Following economic and political crises in the late 1990s, Indonesia has been experiencing radical institutional transformation in all major policy fields, included spatial planning system. This paper concerns with the interaction between the dynamics of formal-institutional arrangements in guiding democratic transitional process, the persistence of long-established political culture, and growing neo-liberalist tensions in the long discussion on the formulation of the draft of new Spatial Planning Act during 2005-2006. The extent to which globalising neo-liberal ideas have changed the planning system irrespective on domestic institutional-cultural forces is critically examined. Although the neo-liberal ideas cannot change the whole nature of the planning system, this paper shows that they tend to fragment the system and conflict with the existing institutional-cultural forces. While removal of government participation in urban development should be analysed critically, it argues that the ideas of rule of law and decentralisation should be encouraged in order to develop a more effective spatial planning system in Indonesia. Keywords: globalising neo-liberalism, Indonesia, institutional-cultural forces, spatial planning system.
