CITIES as urban centres are economic growth generators. As globalisation and mobility become more commonplace, Malaysian cities must compete on an international level to attract both talent and investment. Are we moving in the right direction?

The Malaysian government has acknowledged the importance of creating vibrant and liveable cities, as they are said to have three times the productivity of rural areas worldwide. The 10th Malaysia Plan notes that greater specialisation of economic activity is observed in densely populated areas, which correlates strongly with better economic performance.

In 2010, Kuala Lumpur and the Klang Valley contributed nearly 60% of gross domestic product contributions by cities in Malaysia.

“Cities are the engines of economic growth and where productivity is derived from,” says Hamdan Abdul Majeed, executive director of Think City Sdn Bhd, a special project vehicle established by Khazanah Nasional Bhd. The organisation initiates projects to foster community-based urban regeneration in Penang, and aims to begin work in KL soon.

“Urban planning is becoming the thing that will define competitiveness, jobs and liveability,” he says.

Malaysia’s rate of urbanisation, meaning the population shift from rural to urban areas, has been increasing post-independence. From below 30% in the 1960s, it reached 73.28% in 2013. For comparison, the average high-income Organisation for Economic Co-operation and Development (OECD) country in 2013 had an 80.55% urbanisation rate, while that of a non-OECD high-income nation was 77.28%.

The Department of Statistics forecasts that 27.7 million people (75%) in Peninsular Malaysia and 6.3 million people (50.9%) in Sabah and Sarawak will be living in urban areas by 2020.

However, urbanisation may be a bane if not well planned.

“Economics tells you that the benefits of colocation and activities based on clusters allow for innovation, productivity and so on. If a city is not well managed, jobs cannot be created, economic activity cannot take place efficiently and you lose out on competitiveness,” says Hamdan.

“Cities that are liveable, clean and environmentally friendly are places people want to be. Factors of growth today are no longer just land and capital. Labour has become very mobile. You need to attract talent, as well as money and technology.”

One of the 12 National Key Economic Areas under the government’s Economic Transformation Programme aims to enhance Greater Kuala Lumpur and the Klang Valley. Key initiatives include implementing better public transport systems, upgrading the water quality of KL’s main rivers, planting more trees and developing more pedestrian walkways. The goal is to attract more foreign talent and investment, reduce local brain drain and contribute RM190 billion in terms of gross national income over the next 10 years, creating over 300,000 jobs.

Last year, KL scored 70 to 80 in the Economist Intelligence Unit’s City Liveability Index. The score is based on 30 factors spread across five areas: stability, infrastructure, education, healthcare and the environment. Comparatively, the city topping the list is Melbourne, Australia, with a score of 97.5. Neighbouring Singapore ranks in the high 80s.

Malaysia’s capital city has been consistently placed 78th on the EIU list from 2011 to 2013. In efforts to raise standards, the hardware side of KL, such as developing the public transport system and cleaning up the Klang River, is being fixed.

But what is also needed is the soft side to urban development.

“How do you deal with cultural heritage and the arts scene?” asks Hamdan. “Nice parks and beautiful designs in an urban environment have an impact on us too. We can’t put everything on economics alone.”

Another contributing factor to a liveable city is its social cohesion. A new movement in urban planning today is placemaking, according to Fred Kent, president of New York-based Project for Public Spaces, a non-profit organisation dedicated to creating and sustaining public places that build communities. It is a transformative approach in reimagining public spaces as the heart of every community.

“Placemaking is a sacred process. It’s about understanding the soul of your community,” he explains.

“Architecture today is so unconnected to people’s souls; street systems are not about people, they’re about cars. Kuala Lumpur is an automobile heaven and it’s driving itself to extinction by overemphasising the automobile. In Paris, they want to reduce car ownership and usage, and create shared spaces in neighbourhoods. This paradigm shift is what other cities are doing.”

What defines a good city, says Kent, is a highly viable place that serves everybody’s needs. It’s not necessarily highly financial, but people are returning to core values rather than economic returns.

“Both a shopping mall and a street market have a lot of economic activity, but the difference is like night and day. If you go on [building shopping malls], you could lose the future of your city, because as nicely designed as they are, they’re synonymous. That’s not what a real city is about,” he says.

While George Town has seen a heritage and cultural revival, leading to an influx of tourists and a vibrant international arts scene, KL and the Klang Valley lag behind. Many heritage buildings around KL stand abandoned, and there remains a lack of walking and cycling lanes, causing a large portion of its residents to rely on cars.

Should governments fail to realise the importance of holistic urban planning, they will end up burdened with additional costs.

“There are enormous health costs if you’re unhappy or driving all the time. Obesity is a time bomb for the community,” says Kent. “[You face] psychological issues if you’re lonely. There’s also a high cost of environmental issues when so much energy is used to move around. But with [placemaking], your ecosystem demands are much lower and you have more social cohesion.”

Placemaking can also bring about savings on governmental expenditure. Community-related projects that encourage walking or community spaces, for example, are a lot cheaper than road infrastructure.

“Demand for roads will be reduced because people will have fewer cars and more bicycles. There will be less impact on the environment and less infrastructure demand,” Kent says.

“Even if there is demand for infrastructure, it will be small scale and built upon existing infrastructure. A place like this is self-managed and naturally self-organised, so you need less police and security. There’s more bartering and sharing within your community; economic cycles are more internal. You get far more returns from local investments than you would from external investments coming in.”

How do we get there?

Significant resources will be needed for urban planning or regeneration. Cities may need to be retrofitted and in some instances, “undone”, says Hamdan.

“For example, the Boston Big Dig, a 20-year mega project that rerouted the city’s chief highway into a tunnel, or in [South] Korea, where they removed a highway to restore a river. How you go about doing it has a technical side, a cultural, social side and an environmental side. Cities are like a biological ecosystem. It’s not purely based on engineering.”

Such expenditure can be seen as an investment to be recouped with multiples of returns.

“For example, real estate values go up, economic gross domestic product increases and more jobs are created as a result of successful city transformation. This will compensate for the investment the government makes,” Hamdan says. “You can catch the surpluses if you’re able to plan it right. Public transport can enhance real estate value. If land is made available for private sector participation, the state will be able to capture the surplus.”

As rapid urbanisation correlates with income inequality, it is important for governments to think about addressing a city’s accessibility of amenities and inclusivity. To have urban governance that is more mobile and successful, decision-making needs to be more localised and actions need to be targeted.

“The days where the centre decides everything is becoming obsolete. What’s the relationship between the federal and local governments? With Kulim, for example: is it better planned along with Alor Setar as part of Kedah or as part of the urban agglomeration in Penang? It’s more connected to the urban agglomeration in Penang than to Alor Setar, but it’s bounded by Kedah,” says Hamdan.

“We need new forms of urban governance because cities and metropolitan regions are no longer bounded by traditional boundaries. There’s a need for countries to go through some rethinking. That seems to be the experience, even in places like China, to have a new arrangement in [the federal and local government] relationship.”

This article first appeared in The Edge Malaysia Weekly, on February 23 - 29, 2015.

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