Asia’s City Economic Development

Nineteenth-century San Francisco went from a rough-and-tumble boomtown to a Victorian city with cosmopolitan ambitions. Its development was controlled by a small group of oligarchs: miners, industrialists, financiers and real estate speculators who hoped to forge a world-class metropolis in a single generation, enriching themselves in the process.

The private sector is made up of individual manufacturing or service sector commercial businesses (ranging from large state-owned corporations or multinational corporations to a sole trader), private developers; and chambers of commerce and other business support organizations (BSOs), sometimes called intermediaries.

Private sector participation is involved where there are government failures or weaknesses in public service provisions. Chronic poor performance is the rule in many publicly-run municipal services. Conventional projects centred on public investments in new capacity, training, and public sector managerial reforms often seem to make little difference. Hence, more and more governments are turning to private sector participation as an alternative solution. Options include service contract, management contract, lease, build-operate-transfer (BOT), concession or divestiture.

Asia’s city or local economic development (LED) and city Public-Private Partnerships (PPPs) too has active private sector participation in both hard and soft infrastructure.

In older times, conglomerates like Jardine Matheson helped to shape Asian city skylines like Hong Kong’s.

In modern times, the Asia private sector tended to focus on a few hard infrastructure goods like industrial and commercial sites and buildings, roads, railways, industrial and potable water, telecommunications or energy systems. Soft infrastructure was likewise developed, one at a time, like business advisory services, skills training, private education, as well as capital and finance.

Going full circle, one trend now is to go back to one mega Asian private company to develop an entire Asian community or city, all by itself.

Take for instance, Indonesia’s Lippo Karawaci Township. Through the amalgamation of various property, healthcare, and hospitality companies which was formalised on July 30, 2004, PT Lippo Karawaci has established itself as the leading broad-based property company in Indonesia. Lippo Group in 1993 built this township in Tangerang, west of Jakarta. Previously a swamp area, today it has become the benchmark of Indonesia’s “other” urban developments. Known for its clean environment and excellent infrastructure, Lippo Karawaci consists of three main service provisions. One, its housing and land development division for 40,000 residents creating 45,000 jobs. This in turn consists of commercial and retail businesses, industrial estate, office buildings, condominiums and a memorial park. Two, its healthcare division. This consists of four hospitals and a specialist clinic. Three, its hospitality and infrastructure division. This consists of hotels, clubs, dining outlets, convention centres, resorts and town management services. Most Lippo companies are headquartered in Lippo Karawaci including Lippo Bank, AIG Life, Lippo General Insurance, Matahari Department Store and Supermarket, Multipolar Corporation, and Kabelvision. Besides Lippo Karawaci, the Lippo Group has also developed the Lippo Cikarang Township, Tanjung Bunga Township and Royal Serpong Village.

Another example is Sentul City (also in Indonesia), which is still attracting other hospitality and service providers as its partners. Sentul City is a satellite town located in the sub province of Bogor which started to be developed in 1993 covering with 3,100 hectares. The objective is to make Sentul City the largest and exclusive urban development project in the south of Jakarta. This includes construction and development of infrastructure facilities, residential houses, commercial buildings, business offices, schools, healthcare centre, recreation facilities, shopping malls, golf course, hospital, schools and others.

Such are shining examples of people with big visions and capacity to shape Asian cities, working with public civil servants and foreign investor partners to economically develop micro Asian cities and communities as de-centralised city developers.