its way through the court system.
Ms Rustriningsih's initiatives, according to decentralisation observers, show how good leaders can use autonomy to the regions' benefits. Unfortunately, even she knows that she is in the vast minority.
"We have little money, but our programme focus is on fixing the system instead of raising funds. Most regions focus more on the second approach. That is a problem."
Like Kebumen, Semarang officials put their new powers to good use. When they wanted to raise local revenues three years ago, they decided to make its bureaucracy more efficient and tax collection procedures more honest by computerising the system.
The city, with about 1.3 million people and a yearly budget of about 500 billion rupiah, asked restaurants and hotels to record and calculate service taxes electronically. The approach has paid dividends.
Mr Farchan, a senior economic planning official in the city, said: "Collection rates jumped, and revenues for the city increased." The Central Java provincial capital was also the first Indonesian city to publish its budget and account for how most of its money was spent. Its decentralisation process helped cut red tape and costs, and improve services to people.
Decentralisation watchdog KPPOD rated Semarang this year as the most attractive city in the country for investments. Said KPPOD director Agung Pambhudi: "Some regions went nuts and imposed all kinds of new taxes to get more money. Places like Semarang didn't go that way. Overall, we think they have got a better approach to decentralisation."