Indonesia's 1975/76 budget forecasts the expenditure of Rp. 1,268 billion (roughly US$3 billion) for development. This figure is more than double the preceding year's development budget and almost four times the allocation for the year before, 1973/74. Also in this period, development priorities have altered significantly. The First Five-Year Development Plan, 1969-74, Repelita I, stressed economic stabilization, infrastructural rehabilitation, and agricultural production. In contrast, the Second Five-Year Development Plan, 1974-79, Repelita II, directs attention to social as well as physical infrastructure and stresses such programmes as employment creation, education, health, transmigration, income redistribution, and balanced regional growth. See Table 1 for comparative distribution of allocations. Both of these changes have thrown additional responsibilities on Indonesia's development institutions at the same time as they have opened up exciting opportuni ties. The question arises whether the bureaucracy and the planning agencies can cope with the increased burden, especially in the light of a number of persistent problems that have dogged the administrative system since independence. And what reforms have been undertaken to enlarge the capacity of the development planning and administration apparatus to absorb the increased funding and imple ment the new emphasis on social and local development?