Building Southeast Asia’s cities for a stronger region
A discussion on how Southeast Asian cities should learn from one another and achieve strong economic integration
Over the recent decades, members of the Association of Southeast Asia Nations (ASEAN) have been experiencing rapid economic growth. The region is projected to become the fourth largest economy by 2050, gaining more attention from foreign investors. To optimize this opportunity, ASEAN aims to achieve full-scale economic integration and connectivity by 2025. This would mean increased inter-regional trade, investment, and skilled labor movement to achieve inclusive economic growth and a more globally competitive region. However, a main barrier for this integration is the different levels of development among member states. One of the key factors to overcome this would be to grow the region’s city economies. Current technological development continues to further globalize the economy through increasing connectivity. This will make the biggest impact to be seen at a local level, not national nor provincial. Cities will experience a rapidly growing demand for products worldwide. The key growth areas will be in services, innovation, culture, travel and education; that give quality and authentic products and experiences to customers. Therefore, Southeast Asian cities will be the centers of economic innovation and drivers of sustainable growth through the knowledge, ideas and quality employment generated (Heng, 2012).
To be productive, cities must also be competitive. This means being able to produce goods and services according to international market standards, while growing the earnings of its people. As Southeast Asian cities compete for exports and talent, the increase in competitiveness does not necessarily come at the expense of another. Cities also collaborate to fulfill needs according to their comparative advantage, creating integrated economic growth. An example can be seen through a collaboration between Bangkok, Phnom Penh and Viantiane to attract investment from Japanese, American and European automakers. While Bangkok provides the business services and final production, Phnom Penh and Viantiane provide parts, components and embroideries.
To grow even stronger, Southeast Asian cities should learn from one another. To do so, formal networking platforms should be strengthened. This includes networks of researchers, policymakers, and the private sector to share ideas and develop recommendations for responsive policies. Urban data is required to realize this, especially data regarding urbanization impact on connectivity and economic integration within the region. Having proper data will also help identify good case practices for further studies. A strong network and available data would eventually increase the capacity of local governments to optimize opportunities offered by decentralization, privatization and economic globalization. Moreover, it will create alignment in dealing with climate change and grow sustainably (Sheng and Thuzar,2012).
The Southeast Asian city that can provide the most knowledge would be Singapore, which has consistently generated innovation and economic prosperity for its people. Although many would argue its success comes from its manageable size and central location, the Singaporean government has run simple actions that could be adopted by other cities. First is infrastructure investment in areas of comparative advantage. Having a historically attractive port, the government invested in information and communications technology (ICT) integration to increase distribution efficiency (Airries, 2001). They also positioned Changi Airport as a transport hub and enabled tourism opportunities for those transiting through Asia (Trocki, 2006). Recently, Kuala Lumpur and Bangkok have followed this strategy, giving tourists more alternatives for transit. The emergence of the transport industry for Singapore marked the birth of the financial industry, as it increased the demand for currency exchange and freight insurance. The growth in this sector brings us to the second action: participation of the private sector and independent/academic researchers to form policy co-creation. The Economic Review Committee, which has the role of identifying potential growth sectors, collects inputs from these stakeholders to formulate sustainable policies (Woo, 2016). A concrete example is its discovery of the potential in fund management, capital markets and financial derivatives in 1987 (Lessard, 1994). In short, Singapore shows success in making the right infrastructure investments and involving stakeholders to make the right growth policies that can be learned from other cities.
Having the majority share of both area and population, Indonesian cities have a crucial role for the region’s growth. As mentioned in my previous article, Greater Jakarta followed by other Javanese cities dominate the national economy. However, cities outside have more geographic proximity to other Southeast Asian countries. There are ongoing collaborations at the provincial level, such as Riau with Johor and North Sulawesi with Mindanao. With further investment in infrastructure and inclusive policy making, these cities can have better accessibility and business attractiveness to become stronger economies.
ASEAN does have a standard urban development guideline released in 2018. To foster collaboration, there could be an online progress dashboard accessible to city governments. This will give visibility on the progress of each city and would lead to sharing sessions between cities of similar magnitudes. These dashboards would also cover infrastructure project pipelines, therefore helping ASEAN facilitate foreign investment opportunities.
According to Dr Aladdin D.Rillo in FPCI’s podcast, ASEAN is helping SMEs adopt e-commerce to expand their customer base at an regional level. Local businesses in both rural and urban areas can benefit from this opportunity, as well as logistic services in the latter. This makes me think of a tool to enable this: a SEA-based e-wallet platform. Currently, most international trade requires the use of credit cards. However, the majority SEA population does not have access to it, especially small business owners. Having a regionally accepted platform could help increase inter-regional trade, expanding the market for local businesses.
My personal vision for ASEAN is for all members to be at the same level of development. ASEAN will be the people’s second cultural identity after nationalities. High demand for trade will enable fintech integration. A small coffee business in Banda Aceh can easily sell its product to Bangkok through e-commerce as the financial technology network is integrated. This will also enable distribution of staple products across countries at an affordable rate. The Southeast Asian Trip will be much easier to do, as direct flights are available across countries, no need to transit from Singapore to go from Jakarta to Manila. SEA based companies can operate in a more productive and efficient manner. All of this would be driven by our cities. ASEAN member states have countless similarities, therefore we would be much stronger together.
References
Airriess, C.A. (2001) Regional production, information-communication technology, and the development state: the rise of Singapore as a global container hub. Geoforum 32 (2001), 235–254.
Heng, T.M. (2012) Competitive Cities and Urban Economic Development in Southeast Asia. Urbanization in Southeast Asia: Issues and Impacts, 115–138.
Lessard, D. (1994) “Singapore as an International Financial Centre”, in Offshore Financial Centres. Aldershot: Edward Elgar Publishing Limited.
Sheng,Y.K. and Thuzar,M. (2012) Urbanization Southeast Asian Countries: Recommendations. Urbanization in Southeast Asia: Issues and Impacts, 8–9.
Trocki, C. (2006) Singapore: Wealth, power and the culture of control, Routledge, London and New York.
Woo, J.J. (2016) Singapore as an International Financial Centre: History, Politics and Policy. Palgrave Macmillan, London
