By 2050, 68% of the world’s population is expected to live in cities, with almost 90% of the growth in urban population happening in Asia and Africa. Facing rapid urbanization, governments are increasingly adopting smart city initiatives as solutions for achieving the Sustainable Development Goals (SDGs), especially SDG 11-Sustainable Cities and Communities. ICT-based urban management has the potential to maximize the benefits of agglomeration, while minimizing negative impacts like pollution.

Specifically, the development of smart cities from scratch is gaining traction in the Global South, modelling after well-known projects such as the Songdo City in South Korea. Such projects aim to build entirely new mixed-use urban areas, complete with business districts and residential, retail, medical, educational, and other facilities. Unlike smart city projects deploying ICT-based urban management to retrofit existing city infrastructure, such “built from scratch” smart cities are touted as spaces with built-in smart ideals and technologies, offering high-standard sustainable living and business opportunities to aspiring residents. They are particularly appealing to policymakers in the emerging economies, who seek to accomplish both infrastructure development and ambience intelligence in the new urban area, while attracting businesses and talents to relocate for regional development.

These megaprojects are often extremely expensive, prompting governments to partner with private property developers, investors, and tech firms, to share the cost of development and supply the infrastructure and technologies. Emerging economies court foreign investments to fulfill such roles, and Chinese investments are emerging as crucial players. China has established over 600 new cities since 1949. It is now also a leader in smart city initiatives with about 500 pilot projects, over half of the world’s total. Chinese firms, with experience at home, are venturing to take the expertise of building smart cities global. Take the 10-member ASEAN (The Association of Southeast Asian Nations) region as an example. The ASEAN region boasts a digital market estimated to grow to $200 billion by 2025. Its urban population is expected to grow to 373 million by 2030, an increase of 100 million from 2017. As the table below shows, the region has witnessed a significant increase of Chinese investment in built-from-scratch smart city development.

Apart from growing interests from Chinese firms, the Chinese government has also promoted smart city partnerships among domestic and foreign players through bilateral and regional frameworks. High-level engagement in recent years has operated through the China-ASEAN Summit, and under the banner of the “Digital Silk Road” component of the Belt and Road Initiative (BRI), to promote projects and investments in artificial intelligence, smart cities, the Internet of Things, 5G, fiber-optic cable construction, financial technologies, social networking, and blockchain. Chinese President Xi Jinping remarked during the 2017 Belt and Road Forum that "We should advance the development of big data, cloud computing and smart cities to transform them into a 21^st Century digital Silk Road… The development must incorporate 'green' development”^[1]. China officially pledged support for the ASEAN Smart City Network (ASCN), as part of the ASEAN-China Strategic Partnership Vision 2030 adopted at the 2018 China-ASEAN Summit. The two sides further launched the Smart City Cooperation Initiative at the 2019 China-ASEAN Summit, pledging to exchange best practices, explore cooperation on standards, facilitate joint research and innovation, support private sector collaboration, encourage city partnerships, incorporate cultural linkages, and promote capacity building and knowledge sharing.

We take a closer look at one of the most ambitious projects, the Forest City in Malaysia, to examine its development and sustainability impacts.

Table 1 Notable Chinese-invested Built-from-scratch Smart City Projects in Southeast Asia

Sources: online news compiled by authors.

The case of Forest City, Johor, Malaysia

The Forest City in Johor, Malaysia, is amongst the largest Chinese private real estate investments in Southeast Asia. Touted as a model city and as “one of the most exciting projects in the world today^[2]” while being criticized as an “ecological disaster^[3]” that would lead to a “foreign invasion^[4]”, Forest City has claimed worldwide attention since its inception. The project started in 2014 through a joint venture between Esplanade Danga 88 Sdn. Bhd, a company linked to the Sultan of Johor, and Country Garden Holdings Co Ltd, one of the largest private real estate developers in China. The project comprises four reclaimed islands spanning an area of 30 square kilometers.  Half of the first island is already completed and currently hosts 24,000 residential units, a fully occupied retail complex, two five-star hotels, commercial units, an Industrial Building System (IBS) factory, two international golf courses, a water theme park, and an international school. So far, the project has garnered USD 4 billion of investments. Once completed, it is estimated to reach a value of USD 100 billion and to host 700,000 people.

