About one-third of some 600,000 people made homeless have moved into permanent homes, but some 70,000 people still live in roach-infested and leaky wooden barracks.
The massive task of rebuilding Aceh has been hampered by corruption, inefficiency and land title disputes, with several multimillion dollar projects delayed or cancelled.
Work has barely started on a US-funded road down the devastated west coast because of problems acquiring land from villagers.
The disaster helped end the region's 29-year civil war by bringing the government and separatists to peace negotiations. A deal signed in August 2005 has exceeded expectations and stopped the violence.
The main challenge to rebuilding is widespread fighting between the government and Tamil Tiger rebels.
The tsunami crashed into government-controlled areas and rebel territory, and rebuilding efforts were initially undermined by disputes between the two sides over how aid money should be distributed.
Violence has now grown into full-scale fighting, completely shutting down rebuilding efforts in many of the worst-hit areas.
The result is that less than half the needed 114,000 homes have been built. Tens of thousands of survivors are living with their extended families or in temporary shelters.
Even people who got their lives back on track, such as fisherman who were given new boats, have again had their lives upended after being forced from their homes by fighting.
The two areas in India worst hit by the tsunami, the southern state of Tamil Nadu and the remote Andaman and Nicobar Islands, are rebuilding in very different ways.
A third of the more than 66,000 homes destroyed in Tamil Nadu have already been rebuilt or repaired and work is expected to be completed in the next year on the rest. Fishing fleets have been restored and the local economy is again healthy.
Former US President Bill Clinton even said on a recent visit to the area that "what has been done here, I would like to see copied throughout the world". It is a different story in the Andaman and Nicobar Islands, where rebuilding efforts have been haphazard and poorly directed.
There are more fishing boats than needed, but at least 50,000 people still remain homeless - and no one can say when they might get new houses, according to Action Aid, an international aid group.
Authorities faced the task of luring tourists back as well as rebuilding for homeless villagers. Roughly half the dead were foreign tourists. With a few exceptions, physical damage to hotels and resorts was limited, and the government launched special promotions within months.
The comeback was slow, however: official statistics show a drop to 1.1 million arrivals in Phuket province in 2005, compared with 3.2 million foreign tourists in 2004.
This year has witnessed a rebound: Phuket had 1.3 million visitors in the first half of 2006, compared with 400,000 for the same period last year. Rebuilding of villager's homes have generally been considered a success.
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