The lack of infrastructure development is commonly cited as a critical factor in impeding Asia's economic growth rates. Led by unprecedented urbanization and accompanied by other factors such as a rising middle class, population growth, ageing population, climate change and heightened environmental awareness, Asian cities are facing enormous and complex challenges.
It is estimated that by 2025, Asia alone will have at least 28 new megacities (defined as cities with population greater than 10 million) from 34 currently. It is expected that around 58% of the world's population or 4.6 billion people will live in urban areas by 2025, up from 3.9 billion currently. Asian countries are increasingly benchmarking successful cities such as Singapore and planning or implementing "smart cities" of their own to address their urbanization challenges. India alone is planning 100 new smart cities and 500 cities are being overhauled under the rejuvenation and urban transformation program.
Asian countries have realized that public sector funding is inadequate to effectively address the scale of urbanization and are increasingly focused on attracting private sector participation in order to fast track infrastructure and smart cities development. Donor and multilateral funding e.g. World Bank, ADB, AIIB, Silk Road Infrastructure Fund, BRICS Development Bank are also expected to be significant contributors.
In view of the above, the World Bank has estimated US$8 trillion in infrastructure spending over the next decade in Asia.
At Meinhardt, we define a smart city as one which provides critical infrastructure to its populace and delivers municipal services efficiently and cost-effectively to enhance liveability, economic opportunities and resilience to respond to unforeseen events and future challenges.
A smart city has been defined as a 'knowledge', 'digital', 'cyber' or 'eco' city, representing a concept open to a variety of interpretations, depending on the goals set out by a smart city's planners. A smart city can be construed as an improvement on today's city both functionally and structurally, using information and communication technology (ICT) as its backbone. The infrastructure services are expected to be inter-connected and cover the five key elements: fast and efficient transport/mobility services; robust & reliable energy system powered by smart grids, clean and continuous water supply, proper sanitation; and a safe & secure environment that enables individuals to strike a rich balance between work and play.
Smart cities (both greenfield and brownfield) demand careful planning and, at an early stage, it is essential that national and municipal governments, citizens and all other stakeholders agree on the smart city definition they aim to fulfil. A clear definition or strategy must address two key factors: the city's desired 'functions' and its economic drivers, referring to the appearance and operation of a city, and the benefits promised by a smart city model.
The sustainability approach should not only consider the upfront investment cost but also externalities such as reduced carbon footprint and improved efficiencies by lowering maintenance costs. It is for this reason that capital intensive infrastructure assets such as common services tunnels for utility services, district cooling plants, desalination water treatment plants and even deep tunnel sewerage systems are increasingly deemed to be more feasible.
As planners and engineers, there are varying solutions to deliver sustainable smart cities. For this reason, Meinhardt works closely with city planners and developers to produce a Smart City Concept and Masterplan in conjunction with the more traditional spatial planning masterplan. The Smart City Masterplan is based on a thorough review of a city's current infrastructure Smart City engagement together with a framework for the specific Smart City ambitions. These ambitions can be identified into separate projects for further development. This helps greatly with identifying the easier low cost or more easily achievable initiatives from the more difficult and capital intensive investment that may require earlier projects to be completed before becoming viable.
The design process needs to be continuously scrutinized for smart planning and engineering which optimizes construction cost and simplifies constructability. Front-end infrastructure investment is a major challenge in terms of financing for many Asian countries and therefore cost efficiency is a key driver in making such smart cities a reality. To further streamline upfront capital expenditure, certain infrastructure assets should be scalable to cope with projected demand and step changes in technology. A robust infrastructure environment makes downstream private sector participation in the real estate space not only much easier to attract but can fetch a significant premium for the Government and/or the master-developers.
The planning and engineering work required for rejuvenating existing cities is typically more complex than green-field sites, given such cities will face many constraints such as lack of accurate data, limited site access and requirements to minimize traffic and other disruptions.
In some cases, it is more efficient to build a new infrastructure than to upgrade existing assets. This was one reason why Singapore opted to build a Deep Tunnel Sewerage System (DTSS) instead of upgrading legacy systems. The DTSS is linked to larger and modern centralized sewerage treatment plants outside town areas that are more efficient and have freed up prime property space taken up by the subsequently decommissioned older treatment plants.
For every $1.00 spent on transportation infrastructure, the increase in economic growth is estimated between 2-2.5x. A well-developed infrastructure system lowers operating costs for businesses by enhancing efficiencies & encourages international companies to take a longer term view of the market by nestling their regional and international operations and capital intensive hubs in the country.
Singapore's success story is evidence that a world class and robust infrastructure system is a catalyst for attracting long-term and large scale foreign direct investment. Singapore is consistently ranked as one of the largest recipients of foreign direct investments globally despite being a relatively small country. Singapore is ranked as the world's 2nd most competitive country globally, although it is also ranked as one of the most expensive.
The rationale for more smart cities in Asia is compelling. Smart Cities are a necessary means to address the challenges from urbanization and enables such cities to attract and retain smart talent from within the country and abroad by promising greater economic opportunities & better lifestyle. The efficient infrastructure and talent pool offered by smart cities inevitably encourage businesses to set up and expand their operations, thereby creating a virtuous cycle providing sustainable economic growth.
Omar Shahzad is the Group CEO of Meinhardt Group.