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Urban Development

Infrastructure Gaps Vary across East Asia and the Pacific – and between Cities and Rural Areas

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Lack of clean water facilities, roads in need of repairs, recurring power outages – these are the realities of many developing countries, including in the East Asia and Pacific region. The Status of Infrastructure Services in East Asia and Pacific, a report by the World Bank Group’s Infrastructure, PPPs, and Guarantees unit, or IPG Group, based at the Hub for Infrastructure and Urban Development in Singapore,  shows in detail the infrastructure gaps that are critical for economic growth.

The findings reflect the composition of the region, a diverse mix of high-income and low-income economies with several large middle-income economies. Infrastructure access is also marked by fragmentation, with notable differences between low-income and high-income ASEAN countries, between ASEAN and the Pacific Islands countries, and between rural and urban areas.

These distinctions inform the three broad groupings with respect to access: highly advanced and well-equipped countries, such as Singapore and South-Korea; a semi-advanced group which includes middle-income countries, such as China, Malaysia, Thailand, and Fiji; and countries with less access, such as Myanmar and most of the Pacific Islands, excluding Fiji and Samoa.

Initiatives are underway to crowd in more private financing in infrastructure investment, as part of the World Bank Group’s efforts to maximize finance for development. Currently, public finance remains the largest source of funding for infrastructure development. In East Asia and the Pacific, private participation in infrastructure investments have recovered to pre-1997 Asian financial crisis levels, but they still account for a fraction of total infrastructure investments. In China in 2015, for example, private investment amounted to less than 1 percent of total investment in transport, energy and water.

Attracting more private investment will require regulatory reforms that impact the investment climate, and also business models that ensure returns. Currently, revenues from service tariffs in many East Asian and Pacific countries do not cover the costs of production. In several ASEAN countries – notably Indonesia, Vietnam, Malaysia and Philippines – average unitary revenues from electricity tariffs do not cover the marginal cost required to generate electricity, let alone to distribute and transmit electricity to users. Only China, Malaysia, and Thailand are operating at general cost recovery levels for electricity production.

The following are the report’s additional key findings:

  • With the exception of Fiji and China, on average water utilities cover their operating costs by tariff revenues. This does not imply, however, that current water revenues are sufficient to cover the capital costs required to expand service or rehabilitate existing infrastructure.
  • Among the countries with available information, only the Philippines, South Korea and Cambodia reported operating cost coverage ratios above two, which would allow water utilities to make capital investments to expand and maintain their infrastructure.
  • Singapore has the most developed infrastructure services, with 100 percent access to electricity, piped water, and sanitation.
  • Though strong economies, Malaysia, Thailand, and Fiji require more infrastructure development. Road infrastructure in rural Malaysia remain lacking, as are urban sewerage facilities in its cities. Water treatment and urban sanitation services in Thailand and Fiji can also improve.
  • The Pacific Island states – particularly Papua New Guinea, Timor-Leste, and the Solomon Islands – report low levels of access and quality of infrastructure services. In ASEAN, Cambodia and Myanmar are in most need of broader access to all services.
  • Access to electricity is relatively broad. Outside of the high income countries, EAP’s cities have 86 percent coverage for electricity, while rural access stands at 65 percent.  However, nearly 60 million people still lack access to electricity, particularly in the Philippines, Lao PDR, Cambodia, and Myanmar.
  • Among the Pacific Island countries except for Fiji and Samoa, access is defined by the urban-rural divide. Electricity access in Vanuatu’s cities is 100 percent, but only 11.5 percent in rural areas.
  • While access to improved water sources is relatively high in the region, access to piped water supply is low. Only Malaysia and high income countries such as Japan, South Korea and Singapore have extensive access to piped connections for residential areas. In low-income ASEAN countries and Pacific Island nations that comprise the third tier, overall household access levels for piped water are only 20 to 30 percent – and only 8 percent and 9 percent in Myanmar and Papua New Guinea, respectively.
  • Piped sewerage connections in cities are limited, with significant differences between economies. Access rates in the cities of some countries are ten times lower than rates in more developed economies, and only high-income economies enjoy full access to urban piped sanitation systems. Cambodia, Malaysia, and Timor Leste also have better access to urban sewerage, at 44 percent, 42 percent, and 18 percent, respectively.
  • Elsewhere in the region – even in the cities – coverage for piped sewerage are at single-digit levels.

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Urban Development

As cities fill tech gaps, power of smart cities unleashes

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Governing Smart Cities, a report released today by the World Economic Forum, provides a benchmark for the ethical and responsible use of smart city technologies by looking into the inner workings of 36 Pioneer Cities. The authors of the report seek to help city leaders identify gaps, protect long-term interests and keep up with the pace of technology.

