A national urban policy is needed because of what is known"decentralized concentration". Concentrated growth is inevitable, but it should be utilized in a way that works in the coun try's favour. Instead of distributing resources evenly they should be strategically allocated to the most capable centres where the return is the highest, that is, to the"graduated" local government(see Figure 13.2). This does not mean that cities and towns where the local governments have limited capacities will not be supported to grow. In this approach, the national government still provides technical assistance in an effort to"level the playing field" and support local governments to compete with the other cities to receive the incentives given by the central government. In such an approach, there will be more and more cities or local governments that"graduate" and become more capable of performing the decentralized tasks, hence securing sustainable local development.
In formulating the national urban policy, Southeast Asian national governments need to define the boundaries of functions to determine accountabilities. Support for the local government should be limited to guidance, and not include micromanagement. The roles of the private sector and civic society in sustainable urban development should be enhanced and they should serve as assets for local governments in development. Privatization must be done cautiously as a national government must first establish its degree of intervention, taking into account where the market has failed to serve. As an example, electricity provision in Southeast Asian countries seems best provided through joint efforts of the private sector and the national government, especially in remote areas where private sector entrance needs to be supported by the national government.