Over the past decades decentralization has been adopted as a strategy among many nations in the region to promote good governance. The fundamental ideology here is democratization and people participation: in accordance with the fundamental principle of subsidiarity, decisions are most responsive to the specific and unique needs of the people if they are made as close to the people as possible. Therefore, governments must be brought closer to the people to make the delivery of public services more responsive.

The problems and challenges are even more critical for rapidly urbanizing areas. The argument here is that basic challenges — ranging from the delivery of basic services to the protection of the environment — and the imperative of regulation to address the problems brought about by congestion and a burgeoning population, are best addressed under a decentralized politico-administrative system.

This chapter discusses the relationship between and among economic growth, urbanization, and the imperative to decentralize. It adheres to the observation that growth and urbanization are mutually reinforcing. In fact it could be argued that these trends can lead to a “virtuous cycle” if managed well, or a “vicious spiral” to diminishing living standards if not harnessed properly. Decentralization is presented as both a logical and necessary response to urbanization in Southeast Asia.

The experience of three countries in the region in decentralizing their respective governments is recounted to provide a picture of how these countries pursued decentralization as a national policy, and includes a discussion of some of the issues and challenges they faced along the way. This is followed by a retelling of success stories from four local governments from the three focus countries, which demonstrate that good urban governance can flourish under a decentralized set-up. Various lessons are derived from these good practices, which can be emulated by other local governments in the region confronted by the challenge of rapid urbanization.

In the concluding section, a call is made to establish a regional body that would seek out, recognize, document, and disseminate good urban practices in the region. A regional alliance of cities is also sought to strengthen cooperation among city governments in the region through sister city and other similar arrangements.