According to the report, cities of all sizes, geographies and levels of development have serious governance gaps, such as the failure to designate a person accountable for cybersecurity or to assess privacy risks when procuring new technology systems. However, leaders can close these gaps and protect long-term interests by acting now.

Written in partnership with Deloitte, the report follows the call to action from G20 ministers in 2019 that resulted in the creation of the G20 Global Smart Cities Alliance. The Alliance and its partners represent over 200,000 cities, local governments, leading companies, start-ups, research institutions and civil society communities. It acts as a platform to help cities strengthen their knowledge, expertise and governance of smart city technologies. The Forum is its secretariat.

The 36 Pioneer Cities surveyed span six continents and 22 countries, and have populations ranging from 70,000 to over 15 million. Policy experts and government officials were interviewed from January to March 2021 to assess the implementation of a set of five essential policies identified by the G20 Alliance last year.

Key findings

Nearly all the cities surveyed – including those that are generally regarded as leading global cities – have critical policy gaps related to their governance of smart city technologies

Despite an unprecedented increase in global cybersecurity attacks, most cities have not designated a specific government official as ultimately accountable for cybersecurity.

While the majority of cities recognize the importance of protecting the privacy of their citizens, only 17% of cities surveyed carry out privacy impact assessments before deploying new technologies.

Less than half of the cities surveyed have processes in place to ensure that technologies they procure are accessible to elderly residents or individuals with limited physical abilities.

Open data policy is perhaps the only area in which most cities in the sample have achieved a level of basic implementation. Even here, only 15% of the Pioneer Cities have integrated their open data portals with their wider city data infrastructure, which is a necessary step towards making a city “open by default”.

“Cities are continuing to invest heavily in new technologies to automate and improve city services and urban life. Yet our findings validate our fears that most cities are falling behind when it comes to ensuring effective oversight and governance of these technologies,” said Jeff Merritt, Head of Internet of Things and Urban Transformation, World Economic Forum. “The G20 Global Smart Cities Alliance is working with cities across the globe to address this gap, beginning with more than 15 policy workshops with city officials this summer.”

“Cities have an array of opportunities to become more resilient and sustainable. Technology is an enabler but, to fulfill its full potential, Cities need to revise their governance, operational, and financing models. Here lies the biggest challenge Cities face. Deloitte is proud to have worked with the Forum in this initiative. It is fundamental for us all to gain consciousness of the complexity of the issues and focus on how the moment we are all living can be a key opportunity”, said Miguel Eiras Antunes, Global Smart Cities Leader, Deloitte Global. “Now is the moment for a great urban transformation. Addressing urban challenges through the lenses of sustainability, inclusion, and technology is critical to develop and implement a roadmap to guide cities with their governance of smart technology and make an impact that matters.”

How to take action

The report concludes that city leaders and officials need to take action before these governance gaps become material risk and affect residents. The report’s authors also call for national policymakers, civil society and the business community to help support local governments in overcoming these challenges. Inclusion, data privacy and cybersecurity attacks are top concerns and the G20 Global Smart Cities Alliance has a mandate to help cities close the governance gaps that this report has uncovered. Cities looking for assistance in identifying and addressing their policy gaps are encouraged to contact the Alliance via their website.

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Urban Development

New Report Shows Shape of Urban Growth Underpins Livability and Sustainable Growth

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A first-of-its-kind World Bank analysis, of the shape and growth of nearly 10,000 cities between 1990 and 2015, finds that the most successful urban areas are those that connect their growth to economic demand and then support this with comprehensive plans, policies and investments that help avoid uncontrolled sprawl.

The new report, Pancakes to Pyramids – City Form for Sustainable Growth, analyzes the dynamic, two-way relationship between a city’s economic growth and the floor space available to residents and businesses. It finds that a city is most likely to be its best version when its shape is driven by economic fundamentals and a conducive policy environment – namely, a robust job market, flexible building regulations, dependable public transit and access to essential services, public spaces, and cultural amenities.

Ultimately, getting livable space right, hinges on how a city manages its growth as populations and incomes increase, factoring in three dimensions of expansion – horizontal, vertical or within existing spaces (known as infill), the report finds. This will be key as cities, on the frontlines of the COVID-19 crisis, begin planning for a long-term, resilient, and inclusive recovery.

“Cities are at the frontier of development; they are where people go to chase their dreams of a better life for themselves and their families,” said Juergen Voegele, Vice President for Sustainable Development, World Bank. “This report helps us understand why a city grows outward, inward or up. As we support countries with their COVID-19 recovery efforts, this will also help us reflect on what makes a city livable and remind us that well-planned urban growth is good for both people and planet.”