The project raised immediate concerns once it began, on January 1, 2014, due to the dumping of sand on fishing grounds of nearby villages, whose residents were not aware of the reclamation plans. Six months later, the Malaysian Department of Environment stopped the project pending the completion of an approved Environmental Impact Assessment, after which the project was downsized and modified. The developers claim they used environmentally friendly reclamation technologies and state-of-the-art building techniques and design that won several international accolades. However, scholars and observers have argued that such a large-scale project, over the projected thirty years of its construction, would inevitably produce long-lasting environmental changes in the nearby ecosystem, which includes a protected Ramsar mangrove site and an area rich in seagrass. The lack of consideration for local politics and social affairs earned the project considerable criticism, especially under Mahathir Mohamad’s government, who exerted a new round of scrutiny over Forest City.

This project, amongst the first and largest overseas endeavors of Country Garden, has been a steep learning curve for the company. In response to social backlash, Country Garden has also stepped up its Corporate Social Responsibility program, disbursing USD25 million to compensate 250 fishermen in the area while supporting and creating outreach and environmental education programs for local schools and villages. The company has also promised to build affordable housing for local people, as the flats currently on sale can only be afforded by affluent local elites or foreign buyers. The executive body that manages Forest City now encompasses a mix of Chinese and local staff to navigate cultural, political, and social differences.

Policy recommendations

While being unique in its ownership structure and in the incredible speed of its development, the case of the Forest City presents important considerations for policymakers that can be applied to other current and future smart city projects. Forest City started with negotiations between the developer and the government of the State of Johor, whereby the Sultan of Johor, a popular political figure in the country, acted as a key broker. Because of its scale, the project triggered concerns within the federal government. For emerging economies aspiring to partner with foreign investors to develop new smart cities, a well-coordinated and comprehensive strategy to ensure sustainability outcomes will be vital. Hence:

• National and local governments ought to develop and implement comprehensive long-term planning for smart cities, define scopes that are environmentally and socially sustainable, and develop supportive governing institutions to coordinate efforts at different governance levels.
• The coordination and screening of foreign investments in the country should be strategically performed by both national and local governments to fit their sustainable development strategies. As highlighted by recent studies^[5] on the sustainability of China’s Belt and Road Initiative, the practice of Environmental Impact Assessment and Social Impact Assessment has significant room to improve in the developing world. Governments should therefore develop effective regulatory standards and structures to proactively assess and address any long-term impacts of development while engaging potential investors.
• Regulators need to proactively engage all interested parties and enhance information flow between local community members, governing institutions, and foreign investors to ensure the safeguarding of community welfare and of the local ecosystems. This would help the investors to identify local concerns and address grievances in a timely and mutually acceptable manner, and in turn would have a beneficial effect on the project’s success and on sustainability outcomes.

NOTES:

[1] HSBC. (2018). Smart cities are taking over, and over 50% of them are in China. CNBC.

[2] Sharen Kaur (2018). Forest City – model for other cities. New Straits Times, 24 September.  

[3] Keith Schneider (2018). A civic outcry in Malaysia forces a Chinese builder to live up to its eco-friendly tag. Mongabay, 5 September. 

[4] Hazlin Hassan (2019). New rules for buying Malaysian property: Concern over foreign invasion, real estate bubble. The Straits Times. 

[5] Hughes, A., Lechner, A., Chitov, A., Horstmann, A., Hinsley, A., Tritto, A., Chariton, A., Li, B., Wang, C., Ganapin, D., Simonov, E., Morton, K., Toktomushev, K., Foggin, M., Tan-Mullins, M., Orr, M., Griffiths, R., Nash, R., Brooks, T., Perkin, S., Glémet, R., Kim, M., Yu, D. (2020). Horizon Scan of the Belt and Road Initiative (BRI). Trends in Ecology and Evolution. DOI: https://doi.org/10.1016/j.tree.2020.02.005.

The opinions expressed are those of the authors. They do not reflect the opinions or views of ISPI