In the average Sub-Saharan African city, 60 percent of the population lives in slums—a much larger share than the 34 percent average in cities in developing countries. The lack of floor space takes a severe toll on livability—with major consequences in times of pandemics like COVID-19. Many South Asian cities face similar issues.

Horizontal growth is inevitable for most cities. People will continue to migrate to urban areas for opportunities and a better quality of life, so it is crucial for cities to plan for this trend. As urban populations grow, one way to create more space per inhabitant is by building up instead of out. This could also help reduce crowding, discourage long commutes, draw more people to public transit and drive down greenhouse gas emissions. But building tall, or accommodating more people in a city, is dependent on economic demand and the business environment as it requires better technology, large investments, and higher returns on capital.

“Understanding the multiple drivers of city growth—a precondition for livable density in cities—can help city leaders focus on the right policy actions,” said Somik Lall, co-author of the report. “If managed well, cities that take a more pyramid-like shape can provide an impetus to accelerate sustainable development by getting people out of cars, cutting commute times, and limiting greenhouse gas emissions.”

Today, around 55 percent of the world lives in urban areas. By 2050, this number is projected to surpass two-thirds of the global population, with much of the new urbanization happening in Sub-Saharan Africa and South Asia. While such growth signals opportunities and better livelihoods for millions of people, it also puts immense strain on cities, especially in countries that contend with low incomes and weak institutional and fiscal capabilities.

By describing how economic productivity shapes decisions by households and firms to locate in cities, and how the quantity and spatial distribution of urban floor space respond to these changes in demand, the report aims to help decision makers sort through competing legal and regulatory approaches, evaluate their investments in infrastructure, and mobilize finance for durable urban investments, particularly for essential services such as transport, water provision, solid waste management, and sewage removal and treatment.

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Urban Development

First international online forum Smart Cities Moscow

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The first international online forum Smart Cities Moscow ended in Moscow. 86 speakers from Russia, China, Switzerland, Canada, Spain, the United States, Sweden, and other countries spoke at the forum’s business program. More than 193,000 people watched the broadcasts of the panel discussions and sessions.

“A modern approach to digitalization is unthinkable without exchange of experience and conversation between cities. Moscow, being one of the world leaders of digital transformation, acted as a platform for such a conversation, and it is important for us that the international community responded with interest to this initiative. Recent years have especially shown how important it is to develop the IT infrastructure of cities and create online services focused on the daily needs of city dwellers. Synchronization and joint efforts will make megacities even more sustainable, smart and comfortable for living,” said Eduard Lysenko, Minister of the Moscow Government, Head of the Department of Information Technologies of Moscow.

The need for global communities to cooperate in creating and developing smart cities was also stressed by Juwang Zhu, director of the UN Department of Economic and Social Affairs’ Division of Public Institutions and Digital Government.

“We at the UN support universal interaction in terms of the implementation of new technologies. I am glad that the Smart Cities Moscow forum will now be an annual event. This is very important: to encourage cities to exchange practices, to develop digitalization with the whole world, so that there would be more and more smart cities,” Juwang Zhu said, adding that the greatest benefit of using new technologies was seen by countries during the fight against the pandemic.

The business program of the forum consisted of 15 sessions divided into three main directions: “Smart City Infrastructure and Technologies”, “Smart City for Life”, and “Sustainable Development of Smart City”. The experts shared their experiences of using digital solutions in transport, urban planning, tourism, ecology, energy and other sectors important for the cities. Separate sessions were devoted to piloting 5G networks, application of artificial intelligence in urban processes and big data analysis for urban development planning.

Best practices and ecosystem approach to the digitalization of cities were discussed during the plenary session of the forum. Mayor of Moscow Sergey Sobyanin spoke about the experience of introducing technologies in the capital and creating digital platforms for residents. He noted that Moscow digital projects cover absolutely all spheres of life, focusing primarily on human needs. Representatives of the relevant departments of the Moscow City Government spoke in more detail about the capital’s IT projects during the panel discussions.

Mr. Chen Jining, Mayor of Beijing, Mr. Bakytzhan Sagintayev, Mayor of Almaty, Mr. Saeed Belhoul, Director of Electronic Government Operations of Dubai Telecommunications Regulatory Authority, Mr. Mohamed Salah Eldin, Project Manager for the construction and formation of the smart city Nour (new administrative capital of Egypt) and Mayor of Fort Lauderdale Dean Trantalis also shared their experience at the plenary session.

One of the key events of the forum was the awarding of two certificates of compliance with international ISO standards for sustainable and smart cities to Moscow. “Until now, there has never been a precedent in history when both of these certificates were awarded simultaneously,” said Patricia McCarney, president of the International City Data Council (WCCD).

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